Monday, May 31, 2010

Um, Er, Am I Missing Something???

"A Reuters cameraman on the Israel Navy ship Kidon, sailing close to the convoy, said IDF commanders monitoring the operation were surprised by the strong resistance put up by the pro-Palestinian activists."

Ah yes, when you are going to commit murder in cold blood, especially against unarmed peaceful activists, you always invite a Reuters news crew along to check it all out...standard operating procedure for your run of the mill bloodthirsty military force, obviously.

Check out those peaceful activists here.

Friday, May 28, 2010


All I can say is "Oh Man!" It is on. Throw Bubba under the bus?!?!?! Are you FREAKING KIDDING me?!?!?! Can you even do that? Is that even legal? Nobody throws Bubba under any damn bus...

I am agog, I am aghast. Oh Man. I don't know what else to say. As far as internecine party battles go, this is "global theormo-nuclear war."

Oh Peggy Peggy Peggy...

Wait a second there Peggy. What could have possibly given you reason to suppose such a thing? There was no evidence, no hint of anything suggesting as such. No record, no accomplishments, no people to vouch for him - just hangers-on, opportunists, sycophants, and diversity worshippers - no demonstrated ability at anything other than giving speeches.

I have said it before and I will say it again, the story is not that Obama is not up to the job, the real story is that we (not me, but the electorate) ever thought for a moment that he was. Let me be as shockingly blunt and raw as I can - Obama's election was the mother of all affirmative action hires, and it is working out about as well as most affirmative actions hires work out. There I said it. It's probably what most Americans think but would never dare say, justifiably so perhaps. But we should be beyond the point of bowing to political correctness for perception's sake. This is our country we are talking about and we gave it over to a wholly unqualified - dangerously unqualified - man. As Mark Steyn has said, "The election of Barack Obama was a fundamentally unserious act by the US electorate..." The first step in recovery is to admit we have a problem. I sure hope all the rubes are admitting they have a problem.

UPDATE: I was just thinking, "Oh shit, what if we get in a (bigger) war with this guy at the helm?" Clearly, I'm not alone.

Thursday, May 27, 2010

Deep Macroeconomic Wisdom: When You're Broke, You're Broke

Wow. Did this guy take me seriously! A few more thousand like him and we could see some real economic pain...oh, wait...we are seeing economic pain, at least some of us.

On another note, anybody who has heard me fulminate over dinner, drinks or otherwise about the expected path of our country's and various states' fiscal reckoning (and you know who you are!) know that I do not think our political system can deal with our fiscal challenges. Like a drug addict, we have to hit rock bottom. Literally the government employee paychecks, the pension checks and the tax refund checks have to simply stop coming in the mail before we will change course and rethink our big goverment model. Victor Davis Hanson expresses this exact view quite better than I could:

"Bankruptcy, not politics, is the final arbiter: Individuals, firms, and nations either buy particular bonds or they don’t. And a nation like Greece, in turn, either pays what it has borrowed or it doesn’t. All the op-eds in the New York Times cannot change that fact."

You can seemlessly substitute California, New York, New Jersey, or Illinois as needed. Thus Chris Christie looks like a macroeconomic genius when he states that "unlike the federal government, the state of New Jersey can't just print money." People buy bonds or they don't, New Jersey pays back what it owes or it doesn't. It has the money to mail a pensioner a check today or it doesn't. Just raise taxes, say the unions. Well, you can raise taxes all you like, if guys like that small business owner in the Instapundit post don't leave the state outright, they can do what that guy is doing and ensure that all the people he patronizes have no income to speak of either. I say good for him, politicians and their union cronies have effectively been saying "f*&k you, pay up and shut up" and he is saying back "no, f*&K you, you can go broke while I sit this one out."

Wednesday, May 26, 2010

Is It the Boss Rather Than the Job?

A story at caught my eye with the lede "Obama Struggles to Fill Intelligence Job." When I clicked through I encountered the title "The Job Nobody Wants." Let me posit an alternative title based on what may be closer to reality: "The Boss Nobody Wants." Yes, I think that precious few people are clamoring to serve in an administration whose approval rating is setting land speed records in the southerly direction and that may be on the cusp of getting obliterated into lame-duckdom at the polls. Remember, Obama didn't have deep connections coming into his term so he resorted to ex-Clintonites and his academic cronies. Given the tax troubles of many, he has resorted to some pretty appalling B-Teamers, but it was the dawn of a new age for America and there was no shortage of true believers to fill posts under The One. Can the same be said now? I think any available Clintonites have been given the secret signal to stay away from the cratering Obama administration. So beyond this loyal party core, are there really people out there looking to sign up with an administration that could go down in history as so feckless as to bring the world into wars, an administration that encouraged the most crooked distortions of the legislation process to pass a 2,700 pack of lies that will ruin healthcare for the majority of Americans, an administration that is nothing remotely close to what it billed itself to the American people? Are there really those people out there? Maybe.

Oh Yeah, Sure, Just Plug It

"Plug the damn hole."

Yes, it's that easy. Hundreds of millions of dollars of technology, 5000 feet down...


Holes In Case/Shiller ??

I have been skeptical of the Case-Shiller Index for no other reason than that it is relatively new and I think that benchmark indices ought to have stood the test of time before they are relied upon. Mark Perry validates my skepticism.

Pre-Funded Bailout Fund...Sounds Familiar

This, of course, is old news but politicians that clearly don't understand what happened in 2008 are still clamoring to tax banks to build up a fund that ostensibly will be available for bailouts in future crises. Barack Obama wants to do it globally a) because he knows that if we just did it here, it would just send business offshore and hobble our banks, and 2) because isn't a globally imposed government solution really just the best course for anything? Well, today, the EU's Michel Barnier is the latest to lend his voice to this silly idea. Regardless of what you think caused the financial crisis and what the remedies ought to be, let's look at the "future bailout fund tax" in theoretical terms, or out of context of the financial crisis.

What this bank tax represents is a pre-emptive funding by potential failed companies to protect the vulnerable from losses (let's be very clear, in the event it ain't going to be shareholders or bondholders who will get the money, it'll be "the victims" or alternatively, people who vote in great numbers). This arrangement - pre-funded by the private sector, administered by the government, to protect the "vulnerable" - is exactly what we have in the Pension Benefit Guarantee Corporation...and it is a disaster - the bailout fund needs a bailout. Just as we are now seeing the failures of regulation in the oil industry as we simultaneously seek to impose more regulation on the financial industry, we are looking to setup new bailout mechanisms just as our old bailout funds are in shambles. To steal a line, we are in the very best of hands.

Morning Miscellany

First: Solid economics explained well from guy running for Senate. Gosh, just think of what it would be like to have a guy who knows what the hell he is talking about representing our state in the US Senate. Crazy.

Next item: Chris Christie's poll numbers are sinking because Jerseyans don't like hearing the bad news that they are bankrupt and the MSM is hammering the Governor's "tone" and "style". (Interesting tidbit, Christie chalks it up to a classic New Jersey immigrant love story of yore [click the youtube clip].) Anyway, for all the putative distastefulness of Christie's tone, that "style" of his won't let the elitist punks across the river in New York dismiss and steamroll over the Garden State in their effort to steal all the limelight from the decision to hold the 2014 Super Bowl at the Meadowlands. "Geographically challenged." It's not comedic genius, but it certainly is just clever enough to steal a PR beat on the nasal intonations of Michael Bloomberg and the simply pathetic David Patterson. Jerseyans can be rightly proud that their Governor is going to milk this event for all the PR value it is worth to their state while keeping New Yorkers in their relative place.

Oil and Politics

The WSJ puts the Deepwater Horizon disaster into perspective and urges a measured analysis (much as I did, briefly, here), in contrast to the reaction of nearly every politician from Sarah Palin to Barack Obama. News today deepens the conundrum that we face as a society. We are stuck with a hydrocarbon-based economy for decades to come even if we are desirous to switch to less carbon-intensive energy sources. (I personally don't feel the massive shift is necessary given the speculative nature of AGW theory and the rank corruption within the AGW scientific community, and if Woody Allen or Tom Friedman made me dictator for just a short time, I'd clean up the spill and keep drilling.) So where do we get this energy and do we encourage substantial production of it so that it remains affordable? Well, today, BP announuces that its Mad Dog field in the Gulf has not the 1.5 billions barrels that it thought but 3.5 billion. (I don't have a link right now, but a money quote from the article: "So you've got a field that started out as enormous, and now it is huge, huge and one of the most giant fields in the world.") Let's add that in the oil business, estimates like this almost always low ball the eventual production of resources from wells, so let's say that we may have 5+ billion barrels here. And Mad Dog is just one of a handful of giant fields in the Gulf. And these fields are fresh, while the monster fields around the world, like Ghawar and Canterell are nearing their ends. The USA could likely be the Saudi Arabia of the 21st century, or least second fiddle to leading contender for that role, Brazil. So how do we reconcile all this with what it currently happening in the Gulf in the wake of Deepwater Horizon? As the I and the WSJ have pointed out, the oil industry has an amazing track record of safety while doing mind-bogglingly complex and technologically difficult things. The error that cause the Deepwater Horizon disaster appears to be a garden variety human error. Society is plagued with garden variety human errors that have large negative consequences and our continuing progress as a society will inevitably see more of them on our upward path. The question is what do we do in the aftermath of these events, do we retreat, say we can't do anything because we once did something poorly?

We must clean up, learn from this, go on living life, which should include drilling and grabbing those billions of barrels at Mad Dog in the Gulf.

Tuesday, May 25, 2010

GOP's Got a Brilliant Idea: Spend Less!!!

Paul Ryan's new proposal for fiscal responsibility that looks to become the GOP standardbearer going into mid-term elections is pretty shock-and-awey. Great. Only three f#*king years, several hundreds of billions of dollars, and ObamaCare too late. Geniuses. Coulda' just read your Donny B. back in, oh, 2006 (!!!!) and saved the country a helluva lotta socialistist trouble.

Maybe the GOPers down in DC are just trying to keep up with Chris "NJ is Greece" Christie.

Thursday, May 20, 2010

Stuck In Keynesian Prison

Alan Blinder displays the Keynesian reductio ad absurdum that is plunging our world into financial chaos. Check out this lovely tidbit: "Unfortunately, the basic economic message about deficit spending today requires some subtlety: Most countries need fiscal stimulus today but a large dose of deficit reduction in the long run." OK, Alan, give us a date when we should start spending only what we can afford and assure us that there won't be other unforeseen circumstances that would make it hard to start being fiscally sound on said date. And convince the Greek people of that. Only an academic could say things like this. Somehow Blinder equates 20% of the Greek population getting paid for 14 months a year as fiscal stimulus. This isn't stimulus, it's welfare; and it's been going on for years, not just in the last few in response to crisis. There is no leeway to "stimulate" just a tad longer and then shift gears to a prudent stance. The Greek welfare state has reached the end of the line. The gig is up and the bond vigilantes are not bungling the subtle economic reality of a fragile situation. The carrion is festering in the Mediterrean sun and the stench is attracting the vultures, the vultures didn't cause the stench. Blinder has a small point in that the bond market vigilantes are now looking for anything in the "near dead" category and are showing no mercy. However, all of the contagion could be stopped dead in its tracks if problem countries cut their fiscal deficits to zero. The run on the Euro and sovereign debt would be over because investors are inherently betting on human nature, on the inability of politicians to act, act prudently, and act prudently in a big damn hurry. If they saw politicians acting prudently in big way, they'd unwind their bearish bets. But politicians, especially European ones, are shackled to a Keynesian Frankenstein of an idealogy that conflates welfare with stimulus - abetted by people like Alan Blinder - that is prolonging the current crisis.

California Is Lost

Mark Perry has a great post illuminating starkly what we all know already, California is the worst place to do business in America and Texas is eating every one's lunch. Thank heavens for our federalist system or all California's lost jobs would be going overseas. At least as it is, those jobs are going to other US states.

Wednesday, May 19, 2010

Throw Out the CorpFin Textbook

Recent market fluctuations notwithstanding, I think there is a major paradigm shift going on in the economy and the markets that has profound implications. A basic tenet of corporate finance is that equity returns are based on the risk-free rate plus an equity risk premium. In English this means that it is riskier to hold equities than the risk-free asset, traditionally US Treasuries, so investors require more return to hold equities. I believe that we are in the early stages of a fundamental breakdown of this bedrock assumption. First let me ask you, in isolation, do you really consider lending to the US government at under 4% a riskless activity? With our gargantuan deficits, debt, off-balance sheet unfunded liabilities, and the impending dawn of ObamaCare, should investors really consider this the risk-free baseline? What about flexibility and ability to adapt? Does the federal government exhibit the ability to adjust in the face of circumstances? Can economic and financial imperatives reflect themselves quickly in government accounts and finances? Of course not, there is hardly any flexibility and maneuverability in our fiscal picture. What about the private sector? Broadly speaking the private sector has exhibited enormous ability to adapt to conditions. American corporations, in general, have pared down, gotten lean, hoarded cash, and repaired balance sheets. All this while governments are straining to achieve even the most meager prudent adjustments in the face of fiscal ruin. The US government is positioning its fiscal future to resemble those European countries that today are facing a painful reckoning the likes of which we haven't seen in decades. Yet we are still supposed to operate according to the paradigm that equities should pay us a premium over lending to the US government? So I ask, "Who do you think is a safer bet - the US government or the company that makes Tide, or Tylenol, or the leading brand of toothpaste?" Would you rather hold J&J stock yielding 3.5% or get an identically yielding US Treasury? Frankly, I see less risk in any number of institutions with names like Colgate-Palmolive, Johnson & Johnson, IBM, Proctor & Gamble, Clorox etc. In today's world, these are the less risky bets and the US government ought to pay me a premium for capital that I could otherwise tie up in the equity of these institutions. So what are the implications if this is right? Equities are massively underpriced and treasuries are massively overpriced. The bear market in treasuries could be of the scale and duration of the great bond bull market that began in the early 1980s when your mortgage was 17% and money market funds were paying 14%. The bull market in equities could be just as powerful as the last ten years was anemic. We have seen that American business is as flexible and adaptive as governments are not, that the iconic institutions of business plan for survival in perpetuity while governments plan for the next election cycle. Trust in government is at an all time low, and while trust in certain sectors of private enterprise - banking - may match it, people still buy toothpaste, detergent, medicines, food, etc. with alacrity. Americans will meet their own needs before they meet the needs of their government. So what is the "risk-free" asset and is an equity risk premium of any magnitude justified? In today's world, what type of institution will adapt, endure, protect, and retool. What type of institution will act with speed, wisdom, and effectiveness? Shouldn't you pay more for these qualities and less for the lack of these attributes? I believe so, and I think this will be the new reality a few years down the road.

American Weakness Begets Chaos

Thailand is in flames. North Korea is sinking South Korean naval vessels. Iran is hurtling fast toward nuclear capability (and is on the brink of a confrontation with Israel). Piracy is rampant in a major world shipping lane. Mexico is in a civil war with drug cartels on our border. Russia is flat out usurping power in Kyrgyzstan. Pakistani army officers are supporting terrorism operations on American soil. Al Qaeda is resurgent in Iraq. The Taliban are hitting the heart of the US's base of operations Afghanistan after years of our presence there.

Historians of a certain ilk understand and have made the case that American weakness begets chaos around the world. A strong America, girded with allies, focusing on commerce around the world dampens the desire for bad actors to violently usurp power and encourages peoples to support governments that allow for participation in global commercial activity. Nations and peoples follow and emulate a strong and prosperous America. Yet today, America has trashed two cherished, geo-politically important relationships - with Great Britain and with Israel. We are mute on North Korea and Chavez and solicitous of Ahmadinejad, Assad and Putin. Our President is spending precious political capital trashing our own states (and by extension, our federalist structure) while spouting mushy inanities like "We are not defined by our borders." On the economic front, we are sliding into protectionism, systematically dismantling dynamic free market entrepreneurial capitalism in favor of a statist/crony capitalist hybrid.
Elite pundits say America is on the decline and they are likely right, but we are not in an irreparable decline. We are in a decline of choice. We have chosen (or more accurately, been asleep and let certain factions of us choose) declinist policies. We have chosen weakness and opted for appeasement of usurpers and thugs. We have consciously built barriers to economic propserity. None of this was inevitable and a reversal is indeed possible, but we have to see things clearly for what they are and make the choices to reject weakness and stagnation. Britain failed to do it earlier this month. What will we do this November and in 2012? Will we emulate Britain and choose to muddle along? Our own fate hangs in the balance, but so does much much more. Chaos is on the march around the world. Eventually it will land here or force our invlovement in which we pay a heavy price. Which way will we go?

Welcome to Reality Kids

In a follow up to this post, let me simply highlight two interrelated stories:
1) Diminished Prospects for College Grads
2) Just one more corner of our economy with Washington's boot on its throat.

In 2008, the economy needed a hand up, but the Democrats and the Obama administration have instead placed a boot on the throat of American business. I don't relish the plight of these unfortunate grads, I myself graduated into the teeth of a recession. It woke me up enough to ask questions, read alot more about economics, talk to older folks about the economy and why my prospects looked so dismal. It was a lesson, a painful one but a good one. Perhaps this experience will shock our reflexively progressive voting youth into a little reality.

False Positive

Are the Democrats really going to take heart in the fact that in a special election, where turnout is always low, John Murtha's economically backward/addicted to pork district voted to keep the pork flowing? Do they really think that the awakened masses whose rallying cry is "Wait 'Til November" have fizzled just because the Johnstown, PA Murtha machine is still churning? Do they really think they are in the clear by keeping a district they've owned forever against a no-name upstart in an off-season election? Do they?

Tuesday, May 18, 2010

Docs Have Their Own "Doc Fix"

It's called "Cash, Visa, Mastercard or American Express." The warnings were there. It was basic logic and common sense. I was just one among many who said it would happen - and it is happening, doctors are bolting Medicare in massive numbers. Stay tuned because soon we'll be hearing the same thing about any insurance coverage that comes out of the exchanges tied to Obamacare. Doctors will not provide life saving care for plumbers' wages.

Monday, May 17, 2010

Reap. Sow. All That...

Joe Queenan chronicles the shitty job prospects of our nation's recent graduates. Hey kids, I told you so. Your form fitting liberalism doesn't wear so well now does it, junior??? Hope it got you laid a few times in college, that's about all you have to show for it now.

One More Reason To Love Oklahoma!

I bet every man in America - every REAL man, that is - wants himself a states' rights lovin' Oklahoma hottie right now. Eat your hearts out fellas, already got me one!!!!!!!!!!

Shocker: Blumenthal Is a Scumbag

I said it here at NBfPB, that it was joyous news that Chris Dodd would not run again, that our government would be rid of this loathsome cretin, but that it was not a complete victory in that the man sure to replace him was almost a bigger jerk. I said those very words. Well, I was right and it is coming out from an unlikely source. What is it about Democrats and their phony war heroes?

Friday, May 14, 2010

All the News That We Eventually Figure Out

You could've waited 'til today to get "on the ground" intelligence from the business world/economy from the New York Times, or you could've gotten it from NBfPB months ago.

From NYT today:
"The funny thing is that despite their recent success, most of these folks seem reluctant to acknowledge that things have gotten better. Why? ... Two, I think some people are staying quiet because they don’t want to give anyone in Washington credit for the recovery. They feel that they have recovered due to their own innovation, creativity and hard work and not due to anything related to the stimulus. "

From NBfPB a month ago:
"We've held out this long, might as well hold out a few more months until after the election. No point in handing the current Washington crowd any credit for anything positive. This sentiment is widely held." And, of course, this.

UPDATE: And I've beaten NPR to the punch on this one like nobody's business.

Who Needs Morning Coffee?

When you can get a jolt like this...Chris Christie destroys stupid reporter.

Thursday, May 13, 2010

Is "Buy American" Biting Us in the You Know Where?

More so than we already knew, I mean. China is a large and fast growing market for wind turbines. Western manufacturers' leading market share has eroded steeply...

"China’s so-called “buy local” policy steers most state- financed energy contracts to domestic players, said Magued Eldaief, a GE Energy executive who formerly oversaw the Fairfield, Connecticut, company’s Asia Pacific unit.

'There’s no question preference is given to Chinese companies,' Eldaief said. 'It’s a reality you have to live with.' "

At least Dear Leader is making good on his promise of creating green jobs...they're Chinese green jobs, but hey...

Why Is This Man Smiling?

I'll tell you why he is smiling. Because his cynical calculation was dead spot on. The lie is off and running, and the truth...well, where are those pants?

Will China and the iPad Save Us?

Bob Samuelson is worried about another Depression. Readers of NBfPB know that I am deeply worried about it too. We have two factors in our favor now though that go under appreciated. One, China. China is a massive growth locomotive that we didn't have in decades past and they can't be bothered with all the growth stifling horsepucky that we are indulging in here in the West. They are full steam ahead with no apologies (because the leaders will all get lynched if they do otherwise- it is a good motivator). Two, communication technology. Today, we know just how bad our leaders are screwing up and just how venal, feckless, or out to lunch they are in nanoseconds, whereas it used to take a long time for people to internalize just what poor quality of leadership inhabits the halls of power. Just as one small example, it takes barely seconds after Mayor Bloomberg makes a giganticly asinine statement for it to be all over hundreds of media outlets that reach numerous types of devices used by all walks of society. That makes our democracy more responsive (which is probably why Obama doesn't like it). Of course, we could avoid making the bad policy choices in the first place and we wouldn't have to fall back on the speculative backstops of China and a more responsive political system made so through technology, but that would be too easy.

The Rubes Are Getting Smart...or Educated At Least

Hey Rubes, just another politician.

Consider this one your formative political education. Don't make the same mistake again.


CNBC tells us that the housing market is getting better because foreclosures are down. Awesome, right? Maybe not. This Bloomberg story lets us in on a little secret, banks have so many bloody homes in foreclosure and repossessions are so high, that they may be just too darned busy with what they have already to pursue additional foreclosures. Not good.
As I said, the economy is improving and it will show up in some aggregates for sure, but it won't feel like much of an improvement because it ain't much of an improvement. This is bad for incumbents in November.

A Case Study In Economic Descent

Venezuela has enormous deposits of oil and natural gas. They want and need to extract those resources. Venezuela used to enjoy the willing cooperation of the global energy services industry that would happily supply the latest technology in the effort to tap the country's resources. Then Hugo Chavez started stealing (expropriating is the more polite term) the industry's property. So leading companies stopped working in Venezuela or at least they stopped bringing their most prized, modern technological assets to Venezuela. Thus you have the situation where valuable offshore deposits are being worked by aged and obsolete equipment, which tends to not work out so well. The Aban Pearl rig that sank was built in 1977 and had a bad history.

Wednesday, May 12, 2010

Oceans of Red Ink

The truly shocking fiscal picture that I predicted would emerge roughly in June of this year is starting to take shape and it is as ugly as I anticipated. And it ain't over yet. It's gonna get worse.

On the very day that the news is reporting Dear Leader as chiding Spain over its budget deficits. Two thoughts: 1) what the hell is wrong with this guy? 2) Spain cut government employee salaries 5% today, will Obama do the same???

Another Milepost on California's Descent

Businesses continue to flee California with news of a big blow coming today. All these foofy liberals and unionized government workers are going to look around one day and all the people with money are going to be gone and they are going to wonder who will write their next paycheck or pension check. At some point the check won't be in the mail.

Tuesday, May 11, 2010

Tax Lies

I told you how, why and when federal tax receipts would be down this year, and they are. Now lefties are using this fact to make the highly distortive claim (aka "lie") that taxes are puny. Well, taxes are puny because people have massive loses they are putting through the system, millions of jobs have been lost, investment income has dried up, and people are engaging is tax avoidance behavior because they just ain't thrilled with what the government is up to (item # 16,485 here). In a normal environment the tax burden would be quite serious. Tax receipts of the federal government and individual tax burdens are very different things.

UPDATE: California's tax revenue was only $3.6 billion, or 26%, shy of projections. This isn't low taxes my friends, this is people hightailing it out of Cali and those who stayed making no coin.

My lovely home socialist paradise of New York is furloughing workers because there just is no more money in the till. Government workers thought they could just own politicians, via their unions, and vote themselves generous pay packages. But you can't get blood from a stone, when there is no cash, there is no cash. Gee, what to do when the folks who pay the bills can't or won't?????

Monday, May 10, 2010


Well, the Europeans have unleashed their own version of TARP. Markets are reacting well and that is fine, but this should not put all our minds at ease. The US version of TARP worked out pretty well despite its ugliness, but the Euro version has a critical difference. While our TARP was designed to give our banks running room to restructure and earn their way out of the ditch, EuroTARP is designed to give governments the same running room. The critical difference is that our banks are American corporations, which are both willing and capable of restructuring, and European governments are, well, European governments, which are unwilling and only capable of restructuring under the most remote of circumstances and with the most Herculean of efforts. JPMorgan Chase was hot to give the TARP money back a nanosecond after they got it. The governments of Greece, and eventually Portugal and Spain, will have to be forcibly removed from the ECB's lactating teat. US TARP was ugly in design and birth but mercifully benign in its lifespan. EuroTARP was smooth and efficient in the birth, but will prove quite trying through its infancy and beyond.

Friday, May 07, 2010

Bingo! MSM Loves the Household Survey

Did I say that the household survey would get some newfound love from the media, now that it can support the correct narrative? Yes I did...and...BINGO!!!!!!!!!

The First Part of This Post Is Serious...The Rest, Less So

I have long been a believer - in the sense of admitting the eventual reality rather than wishing for the reality - that Iran and Israel will be at war in the near future. They, at least, will be the principal combatants but of course there is the potential for a wider war.

It should be obvious by now to most sensible observers that Iran is building nuclear bomb capability and nothing short of military action can stop that now. The Israelis know this which is why they elected the most decisive and hawkish politician on their scene to govern. There were several reasons to believe that Israel might be restrained from taking military action against Iran nuclear capability development. The main reason was that the United States would not like it and in exchange for holding off the US was prepared to stand by Israel against Iran come any eventuality. That is now gone. The US of course still wants Israel to stand down but instead of offering its protection and big brother embrace come what may, we've insulted them slapped them in the face and all but turned our back on them. The Israelis don't believe the Obama administration will lift a finger to help them, and why would they with a major US military official publicly spitballing about shooting down Israeli jets if they were to bomb Iran. Then there were the lesser, but still sticky, issues of the Straits of Hormuz and the Iranian population. I speculated that these don't really enter into the calculus anymore. There is plenty of oil in storage outside the Gulf to survive for a time if Iran tries to cause trouble. And nobody believes that the Iranians will rally around their government anymore. As for the Iranians, the time is perfect for them too. The US-Israeli alliance is at its weakest in decades with a naive, Israel-hating leftist in the Oval Office; and, as a practical matter, the US military is stretched thin cleaning up two previous military engagements.

OK. That sets the stage from my perspective. Now I turn it over to others. Read Glick and watch Whittle. Is the picture coming into focus? Good, I think this is all a serious and a rational concern after you think it all through.

Now, here is where I am going to go off the deep end a little, but, well, it's Friday and Fridays are always good for a little conspiracy theorizing, or 'thought experiments' as I like to call them. If you watch the Whittle report, General Vallely cautions on the potential for a wider war and insists that (I am paraphrasing) "it is imperative that we get the Obama administration on board with helping Israel and containing this should it happen." Why would he say this? Naturally because clearly the Obama administration ain't on board. But more interesting to me, I think Vallely knows something about the tension between the military and the administration on this right now. I have heard, through my sources who don't talk loosely or lightly, some pretty outlandish speculation that there are those inclined within high US military command that could (not intent but inclined, not would but could, as in depending, maybe, and I'm hedging 'til the cows come home here) deploy US military assets in assistance to Israel in the absence of such a command from President Obama. Yes, it is crazy but the danger is so great, the implications so vast, and the viewpoints so at odds that, well, who knows. One source has even told me that in such a scenario, the US military would act and give Obama the opportunity to say he went along after the fact so as to keep civil order here at home and preserve the appearance of legality. I, of course, dismissed this when I first heard it, despite my respect for my interlocutor, but Vallely's comment caused me to do a double take, raise my eyelid a tad, and say "Hmmmm." So there is something for you to ruminate on over a nice Cabernet tonight. (And if you really get toasted, throw in the computer-driven stock market crash and this and mix it all around!)

Just Spitballin' Here

Nowhere have I read speculation that the Deepwater Horizon disaster could potentially be an act of terrorism. I don't know why that is. Perhaps the MSM has a bias that assumes "oil companies spill oil and foul the environment, that is just what they do." But that is not the case, actually. Oil companies have a very good safety record, as you would expect because oil is money. Why would they want spill money everywhere (and then spend money to clean up the money they spilled everywhere and now can't use)? Thus rigs have a solid record, they rarely blow-up. They get knocked over by hurricanes and such but a blow-up is very rare. Some attention has been paid to the Blow Out Preventer equipment in the sea floor that is supposed to be the fail safe device to prevent catastrophic blow outs. The BOP is one of the most sophisticated and constantly tested pieces of equipment on a drilling site. Why did this one not work? The fact is that given the safety record of modern energy exploration, we should be more likely to be asking the question "could this have been an act of terrorism?" and we should be more skeptical. I actually tend to be on the side of the guy that worked on the rig that called to that radio show - that sometimes, despite best efforts, Mother Nature wins - but logic should be telling us to at least be open to the idea of sabotage and asking more skeptical questions.

Jobs Data

Confirming that I and Peter Morici are right the jobs numbers are telling us that this economy continues to suck for the lowest on the totem pole. Sure, 290,000 people with skills (I'm being generous and assuming that if you work for the US Census you have at least some skills, although I am skeptical) got new employment, but the tens of thousands of others, including kids spilling out of high schools, colleges and vocational schools are not so lucky. Underemployment rose for these folks. The unluckiest are the least skilled. These people are "long term unemployed" and they are doing quite poorly. The economy is nowhere near being able to employ the most marginal worker. Companies are scared enough to avoid hiring even workers that are a fairly good bet. Maybe, just maybe, when companies determine they are better off dumping their healthcare plans and paying the fines, the cost of hiring marginal workers will go down and that'll move the hiring needle. I doubt it, but it is not that outlandish.

Thursday, May 06, 2010

Trichet Learns from Bernanke Mistakes

As the financial crisis brought about by sub-prime mortgages was gathering steam in late 2007, the markets looked to Ben Bernanke to supply the heroin to make the problems appear to go away and keep everyone calm and mellow, to which he graciously complied more or less. Investors are making similar calls of ECB President Jean-Claude Trichet to play the role of heroin dealer. Shockingly, Trichet is refusing and telling all manner of would-be junkies to get clean and sober. As we head into the teeth of this European debt crisis, we should feel very good about the presence of one Jean-Claude Trichet.

I See Now Wherefore Hate Is Bred

Liberals are supposed to be smart, or so they tell us, but then they put on display for all the world to see monumental foolishness like, say, Ezra Klein's ruminating that a home foreclosure process could have spurred Faisal Shahzad to want to blow-up Times Square. (If you really think this you are as dumb as dirt, if want the world to know that you think this, well, you are setting new standards in dumb.) Let's put aside that Shahzad stated he was angry over the US's war on terror. Let's forget for a moment that he trained in bomb-making in Pakistan, known to the be the worldwide nexus of radical Islamist movements, where jihad against the West is fomented and plotted. Let's leave all that be. Let's look at what this man lost that drove him to the brink of homicidal madness. Behold the castle that was ripped so heartlessly from this striving American middle-class king. Just gaze at the quintessential American Dream shattered over the bloated wallet of some fat cat banker.

How heartless a society do we live in that we would tear asunder a man's hopes and dreams of simply setting down on his fold up chair at his empty fiberboard desk to take in the day's events before he retired for the night on his air mattress surrounded by the edifying minimalism of his stark white walls. Cruelty thy name is America! Can you not feel the rage boiling up within you now! You feel it don't you!!! MURDER IS TOO GOOD A FATE FOR THESE DESPICABLE CAPITALIST PIGS!!!!!!!

Wednesday, May 05, 2010

Net Neutrality Despite Bust!!!!

Stymied by the courts on their "net neutrality" obsession, Obama's FCC is going to give it another run using different rules.

Fred Barnes had it sooooo right, we're witnessing "Democrats at Ramming Speed." They've lost popular legitimacy so it's time to ram it, ram it, ram it through.


Bill Whittle does it again. Wow.

First Hand Account of Deepwater Horizon Explosion

Here is a transcript from a call-in radio show with an interview of a guy who survived the Deepwater Horizon disaster and who gives a first-hand account. Clearly this guy is a petroleum engineer. What he says is interesting. Take it from me, a guy who subscribes to Offshore Engineer magazine.

Four Thousand Year-Old Culture Needs To Grow Up

In their zeal to protest that money doesn't grow on trees or assert their rights to sponge off of others or something like that, Greek union members have left three people dead. Disgraceful.

Crap, Yes...But At What Price?

Check out this great column by Caroline Baum on the Goldman hearings. Her central point is an elementary one, but one easily forgotten and always worth a refreshing mention - quality must be measured against price, value - like beauty - is in the eye of the beholder. Baum quotes the astute James Glassman about his views on People magazine. For my part, I think any and all romantic comedies starring Jennifer Lopez are crap, but they are nonetheless produced and consumed all the time. Most likely by people whose movie nights don't include the cost of a baby-sitter and require the foregoing of other appealling entertainment options. In markets, Goldman's crap likely is another firm's "screamer."

Glenn Would Say: "We Are In the Very Best of Hands"

Remember I shared with you the opinion of a top executive who told me that the business threat that most keeps him up at night (and this guy does not run a financial company) was the United States Senate? Well, the sleeplessness seems to be shared.

UPDATE: And then there is this.

I Guess It Really Does Matter Where You Start Out

Greeks flock to UK to avoid potential confiscatory taxation. Bankers flee UK to avoid confiscatory taxation.

Tuesday, May 04, 2010

Another CEO Dumps On Obama

I have pointed out the several times that Warren Buffett has repudiated Barack Obama's economic policy and leadership (in his typically mid-western restrained and constructive way). Jim Owens, CEO of Caterpillar, early Obama supporter, and another classy guy (most CEOs are classy folks, contrary to the media depiction of them) like Buffett, comes out and repudiates Obama's economic policy in the pages of the WSJ. It is not aggressive or confrontational, but Owens pretty much says we should not be doing what this administration is doing and we should be doing what this administration is not doing. Just one example, Owens's bullet point on healthcare obliquely says what we just did on healthcare wasn't the way to go. Perhaps cynically using Caterpillar to sell the crappy stimulus to America squandered what goodwill he had with Owens. I guess they don't teach how to maintain goodwill at Harvard.

Smart Power

Iraq: Iran A 'Real Friend' - President
May 4, 2010
Iraqi President Jalal Talabani called Iran a real friend while meeting with Iranian presidential adviser Mehdi Mostafavi, Fars News Agency reported May 4. Talabani was visiting an Iranian cultural exhibition in Iraq’s Sulaymaniyah province when he spoke. He said the Iraqi Kurds are very interested in Iran and its cultural activity, and the Iranian and Iraqi people have common cultural bonds that are supported by the governments.

What the hell did we expect...?

Inidividual Mandate Akbar!

Once again Mayor Michael Bloomberg proves himself to be a jackass and Mark Steyn proves himself to be a literary comic genius. Given the parade of corrupt hacks that usually run for NYC mayor from the Democrat side, Bloomie's next campaign slogan could be "Vote for the Jackass, It's Important."

Monday, May 03, 2010

Oh Yeah, Chris Christie Will Go There

Wow, Chris Christie is slaughtering all sorts of sacred cows. NJ's Supreme Court has only one African-American justice. This guy is up for tenure review and you'd think that the only African-American anything in any walk off life in today's America would be untouchable in our racial spoils/guilt trip society. Um, not to Governor Christie.

More Than Ever: Tankers and Pipelines

I am afraid the Deepwater Horizon disaster will prove to be the undoing of any positive political momentum for increased offshore oil drilling for years to come. This is unfortunate. I view the Deepwater Horizon sinking and subsequent leak the same as an airplane crash, it is tragic and when these things happen the cost can be high, but we don't shut down commercial aviation because the benefits, which are taken for granted, are so immense. The same goes for our hydrocarbon energy-based economy. The benefits are immense and misunderstood, but when the system has a rare serious incident, it is a crisis level failure and the costs are huge. Still, the political deck is stacked against continued oil offshore exploration and production. It is much easier to argue for shutting things down than for taking the stand that after you tally up the benefits and the costs over the long run, we're better off drilling. So drilling will be curtailed for many many years until the industry can rebuild its safety record and time has healed the impact of this disaster.

That said, restrictions on drilling were in place and weren't opening up all that fast. This incident will only make it politically easier to advocate a position that is already fervently advocated by many. I've explored the investment implications of this before. Those implications are all the more relevant today. We'll need the energy, so more than ever we'll just be bringing it in from far afield. Brazil comes to mind. Canada of course. Angola, Ghana, and Uganda too.
Tankers and pipelines, young man. Tanker and pipelines.

UPDATE: Perhaps this is a good time to remind people that BP spent the last 10 years sermonizing. A little less preening and a little more attention to detail would have been nice.