Recession in America 2008

Other countries have bread lines and slums the size of American cities. Other eras saw bread lines, Hoovervilles, and widespread begging. This is what economic hardship looks like. What does economic hardship in America in 2008 look like? Crowds at Wal-Mart trampling one another to death. Are they giving away free scoopfuls of rice at Wal-Mart these days?

Climate Change Versus National Greatness

The world has just received a lesson in what happens when people stop consuming oil. From American drivers driving less to Chinese factories producing less goods, "demand destruction" has been the buzz phrase of the second half of 2008, and for many countries around the globe who rely heavily on the production of oil for their economic health or their very survival, the picture isn't pretty. There, of course, is Saudi Arabia that keeps its unpopular monarchical regime in place by using vast oil wealth to keep the state running, but Saudi is not near any type of inflection point, or brink. There are several other countries that are on various types of brinks. Large oil producing counties like Russia, Venezuela, and Iran (possibly even Iraq) have been brought to the brink of societal collapse, or at least of current regime collapse, by demand destruction. These countries have very little else in the way of economic strength to sustain them in the absence of oil and keep themselves propped up through oil-driven social spending. (There are small fries in this category too, like Ecuador) Other countries, like England, Norway and Mexico are on the brink of severe fiscal distress by virtue of softening oil prices. Massive social spending in these countries is funded by oil revenues. Things won't collapse but governments in these countries will be stressed to afford their generous social spending should trends continue. Lastly, there is another type of brink, but a good brink to be on - the brink of national greatness. Several countries are either new to the oil scene, like Angola, and are making enormous strides, but others are in the process of pursuing game-changing opportunities that will catapult them from also-rans into the upper tier of the oil world. In this category, you have most notably Brazil and Canada. Brazil had found boatloads of oil and is working feverishly to tap into it. The scale of the finds offer Brazil the opportunity to go from being a persistently poor country to achieving living standards among the highest in the world. Massive investments in both physical and social infrastructure like education and healthcare will be possible if Brazil capitalizes on its behemoth offshore discoveries. Canada as well, if it can scale up and drive down costs in its oil sands and arctic plays, will become a true economic power with a vast petroleum wealth spread out over a relatively small population.

Regardless of what brink you're on - collapse or national greatness - all of these countries can count on tipping over onto the wrong side of the brink if there is severe and persistent long term demand destruction of petroleum-based energy. What could achieve that? Recession obviously, but recession is usually temporary. What could do it on a more permanent basis? Pervasive climate change legislation. Each of the countries I have named, and many others that are in the same position on a smaller scale, stand to fall into disarray or be denied dreamed-of living standards at the hands of the next great global climate change initiative. Thus, it will not stand. Individual countries may do what they please to limit hydrocarbon fuels, but only a global initiative stands a chance of doing something meaningful, so the greenies tell us. Just as developing economies won't sacrifice their shot at economic opportunity in order to indulge the developed world, countries reliant on oil production won't vote to kill off global demand for the one industry on which their future rests. The lesson in demand destruction that we've just experienced has shown a large part of the world our potentially green future and I am certain they will have none of it. Angola will not throw off the shackles of Third World poverty with solar panels, Brazil won't achieve First World living standards via biofuels, and Russia won't be able to keep up with the West by virtue of wind. Barack Obama and all the Dems in Congress can dream all they want about resurgent US leadership on global warming. Global climate change consensus is all but unachievable.

UPDATE: The Poznan conference didn't go so well. Fine by me.

CFLs Suck

I agree with this lady. Compact Fluorescent Lightbulbs suck. I have four years to stockpile incandescents. I just wonder if I'll have to store them in a hidden compartment from intrusive government raids.

UPDATE: Wow, the LA Times agrees with me.

Obama Already Failing

The economy is without question the most important issue of our day - layoffs are accelerating, bankruptcy fears are rising, the stock market is down 15%+ since the election - and is critical to all else that we do as a nation, but what does Obama hop right on? Making sure that a run-of-the-mill, uninspiring Clintonite bureaucrat is our new AG. Brilliant. Oh yeah, and give the market a nice shot of "climate change". The market is coming to realize that we bought ourselves a pig in a poke. But that is what all the big money hedgies and Goldman liberals wanted. Enjoy.

UPDATE: Oh yes, and fill that vital Health & Human Services cabinet slot, with an oldie but goodie no less.

UPPDATE: WSJ says it's Geithner for SecTreas. Finally. Market seems to like it.

Piracy Update

Somali pirates have seized a couple more commercial ships in the last two days. As you would expect, our modern world with its leviathan superstructure of bureaucracy and its 'root causes' ninnies places significant barriers to addressing the situation promptly and effectively. Two tropes that you will hear incessantly in media coverage is that 1) this is a global problem that demands global coordination, and 2) that there is no direct solution, only a solution that addresses the root cause, which is the lack of political stability in Somalia. Both are sheer poppycock on stilts. First, while this can be solved with global coordination, it is not a requirement that it be done so. The ultimate loser in this situation is Egypt. The only reason to sail through the Gulf of Aden is if you are transiting the Suez Canal. According to this, Egypt got over $3 billion in revenue from fees for passage through the canal in 2006. I would bet the fees are more like $5 billion now. Egypt needs that money, and as ship owners start to avoid the dangerous waters off of Somalia, it will be Egypt that feels the pinch most directly. The world can handle the delays and the increased costs of sending vessels on the longer route around the Cape of Good Hope, and thus can wash its hands of key responsibility for the most part. Ultimately it falls to Egypt to protect its interests. Second, there is a direct solution - routing the pirates. Political stability in Somalia is not necessary, nor is it sufficient to put an end to the piracy. Nor is it likely. Creating stable political conditions in Somalia would be the hardest and most time consuming solution, and while it is ultimately the best long term solution, we have a critical short term need. Forcibly putting the pirates out of business is the near term requirement. Multinational naval power ought to establish a safe shipping corridor through the Gulf and a lead navy (ought to be European since Europe relies on Suez trade) ought to blockade the Somali port of Eyl - no one gets in or out without say so from the blockading navy. Third, pirates in international waters ought to be fair game. Any participating national navy can kill or capture pirates and process them through their own legal system. Personally, I would very much like to see pirates picked by the Saudi navy and put through the Saudi judicial system.

UPDATE: Whaddayaknow...the Arabs get that this is really their problem.

Will The Saudis Blink?

The world seems kind of flummoxed over what to about this. What the hell have we come to? Send in the flippin' Navy. Somebody. Anybody. History's lessons are unambiguous. The only solution is many sunken pirate boats and numerous watery graves. Harsh reality, but reality. The pirates, by some estimates, currently hold some $250 million of Saudi state property - $140 million of ship and $110 million of oil. Let's see what they do.

Government Health Bureaucrat Issues Death Sentence

I've written numerous posts on the extremely bad idea of nationalized healthcare, but I can't say it any better than this story (which comes oddly from the pro-universal healthcare Bloomberg News organization). Quite simply, government controled heathcare will lead to unnecessarily premature deaths.

"We Have To Tax Something Somewhere"

There is much talk these days about the Great Depression. Amity Shlaes's book The Forgotten Man couldn't be timelier although there are places where it is not being enthusiastcally embraced, or even read (hint: in the Office of the President Elect).

I'm not going to wade into this massive subject, but I do want to highlight a little known aspect of Depression Era policy that doesn't get enough attention (and thus opprobrium) - the check tax. Read here for some background (and to discover that the title of this post was a quote from a then member of the Great Sausage Factory). The details of the debate are worth your time but here is the quick summary: Congress and the Hoover administration levied a tax on checks, so people pulled their cash out of banks in order to transact. Why pay your $2 milk bill via check if you get hit with a tax to do so? Same went for paying employees. Turns out that paying employees via check was a relatively new concept too, and Congress was warned that a check tax might encourage "going back to the old way" of handing out cash on payday. Well, the logic represented by the quote in the title of this post carried the day and we got a check tax. Guess what happened? People took cash out of the banking system. Muliplier effect? We got it in reverse.

US Taxpayers Invest In China

Follow the money:
You & Me --> Federal Government --> Banf of America --> China Bank of Construction ...

Climate Change Whoops

They're gonna tell you what cars you can drive, among other dictats, because we HAVE to listen to the scientists...well, certain scientists anyway.

Remember, even in a pure world - with 100% competent and scrupulous scientists able to sidestep the failings of human nature and display no venality, ambition, nor lust for notoriety - the current consensus and predictions regarding global warming stand almost no chance of being correct. Throw in some decidedly 'human' scientists and you can guarantee it.

To Deadbeat or Not To Deadbeat?

That is the question that mini-Chavez Raphael Correa is pondering.

What dumb-asses bought these bonds?

Bankrupt Empire

We have a "key man" problem nationwide due to our steeply, and steepening, progressive taxation system. We have it at the national level but it is more acute in liberal paradises like my lovely state of residence, as the WSJ discusses today. 2008 and 2009 will be a shock to end all shocks for the Empire State. I predict NY state's tax receipts declining on the order of 40% from 2007 levels. New York is bankrupt, it just won't know it for 18 months.

Note to Dear Leader

I won't be "ruled". I won't meet your requirement (now apparently being rethought) to volunteer other than what I already freely choose to do. I won't offer my hard-earned (laughably modest) wealth up for distribution. Frankly, I just might hide under my desk for four to eight years and limit my productivity. But...I will promise you one thing. I will stay informed. I will closely and dispassionately analyze what your leadership and policy enactments mean for me, and should you not measure up, I will vote for an alternative in 2012. After all, you work for me.

And So It Begins

Nancy Pelosi is talking stimulus bill and the translation into English goes something like this: "I'll gladly pay you Tuesday for a hamburger today." She wants a big government, Keynesian type stimulus (of the same variety that we just had and that GWB shamefully agreed to) asap so it can hit before Christmas and she's making a grudging bow to bipartisanship by saying that she'd like to follow up with a tax cut stimulus later when the Dems start up the new Congress in January with bigger majorities. Sure she does. It is a head fake, a gambit, a ruse. She will pocket the Keynesian waste of time/money and screw the tax cut later after several stupid Republicans have been snookered.

So here should be the Republican response, from Congress on up to the White House: "You can have all the Keynesian stimulus you want as soon as you want it so long as any first round of stimulus has two of the following three:
- make permanent the current dividend and capital gains tax rates
- lower the corporate tax rate to 25%
- make permanent the current individual marginal tax rates

Pick any two. Otherwise no dice, and you can wait 'til January to get something done. Then McConnell and whoever leads the House needs to hold the troops in line and not be a bunch of wimps.

Democracy Is Messy

White liberal Californians must surely embrace and welcome the increasing participation and emfranchisement of minorities in our democratic society, right? Maybe.

Once Again...

As the Republicans cast about for a policy platform that actually might attract votes, let me reprise, yet again, a novel idea...namely, making a stand for smaller government by having a plan to make government smaller.

Obama: I'm Cool With Bush's Dumb Ethanol Policy

Same same. Some background here and here and here and here and here and here.

...and all this for our planet in peril.

Stimulus Update

Mark Perry notes an eleventh state where gas prices are below $2/gallon. Holy Cow. If the national average gets down to these levels, that stimulus that Perry and I have been talking about will blow past $300 billion and approach $400 billion.

UPDATE: Don Luskin points out that the windfall profit tax is still high on the priority list, even though crude oil and gas prices have plunged. And I mean plunged. We have a $300 billion stimulus on our hands already, which doesn't include at all the savings that Americans are going to receive on heating their homes this winter, and the oil and gas sector has been slaughtered and these bozos are still wagering this horrible campaign against energy. One can only hope that they just haven't gotten around to updating the website.

The Big Question

So the big post-election soul searching among libertarian/conservative folks seems to be, "should I engage in principled opposition or should I give Obama about as much chance as lefties gave George W. Bush?" (e.g. here) Most seem to agree that the former is the way to go, but before this becomes consensus, let me ask "when has graciousness and magnanimity ever been repaid in kind by Democrats and 'progressives'? When? Tell me and I'll be as principled and respectful as anyone.

Congratulations, But I Still Won't Buy Peggy Joseph's Gas

I am John Galt.

If McCain Beats the Long Odds, Here's Why

I am pretty sure McCain will lose today, but if he doesn't, here is why he won:

1) We don't like being called racists - Most of us aren't racists. We live, work and play among each other and our society has made enormous strides to integrate and share the opportunities of American life for all. Furthermore most of us trace our lineage to groups that represented the marginalized of society long ago ("No Irish Need Apply" and all that); we haven't forgotten where we came from and aren't interested in holding others down now that we've received good fortune in America. So we don't particularly appreciate being called racists when we aren't. In addition, we don't appreciate that particular besmirchment when the accusation comes from those who wish to blunt the cold reality that the Democratic candidate for President is the most inexperienced nominee for President in the history of the country, has hardly been critically examined and is much more radical idealogically than most Americans. I can see many Americans saying to themselves, 'So I'm a racist for being skeptical? Screw you. Lever pulled for McCain.'

2) The Media tried to pull one over on us - The media bias has been indisputable in this election and alternative media has made it all the more apparent to average voters just how much the MSM has abandoned its role as an honest broker for civil society. Americans culturally are accepting of disagreement but we hate to be conned. Disagree all you want but be open about where you stand, don't try to pull the wool over our eyes. If you do, we won't listen to anything you have to say going forward no matter how meritorious. The media has at best merely forgotten to probe deeper into who Barack Obama is. At worst they have been complicit in the fraudulent packaging of this man. Obama may truly be the greatest option for our highest office, but it sure looks like the media is trying to snow us. Many Americans may conclude that where there's smoke, there's fire and will resent it. Lever pulled for McCain.

Americans are mostly evenly divided about core issues - healthcare, education, foreign policy, taxes, government spending. Good people can argue all day long about this stuff, and do, and rarely sway their fellow citizens. Elections are decided by swing voters and turnout. McCain is far from an inspiring candidate and the Republican party is far from making a good case for itself, but the level of dishonesty and insult aimed square at average Americans this election might just have been enough to create a wave of, sympathy is not the right word, grudging affinity for McCain. If he wins, that'll be why.

UPDATE: The media got what it wanted and now it will regret it, as it's death is largely assured. Just yesterday we marked another milestone in the slow self-immolation of the MSM. As for Americans who think that this will end all the annoying piffle about what a horribly racist country we are, don't kid yourselves. If Obama turns out to be a disaster and we cashier him after four years, we'll all be racist troglodytes all over again. Racial grievance is an industry and it is not voluntarily going out of business.

I Knew It

I knew that if you scratched below the surface of the AIG debacle, you'd find an academic economist doing tricks with math. Great Warren Buffett captures it perfectly, if a finance guy is selling you something they developed in conjunction with academia...run...run fast.

Go Figure, Obama Would Increase Energy Costs

Wait, it's two days before the election and now Obama's ridiculous and dangerous views on energy policy are getting play?  I was on this in June  and I do this, like, a few minutes a day.  Good Lord, how bad is the media?