Shame On Obama. Shame!

I just watched a clip of Obama denouncing the Chrysler bondholders.  Deep shame on him.  This is dishonest to the core, destructive beyond belief, and the height of irresponsibility for the head policy maker for the US economy.  Truly a dark day for the rule of law and the dynamism of the American economy.  Why would anybody buy a bond of an American industrial company now after this long running tragic farce, which was capped off today with the President of the United States demonizing the people who lend their money as the capital that enables our companies to produce?   Why would anybody invest at all?  This is precisely why places like Argentina are economic basketcases.  Labor needs capital and capital needs fair and consistently applied rules.  If capital disappears you get a surplus of labor, which drives wages down which is...poverty.  Truly awful performance, either by ignorance or sinister design, truly awful and hurtful to our prosperity.  Obama's term as President can't end soon enough.

This Kudlow segment gets it exactly right.

Get Smart on Energy

Mark Perry highlights Jeff Jacoby's highlighting a seminal point of Peter Huber and Mark Mills's fantastic book on energy, "The Bottomless Well." Perry and Jacoby focus on Huber and Mills's notion of the false economy of energy. While powerful, I think that Huber and Mills have much deeper insights than this in their book.

My past posts on Huber and Mills here and here and here. Oh, and a targentially related post here.

Living American Industrial History

On the WSJ.com homepage, they are reporting that the Administration is saying that a restructuring at Chrysler has the full support of all stakeholders, which presumably includes bondholders. Just below this "breaking news" item, is the standard headline that Chrysler talks have failed and that bankruptcy is imminent. So, either 1) last minute talks have produced success and the WSJ is lagging in getting the story up and the contradictions fixed, or 2) Obama is talking out of his ass again, just like he did with that whole Caterpillar thing.

Meanwhile, elsewhere in the WSJ, Paul Ingrassia gives us a slight hint of what Government Motors might do to compete with non-government/UAW controlled automakers. They certainly won't make the cars that Americans want as efficiently as they can, so they will have to resort to one or a combination of the following:
- Subsidize GM cars to compete with Ford on price
- Hamstring Ford through legislation
- Strike Ford, but not GM or Chrysler

Trust me the government/UAW is not going to just shrug and say "Oh well, Americans don't like our cars", they are going to fight like dogs to cram their products down our throats and tie the hands of better automakers. Ford has a nasty street fight ahead of it for sure. It is going to have to be as efficient and as customer-focused as it can possibly be. I think, long term, it has to come up with a way to ditch the UAW. It can't have what now amounts to a mortal enemy on the inside anymore. Of course, we all can help too.

China Hits Ground Running

The WSJ reports today on how China's economic stimulus is going. Turns out that China knows how to do Keynesian stimulus right, unlike us, but the salient point of the article is that China knows how to move fast.

I pointed out this secret to China's success back in 2007.

Toss the Tea Overboard, Buy a Ford

It will very soon be official...the federal government, along with its step-child in socialism, the UAW, will own the vast majority of Chrysler and General Motors. At that moment Ford will be the official car of the Tea Party movement. If you want government scaled back, humbled, reduced, chastened, and diminished you can start very simply by voting with your dollars. Buy a Ford. Or at the very least, shun GM and Chrysler products.

I know it is hard to consider because, as taxpayers, we will be on the hook for the disaster that a GM and Chrysler intervention will become anyway, but it is better to be on the hook, have a decent car and have taught the government a lesson than to be on the hook, have a crappy car and have emboldened/endorsed the government's foray into private industry.

UPDATE: Clearly I am not the only one thinking along these lines. Will the t-shirts and bumper stickers be next?

Venezuela's Slide to Anarchy Continues

Chavez's days are numbered.  He has stiffed the global oil services industry a bridge too far.  Nobody will pump his oil now.  At least nobody worth their salt.  Venezuelan crude is nasty stuff, very difficult to extract.  Only the most technologically advanced companies can do it.  Without industry help, PDVSA just can't do it.  He's begging the Chinese and Japanese, but even they don't have the best technology.  It used to matter where prices were.  Now prices prices don't matter, Chavez's resources will dwindle at any price, and there is nothing else.  It's just a matter of time and pain.

US Energy Crisis Building In Slow Motion

There is a crisis brewing in the US energy business.  Normally, the Minerals and Management Service, a branch of the Department of the Interior, auctions off leases to drill for oil and gas in places like the Gulf of Mexico, one of the largest and most prolific energy producing areas in the entire world.  Since Ken Salazar, Obama's Interior Secretary, has taken over, the lease sales have had a cloud over them as Salazer's rhetoric has been confusing at best.  But even more troubling is the interference of the courts.  Some courts are now weighing in on whether or not these lease auctions should stand and from what I can tell, the basis for overturning decades old practices between a multi-billion dollar industry and the federal government is simply a few judges dislike of hydrocarbons.  The crisis is building.  The oil and gas industry is having the rug pulled out from under them, or at least it looks that way so they are bound to be gun shy on making investments.  Environmentalists love this, but the reality is not so pretty.  Energy investment will plummet and prices are hyper sensitive to small imbalances between supply and demand.  With enough under-investment, prices are certain to skyrocket in time.  And then the only option is massive importation of energy, the US can't ramp up to cure the imbalance in the short term.  Alternatives are a joke, don't count on them no matter how much money the Democrats throw at our green future.  Unless this gets resolved, in the end, we'll import more energy. There is only two ways to import energy, via pipeline or via tanker.  Take your pick, there are ways to invest in either.  

Mayor Bloomberg, Now Is the Time to Poach Business from London

New York and London have fought for financial industry dominance for decades. Congress ceded New York's advantage with the ill-considered reaction to Enron called Sarbanes-Oxley. London laughed at us and stole huge chunks of business and numerous jobs from NYC, to begin a brief golden period of financial dominance. Now is the time to strike back, Mayor Bloomberg. London is self-destructing as a financial hub. There is significant business and that can be brought back to the Big Apple along with desperately needed financial sector jobs. But it won't fall into our laps, we have to grab it. New York has to structure an incentive package of tax breaks and goodies to entice business and job relocations from London. It doesn't have to be a give-away, people understand they have to pay taxes, but the punitive levels of taxation that the UK has just imposed are too much. Give them an attractive yet fair tax package as a reason to come to New York. Do it. Do it soon.

Newsflash

Just in case you were wondering...idiots still run our government.

Ford: The Official Car of the Tea Party Mindset

Keep it up America. Vote against government with your dollars. Help Ford stay away from the government cheese and let GM and Chrysler whither and die in the loving arms of the government. We have the opportunity to teach an entire generation of young Americans that the government can barely run itself let alone a car company. In one fell swoop we could do more to counteract all the collectivists and statists that infect our education system than any other tactic available to us today.

Previous.

Whew!

Greg Mankiw is happy that Obama is a liar. Er, I am too, I guess as it is a win for free-traders. Somehow, the labor unions never seem to feel screwed when something like this happens. They just double down on increasingly leftist, protectionist candidates. Now that Obama has failed to deliver on repudiating NAFTA, who's left? Could be an opening for Bernie Sanders in 2012.

Why Is This Not Hard to Believe??

The government can't even handle technology that's been around for decades. And we want them involved in healthcare, where cutting edge technology could save your life????

Note: the USPS branch near my office in NYC has to be the worst PO in all of America. They ditched their one vending machine months ago. Even before that though, any time of day you could rely on huge lines and a minimum thirty minute wait for even the most basic transaction. Now it is worse. Most infuriating, routinely, there will be a line twenty-five customers long and one of the three clerks working will get up and go on break. Union rules.

American Business Has Buyer's Remorse

Conservatively, I would estimate that about 75% of American business that supported Obama is having buyers'  remorse.  I got an earful the other day from a friend at Goldman who cursed the "communist lynch mob" in government, yet who did he and all his Goldman colleagues vote for - not just vote for, but swoon over?  Bingo.  Far from Wall Street, people who make bulldozers are probably feeling the same way.

Now, Barry O is going after venture capital and they are scratching their heads.  They are asking themselves "WTF?  What did we do to deserve this, except go for Big O, like 80%?"   Ah, losers.  You make money, that's what you did.

Where were all these people not paying attention during the campaign?  You could have called BO's antipathy toward American capitalism a mile away.

The good news?  Businesses, big and small, hire people.  If business ain't happy, they will just sit on their hands and many people don't have jobs ("Going Galt" is, I beleive, the hip phrase for it).  And if many people don't have jobs come November 2012,  Barry O will be retired to the lecture circuit.

Hillary Talks Tough On Iran

I guess all those New York money people finally got to her...

CAT: Obama Used Us to Dump a Load of Crap on America

Aside from being a 110% right on the money analysis, this also tells me that the folks at Caterpillar are a little ticked off that Obama used them shamelessly to promote the liberal boondoggle "stimulus" bill. CAT CEO, Jim Owens, is even on Barry O's economic advisory board, so this genteel criticism is a sharper rebuke than the language indicates. Kudos to the folks in Peoria for stating the obvious in our world of anodyne media blather and Orwellian phony-speak.

You heard it here first, too. If the US and China were both to engage in pure, unadulterated Keynesian infrastruture stimulus spending, the global economy would have had two powerful locomotives to pulling it out of the downturn, at least in the short term. Instead we chose pork-riddled social welfare and the global economy is left with only one powerful locomotive, in China, helped along by a feeble little caboose.

UPDATE: If you click through that second link, you'll see I suggested that what Jim Owens most likely really wanted out of Barry O was progress on the Colombia free trade agreement. So, did Owens have any influence on this... (note: as critical of Dear Leader as I am, if we get this free trade agreement I will definitely score this as a big plus in his column, but that just leaves him at even par after the Mexican truck debacle. Although there is a case to be made that Barry O had no clue the Mexican truck thing was in the stimulus bill. Nobody else read the thing, why would Barry have? If we get Colombia and we fix the Mexican truck thing, Barry will be 1/2 point in the plus column.)

Our Supply-Side, Hydrocarbon Lovin' Friends Across the Pond

In jolly ole' England, the Exchequer - that's their Treasury - needs more dough badly, so they are looking to the country's large oil and gas sector, albeit not in the way that you might think. While we here in the colonies look to sap, bleed, milk and generally hamstring our world-class O&G industry in general and especially when we need tax revenue, in the UK they are applying supply-side logic to grow their O&G industry and generate greater tax revenue from a lesser burden on a larger industry. This from the hyper green wankers that roam the halls of the UK's ministries. Amazing.

UPDATE: Holy Cognitive Dissonance Batman! They're slashing tax rates to spur the Oil & Gas industry but raising rates on high-earning individuals, as if the same incentives that apply to companies and industries don't apply to individuals. That is politics for you.

TARP: A Socialist Foot in the Door?

You think it was BofA's earnings that tanked the market today? Wrong. It was this. Kudlow has it right. This is an oncoming disaster. Even though they signed the term sheets, some banks have a plausible case that they were coerced into taking TARP funds. JPM and WFC at least - Kovacevich was even reported in media as asking Treasury Secretary Paulson "why is this necessary?" If I were Wells Fargo (after I run out the string on diplomacy with the feds, which would include a call to Dear Leader from Warren Buffett) I'd sue. Given the coercive nature of the investment and the many retroactive conditions, a bank ought to make a plausible case that they should, at least, be able to pay back the money.

UPDATE: The good news is that anything that comes out of this White House or, by proxy, Sec. Geithner stands a very good chance of being totally contradicted and countermanded in the near future. For instance, just a few short weeks ago, China was a currency manipulator. Magically, today not so much. Here's hoping the TARP money will be happily accepted back from healthy institutions in short order.

When Protectionism Leads to Derangement

Despite my otherwise unshakable affinity for Australians and all things Australian, our friends down under maintain one of the stupidest - and comically risible - protectionist policies. And not to leave even one scintilla of comedic potential on the table, the policy centers around...bananas.
Here is the basic jist: Aussies are a health conscious lot. They eat alot of fruit, 'cause it's good for you. Aussie banana farmers make alot of money growing and selling bananas to their countrymen. But lots of folks grow and sell bananas too, like, for instance, the Filipinos. If they were given the right to sell bananas in Australia, the Aussie farmers would make less money (and their countrymen would have more money having to spend less on bananas). So, despite the fact that everyday around the world hundreds of millions of people eat billions of bananas just like those grown in the Philippines, the Aussie banana protectionists persist in maintaining the preposterous notion that Filipino bananas are somehow unsafe. The stupidity doesn't end there. When a cyclone wipes out the banana crop in Oz, you'd think they'd let in a few foreign bananas in, at least temporarily, so that people could have bananas, any bananas, to eat. Nope. But if you think that is height of brainlessness that could prevail in the effort to insulate local banana farmers from competition, you would be, woefully, wrong. They will even call for a boycott of pretty much the only airline that can get you in, out, or around Australia for the unconscionable sin of serving a Filipino banana onboard. Protectionism can lead people to say and do some pretty dumb things.

Note to Brilliant Politician, Pirates Don't Have Checking Accounts

If you'd asked me in the last few months or so to imagine what scenario might produce the most laughably asinine policy reaction, it would have been either "Barney Frank seeks to fix the banks once and for all" or "Hillary Clinton Tackles Scourage of Piracy." Well, obviously we have our winner. Instilling fear of visiting Davy Jones's Locker this is not.

Gimme Shelter

Judging by this, I think somebody actually read and took my advice...Well, no actually, hard-working Americans are just smart enough and ticked off enough to figure out how play the game better than the government.

Requiem for Sir John Browne, Green Poseur Nitwit

Sir John Browne spent his tenure at British Petroleum trying hard to convince the world that BP wasn't an oil company. Between the ubiquitous and annoying "Beyond Petroleum" ad campaign and scrimping on safety, Lord John did a good job of seeing that the company was bad at producing oil. What could be a more fitting sign of the true burial of the Browne era than word that BP has finally figured out how to open the spigots and let flow shitloads of wondrous hydrocarbons.

What Could Go Wrong

Awesome news. Obama is pushing hard for the US taxpayer to foot the bill for thousands of new, putatively "green" automobiles for federal functionaries to zip around in. Any chance that this bold step toward our gleaming new green future could go awry? Quite a good chance actually.

How much money will we waste, how much economic damage will we inflict before we realize what a senseless, misguided endeavor it is to combat this speculative theory of anthropogenic global warming? My guess, $1 trillion.

Who Needs Congress? Obama's Very Own Cram Down Is Coming.

While the controversial "mortgage cram-down" legislation, seeking to give judges the power to alter mortgage contracts, works its way through our democratic process, Obama says 'Who needs a judge? Hell, who needs to wait on Congress?' He's got his own cram down plans. If the rush to repay TARP wasn't intense enough, it will now become a cattle stampede. The space between Chuck Schumer and a micrphone will be a relative safe zone compared to the space between TARPed banks and the Treasury's teller window.

UPDATE: Wait a second...upon further reading, so says the HUD Chief. Since when does HUD have power over the TARP? Isn't it a Treasury program? Any doubts that Obama wants to control the banks now?

Energy: What Has Changed?

Hey, remember when oil prices were high and a Texas oilman was in the White House? What happened back then? Oil and gas companies did a shitload of drilling. What did they find? A shitload of oil and gas.


Fast forward to today, oil prices are moderate and a leftist urban elitist is in the White House. What is happening now? Oil and gas companies are drilling at a modest pace, but still drilling. The only appreciable difference is that US companies have shifted their capital spending drastically away from the US. They are drilling, it would seem, everywhere but the US. This is great news for countries that probably wouldn't have gotten the benefit of energy industry investment if the US was competing seriously for those investment dollars and the jobs that go with it. But we aren't. The US is essentially a no go zone for new capital investment in the energy sector save for projects that are well-underway or already have deep sunk costs.

What are the consequences of this? Two things likely. First, we will have the energy we need to run our economies in the future - we won't run out of oil and gas. Second, although we'll have that energy, it'll have to come from somewhere else. We'll be more reliant on foreign sources of oil for good or ill.

You Can Have Any Car You Want, As Long As It's Green

Chrysler, in desperate need of some success, seeks to improve one of its best-selling vehicles, a vehicle without which the company would have been out of business ages ago. So, it makes the Jeep Grand Cherokee more fuel efficient. But our new industrial overloads in the Obama Administration are still pissed, 'cause its an SUV. But the highly-risky, certainly loss-making Chevy Volt is full speed ahead.

UPDATE: One of GM's best and historically most successful brands (but they had a bad 2008 when gas was at $4/gal.) ought to go says the Gubmint. Why? No small cars, obviously. GMC is a truck-only brand essentially. Social engineering via bailout. Don't despair though. Remember, you can fight the power...buy a Ford.

Obama Takes America Down a Peg

Obama went to London, made apologies for America, and gave centrally controlled, statist governments more control  than they deserve, making crony capitalism the dominant model rather than entrepreneurial innovation.  The world will be poorer for it.