Tuesday, July 29, 2008

I LOVE To Say "I Told Ya' So.

Friday, July 25, 2008

Tax Avoidance, Dutch Version

Wednesday, July 23, 2008

"Reprehensible Schmuck"

I have posted several aggressively anti-John Edwards commentaries in the past few years (e.g. here, here and here).  Some might even call these posts over the top.  I have to disagree.  I was driven above and beyond the normal levels of politician bashing simply because John Edwards is a unique creature, unsurpassed in his phoniness and superlative in his own special brand of loathsomeness.   I don't know if I have a nose for this or if I was simply paying attention, but never have I seen a politician whose contemptibility was matched only by their self-absorption.  Never have I seen a politician with a more fundamental conflict between his life and his message, and who operated so overtly behind the cameras as the antithesis of what he said in front of the camera.  I like Roger Simon's assessment: "one of the most reprehensible schmucks to appear on the American political scene in some time."  Some time, Roger?  A very long time, IMO.  The fact that John Edwards was even minimally successful in politics is a pox on the American electorate and an indictment of our collective judgement.  Shame on us. 


I think I heard it said once that gloating was overrated. Poppycock. If you've fought the sharks, taken the low blows, and battled the worst of the worst, a good gloat is AWESOME. Paul Gigot gets in one of the gloatiest gloats ever, and man is it dee-lish. Wow. Good for you, Mr. Gigot.

Fed: "The Eagle Flies At Dawn"

It is a widely held view in the financial/economic policy world that the Federal Reserve needs to raise interest rates to begin to reverse the now obvious inflationary trend. However, it is also conventional wisdom that the Fed won't do anything until after the election, which means December. Let's examine that conventional wisdom. Recent FOMC meetings, which have resulted in rates falling dramatically, have had a string of dissents - Lacker, Fisher and Plosser have all dissented at some point. Fisher remains a stalwart inflation hawk and Lacker is on record that he's eager to raise rates. Now, in the last few days we've seen a media full court press of sorts in favor of inflation hawkishness. Gary Stern said last Friday that we shouldn't wait for complete stabilization of housing and financial markets to raise rates. This week it was Plosser to come out and say "sooner rather than later." Today the Fed's Beige Book noted that all 12 bank regions are experiencing inflation. All this is coming to a head and taking on quite a public face. Are we really to believe that this is all rogue officials waging their campaign of hawkishness in defiance of standing policy? No. These are the signals that rates are going up. But when? Why would these officials be laying it on thick in July, when many are on vacation, for a rate hike in December? October is more plausible, especially since Mishkin will be gone, but would the Fed spring this just a month before the election? That seems odd. It'd be better to get a new policy course started earlier so the electorate and the respective campaigns get used to and operate longer with a known policy direction. So I think rates are going up in August. We've got two weeks until the FOMC meeting, the Fed is saying 'get your deals done now, rates are going up.' Anybody who needed some breathing room to repair their balance sheets to avert financial disaster ought to have done it by now. If any financial institution's fate rests on looser policy or more time in this low rate environment, they are dead in the water anyway. Banks got their respite. It's over. It is time to heal the dollar and stamp down inflation. Away we go.

Tuesday, July 22, 2008

French Buy Legendary American Winery...Will a Soccer Club Be Next?

On the heels of InBev snagging Anheuser-Busch, we get news today that Chateau Cos d'Estournel (that would be wine folks, French wine) is scoring Chateau Montelena (that would be America, yes, we tried to fool you with the "Chateau", but trust me it's American).  

I can't really get too analytical about this, just that it is another sign that we live in a globalized world and that in small, almost imperceptible ways we will all almost certainly benefit from this.  Although I am getting a chuckle thinking about some parallels.  If you know the history, Montelena was one of the wines in the famous Paris tasting of 1976 - incidentally the subject of a movie out Aug 6th, starring all-round awesome dude Alan Rickman. So we kicked the froggies ass at their own game and 30+ years later - because we've trashed our currency - they own us.  So here is a prediction, the USA beats Les Bleus in the elimination round of the next World Cup and in 30+ years Olympique Lyonnais buys DC United!

Merkel: "Stop Digging" (Presumably in German)

Angie Merkel clearly isn't angling for a cushy, post-government sinecure on the Russian payroll like Gerhard Schroeder, because she's suggesting that maybe Germany ought to rethink its profoundly silly policy of phasing out its nuclear plants. I say profoundly silly because the two very clear goals of sensible energy policy today ought to be 1) more and 2) cleaner. Germany's nukes are a big part of their energy supply base, phasing them out reduces supply dramatically. And nukes are emissions-free. So the greens should love them, but they don't because, like here in the US, Germany's greens aren't for abundant, clean energy, they're really for less energy, maybe even ultimately no energy. They are for lethargy. Capitalism runs on energy, they are against energy because ultimately they are against capitalism. Read any Social Democratic talking point on why the nukes should go, and you'll see their main objection is to profits.

Germany is on a slow, long decline, experiencing debilitating brain drain and yet it can't seem to do simple things to right itself. Merkel's call to keep the nukes is positive, but the black cloud in this silver lining is that she should have begun this campaign the day she took office, she's lost time and allowed needless energy inflation to further sour a populace already sour on free markets.

How Russia Falls Apart, Again

Well, the Russians are very near completing the screwing of the last major oil company that stupidly trusted Russians. Showing adeptness at numerous forms of theft - from guys with guns to bureaucrats denying work permits - the Russians have consolidated their energy resources into the hands of the government in order to fund their geo-political ambitions. I guess the biggest disappointment for me is that the last and final patsy to get the treatment were the Brits, who have historically shown more savvy. Just more damning evidence of the sheer imcompetence of former Chairman and CEO, John Browne. To the tragic legacy of basic safety giving way to green posturing, we can now add getting fleeced in Russia. It is not the case that the Brits can say, with Obamaesque wonderment, 'these are not the Russians we thought we knew.' The Brits have been in this game for a long time; they ought to know that when the Russians are down, they are deadbeats, and when they are up, they are thieving gangsters. This was not a hard one to call.

So what is the upshot? Foreign investment will continue its march toward nil. For the Russians' sake I hope they stole enough know-how off of the Brits during their brief interlude to confront the declining productivity of their Siberian fields and to tap undeveloped plays. If not, they'll have to convince the likes of Schlumberger and Halliburton to help them. I don't know the industry politics here, but I could see BP, the UK and US governments wanting to chat with any oil service company before they sign up to do big business in Russia. That's if the oil services guys even want to go there. There will be plenty of business in Brazil for years to come. Hey, and maybe even in Alaska! Bottom line: Russian production is likely to stay stagnant as a best case, more likely production declines will accelerate. Couple that with rising US interest rates (a second Fed governor has come out to say that rates ought to rise soon) and the headlong rush to find alternative fuels, we could see falling oil prices. If you are a petro-state, the combination of declining production and falling prices equals you're screwed. Of course, lots of things could happen and this analysis could be totally wrong, but I'm saying that there exists a significant probability that Russia is beginning its glidepath toward destabilization and, ultimately, disintegration. Once you're on that glidepath it is hard to break free, you can hang on if you are adept, but the destination is usually a given. Chavez is clearly on that glidepath. Russia could be next.

Monday, July 21, 2008

The NY Times Is Lame, Its Competitors Too, It Seems

Maybe I am a doofus but I can't seem to find any news on where McCain's rejected Op-Ed - rejected by the NY Times (which I don't read for the same reason that I don't drive a Chevy) - will be published.  Not that it promises to be any great shakes, I mean, who is expecting sheer brilliance from a 700 word piece whipped up on the fly that conveys mostly what everybody knows already?  Still, where is the competitive fire in the news business?  Where is that sensational headline "The McCain Op-ed that the NY Times Won't Print" that seeks to capitalize on this journalistic gaffe?  This a story.  Not so much about the value of McCain's words, but about the Times's obtuseness.  What competitor wouldn't want to show up an obtuse and silly competitor?  There's your answer right there.  The print news business ain't all that competitive.  With the exception of the Wall Street Journal, there is no print journalistic enterprise looking to rub the Times's face in it.  The Times's action is exhibit A as to why modern American journalism is so dreadful.  Exhibit B is that there seems to be no instantaneous response from the competition eager to bring you what the Times won't.

Great Acting Does Not A Good Movie Make

I don't go to the movies often because too often it is a waste of money. Hollywood is churning out pretty mediocre stuff. Still, I am attracted to superlative individual performances, and so it was that I joined hordes of the great unwashed (this is not a literary flourish, the theatre was packed with families who brought their infants and toddlers to the midnight showing and, of course, people who yelled at the screen, like the girls next to me who raucously derided the Maggie Gyllenhaal character as a "slut" when she kisses Christian Bale, her ex) on Friday night to take in the late Heath Ledger's performance as the The Joker in "The Dark Knight." I have to agree with Joe Morgenstern, bottom line, "Ledger Great, Movie OK."

The last two movies I went to to see on the reputed strength of an acting performance - The Last King of Scotland and There Will Be Blood - were a small whiff and a big WHIFF respectively. Strike three. Note to self.

The Chinese Get It

Even the command and control Chinese realize that to get more momentum behind cleaner burning fuels, you need to unleash private actors and the way to do that is to cut taxes. Here in the heart of the capitalist West, not so much.

Ethanol From Garbage?

This is good news. It's about the only way a sane person, who isn't a corn farmer or a politically-connected venture capitalist, could get excited about ethanol.

Friday, July 18, 2008

Are Chuck Schumer's Jack-Booted Goons After Little Ole' ME ?!?!?

Why is the U.S. Senate's Sergeant at Arms looking into bloggers that were critical of senior Sausage Factory Worker from New York Charles Schumer's role in the collapse of IndyMac Bank?

You know, they told Glenn Reynolds that if George W. Bush was re-elected, the government would start spying on normal citizens who were exercising their basic rights of free speech by being critical of powerful politicians. And they were right!

With Apologies to Chief Justice Roberts, "The Way to Make Government Smaller Is to Make Government Smaller."

I've notice here and there around the rightosphere a call to make suggestions on how the GOP can right itself and regain some electoral competitiveness. This is silly, of course, because the answer is easy, stop being Democrats. Still, in the spirit lighting a candle rather than cursing the darkness, I resurrect a post from 2006 where I lay out a plan that, if boldly championed, will light the fires of the armies of small government voters. Since I had maybe five readers in 2006 and easily have 10-15 readers now, my proposal will clearly have double or triple the impact that it had then. So without further Adoo...

Thinking Ahead to 2008

OK, time to begin building the policy platform for 2008. Republicans need to really convince small government types, Libertarians and Reagan Republicans alike, that they will walk the small government walk. How? In addition to keeping the flame for reform - Social Security reform, tax reform, tort reform, free-market healthcare reform, drilling for domestic energy - forgo namby-pamby goals. Think big, make splash. Here are a few starting points:

The Department of Education's budget is $89 billion. Cut it in half. Yes, half. Abandon all federal mandates and aid to states. Retain only those programs that benefit the lowest income Americans, say bottom 5%. The Department of Education has no bearing on the quality of education in this country.

The Department of Health and Human Service's budget is $700 billion most of which is Medicare and Medicaid. Those are separate issues. For now, cut in half the approximately $70 billion of HHS's budget that is discretionary. Meals on Wheels? Nice in theory, but leave it to states and private citizens.

The Department of Housing and Urban Development's budget is $31 billion. Kill the entire department. Yes, kill it. HUD is a patchwork of subsidies and grants that make housing more expensive and urban areas more dependent on the federal government. Devolve the responsibility to states.

The Department of Energy's budget is $23 billion. Kill it. Biggest waste of money there is. Alternative fuels? Leave it to venture capital and the private sector. We'll have more, better, and cleaner energy as a result.

The Department of Commerce's budget is $9. Small potatoes, but cut it in half anyway. Plenty of subsidies and protection that can and should go poof.

The Department of Defense's budget is $400+ billion. Defense is important and cannot be done by the private sector. But there is ALOT of fat. Freeze the budget for 5 years, force the department to prioritize necessary projects over fat.

The Department of the Interior's budget is $10 billion. Small spuds but kill it anyway. Let states steward their natural resources. Nobody cares for the land like the locals.

Much of this will shift fiscal burdens to states. Fine. Cut federal taxes so that citizens have more money to pay state tax increases and let the 50 states compete to provide efficient government. Bloated, inefficient state governments will lose residents, economic and political power. Efficient ones will win.

This advice is easy applicable to Democrats as well. Americans want honest government first and foremost and less government ultimately. If you want to keep this majority, you will need to show at least some propensity to admit the ineffectiveness and unnecessariness of certain government activities. Two to four years of "we are going to take things away from you for the common good" will land you back in the wilderness.

The US Version of "Crushing Poverty"

I've made the point before, about our poor people here in the good ole' US of A, but this takes the cake. This is the perfect example of what I've said - check this out.

As the mercury rises here in mid-July, I have a great idea for a story about how the anemic economy is squeezing the poor - the increasing cost of energy is forcing electricity bills higher, pinching the budgets of poor Americans who are now forced to make the wrenching choice between watching TV or running the air conditioning.

Or how about the 58 year old guy whose employer cut back on healthcare expenditures and will now require him to chip in more than just a few hundred dollars to have miracle of science, life-saving triple bypass surgery.

Truth is, we don't have poverty here in the US. Certainly, we have an incredibly small group of people in poverty, many of which are in poverty for non-economic reasons like mental illness or drug addiction; but, in general, we don't have poverty as a serious social condition. What we do have is income inequality, which is different, and, I would argue, is alot better problem to have. First, let's thankful about what we do have and what we have achieved. Then, as we attempt to ameliorate the conditions of our least fortunate, let's be cognizant to preserve and strengthen that which got us here, here being the state of affairs in which our poverty problems are very small compared to history and true poverty as it is understood around the globe.

P.S. - Don't believe me? This the Census Bureau's picture of poverty in America.

Update for P. Gigot: Frank Still Terrible

I'll leave this week's evisceration of Thomas Frank's WSJ column to others. I'm beginning to wonder if Dow Jones is getting phone calls from people who want to subscribe to the paper everyday but Wednesday. Trust me, us capitalist pigs want that Wednesday liberal column, we just don't want shoddy journalism, but that is what we are getting, apropos Instapundit's take: "...using an ingenious modern appliance."

Wednesday, July 16, 2008

Whoops! Part...%$&...I Lost Count

Via our fine friends in North Dakota, which has been a hotspot for the ethanol industry in recent years, things aren't going so well in the ethanol biz these days. Whoops.

Monday, July 14, 2008

Beyond Shameful: Schumer Causes a Run On Indymac

The protestations of my ghastly senior Senator ring hollow.  A basic familiarity with financial history teaches that banks on the razor's edge of trouble can be saved or pushed over the edge into the abyss by the ever-so-slightest breeze of luck or ill wind.  How a bank gets into trouble is water under the bridge, the matter of life and death swings on the critical current status of public confidence.  Schumer's letters to federal agencies, made public, amounted to an air cannon applied to a tack spinning on a razor.  Schumer clearly isn't that stupid, the only explanation is that he wanted to facilitate some catastrophic headlines that he perceives can only help the Democrats in November (with few direct consequences on his constituents).  This is dastardly in the extreme.

Wednesday, July 09, 2008

Trans Fats and Aluminum Bats

I have lamented numerous (here, here, and here) times that the formerly free-wheeling City That Never Sleeps has become a leader in busybody nannying under Nanny in Chief Michael Bloomberg (to be fair alot of the nannying comes courtesy of the raving socialists on the city council, but that doesn't let NIC Bberg off the hook). In this video, Drew Carey calls NYC "the new California". Sad. And to think all the numb-nuts here thought Rudy was a fascist. Rudy made the city safe from street thugs. Bloomberg is making the city safe from yourself.

The Tax Base Problem: Big and Getting Worse

The guys over at Powerline have an absolutely indispensible post regarding an upcoming release of tax data by the IRS, which Steve Moore previews today at WSJ.com. Astonishingly, 1% of taxpayers shoulder 40% of the income tax burden. No doubt populist sentiment and an ignorance of how our economy works would lead many to react to this news with a resounding "Excellent!" But the proper reaction ought to be "Oh, Shit!"

We have a "key man" problem here in America. What if many of that top 1% simply checked out? What if we demonized them so much and we beat them down so much with taxes that they simply take their ball and go home? Do we really think that vast riches will be left for the rest of us to share? Current events are apt here. Think about Tiger Woods's impending absence from the PGA tour. Tiger is the ultimate "have." In Tiger's absence will the wealth now be spread around to the have-nots? Maybe in the short term, other golfers will take home the prize money. But what about the throngs of fans that turn out and tune in to see Tiger's remarkbale feats? They'll check out too and eventually the prize money will dwindle as golf events attract less viewership and attendance. Sure, another Tiger could emerge, but then again maybe one won't. It's a risk. What if Bill Gates never existed? Would his billions just be dispersed throughout the land, with a little in your pocket and a little in mine? Nope. Those billions likely wouldn't exist and wouldn't be anybody's hands.

So what are the implications for the government? Well, they are quite serious. The government has made enormous commitments and its ability to meet those commitments rides on very small number of people. What if that 1% didn't go along or got hit by the proverbial bus? It actually happened in California in 2001. All those dot com stock option millionaires went bust and capital gains tax revenues disappeared, causing quite the financial strain on the Golden State's budget. Involuntarily or voluntarily, our most productive citizens could fail to contribute to tax receipts. What then? Those who love government and constantly tell us of the necessity of government "services" should be quite worried. The funding for their precious services hangs by a thread. Ever more steeply progressive taxation could actually, in the long run, turn out to be Big Government's Achilles' Heel.

UPDATE: Tigerlessness is already hurting...in Britain no less. I fear for the PGA Championship coming up here in Tiger's homeland.

Tuesday, July 08, 2008

Let's Hear It for Choice: Diesel Is Here

Clean, efficient diesel cars are here now and there are more to come. This is good news for consumers looking for the hard benefit of fuel-efficiency and/or a few squishy utils of environmentalist self regard, giving them an alternative technology to hybrids. Hopefully, this technological competition will drive down the costs for both (which may even result in actual positive economics for Prius owners). Further, increased penetration of diesel into the passenger vehicle market will hopefully hasten the ramp up of refinery capacity to produce ULSD, which should ease fuel prices (see here and here). Finally, a subtle, but important, benefit of diesel uptake in the US will be to ground the debate over energy policy in reality, or at least move the debate in that direction. Diesel technology is real, it is available and it is going to have compelling economics. It will be harder for pie in the sky schemes (cellulosic ethanol) and bad technologies (hydrogen) to garner policy traction and secure economic rents in the face of our emerging diesel experience. Diesel may prove that we can take existing technologies and make them orders of magnitude better in terms of efficiency and environmental impact. If the nation's policy comes to broadly accept that we can have a huge impact by making existing technologies (read hydrocarbons) incrementally better, then we'll be alot better off.

Thursday, July 03, 2008

Happy Independence Day

Wednesday, July 02, 2008

To Do: Store 50 Cases of Franks n' Beans in the Basement

This analysis suggests that the Fed is likely to be more dovish and monetary policy will be looser into 2009. In the words of Frank Barone..."Holy Crap!"

The only thing I have to cling to is this. Fortunately, in the long run, Brian is usually right. I've been tracking his views since 2001 and you would have made lots of money listening to him.