Detroit's black hole - NYT: "U.S. expected to give more financing to automakers" Sure, why not, we've got plenty of money.

Changing the rules in the middle of the game - Charlotte Observer: "Banks are now eager to repay TARP - Many that have taken government money are dismayed by changing rules and public outrage."

Class warfare, first last and always

Here's Fred Barnes at the Weekly Standard:

President Obama insists he's a free-market guy. But you have to wonder whether he understands how a free economy really works. His policies and his words--especially what he said at his press conference this week--suggest his sense of what makes economies grow and how people are affected by government policies is surprisingly weak.

Although it's a minor part of Obama's budget, the idea of putting a cap on the deductibility of charitable contributions from the wealthy is downright un-American. At its heart, the effort suggests that the government is better able to distribute funds than millions of citizens. In a roundabout way, that was the idea behind the 1990 "luxury tax" to take money away from the wealthy before they could spend it.

Great idea:

In 1990 the Joint Committee on Taxation projected that the 1991 revenue yield from luxury taxes would be $31 million. It was $16.6 million. Why? Because (surprise!) the taxation changed behavior: Fewer people bought the taxed products. Demand went down when prices went up. Washington was amazed. People bought yachts overseas. Who would have thought it?

According to a study done for the Joint Economic Committee, the tax destroyed 330 jobs in jewelry manufacturing, 1,470 in the aircraft industry and 7,600 in the boating industry. The job losses cost the government a total of $24.2 million in unemployment benefits and lost income tax revenues. So the net effect of the taxes was a loss of $7.6 million in fiscal 1991, which means the government projection was off by $38.6 million.

With the yacht industry crippled, the luxury tax was repealed in 1993 by a sensible Bill Clinton. On the other hand, neither candidate Obama or president Obama has shown much tolerance for real economic results as long as he can ride the populist wave.

Related – Another "bad" group is targeted: "Proposed taxes on oil companies will be paid at the pump." By you, that is.

And this – American Thinker: "Class envy has been a defining staple of the left for centuries, from the frenzied mobs leaping around the French guillotines to the Soviets to, well, the new masses circling AIG executives today." (H/T Maggie's Farm)

A (small) opening for Republicans in Massachusetts

The Bay State has had a long string of Republican governors, possibly because many citizens view a GOP executive as the only check on an overwhelmingly Democratic Beacon Hill. Now that Governor Deval Patrick's poll numbers are way down, maybe a Republican candidate can bring sanity back to the Massachusetts government:

A wave of voter disgust at business as usual on Beacon Hill has swamped Gov. Deval Patrick, dealing the first-term governor a devastating credibility blow that leaves his re-election hopes shaken, a new 7News poll has found.

Only 34 percent of those surveyed in the poll conducted for 7News by Suffolk University say the governor deserves re-election, while a stunning 47 percent say it is “time to elect someone else.”

Less Big Dig and cronyism, more Yankee fiduciary common sense.

How embarrassing – Reuters "Blundering Afghan suicide bomber blows up 6 militants": "A would-be suicide bomber accidentally blew himself up on Thursday, killing six other militants as he was bidding them farewell to leave for his intended target, the Interior Ministry said."

Jocks don't like stocks

That's my more exciting title to this great Sports Illustrated article: "How (and why) athletes go broke"

In a less public way, other athletes from the nation's three biggest and most profitable leagues-the NBA, NFL and Major League Baseball-are suffering from a financial pandemic. Although salaries have risen steadily during the last three decades, reports from a host of sources (athletes, players' associations, agents and financial advisers) indicate that:

- By the time they have been retired for two years, 78% of former NFL players have gone bankrupt or are under financial stress because of joblessness or divorce.

- Within five years of retirement, an estimated 60% of former NBA players are broke.

- Numerous retired MLB players have been similarly ruined, and the current economic crisis is taking a toll on some active players as well.

The usual suspects are represented (divorce, usually because of infidelity, rapacious agents and hangers-on) but one interesting aspect was this: many athletes don't invest in traditional securities because they're too abstract. Instead, they buy cars or jewelry or nightclubs because they seem tangible. Soon they're pawning their championship rings.

Press conference fever

Too busy with chores tonight, but I had to comment on this one line from President Obama's presser:

Finally, the most critical part of our strategy is to ensure that we do not return to an economic cycle of bubble and bust in this country. We know that an economy built on reckless speculation, inflated home prices and maxed-out credit cards does not create lasting wealth. It creates the illusion of prosperity, and it's endangered us all.

Two things. First of all capitalism is, by nature, a cycle of boom and bust so I think Obama is shooting for permanent malaise. The theory of capitalism's sinusoidal behavior was observed by Soviet economist Nikolai Kondratieff who showed that free markets will always bounce back. This did not go over well with his Communist bosses:

Kondratiev was a Soviet economist, but his economic conclusions were disliked by the Soviet leadership and upon their release he was quickly dismissed from his post as director of the Institute for the Study of Business Activity in the Soviet Union in 1928. His conclusions were seen as a criticism of Stalin’s intentions for the Soviet economy; due to this fact he was sentenced to the Russian Gulag and later received the death penalty.

Must. Resist. Krugman. Joke.

Second thing: criticizing Americans maxing-out their credit cards is a ballsy thing to say considering Obama's budget will add over $9 trillion to the national debt over the next decade.

Gitmo as a recruiting tool – fact or fiction?

Here's President Obama on "60 Minutes" last night:

"[Gitmo] hasn't made us safer. What it has been is a great advertisement for anti-American sentiment. Which means that there is constant effective recruitment of-- Arab fighters and Muslim fighters against U.S. interests all around the world."

The "war on terror is breeding more terrorists" line has been accepted as gospel among the anti-war crowd. But is it true? This NPR report hints that Al Qaeda is having trouble finding new recruits for jihad:

For months now, counterterrorism officials have seen signs that al-Qaida has been looking for new and innovative ways to recruit terrorists, including a new manual that has surfaced on the Internet.

Researchers at West Point recently stumbled on the 51-page manual while they were visiting a jihadi chat room, called Ecles. It's a Web site that allows members to have interactive discussions, post videos and download manuals. Ecles is the second most popular jihadi chat room on the Web, and al-Qaida often posts things there. Because of that, it is a place counterterrorism analysts track regularly.

So when the West Point analysts discovered a step-by-step primer called "The Art of Recruiting Mujahedeen," it got their attention. On one level, the manual might be an early indication that al-Qaida is trying to identify new sleeper terrorists. On the other hand, the book is so basic it seems to suggest al-Qaida is getting desperate for new members.

Brian Fishman, the head of research at West Point's Combating Terrorism Center, says he was struck by the remedial tone of the book. At the end of a chapter, for example, there are questions to judge both the recruiter's progress and the recruit's.

There's no verifiable way to gauge the success of Islamo-fascist recruiting so let's file this under: I report (an NPR story), you decide.

Quote of the day: we're broke

It's Senator Judd Gregg (R-NH) on the Obama administration's fiscal policy:

"The practical implications of this is bankruptcy for the United States," Gregg said of the Obama's administration's recently released budget blueprint. "There's no other way around it. If we maintain the proposals that are in this budget over the ten-year period that this budget covers, this country will go bankrupt. People will not buy our debt, our dollar will become devalued. It is a very severe situation."

This is coming on top of warnings Gregg has made in the past about the massive unfunded liabilities of entitlement spending and the tax burdens that will be passed on to future generations (H/T Gateway):



I keep telling my kids that when credit card companies send offers urging you to "treat" yourself to a vacation or a new toy, you still have to pay that money back. At the very moment in American history when we should be bracing for unsustainable levels of entitlement spending, the White House is pushing a fiscal policy where the budget deficit never drops below 4% of GDP.

Extra - WSJ: "Obama sticker shock"

Amazing Race update – India again

Teams started out from Russia and headed to Jaipur, India. It seems like every season of the Race stops by in India and, if you're a fan of "poverty porn" the Race doesn't disappoint. The taxi drivers drive primarily by horn; gas seems to be a secondary concern. Some of the Racers are overcome with emotion at the destitution.

At a village, teams find a sacred tree where a telephone sits. They dial the number and they're told to go to a parking area or something. There it's the Roadblock: one team member must feed and water a group of camels. Team Esquire arrives first and Victor shovels camel feed and hauls water to fill a trough. Mike, the older half of Team White Guys, is having a lot of trouble in the heat. Tammy & Victor head to the next clue just as Team Drinkcart is pulling up. Because they came in last on the previous leg, Christie & Jodi need to perform an extra task at some point, so they're running far behind.

At the next stop, it's the Detour: Movers or Shakers. Teams may either transport a bicycle loaded with barrels, or join an Indian dance troupe and dance for tips. Team Esquire decides to dance in the streets and beg for rupees. Meanwhile, back at the Roadblock, Mel is the only Racer following the clue correctly and using baskets to transport camel feed. Team White Guys is the next team to head to the Detour just as Team Esquire is heading to the Pit Stop at Jaigarh Fort.

Team Drinkcart hit their Speedbump: they must decorate an elephant. That is, they must paint the trunk of an elephant for some kind of ceremony. Well, OK. They must complete this before the Detour, so things aren't looking good for them. Still, it looks like Team Mighty Mites took a long time doing the "Movers" Detour.

It's a fairly close race to the mat, but Michael & Mark pull it out and Christie & Jodi are eliminated from the Race.

Team standings:

#1 – Team Esquire – Tammy & Victor
#2 – Team White Guys – Mel & Mike
#3 – Team Sistahs – Kisha & Jen
#4 – Team Say What? – Margie & Luke
#5 – Team Ginger – Jaime & Cara
#6 – Team Mighty Mites – Michael & Mark
#7 – Team Drinkcart – Christie & Jodi – PHILIMINATED

Next week – Wild animals in Thailand.

If it's Sunday, it's Jeff Jacoby – The Boston Globe's token conservative pokes fun at Joe Biden, and that's a great way to start his column: "Things have been worse."

Not a bad idea

There's a pushback in Massachusetts' over Governor Patrick's proposed 19-cent gas tax. I like this counterproposal in a letter to the editor to today's Boston Globe:

Need revenue to maintain roads and bridges? Want to make driving safer at the same time?

Tax cellphone calls from moving vehicles at 25 cents a minute!

We might need a little help from the techies to implement this, but if the cellphone companies know the duration and location of the call, they can compute the average speed, and tax calls from phones going faster than 5 miles per hour.

I can see those ACLU crybabies getting into a huff about tracking people, and then the police will figure out how to ticket people for speeding. Hmm. Now that I think about it, it's an awful idea.

No common touch - Michael Wolff: "Barack Obama is a terrible bore."

Where did my rights go?  I had them just an election ago - Powerline asks "Are we a banana republic?": "If the Pelosi bill is actually enacted into law (which I still think is doubtful) and upheld by the courts, there is no limit to the arbitrary power of Congress. In that event, we have no property rights and there is no Constitution--no equal protection clause, no due process clause, no impairment of contracts clause, no bill of attainder/ex post facto law clause. Instead, we are living in a majoritarian tyranny."

Jazz hands - Tonight I caught a great concert with my son's trumpet teacher.  Here's the link to his band's YouTube page: Music in Our World.  Check 'em out.

Madness, sheer madness - WashPost "U.S. Federal Deficit Soars Past Previous Estimates": "Deteriorating economic conditions will cause the federal deficit to soar past $1.8 trillion this year and leave the nation wallowing in a sea of red ink far deeper than the White House had previously estimated, congressional budget analysts said today."

What does the future hold for America? As I've argued (repeatably) we already can't afford the projected expansion in entitlement spending, but nobody has the political will to make necessary reforms. Now we're facing systemic $1 trillion deficits for the next decade, at least.

What does the future hold? An America where our sovereignty is handed over to the banks and foreign lenders who will now make the policy decisions because our government was unable to. The Chinese government is going to dictate terms for us the same as a bankruptcy judge. Man, I give up.

Related - Maggie's Farm: "Government run by fools."

Pointless extra-constitutional grandstanding

I agree with every word Tom Maguire says here on federal legislation to pander to Americans' anger grab back the AIG bonuses:

I deplore this confiscatory tax aimed at whoever Congress is mad at today. Right now it's AIG and Fannie Mae; later it will be Merrill and Citibank, and eventually it will be defense contractors, profiteering oil executives, or whomever the Congressional Dems single out as their whipping boy du jour.

Judd Gregg is quickly moving up the charts as the only adult in Washington:

Two of those difficulties, lawyers say, lie in Article I of the U.S. Constitution -- a section stating Congress cannot pass any "Bill of Attainder" or "ex post facto" law.

A Bill of Attainder is an act of the legislature that singles out and punishes a group or individual without trial. An ex post facto law retroactively changes the legal consequences of an act.

"It's a Bill of Attainder. It can't be done," Sen. Judd Gregg, R-N.H., told FOX News when asked about proposals in the Senate to tax AIG.

In other words, this whole kabuki theater is has no basis in the Law. It makes you proud to be an American.

This doesn't look good - Time: "Treasury learned of AIG bonuses earlier than claimed."

Tomorrow's scandal, today!

AIG is so five minutes ago. Let's move on to the latest government-supported financial entity with inept executives grabbing big bonuses. WashPost: "Top Fannie Mae Executives Each Get $1M Retention Bonuses"

Fannie Mae, the federally run mortgage finance giant, plans to pay four top executives $1 million or more in bonuses as part of an employee-retention program.

The bonus plan prompted the company's federal regulator to defend compensation decisions the government made when it took over Fannie Mae in September. It comes as American International Groupis facing public outrage over $165 million in bonuses it awarded last week.

Fannie Mae, which suffered $59 billion in losses last year, has requested $15 billion in taxpayer assistance, and has said it expects to need plenty more.

Don't worry Fannie Mae, the kids are driving us home after the party.

Hooray - I just submitted my final take-home exam for my class.

Seven classes down, three to go.