Thought of the Day

"An error doesn't become a mistake until you refuse to correct it."
- Orlando Battist

How To Discourage Government Intervention

I'll give Obama this: his administration is quickly curing corporate America of its desire for public assistance. In the aftermath of the bank bailout and the auto industry bailout the lesson is quite plain: take government money and you'll never have control of your organization again.

What most of these companies probably didn't realize is that with government money comes government tactics. Reality, facts, and business acumen have nothing to do with government. Once public money is involved the government can at any time stir up public outrage over standard business practices and bludgeon you into submission.

The law has nothing to do with it. Connecticut Attorney General Richard Blumenthal recently admitted on Glenn Beck's television show, the AIG bonuses were not against the law. The closest he could get was "against public policy...and it is unsanctioned by law."

Get that? AIG should not have done what it did because it was not approved by law. Let's ignore the fact that, thanks to Sen. Dodd, it was approved by law. They are saying that the moment a company takes public funds it should not be allowed to do anything unless it is approved by law. In short, if you take taxpayer funds the government now controls you.

In fact, in asking GM CEO Waggoner to step down, President Obama is finally being honest. The only way he could be more honest about this is if he were to step into Waggoner's position himself. If you take federal funds you are now under government control and subject to the Administration's capriciousness. If Obama wants to show America he's tough, well, it sucks to be you. Because you're in the government now, and the government doesn't run on reality, but on the illusion of reality.

So let that be a lesson to corporate America. The ideal relationship between government and business can be best summarized by an exchange in the musical "Fiddler on the Roof" when someone asks the rabbi if there is a proper blessing for the czar. The rabbi replies "If course", and then demonstrates: "May God bless and keep the czar...far away from us!"

Boise Code Camp Review and Soul-Baring Insights

This Saturday I went to Boise Code Camp, an amateur IT conference put together by a local developers group. I've been here ten years, but this is the first I'd heard of it. So of course I signed up to be a presenter. Here are a few highlights.

Keynote Speaker Bob Lokken
This fellow has started and sold two businesses, and is starting a third. He gave an excellent overview of the the economic and IT trends both globally and locally. While he did not paint a very rosy picture, he did have some ideas on how to survive it. I heartily agree: innovation is the key, coupled with community involvement. We need to produce a bigger local crop of IT workers or everything will continue to leave town and go where people can be found. He also did a good job of cheerleading for groups and events such as this.

The Green Room
I think they did a great job of taking care of their presenters. I almost felt guilty using the green room, but I had to remind myself I'm their partner, the "talent", that makes the event possible and successful. If a t-shirt, two bottles of water, a donut, and a table to sit at while I review my presentation are all it takes to make me feel appreciated we all win!

My Presentation
I was scheduled in a room that could hold 80 people. Fortunately I drew only about 25. They were a good group, and I quickly felt comfortable speaking to them. Yes, I could have been more comfortable, but that was my fault. I didn't finish writing my presentation until Friday afternoon and didn't rehearse it at all.

I got some good, positive feedback. One person said my presentation was one of the best organized he'd seen. I appreciated that, as I'd tried to make it flow well. Another suggested I'd been a little hard on developers. And he was right. They're not the only ones who dislike doing documentation. Nearly everyone does--myself included at times.

I'm no stranger to being in front of crowds, but I was more nervous for this than I've been in a long time. Like "I think I'm going to be sick" nervous. Thank heaven for theater instincts. Once I was "on stage" I was fine.

If anyone finds their way here instead of my site, you can find my presentation slides here.

Lunch
I'm mostly vegan, so it was nice that they had vegetarian pizza available. I got one slice. Fortunately(?) I was still knotted up internally from my presentation and wasn't that hungry. Instead I spent the time speaking to a colleague I hadn't seen in a few years. It would appear that we're both still crusaders, trying to bring better processes to the resistant natives.

My Brother's Presentation
My brother is becoming something of a time management consultant, and he was presenting after lunch. I was already planning to go, and not just because he's my brother. I've been to one of his previous presentations and became a convert to the system he advocates. I've since fallen off the wagon and needed a kick start. He did a good job, and I was glad to be able to assist with a loan of my laptop. Yeah, I got to tease him about being his personal assistant, but I'm glad to do it. Heaven knows he's done a lot for me, not the least of which being my cheerleader.

Other sessions
I next started a session on virtualization. I was hoping to hear how they apply it on a corporate scale, but it appeared to be headed more into different packages available. I ended up bailing and catching the latter half of a session on copyright law. I doubt I'll ever need to worry about software copyrights, but it was just as applicable to other projects I have coming up. All in all, good stuff.

After that was a rotation where there wasn't really anything of interest to me, so I just picked something that sounded like it may be useful information. And it might have been. Unfortunately the speaker drew one of those annoying people who thinks that they're a co-presenter. If he disagreed with something the speaker said he made sure we all knew about it, and would start to debate it right there until the speaker would eventually cut him off and ask him to talk to him afterward about it. Annoying, selfish person. We were there to hear the presenter's thoughts and experiences, not his.

Unfortunately he interrupted so often that the speaker only got to give about half his presentation. He was trying to cover far more material than he really had time for as it was, and ego-maximus interruptus made the presentation even more scattered.

I had high hopes for the final session, which was a panel discussion on being a consultant. There were some good points brought up, but they opened up to audience questions too soon and it never really hung together after that. Few topics got more than cursory treatment. About all I learned about being an IT consultant is that I probably don't want to be one.

Insights
While I was there I had a flash of insight. I found myself becoming passionate about IT again. Then it occurred to me that it it wasn't because IT is my "calling" in life. On the contrary. I realized that I am a passionate person, though staid and mild-mannered I may appear. If something catches my interest and I get in far enough to get a feel for it I become passionate about it.

This causes me no end of grief, actually. I've struggled for years to determine just what my calling really is. The answer has always been "I don't know...I can't narrow it down". But now I realize that the answer is not going to be found by looking at what I'm passionate about. Call it Terminal Curiosity Disorder, call it Stockholm Syndrome--whatever. If I'm around something for awhile I start to care, whether or not I should.

Some things wear off over time. I was passionate about the local ITIL group my company was trying to start a few years ago. I was passionate enough to volunteer. And I did pretty well, I think. But the moment someone else came along and volunteered for my job I was happy to let them take it...and I haven't been involved since. Part of that is because of changes they made to how the group operates, but partly because reality set in and I realized I couldn't afford to stay passionate about something that did not directly relate to my career.

I've often done that. If I can see the benefit of something I find it easy to get involved to make sure it happens. That's how I became HOA president. That's how I became an editor on my college paper--and then Communications Board Chair in student government to defend the paper against student government censorship. Passion is easy for me. It's channeling it in the right direction I struggle with.

So the trick for me now is not to find what I'm passionate about. That will come easily enough. It's finding out what skills I have that I most enjoy using, then finding someplace to use them that will be worthy of my inevitable passion.

I know that sounds a shade egotistical, but it's true. Not every activity deserves a person's passionate participation. Not every organization rewards empassioned advocacy. I think that has been a major source of frustration for me in my current job. I've been spraying passion around like a fire hose, but it's largely gone unappreciated and unacknowledged. That's not entirely the fault of the organization (I know I get impatient with the speed of change, or lack thereof, but it's the nature of a beast this large), but it explains why my only regret about my pending unemployment is unemployment itself, not about leaving the organization. It's a simple equation: passion - empowerment = frustration.

So when it comes to "What Color Is Your Parachute"-style life-changing career searching, I think I just discovered at least one element of my "where". I need a situation where I'm either in a position to act on my passion, or where I get the support and appreciation to know that, even if things can't happen quickly, I'm not being ignored and my passion is appreciated.

Ah, more insights. This is why I blog (okay, one reason. It's cheap therapy. For me, at least. Reading this may be costing you dearly. <*maxwellsmart>Uh...Sorry about that, Chief!<*/maxwellsmart>

In Defense of the "Teleprompter President"

While I don't always feel I have to be nice to politicians, I do try to be fair. The reports of President Obama's teleprompter gaffes during a St. Patrick's Day event with the Irish premier are evidently not only wrong but mask what was actually a good natured joke by the president.

From Toby Harnden of the UK Telegraph:

The most authoritative account I can find was from pool reporter William Englund of National Journal. His pool report stated:

"Then it was Cowen's turn, and he was in for a surprise. 'We begin by welcoming today a strong friend of the United States,' he said--then stopped in surprise as he realized he was reading President Obama's speech off the teleprompter. 'Why don't these things work for me?' he asked, as the crowd roared. 'Thank you for having us. Who said these things were idiot-proof?' Then he got his bearings and gave the same talk that he delivered in the East Room. When he ended, at 8:12, Obama stepped to the microphone and said, 'First, I'd like to say thank you to President Obama...(much laughter). Happy Saint Patrick's Day, everybody.' Then we were escorted out."

That was pretty clear: there was a teleprompter mix up and the fall guy was Cowen. Obama stepped in after Cowen's five-minute speech to make a good-natured and well-received joke at the Irish premier's expense.

So there you have it. Eyewitnesses indicate Obama wasn't the one with the teleprompter problem.

Harnden concludes with this:

I'm surprised, by the way, that the White House isn't rebutting misleading stories such as the St Patrick's Day one. Once a perception gets embedded into the public consciousness it's difficult to erase it - whether it's accurate or not.

Indeed. Democrats wrote the playbook on how to capitalize on presidential gaffes. You'd think they'd recognize the same play when it's used against them. Unless, of course, they want us to see Obama as a inexperienced bumbler. The conspiracy theorist in me can certainly see the potential in that one.

AIG Employee Resigns

Jake DeSantis, an executive vice president for AIG's notorious financial products unit, has resigned. His resignation letter was sent to CEO Edward Liddy and the New York Times. Some highlights:

I take this action after 11 years of dedicated, honorable service to A.I.G. I can no longer effectively perform my duties in this dysfunctional environment, nor am I being paid to do so. Like you, I was asked to work for an annual salary of $1, and I agreed out of a sense of duty to the company and to the public officials who have come to its aid. Having now been let down by both, I can no longer justify spending 10, 12, 14 hours a day away from my family for the benefit of those who have let me down.

If true, he's hardly a greedy, taxpayer-bilking con artist. He's not getting rich from any of this, and killing himself in the process. I'd quit, too.

I never received any pay resulting from the credit default swaps that are now losing so much money. I did, however, like many others here, lose a significant portion of my life savings in the form of deferred compensation invested in the capital of A.I.G.-F.P. because of those losses. In this way I have personally suffered from this controversial activity — directly as well as indirectly with the rest of the taxpayers.

Hmmm... you mean AIG employees are taxpayers, too? Unlike Geithner, Dodd, and many others who are calling foul over this man's bonus. They're allowed to "forget" to pay their taxes.

I have the utmost respect for the civic duty that you are now performing at A.I.G. You are as blameless for these credit default swap losses as I am. You answered your country’s call and you are taking a tremendous beating for it.

But you also are aware that most of the employees of your financial products unit had nothing to do with the large losses. And I am disappointed and frustrated over your lack of support for us. I and many others in the unit feel betrayed that you failed to stand up for us in the face of untrue and unfair accusations from certain members of Congress last Wednesday and from the press over our retention payments, and that you didn’t defend us against the baseless and reckless comments made by the attorneys general of New York and Connecticut.

Ouch. That's just poor leadership. Leaders shield their people from the crap that rolls downhill toward them. Liddy's not alone. Many, many people who knew the truth of the situation sat on the sidelines last week and let good people get beaten up. It's disgusting, really.

I think your initial decision to honor the contracts was both ethical and financially astute, but it seems to have been politically unwise... You’ve now asked the current employees of A.I.G.-F.P. to repay these earnings. As you can imagine, there has been a tremendous amount of serious thought and heated discussion about how we should respond to this breach of trust.

As most of us have done nothing wrong, guilt is not a motivation to surrender our earnings. We have worked 12 long months under these contracts and now deserve to be paid as promised. None of us should be cheated of our payments any more than a plumber should be cheated after he has fixed the pipes but a careless electrician causes a fire that burns down the house.

Many of the employees have, in the past six months, turned down job offers from more stable employers, based on A.I.G.’s assurances that the contracts would be honored. They are now angry about having been misled by A.I.G.’s promises and are not inclined to return the money as a favor to you.

The only real motivation that anyone at A.I.G.-F.P. now has is fear. Mr. Cuomo has threatened to “name and shame,” and his counterpart in Connecticut, Richard Blumenthal, has made similar threats — even though attorneys general are supposed to stand for due process, to conduct trials in courts and not the press.

They kept their part of the deal and are not being fed to the wolves for their efforts. And the wolves are people who should be upholding the law, not giving in to posturing vigilantism. I've held that this whole "outrage" is counterproductive, but after reading this I can't help but be ashamed of my government. This is just plain ridiculous. The pompous jerks who are screaming the loudest are the ones who knew all along what was going on. Despicable.

On March 16 I received a payment from A.I.G. amounting to $742,006.40, after taxes. In light of the uncertainty over the ultimate taxation and legal status of this payment, the actual amount I donate may be less — in fact, it may end up being far less if the recent House bill raising the tax on the retention payments to 90 percent stands. Once all the money is donated, you will immediately receive a list of all recipients.

He's voluntarily providing more visibility and accountability than our foolish government ever thought to ask for. This man shouldn't be punished by our government. He should be running it.

If outrage where monetizable our government would have fumed us out of the recession already. It's ironic that the king--I mean president of outrage last week is asking us all this week to calm down. You stoked this fire, Mr. President. We hired you to fix this mess, not to spend one week working on fixing it and the next week trying to widen it. Get your head in the game and stop grandstanding to get your socialist agenda passed before we come to our senses.

Some of us already have, and we're telling you to stop. Enough of this irresponsible behavior. Good and decent people are paying the price for your arrogance, hubris, and manipulation. No one can be this clueless by accident. Just stop.

Invasion of the Spiders

We were awakened in the middle of the night by a blood-curdling scream from our youngest. My wife was evidently impressed by the speed I exhibited in getting from our bed to his. I just know that screams like that can never be good.

He was seeing spiders everywhere, but there were no spiders. We calmed him down and got him back to bed. That lasted all of two minutes. The spiders were back. They were everywhere. And they were invisible to me. It was as if he were hallucinating.

Our three-year-old is not typically afraid of much. This was something I'd have expected from his older brother, to be honest. But he was terrified. I did my best to comfort him, but after a little while it became obvious he wasn't going to calm down any time soon. Meanwhile we were keeping his brother awake.

I ended up taking him downstairs and reading him books, then snuggling on the couch for awhile. Eventually he started getting a little drowsy and talking about squishing spiders. I decided it might be time to try again. He willingly went upstairs and got into bed--after checking his pillow for spiders again. He didn't make another sound until breakfast time.

I'm pleased I was able to handle this situation patiently. Perhaps this was one case where I could empathize. I remember being scared at night sometimes as a kid. I know that it's not always rational. Still, as an adult who needs his sleep, it could have been easy to get upset. I'm glad I didn't. At least not with him. The cat who kept trying to slip into my lap and perform acupuncture no matter how many times I said no wasn't so lucky.

But I'm not sure whether to chalk the episode up as a victory or not. Should I be satisfied that I was eventually able to get him past his fear, or be concerned that I lack the presence to dispel the monsters with a word like some fathers seem to be capable of doing? I'm not sure.

All I know is that the hug and kiss he gave me before we headed upstairs to bed made it worth it. Being a daddy is not for the faint of heart, but it can certainly have its rewards.

It Couldn't Last

It seems my optimism was premature. Obama sent a letter to former French President Jacques Chirac expressing his certainty that the two of them will be able to work together in the coming four years. Why he is eager to work with the former French president and not the current one, Nicolas Sarkozy, I don't quite understand.

The Volokh Conspiracy is more charitable, suggesting that we should look at how the letter was addressed. He may have been writing to Chirac about his new foundation; The Jacques Chirac Foundation for Sustainable Development and Cultural Dialogue.

Reuters indicates that Obama's contact with former heads of state prior to engaging the current ones is not new.

In any case, this is not encouraging after the embarassment of the Gordon Brown visit--which keeps getting worse. The DVD set Obama gave him was for the wrong region.

It's About Time

The government has announced a plan to buy up toxic assets and to get private investors involved. I may be wrong, but wasn't this idea floated about six months ago by the Bush administration? I'm not sure why they didn't do it at the time, and now that the idea is back on the table Wall Street seems to be quite favorable.

To be sure, the private investment component is new, and I like it. They're also showing a bit of fiscal responsibility at last, in that they're going to launch the program and see if it's successful before asking for more money to expand it to the levels needed.

Two fairly smart actions by the administration in one day. I hope this is the beginning of a trend.

Glenn Reynolds, however, thinks the damage has been done already:

“U.S. Treasury Secretary Timothy Geithner said on Sunday that help from the private sector was critical to get toxic assets off banks’ balance sheets and help resolve a credit crisis.” Even on NPR they were skeptical that private investors would want to get involved, for fear that they’d wind up facing punitive taxes if they made “too much” money.

Some Hope After All

It appears that President Obama is having second thoughts about the bill working through Congress to tax executive bonuses at AIG and other companies nearly out of existance. From MSNBC.com, reporting on a 60-Minutes interview:

President Barack Obama wagered significant political capital Sunday, signaling opposition to a highly popular congressional drive to slap a punitive 90 percent tax on bonuses to big earners at financial institutions already deeply in hock to taxpayers.

Obama defended his stance by saying the tax would be unconstitutional and that he would not "govern out of anger." He declared his determination, nevertheless, to make Wall Street understand it must shed "the old way of doing business."

Of course he's still baffled about the economy's sharp decline, which isn't good:

"I don't think that we anticipated how steep the decline would be," he said in the interview on CBS' "60 Minutes." "That slope is a lot steeper than anything that we've said — we've seen before."

I think he needs to take some responsibility for the effect his programs (and various gaffs from his administration) have had on the economy. But he always seems to stop short of that.

Hitting The Tweets

As you may have noticed, I've joined Twitter. I'm still in wait-n-see mode over it, but if nothing else it was worth joining just for this single tweet from James Lileks:

There is actual MARCH MADNESS outside my office; I see people streaming into the Metrodome. Festival! Festival! It is the will of Landru!

There's some actual March Madness in my town this weekend, too. Me? I'm feeling somewhat sane.

Your Stimulus At Work

Yahoo Finance columnist Laura Rowley has an example of how TARP was supposed to work: Banner Bank.

Banner Bank, a 16-branch institution based in Walla Walla, Washington, received $124 million in TARP funds last November, in exchange for giving the Treasury preferred stock with a 5 percent dividend. Last weekend Banner launched a program offering 30-year, fixed-rate mortgages at just below 4 percent to buyers who put 20 percent down, and 4.875 percent for 30 years with no money down.

Buyers had to choose from an inventory of 243 homes offered by 75 builders currently financed by Banner and its subsidiary, Community Financial. In the first weekend of the program, builders sold 25 of the homes, priced from $184,000 to $2.5 million. (The offer ends March 22.)

I suspect this was one of the "Good Banks" that were asked to take the money when they didn't need it. And since they didn't need it, they decided to use it for the purpose intended.

"We think it's an effective way to utilize TARP funds and create a positive atmosphere surrounding home-purchase activity," says Banner CFO Lloyd Baker, adding that the bank hopes to lend $50 million under the program. It will also be offered in Seattle and Boise, Idaho.

Banner doesn't expect to profit on the mortgages, which include jumbo loans. Rather, it was looking for a way to jumpstart activity for its builder clients. The bank, which is well-capitalized, had almost $190 million in non-performing loans last year, 80 percent of which were residential construction and development loans.

"It doesn't serve our communities to drive by and see vacant houses -- nobody wins," says John Satterberg, president of Community Financial. "With this program, the homebuilder sells a home, the consumer gets a low interest rate, it gives the builder the opportunity to start another home, which puts the rest of the economy to work -- the excavator, the concrete company, the framer, plumber, electrician. That's what is gone from our economy."

Well, the homebuilder may decide to sit it out for awhile until demand comes back, but still. When homes start selling again it's bound to have a positive impact, even if it takes awhile.

The house across the street from us has been for sale for over a year and a half. It finally sold, though I have no idea how much they had to come down on their price. Someone from my church who works for a custom closet organizer company has said that business has picked up a touch again.

New home starts were up last month. It would be nice to think that things may be starting to turn around. If so, it'll probably be because of smaller banks like Banner being willing (and able) to do their part.

The AIG Mess

Outrage is all the rage in Washington this week. The only real question is whose outrage isn't faked. At the heart of the matter is around $450 million that AIG has paid or is contracted to pay to top executives in retention bonuses. $165 million of that went out last week.

According to the Washington Post, these bonuses were known about for months:

Attorneys working for the Fed had been examining the matter for months and determined that the retention payments couldn't be touched because AIG would face costly lawsuits and be subject to penalties from states and foreign governments. Administration officials said over the weekend that they agreed with that assessment.

These bonuses were announced nearly a year ago:

Beginning in the first quarter of 2008, AIG disclosed the plan to offer retention awards at Financial Products. The unit had already begun to hemorrhage money, a problem that would later grow exponentially. The unit's executives, fearing they might lose valuable employees in the tumultuous months to come, successfully negotiated more than $400 million for their workers, to be paid this month and again next year.

At the Federal Reserve Bank of New York, which has directly overseen AIG since its federal takeover in September, officials have studied the possibility of rescinding or delaying the bonuses. They even brought in outside lawyers for advice. The conclusion: If the bonuses weren't paid, the AIG staffers would be able to sue the company and probably would win, not just what they were owed but also punitive damages that would make the ultimate cost perhaps two to three times as high as the bonuses themselves.

Moreover, Fed officials also hope to keep current employees with the company. The senior executives whose decisions caused the company's collapse are long gone. Most of those left behind are trying to unwind complicated derivative contracts. Completing that process correctly is essential to preserving as much value as possible for taxpayers, officials at both the government and AIG have argued. If it is mishandled, it could expose taxpayers to billions of dollars in additional losses.

The article even goes on to speculate that the current government outrage was designed to pressure the execs into giving back their bonuses.

At any rate, it's pretty clear that these bonuses were known about well in advance and were deemed either critical to keeping key people in place, or at least more dangerous to attack than to leave in place. Had this all been explained up front to the American people I doubt we'd be having this big fuss.

But then we hit the big "teeter" (not quite a crash) of 2008. AIG received bailout money, along with quite a few banks. Only a few of those banks actually needed the money--the rest were pressured into taking it to help the needy banks maintain anonymity and prevent runs on those banks.

Then along comes the Stimulus Bill. Knowing about AIG's bonus program, and knowing there were many banks holding government money who didn't need it, lawmakers stepped in to remove an amendment from the bill that would have restricted bonuses to any company receiving bailout funds. It's claimed that Senator Chris Dodd inserted language that limited executive compensation, but exempted bonuses.

Dodd claims to know nothing about this "Dodd Amendment". In fact, no one seems to know how it got into the bill. The only thing we know for sure is that it wasn't the Republicans, as they were specifically kept from helping draft the bill. And we can't blame anyone who voted for the bill, because no one had time to read it.

The usual arguments over what Dodd knew and when he knew it are ensuing. And Dodd himself is trying to combat the provision he supposedly added--and undoubtedly hoping no one remembers the $103,100 campaign donations he received from AIG in 2008. This is the same Dodd who vigorously defended Fannie Mae and Freddie Mac when the Republicans tried to investigate alleged wrong-doings there, and one of the recipients of a sweet mortgage deal from Countrywide Mortgage.

Fannie Mae, by the way, is also giving its top execs retention bonuses of between $470,000 and $61,000 this year. Freddie Mac, not to be outdone, is planning similar bonuses. These companies received $15.2 billion and $13.8 billion in federal funds last year, and Freddie Mac has requested $31 billion more this year.

Meanwhile lawmakers are up in arms, and turning their ire on the Obama administration for being asleep at the wheel. The White House is expressing full confidence in secretary of Treasury Tim Geithner's oversight.

So let me explain...no, it will take too long. Let me sum up. Bonuses we knew were coming are being paid to AIG executives deemed necessary the company's recovery. These bonuses were protected by language placed in the Stimulus bill, though no one knows how it got there. But now that the money is being paid out everyone is suddenly surprised and angry and vowing to undo what they allowed to be done--while at the same time ignoring the exact same thing being done at two government-supported companies with an even more corrupt past. The result:

Hired guards stood watch outside the suburban Connecticut offices of AIG Financial Products, the division whose exotic derivatives brought the insurance giant to the brink of collapse last year. Inside, death threats and angry letters flooded e-mail inboxes. Irate callers lit up the phone lines. Senior managers submitted their resignations. Some employees didn't show up at all.

"It's a mob effect," one senior executive said. "It's putting people's lives in danger."

Politicians and the public spent yesterday demanding that AIG rescind payouts that they said rewarded recklessness and greed at a company being bailed out with $170 billion in taxpayer funds. But company officials contend that the uproar is scaring away the very employees who understand AIG Financial Products' complex trades and who are trying to dismantle the division before it further endangers the world's economy.

"It's going to blow up," said a senior Financial Products manager, who spoke on condition of anonymity because he was not authorized to speak for the company. "I have a horrible, horrible, horrible feeling that this is going to end badly."

I'm not sure what to be more concerned about, our tax dollars being spent to save the economy, or our tax dollars being spent to destroy it. At best we can hope the two cancel each other out without doing any lasting damage.

But then what can we expect when we put the party that hates big business and decries capitalism in charge of saving both. It's like asking Gen. Patton to perform life-saving surgery on Hitler. Why should we be surprised when the patient inexplicably dies on the operating table?

Oh, and now it's also coming out that AIG has send out over $100 billion--over half of what's been given them so far--to other institutions and city governments, including some foreign businesses. The Wall Street Journal has suggested the government is using AIG to launder foreign aid funding, and that Washington is making such a fuss over the AIG bonuses to draw attention away from its own inability to supervise AIG and other bailed-out companies.

Jim Rickards, quoted in the Washington Times, suggests there is a "straightforward economic reason" for the rerouting of funds, though it does present a huge political problem for the administration:

AIG, Rickards said in an e-mail, "had trades with counterparties (Goldman, Deutsche Bank and many others) which, over time, produced paper profits for the counterparties and paper losses for AIG as market prices moved against AIG. In that situation, it is customary (and contractually required) for the losing side (AIG) to pay the winning side (Goldman, others) the amount of the paper profits in cash."

"This protects the counterparty against the possibility that AIG might not be around to perform when the trade is finally closed out at maturity. The name for this is a 'margin call' with margin being the name for AIG's paper losses which have to be made good," Rickards said. "So, when the U.S. gave AIG money, the money went right out the door to meet margin calls."

"AIG was not much more that a conduit for government money which really went to the counterparties. So, in effect, the U.S. was not just bailing out AIG, it was bailing out the counterparties. Many were foreign banks which is part of the outrage," he said.

I think basically what we have is an administration that is deathly afraid of the public while being simultaneously condescending toward them. They don't think we're smart enough to understand business. I, for one, having read all the above articles feel the real problem is Washington's response, not AIG's activities--at least lately. There's no denying they did some very, very stupid--and perhaps greedy--things and got themselves into serious trouble. But they're not going to be able to get themselves out of trouble without doing some things that are not going to be immediately understood by the public.

Rather than try to explain it to us and risk taking the heat for supporting this, the administration prefers to keep things quiet unless they become public and then howl with rage and feign ignorance. In short, these people are afraid to make the tough call. They want to have their cake and eat it too. They want to make villains of big business while working quietly to try and save them. They claim that some companies are just too big to allow to fail, yet do everything they can to undermine the company's attempts to not fail.

Is $165 million a lot of money? Obviously. Is it money well spent if the people it was supposed to help retain really can salvage the company and stabilize the economy? I think so. If that's what it takes to make the right people willing to stick it out and put up with the crap they're having to wade through right now then it's a small price to pay.

Meanwhile, Congress has voted themselves a pay raise. Just what have they done to save the economy? They seem actively bent on destroying it with their selective amnesia and poll-fueled outrage.

Does anyone have the guts to stand up and say "Hey, we don't have to like it, but this is what it's going to take"? I can think of one senator that might have. In fact I voted for him for preseident. I'm becoming increasingly proud of that vote.

AIG Bonuses - What's the Alternative?

Andrew Ross Sorkin of the New York Times (via Yahoo.finance) suggests that attempts to get back the $165 million in executive bonuses at AIG may result in worse consequences than just letting it go and learning from it:

That may strike many people as a bit of convenient legalese, but maybe there is something to it. If you think this economy is a mess now, imagine what it would look like if the business community started to worry that the government would start abrogating contracts left and right.

As much as we might want to void those A.I.G. pay contracts, Pearl Meyer, a compensation consultant at Steven Hall & Partners, says it would put American business on a worse slippery slope than it already is. Business agreements of other companies that have taken taxpayer money might fall into question. Even companies that have not turned to Washington might seize the opportunity to break inconvenient contracts.

It's an interesting take, and I'm not sure it's not a valid one, considering the current "competance deficit" the current administration is increasingly accused of. When every other day one of them is doing or saying things to send the stock market into another slide, what would saying "the government will decide which of your contracts you will keep or break" do to the system?

I understand America's irritation, and I understand Obama's need to be seen doing something about it, but quite frankly, we have over $1 Trillion out there for the purpose of stimulating the economy. I'd rather me make sure that is used wisely and supervised. Don't step over a dollar to pick up a dime. Since he's not able to focus on everything happening right now, focus on the economy as a whole and let someone else worry about getting back that %.0001 that AIG potentially misused.

Focus, Barry!

Good Company

This week I was accepted into a new pilot program sponsored by the state Department of Labor to help professionals network and hone job-hunting skills. Today was my first meeting, and I have to say it was well worth it. We practiced interviewing today, which was fascinating. Most of the people in the group are more experienced than I am (plus they've had a few more weeks of the program than I have), and were quite impressive in their interviews. I learned quite a bit and, having gone last, was able to apply some of it to turn in a decent performance of my own.

The others were a bit intimidating, though. There was some impressive credentials and experience in that group. I'm no slouch, but I was the youngest and least-experienced of the bunch. I look forward to learning more from them as time goes on.

An Astronaut Write to the President

Astronaut Tom Jones writes an open letter to President Obama, in which he lays out six goals he feels essential for NASA's future:

• Retire the shuttle fleet by 2010
• Use the International Space Station
• Send Explorers Beyond the ISS--Soon
• Reaffirm America's Place in Space
• Unleash the commercial space industry
• Inspire the next generation of explorers

Tom Hanks Hitting Below The Belt?

HBO is apologizing in advance for an upcoming episode of "Big Love" that will show a Mormon temple ceremony. Such ceremonies are considered sacred by the church and are not made public.

The Mormon Church has previously voiced fears about the series, which launched in 2006. In a release, it says it feels a betrayed by HBO.

"Despite earlier assurances from HBO, it once again blurs the distinctions between the Church of Jesus Christ of Latter-day Saints and the show's fictional non-Mormon characters and their practices. Such things say much more about the insensitivities of writers, producers and TV executives than they say about Latter-day Saints."

As a member of the LDS church myself, I have a problem with this. I'm not surprised, but definitely disappointed by this decision. I'm more concerned that the creators of this show are dishonest enough to deliberately try to link the LDS church and its polygamous offshoots. No polygamous marriages are performed in LDS temples. Period. To suggest otherwise, or to suggest that a polygamist would be able to gain entrance to one of our temples is a deliberate ignoring of fact, bordering on libel.

But more disturbing to me is Tom Hanks' connection with the show. He's the executive producer, and recently railed against the church for its support of California's Proposition 8.

So is this just a petty attempt by Hanks to get revenge on the LDS church? It's hard to believe otherwise, considering the timing, and considering the fact that the show has to purposely bend reality in order to do what it's doing. This is practically the same as producing a show about Lutherans and then showing them performing a Catholic mass. Except if they were doing that they'd just be discredited for making a rather obvious blunder.

In this case they'll probably be applauded and rewarded by the industry for their "artistic bravery". There's no bravery here, and even less to do with art. It's just a cheap shot from a man upset that America is still governed by majority rule and is too much of a coward to attack the Muslims and black Christians who also supported the proposition. He's got a political ax to grind and doesn't care what truth he has to distort or what sacred and beloved traditions he has to trample on to do it.

I'm not going to boycott HBO. Sure, they have the power to stop this, but they're merely supplying the platform for Hanks' childish vengeance. And frankly, I think it would do the Church more harm if they did manage to get the episode canceled. Besides, I don't even have cable or satellite, let alone watch HBO. It would do no good to boycott.

But I am seriously considering boycotting Hanks, even though he's been one of my favorite actors. Even if he didn't come up with the idea, he is in a position to have stopped it. He could have taken the high road and said "Look, I know I have a problem with the Mormon Church, but that's no reason to compromise the integrity of my show by allowing deliberate fabrication and sacrilege. We're all adults here."

But he didn't do that. He decided to use his money and fame to punish another group for using their money to legally influence an election. Don't get me wrong. He has a right to do it. That's exactly my point. The LDS Church has a right to weigh in on moral issues, and the members of that church have a right to donate their time and money as they see fit in political causes. If that is wrong, then it's is just as wrong for Hanks to do what he's doing (if not worse considering the potential libel involved).

You can't have it both ways, Mr. Hanks. If that's how you want to spend your money then I'm sure I want to put any more of mine in your pocket.

That's No Moon...That's the National Debt!

I nearly spit all over my keyboard over this one from AR15 (Post title taken from The Smallest Minority:

What's That Again?

Obama was against "signing statements" before he was for them. From Yahoo! news:

On another potentially controversial matter, the president also issued a "signing statement" with the bill, saying several of its provisions raised constitutional concerns and would be taken merely as suggestions. He has criticized President George W. Bush for often using such statements to claim the right to ignore portions of new laws, and on Monday he said his administration wouldn't follow those issued by Bush unless authorized by the new attorney general.

White House officials have accused Bush of using the statements to get around Congress in pursuing anti-terror tactics.

Too Many Strings Attached

Megan McArdle from The Atlantic:

Apparently, the restrictions that Congress is putting on bailout monies is pushing a number of institutions to give the money back.

What to think of this? One's first instinct is to say that this is an unalloyed good--the restrictions have made taking the funds costly enough that only truly troubled institutions will do so.

The problem is, that's precisely what the Fed was trying to avoid. Central bankers have long made a practice of keeping it a secret who borrows from them at the discount window, because publishing the names of those who need a temporary cash infusion could trigger a bank run. In order to get the money into the banks that needed it to stave off a liquidity crisis, Bernanke and Paulson very deliberately asked banks that were widely believed to be sound to take the money too. Otherwise, the government bailout funds might have touched off the very crisis we were trying to avert.

I guess the price of doing their "patriotic duty" was too high. It was bad enough for the banks taking the money they didn't need to be painted as a potentially failing bank. To accept the conditions that were pushed on them later at the risk of becomng a failed bank for real was just too much.

I wrote about this back in early February.

I think the idea of not paying the price for someone else's irresponsibility is gaining traction.

She goes on to make another good point:

It's also possible that some of the measures that express our collective rage at the bankers could tip the banks over the edge. It's satisfying to make AIG cut out junkets for independent insurance agents, but it also probably means that fewer AIG policies will be sold. Since we now own the company, we probably cost ourselves money in order to express our outrage. Similarly, watching the conga line of Merrill's top performers snaking up Wall Street to other firms, one can't help but wonder if B of A shareholders did themselves any favor by complaining about the bonus structure. The major assets of these institutions are client relations and human capital that tend to adhere to the individual, not the firm.

To reverse a popular phrase, "If you bought it, don't break it!" Like it or not, we're now stockholders in AIG and the like. If we want our money back some day we'd better support those businesses.

It's Not Just Paranoia Anymore

The idea that Obama and his administration may actually want the economy to stay bad is gaining support:

From the DC Examiner:

White House chief of staff Rahm Emanuel gave the game away back in November with his observation that:

"You never want a serious crisis to go to waste. What I mean by that is it's an opportunity to do things that you think you could not do before. This is an opportunity…And this crisis provides the opportunity for us, as I would say, the opportunity to do things that you could not do before."
...
Initially, Emanuel’s disturbing words were dismissable as just his own, but the president himself and most recently Secretary of State Hillary Clinton have since repeated variations on the theme. So it is clearly the Obama strategy to use the current economic crisis as justification for his radical agenda.

Call it policy-making by perpetual crisis.

Terrestrial Musings, quoting Carl Pham:

I bet if the entire Obama Administration and Democratic Congressional Leadership were sentenced to hang on December 1, 2009, if the stock market were not above 9000 and unemployment were not below 7%, they would become raging tax-cutting pro-business libertarians overnight.

That is, I don’t believe they are so stupid and deluded as to believe their own hogwash right down to their core. They know very well they’re hanging a millstone around the economy’s neck, costing jobs and punishing capital markets. But they don’t care. They have ambitions — more government power for themselves, better status and pay for their supporters — and they actually don’t care that a bunch of plumbers and HVAC men are going to pay for it with their jobs, 401k’s, life savings invested in the new house. Can’t make an omelet without breaking eggs, y’know.

Biotech Benefits from Obama

The DC Examiner identifies the real winners--and the double-standard--in Obama's lifting of the ban on government funding for embryo stem cell research:

The Biotechnology Industry Organization, which represents drugmakers and for-profit laboratories, quickly endorsed Obama’s new policy. “We fully support and are enthusiastic about President Obama’s decision to allow the National Institutes of Health to fund embryonic stem cell research,” said BIO President and Chief Executive Officer Jim Greenwood.

Financial headlines around the world indicated Greenwood and BIO’s member companies had reason to celebrate: “Industry set for stem cell profits”; “Stem cell buzz may help industry”; “Shares of Stem Cells [Inc.] rally on Obama’s news.”

Destroying human embryos to harvest stem cells has never been illegal in the United States, and many laboratories have been carrying out this sort of research for years, either with private money or with state taxpayer money. Obama’s decision gives these businesses — and any that now want to jump on the bandwagon — access to federal taxpayer money for their efforts to turn human embryos into profits.

Consider an analogy. What if President George W. Bush had announced he was lifting many restrictions on oil drilling on federal lands — on Alaska’s Northern Slope, in the Gulf of Mexico, in national parks and forests, and off the Atlantic and Pacific coasts? He might have trumpeted this as “depoliticizing drilling” and “restoring geology to its rightful place.” Imagine the outrage of environmentalists — and the catcalls from Democrats charging it was a gift to the oil industry.

One important difference between this imaginary Bush story and the real Obama story: It’s nascent human beings, not virgin tundra, being trampled by Obama’s policy.

Note that embryo stem cell research has not been illegal, only just not open for government funding. This work has been progressing all along during the Bush years. Just not at the expense of taxpayers, many of whom have ethical objections to such research.

On top of that, most of the breakthroughs in stem cell research have come about using adult stem cells, so there really is no need for this research anyway. This is a largely political move, motivated by the promise of lobbying dollars.

Making Government Smaller?

Don Surber has an interesting post up about the Administration--or lack thereof:

After 51 days in office, Barack Obama has appointed only 73 people to 1,200 jobs that require Senate confirmation.

If they require Senate approval, they are important jobs.

But Obama is too busy to properly vet the people and appoint them to fill the jobs to get the work done.

That is his job.

Perhaps if he could actually appoint people to the top jobs who won't resign or refuse, they might be able to fill those spots? Well, except Geithner, who still doesn't have any help while he battles the economy.

This has serious repercussions:

“But yesterday, Sir Gus O’Donnell, Britain’s most senior civil servant, exposed transatlantic tension when he protested that Downing Street was finding it ‘unbelievably difficult’ to plan for next month’s G20 summit in London because of problems tracking down senior figures in the US administration. ‘There is nobody there. You cannot believe how difficult it is,’ the Cabinet Secretary told a civil service conference in Gateshead.”

Well, on the upside, until those positions are filled there's no one drawing all those paychecks. That should put a crimp in the deficit, right?

A Thank You Is Warranted

We take a break from our (seemingly) regularly scheduled politics for something of a more personal matter.

As I've mentioned before, I will be out of work soon, and so I'm actively hunting. Job hunting is not easy work. It's a soul- and esteem- crushing business. Applying for job after job and most of the time receiving no response back of any kind really starts to grind you down.

I know there are better ways, mind you. And I'm gearing up for that kind of a life-changing career search as we speak. But anyone who is serious about job hunting must try as many different approaches as possible. And that means endless applications which seem the paper or electronic equivalent of hollering down a well.

What keeps me going are the people who express concern, confidence, or give me contacts. Just today out of the blue someone at work sent me a contact for a company I've been banging my head against a wall trying to figure out how to approach. Even though times are tough and everyone has to watch out for themselves more than ever, the number of people who gladly lend a hand is encouraging.

Thank you, everyone!

Jim Cramer Asks Some Good Questions

From his editorial on Mainstreet.com:

So, why after toiling in the cable wilderness for four years with Mad Money am I the target of the wrath of the Obama clan, and the darling, albeit surely momentary, of the Obama-critics? After all, my criticism of Obama's handling of the economic crisis is a lot less pointed than my withering August 2007 "They Know Nothing" meltdown against the previous regime's handling of the economic crisis. Then, I advocated a swift slashing of interest rates by the Federal Reserve and a concomitant policy for potential widespread banking failures that were sure to come because of the Republican administration's pernicious laissez-faire attitude toward Wall Street.

The answer lies in the way the two administrations handled criticism.

Basically, neither administration comes off very well. He believes the Bush administration could have avoided the whole mess and didn't. But he also believes that Obama's administration has not done any better:

Don't get me wrong, Obama was dealt a terrible hand by the previous croupier. But this administration's handling of the banking crisis, something that has brought Citigroup (Stock Quote: C), Bank of America (Stock Quote: BAC), Wells Fargo (Stock Quote: WFC) and even JPMorgan Chase (Stock Quote: JPM) to their knees, has been devastating. The indecision of Geithner, who has floated to the media every single idea in his head, only to announce none orally, has created a vacuum that has allowed short-sellers to dictate policy.

Yet he still supports Obama's agenda. He just doesn't believe now is the time for it:

After the White House briefing, Rush Limbaugh defended me as a wayward leftist who has seen the light. I am always glad to have any allies and defenders, but I do favor almost all of Obama's agenda, right down to having the rich pay more of their freight in this great country. It's just not the right time. We need to declare a war on unemployment and solve it before we let it get out of hand. We need to stop house-price depreciation. Neither the pork-laden stimulus plan nor the confusing mortgage proposal put forward by Obama will defeat either enemy. When Obama trounces both unemployment and house-price depreciation, he will have the power to enact anything he wants. But all the initiatives he wants to rush, like tax hikes, changes in health care, tinkering with the mortgage deduction -- good grief, right now in the midst of the worst housing downturn ever -- and the tough cap-and-trade rules, will derail any chance we have of turning this economy around. Instead, they put the Second Great Depression smack on the nation's table. The markets thought he could stop it; hence the giant relief rally when he was elected. But in fewer than 50 days of his ascendancy, the markets' hopes were totally dashed and the averages are now forecasting the worst decline since the Great Depression. As someone who listens to what the averages are screaming, I think they are accurately predicting the future.

Fairly strong stuff. His criticism that neither administration seems to be listening seems valid.

WSJ Editorial Defends Obama's Budget

Laura D'Andrea Tyson believes that Obama is showing true leadership in his handling of the economy and his coming budget:

If leadership is defined as recognizing a crisis, addressing its challenges, and setting new directions while remaining true to one's values, then Barack Obama is already demonstrating his strengths as a leader. He has inherited an economic crisis worse than any the nation has experienced since the Great Depression. Within fewer than 50 days in office he has signed a historic stimulus package to bolster demand and create 3.5 million jobs. Governors, business leaders and economists from both the left and the right have applauded the stimulus. Friday's distressing employment numbers indicate that much more may be needed.

Friday's distressing employment numbers indicate that employers aren't buying the stimulus. Tyson makes the point over and over again in the article that it's only the rich who will be impacted by Obama's plans. She forgets, however, that it's mostly the rich who create the largest number of jobs. The economy won't recover if there aren't more jobs. Cutting taxes on the middle class won't help those who aren't paying taxes because they're unemployed.

President Obama has also proposed a 10-year budget that is faithful to the progressive vision he articulated during his campaign. His budget includes significant investments in health care, energy, the environment and education, and a tax cut for the middle class. It also calls for higher taxes on the top 3% of income earners to finance his priorities and reduce the deficit. Not surprisingly, a budget plan this ambitious is triggering strong and well-organized opposition on numerous fronts.

Obama campaigned on a "sunny dat scenario" in which he would not be hampered by a poor economy. When pushed during debates he admitted that he wouldn't be able to do everything he wants to do if the economy remains poor. His budget doesn't seem to accept the reality that the economy is poor. Even Tyson gives passing mention to this limitation:

President Bush's tax cuts are scheduled to expire at the end of 2010. At that time, assuming the economy has entered a recovery, President Obama's budget will restore the top two marginal income tax rates to their 1990s levels of 36% and 39.6% for individuals earning more than $200,000 and couples earning more than $250,000. (emphasis added)

I think it assumes more than the economy entering a recovery. It assumes we've already recovered back to where we were--and then some. That is just not likely at this point, as much as I'd like to think it is.

Tyson continues in an effort to refute criticism but instead gives us more cause to worry:

These changes will affect only the top 3% of taxpayers, the group that has enjoyed the largest gains in income and wealth over the last decade. In addition, for these taxpayers the tax rate on capital gains will increase to 20%, the lowest rate in the 1990s and the rate President Bush proposed in 2001, and the tax rate on dividends will increase to 20%, a rate lower than the rate of the 1990s and nearly 40% lower than that proposed by President Bush in 2001.

By her definition I am not in the top 3% of taxpayers--not by a long shot. She, like Obama, seems to ignore the fact that it's not just the rich that own stocks. Raising the capital gains and dividend tax rates will impact me.

Besides, if these rates are actually lower than what they once were (which is largely irrelevant, mind you), then how does she figure that 3% of the taxpayers are going to finance all these vast amounts of spending? That 3% does not include the mega-rich, mind you. It's those who make more than $250,000. I'd like to see the math she uses to determine that these 3% are going to cover the $634 billion just to reform health care, let alone his other pet projects.

How about I do some math, then? Let's assume a generous definition of "taxpayer" as everyone in the US. With a population of about 350 million, that 3% represent about 10.5 million. By my calculations, just to finance health care reform, each of that 3% are going to need to pay out an additional $60,380. If that were the only thing Obama was asking this group to fund it might be possible. But it's not.

In addition, the president proposes to limit the deductions for dependents, charitable contributions and other expenses to 28%, the top rate for such deductions under Ronald Reagan. Some critics claim this is class warfare. But why should a family in a higher tax bracket get a bigger break on expenses than a middle-class family?

Huh? She either leaves out some information here or she just doesn't make sense. The only way a higher bracket family is getting a bigger break is because they are making more. By her logic they shouldn't be taxed more because they're already paying more taxes.

Now granted it shouldn't cost the more affluent family more to raise their children. But then it's this wealthier group that tends to give more to charity. This is not insignificant, yet Tyson blows right past it. By reducing the deduction on charitable giving the government will effectively reduce charitable giving. Who is going to make up the difference? Does the budget cover that shortfall? If so, it's essentially the government saying "Hey, we can give to charity better than you can, so let us be the middle-man". That doesn't make sense. Middle-men always get their cut, so the government would have to take in more taxes just to fund charities at the same level.

In addition, this discouragement of charity will somehow cover half of that $634 billion. Assuming for a moment the numbers add up (I doubt it), where's the other half coming from?

...with the other half coming from savings in health spending. These savings include competitive bidding in order to reduce Medicare payments to private insurance plans, increasing the Medicaid rebate for brand-name drugs, and strengthening Medicare pay-for-performance incentives for hospitals.

Okay, I'm really baffled here now. Someone please explain this to me. Competitive bidding I understand and can more or less accept (though we've all heard how well the government handles bidding processes, so why expect this will be somehow better). But increasing Medicaid rebates and strengthening performance incentives doesn't sound like a cost decrease to me--quite the opposite. I'm no expert on Medicaid, so I'm willing to learn if someone can teach me how this works.

Tyson dismisses the opposition to all this.

Those who stand to lose from these changes are already protesting. But like the 28% limit on deductions, these savings are fair and reasonable ways to finance the twin goals of achieving universal health-care coverage and moderating the growth of health-care spending.

Actually, most of the people protesting these days are middle-class Americans (see the Tea-Party Protests), so she's either out of touch or she's just trying to convince us she's still talking about that horrible 3% who should just pay up and shut up. In any case, she glosses over whose "twin goals" we're talking about. It's not necessarily the American people's goal. It's Obama's. And even if the majority do support these goals, I'll bet her dollars to donuts that there is a wide disparity on how they want these goals met.

Now let's look at Obama's plan for cutting carbon emissions.

Reducing the nation's dependence on foreign oil and cutting carbon emissions are also priorities, supported by overwhelming scientific evidence on the risks and costs of climate change. Economists agree that establishing a price for carbon emissions either through a carbon tax or a cap-and-trade system is essential to achieving these goals. The Obama administration has opted for the latter. The system will impose a limit on the amount of carbon that businesses are allowed to emit each year. Firms will be required to purchase permits from the federal government through an auction and will then be free to buy and sell them.

"...overwhelming scientific evidence on the risks and costs of climate change..." She's overreaching here. There's overwhelming evidence of climate change, but climate change is not synonymous with Global Warming. Climate changes, with or without man's help. That's why they gently changed the wording from "Global Warming" to "Climate Change". People think it's the same thing, but it's not.

Furthermore, there is very little scientific speculation, let alone evidence, of the cost of climate change. Greenland will tell you the costs are pretty darn good! They're experiencing an agricultural boom. Warmer weather is good for agriculture, so just where are the costs, exactly? Tyson is pulling a common media trick of reducing an entire debate into a single statement of certainty that glosses over reams of complexity and disagreement.

But let's assume for a moment that she's correct. The government wants to set up a market for carbon offsets. And the government wants to be right in the middle of it, getting their cut:

The Obama auction plan will also generate substantial government revenues, about 80% of which will be used for financing a refundable tax credit of up to $400 for individuals and up to $800 for families. The result will be tax cuts for 95% of working Americans. The remaining 20% of the auction revenue will be used to finance investments in energy efficiency, clean energy and smart-grid technologies.

Herein lies the fallacy in this approach. If the government is relying on this revenue to appease the peasants (why gives us rebates? Isn't this money needed to fund programs and avoid deficit spending?) and fund research, then they're not really interested in seeing this revenue stream dry up. In other words, they just want to profit from carbon emissions, not reduce them. Once this source of revenue is in place, what incentive will the government have to eliminate it by moving all companies to carbon-free production?

But let's assume this works. In the very next point Tyson contradicts herself--probably without even realizing it. She moves on to college tuition:

Others will oppose expanding the tax credit for college tuition to $2,500 a year and making it permanent and partially refundable; increasing the Pell Grant to $5,500 a year; and eliminating subsidies to banks participating in the student-loan program, cutting $50 billion from the 10-year deficit. But, again, the returns to higher education are substantial for both the individual and the overall economy. Too many American students are forced to forego these returns because they cannot afford a college education, with deleterious effects on the nation's competitiveness.

So if creating a shortage of something increases the cost of something (ie. carbon offsets), wouldn't creating a surplus of something else lower the cost of it? If we can double the number of college graduates, that doesn't automatically double the number of jobs for them. On the contrary, if the rate of graduates exceeds the rate of economic expansion we will end up with fewer jobs for more graduates. Salaries will decrease, and companies will be able to increase their highering standards. It's not inconceivable for freight companies requiring college degrees from their truck drivers.

If we increase the number of college graduates without the economy keeping pace we'll just end up creating an even wider divide between the poor and uneducated and the middle class. Meanwhile wages and salary across the board will fall. While this could reduce our interest in offshoring, we're just shifting the problem. We create problems for other countries while decreasing our own productivity. A college graduate glut is not in this country's best interest.

Tyson then moves on into further generalization:

The president's budget is progressive and ambitious. It will not, however, explode the size of government as some critics warn. If the economy recovers as projected, over the next decade taxes as a share of GDP at around 19% will be lower than they were during the second half of the 1990s, government spending as a share of GDP at around 22.5% will be about where it was under Reagan, and nondefense discretionary spending at around 3.6% of GDP will fall to its lowest level since that data was first collected in 1962.

"If the economy recovers..." That's a vague and big "if". How much will the economy recover to make her statements true? And that also assumes that, as the economy grows, the government doesn't grow with it. Does she honestly think that, of Obama gets what he wants now, that he's just going to sit on his hands for the next four to eight years and not do anything else? Is she suggesting that there would be no more to do? She seems like a liberal, so I have a hard time believing she thinks that this is all we need.

Finally she reaches her conclusion--and shoot herself squarely in the foot:

The real risk lies in the possibility that the economy's recovery starts later and is much weaker than the economic assumptions in the budget. In this case, by no means remote, President Obama will have to adjust his plans while remaining true to his values. In a very few days in office, he has already demonstrated that he has the leadership skills to rise to the challenge.

Okay, she gives lip-service to the possibility (which Obama himself seems to believe) that the recovery will be later and weaker. But she suggests that Obama will just adjust his plans to meet that reality. Based on what? He hasn't curtailed his plans to meet reality yet, even though he promised to. He's decided that all we need to do is run up the deficit he once abhorred rather than adopt the fiscal responsibility he once championed for government--and still champions for the general public.

He hasn't even shown he possesses the leadership skills to meet this challenge! He had a perfect opportunity to lead by example, and he blew it. He's essentially saying "America, you be more responsible, because I want get everything I want right now, on credit."

Ah, there's the key. She's got a personal stake in this plan. No wonder she thinks it's wonderful:

Ms. Tyson is ... a member of President Obama's Economic Recovery Advisory Board.

She might have mentioned that up front rather than literally burying it in a footnote. But then that would have influenced the reader to weigh her words more carefully, and we can't have that.

Believing His Own Press?

James Morrow suggests that Obama's main problem is just trying to do too much at once.

The President needs to focus all his energies on restoring credit flows and national and international confidence in the American economy and its private capital markets. Now is not the time to tackle health care reform or attempt to impose the huge inefficiencies of a carbon cap-and-trade system on the US economy, nevermind the illusory promise of so-called "green jobs".

Obama's sort of stressed out, all over the shop sort of urgency does not inspire the feeling that the US has a confident, inspiring captain at the helm for the difficult times to come.

Instead, it calls to mind thoughts of the stressed-out housewife pleading, "Calgon, take me away!"

I remember him saying during the campaign that the economy meant that some agenda items would have to wait, that naturally there would need to be some programs that would need to be cut for now. What happened to that Obama?

I think both he and the Democratic congress got it into their heads that they have a mandate to clean up every little problem in the first year. I think Rahm Emanuel talked them into "going for the gusto" while they've still got high support and a convenient crisis.

I think they're wrong. They would have been well-served to focus their attention on one or two things, show a good, solid victory, and then move on with even greater support. This approach seems too much like they don't have enough faith in themselves or their ideas. They want to hurry and ram everything through before we can catch on. Sometimes haste means something is important, but far too often in Washington haste just means you've got something to hide.

A slower, more deliberate, more bipartisan approach (don't just blame the GOP for not playing ball, make an actual effort to include them--even Obama supporter Warren Buffet is saying it!) may be more difficult, but it would instill more confidence and show an administration that truly is confident and in control.

Instead we have this chicken little firedrill with the administration running around in every direction throwing buckets of water on everything that moves while very little gets thrown on the actual fire.

It's Not All One-Sided

I've been wondering why the GOP hasn't been pushing harder on Congressional ethics. Politico has the answer:

Republicans say they don’t want to ignite a full-blown ethics war like the one that dominated the House in the 1990s, but there’s another cause for their caution: If they were to file a complaint against Murtha or anyone else, Democrats would retaliate by filing their own complaints against Reps. Jerry Lewis (R-Calif.) and Don Young (R-Alaska).

In short, their own house isn't clean enough yet. However, if I were Pelosi and Reid (and I'm obviously not), I wouldn't wait for the GOP to force me to clean up my act--especially when I promised to do just that two years ago. I'd start now and lead the way. If they were to relentlessly push ethics in their own party they would be able to cut the GOP off at the knees.

But they haven't done that, and they won't. There's too much of a chance that they'll lose their near supermajority if they do. Heaven forbid they should actually have to work a little and maybe even compromise! No, it's better to hang on to the crooks in the party than have to give an inch to the GOP.

Unfortunately it's probably the smart move. The GOP isn't doing enough on their side to clean up their own house, and so won't have enough of a leg to stand on.

Newsweek Turning On Obama

Wow, he's starting to lose the Main-Stream Media:

Barack Obama is a great pretender. He constantly says he's doing things that he isn't, and he relies on his powerful rhetoric to obscure the difference. He has made "responsibility" a personal theme, and the budget's cover line is "A New Era of Responsibility." He claims that the budget begins "making the tough choices necessary to restore fiscal discipline." It doesn't.

Let's recognize that, with today's depressed economy, big deficits are unavoidable for some years. Let's also assume that Obama wins reelection. By his last year, 2016, the economy will have presumably long recovered. What, then, does his final budget look like? Well, it runs a $637 billion deficit, equal to 3.2 percent of the economy (gross domestic product), projects Obama's Office of Management and Budget. Just for the record, that would roughly match Ronald Reagan's last deficit, 3.1 percent of GDP in 1988, so fiercely criticized by Democrats.

As a society, we should be willing to pay in taxes what it costs government to provide desired services. If benefits don't seem equal to burdens, then the spending isn't worth having (granting exceptions for deficits in wartime and economic slumps).

If Obama were "responsible," he would be leading a candid conversation about government's size and role. Who deserves support and why? How big can government grow before higher taxes and deficits harm long-term economic growth? Although Obama claims to be doing this, he hasn't confronted entitlement psychology—the belief that government benefits once conferred should never be revoked—and asked whether some significant spending no longer serves any "public interest."

The article also points out that Obama's budget will shrink defense spending considerably over the next eight years, which assumes a safer world than we can necessarily expect--or assumes isolationist strategies that would be less than wise.

It then goes on to discuss his handling of the economy. While they're unwilling to lay blame for all of the market declines in 2009 at his feet, they're certainly not giving him a pass:

Confidence (too little) and uncertainty (too much) are at the core of this crisis. All of Obama's double-talk threatens to reduce the first and raise the second. Investors and traders have surely noticed the discrepancies between Obama's words and actions.

Obama says he's focused singlemindedly on reviving the economy, but he's also using the crisis as a vehicle to advance an ambitious long-term agenda to reengineer the U.S. economy. The two sometimes collide. The $787 billion "stimulus" is weaker than necessary, because almost $200 billion of the impact occurs after 2010. Many of these extended projects (high-speed rail, computerized medical records) can't be accomplished quickly. When Congress debates Obama's sweeping health-care and energy proposals, industries, regions and governmental philosophies will clash. Will this improve confidence? Reduce uncertainty?

A prudent president would have made a "tough choice"— concentrated on the economy, deferred his more contentious agenda. Similarly, Obama claims to seek bipartisanship but, in reality, doesn't. His bipartisanship consists of sprinkling his cabinet with token Republicans and inviting some Republican members of Congress to the White House to watch the Super Bowl. It does not consist of fashioning proposals that would attract bipartisan support on their merits. Instead, he clings to dubious, partisan policies (mortgage cramdown, union checkoff) that arouse fierce opposition.

The article then ends with a most interesting assessment:

It is Obama's conceit—perhaps his cockiness—that he can ignore these blatant inconsistencies. Like many smart people, he believes he can talk his way around any problem. Perhaps he can. In this, he has an ally in much of the mainstream media, which seem so enthralled with him that they can't recognize glaring contradictions. During the campaign, Obama claimed he would change Washington's petty partisanship; he also advocated a highly partisan agenda. Both claims could not be true. The media barely noticed; the same obliviousness persists. But Obama still runs a risk: that his overworked rhetoric loses its power and boomerangs on him. (emphasis added)

So Newsweek hasn't been carrying the torch for Obama? They seem to completely ignore that they are a part of that "much of the mainstream media". On the other hand, if they're really going to take off the blinders, it's better late than never. If they're willing to start taking a closer look at Obama's policies and actions I'm willing to let them get away with dodging blame. Just a little.

Lest We Forget

Sippican Cottage has a post about his father, a WWII veteran, and his visit to see on of the few remaining B-24 bombers in which he flew 40 missions as ball-turret gunner.

My father was a ball gunner on a B-24J Liberator bomber in the Pacific during WW2. He rarely spoke about that. My father and his confreres considered themselves part of a thing greater than the sum of their parts in it --or so it seems to me -- and more or less did what was expected of them as a sort of unpleasant chore, kept themselves safe as much as was practicable, amused themselves when possible, and got back to being regular people as soon as they could.

The Greatest Generation is rapidly disappearing. We will have lost something irreplaceable when they're gone. The represent something nearly gone from our nation, something we will miss dearly once we realize what we've lost.

Corruption: Anything You Can Do We Can Do Better

Raided Lobby Firm Still a Force on Capitol Hill

Weren't the Democrats supposed to be draining the corrupt swamp in D.C.? Someone needs to tell them they've got the pumps hooked up backward.

Just what does it take for Pelosi to clean house? Heck, I'd even settle for her admitting that there's a problem. Instead they seem determined to ignore and sweep under the rug every scandal.

There is a difference between GOP scandals and Democrat scandals. The GOP fallen were primarily hypocrits; decrying immorality while serving up a side of sex scandal. And don't get me wrong. That's bad. But ultimately they didn't cost the taxpayers or jeopardize the ethical operation of government. I hate to drag out the "they were only hurting themselves" cliche, but it fits.

The Democrats, however, seem rife with pay-for-play, tit-for-tat, special-deals-for-special-friends, taxes-for-you-not-for-me type deals the compromise every aspect of government operation. It's influence peddling writ large, and no one seems to care, least of all Nancy "I'll Clean Up Congress" Pelosi.

Instead they seem to be watching each others' backs quite nicely. They're determined to "make the problem go away" in true mafia style. Except no one's been dumped in the river. Yet.

I am reminded of a line from the Gilbert and Sullivan operetta "The Pirates of Penzance" in which the pirate leader is invited to give up the pirate's life and go straight. He replies, "I don't think much of our profession, but contrasted with respectability, it is comparatively honest."

Obama's Diplomacy Gets Low Marks In Britain

Ouch. There's not much more than can be said.

We get the point, sunshine: we're just one of many allies and you want fancy new friends. Well, the next time you need something doing, something which impinges on your national security, then try calling the French, or the Japanese, or best of all the Germans. The French will be able to offer you first rate support from their catering corps but beyond that you'll be on your own.

Don't You DARE Call This a "Merit Increase"

Congress has voted themselves a pay increase and a petty-cash increase, and Obama is dining on expensive wine and steak. Meanwhile the economy continues to slide, unemployment rises, and wages are falling. But that, they tell us, is the fault of Bush and Rush.

The only trouble with that theory is that the stock market had started to stabilize in January. We were actually seeing increases. Then Obama took office and every new program or policy or casual remark by government official is met with another market drop. He can't blame THAT on Bush. He can't blame THAT on Rush Limbaugh.

We're hearing nothing but hypocrisy from the Democrat establishment in Washington. Americans, we are told, need to tighten our belts and brace for things to get worse before they get better. We need to be responsible. We need to not buy houses we can't afford.

Washington is not leading by example. They are spending money they don't have, won't have, and may never have. They are attacking the rich as the heart of the problem, and yet are prepared to raise taxes on them as if they're the only solution. They are rewarding their supporters with spending and pork. Our President, who not that long ago was talking tough on earmarks is now refusing to see earmarks anywhere he looks.

Americans are expected to sacrifice for their country, while our Democratic government are determined to feast on the offerings--and demand more.

They can blame the GOP all they want for being the "Party of NO", but the reality is that their "No" is nearly pointless. The Democrats have shut them out of every discussion, and while Obama has at least appeared to want to listen, he didn't use any of the ideas he heard.

Pelosi and Reid have gone a step further by saying that the GOP cannot possible have a good idea worth listening to because every single idea they've ever had in the past eight years are useless and the very cause of the mess we're in. Such a notion is not only insulting, dishonest, and disingenuous, but inherently dangerous. They are essentially saying that every second of the last eight years were a complete and utter failure, including the government's successful response to the economic downturn after the dot-com bust and 9/11 and the steady economic growth we've experienced for at least six of the past eight years. That can't possibly be correct.

What's more, it's not as if the Democrats did nothing at all during that time. Had the GOP enjoyed the level of control the Dems now have it would be much easier to make that case. But in many, many cases the policies and budgets that got implemented were done with Democrat approval. So essentially they're contradicting themselves: "the things we did when we weren't in control were stupid, but now that we're in charge we're suddenly right."

Besides, we know that not everything done during the Bush years were wrong, because Obama has adopted many of the same policies. Remember how "launching missiles into Pakistan won't solve the problem"? How many missiles have been launched into Pakistan since Obama took office? He's C-in-C now. He could stop that if he wanted to. An all we've heard since his original order to close Guantanamo is how difficult that will actually be. It wouldn't be if he really wanted it closed. Irresponsible, yes, but not difficult. And it looks like we'll have a significant number of troops in Iraq for the foreseeable future.

The Democrats seem to think that having won the election translates into "we have a massive mandate to completely undo everything done in the last eight years." That is self-delusion, and a recent poll confirms that while Obama is still popular, his policies are becoming less so. So far he's been able to blame things on Bush or make it appear that it was Congress' work that he was merely okaying. The reality is that he and his team are at best too inexperienced and at worst deliberately trying to weaken the economy further.

Here's a news flash for you, Mr. President. The so-beloved Middle-Class you are out to save have a considerable amount invested in our 401Ks and retirement accounts and are depending on the stock market to turn around. It's not just the Wall Street "fatcats" (most of whom are NOT irresponsible near-crooks) who need the stock market to do well. We all do. What we have seen since January is not the normal gyrations of the market. It's a steady, rapid decline. Call your accountant. He'll tell you what your cabinet of so-called smart people can't seem to figure out.

Suck it in and show some of that fiery resolve you campaigned with. Bring fiscal responsibility to Washington. Put an end to earmarks. Cut back or postpone your programs to meet the economic realities like you said you would. Show us that Washington knows how to manage our money before you lecture us on responsibility.

The economy is continuing to slide because we're not seeing anything new from Washington. It's business as usual. It's revenge as usual. It's scapegoating and blame-deflecting as usual. We need to see leadership and accountability.

It's time you deliver.

Charles Krauthammer on Russia, Cap and Trade

National Review posted some excerpts from Charles Krauthammer on All Stars. First, regarding Obama's secret letter to Medvedev about the missile defense program:

This is smart diplomacy? This is a debacle. The Russians dismissed it contemptuously.

Look, if we could get the Iranian nuclear program stopped with Russian's helping us in return for selling out the Poles and the Czechs on missile defense, I'm enough of a cynic and a realist to say we would do it the same way that Kissinger agreed to de-legitimize and de-recognize Taiwan in return for a large strategic opening with China.

But Kissinger had it done. He had it wired. What happened here is it was leaked. The Russians have dismissed it. We end up being humiliated. We look weak in front of the Iranians, and we have left the Poles and Czechs out to dry in return for nothing.

I agree. It was a sophomoric attempt at best, and reckless at worst. In fact, Medvedev comes out of this showing more integrity than Obama. Medvedev could have accepted, gotten what he wanted, and done nothing. What would Obama have done then? What options does he feel he has to enforce such a deal? The Russians have shown many times over that they will simply do what they want. And now they have even less respect for Obama and America.

Obama attempted to sell out our allies. He did an end-run without consulting allies with a much higher stake in the game than the US has. Obama has announced to the our allies "The US will not stand by you. If we think we can get what we want without you we will. Trust us at your peril."

When world security depends on Russian integrity then America really has lost its standing as the leader of the free world. Bush may have been unpopular, but he kept his word.

Krauthammer also had this to say about Obama's cap-and-trade plan:

The only purpose is the reduction of global warming, which in and of itself is speculative. And even if it were not, the fact that India and China are not in on this means that any of our savings on that, which are going to add a huge expense to our economy, will be swallowed up entirely by increased pollution by India and China.

It's a double-play of the worst kind. The US penalizes its economy at the worst possible time while China and India get to continue unchecked to establish economic dominance in the world. Europe and many other nations are starting to back away from Kyoto-type restrictions. Why on earth should we pick this particular time to decide to implement them ourselves?

Consider these two seemingly separate points and you have to wonder if Obama is purposely trying to move America to a backseat position in the world.

Rush Makes Obama An Offer

Rush Limbaugh has been the subject of continuous attack by the Obama administration for some time now. I agree with many others who believe such attacks (and others against other critics) are childish and unbecoming of the office, and will eventually backfire.

I think the Obama Whitehouse knows this, too, but figure if they can just keep the GOP off balance long enough they'll be able to push the rest of their agenda through before America wises up. They're even bragging about it to Politico.

Well, Rush is shooting back by challenging the President to come on his show and debate policy. He knows full well Obama won't--can't--accept such a challenge. But then Limbaugh moves on to the real meat of his challenge--exposing Obama's and the Democrats' hypocrisy, pettiness, and outright nastiness:

In fact, Mr. President, you know what, I know these are tough economic times, and you're trying to convince people that you're "saving" the taxpayers money, that you're cutting spending, that you're cutting the deficit. In that vein, I, Mr. President, will send my jet, EIB One, to pick you up and bring you here and take you back to wherever you want to go. You'd love it. It's not as big and luxurious as your jet, but it's got enough seats for your Secret Service detail. But it is something to behold. I'm very proud of it, Mr. President. I worked for it. I paid for it. Taxpayers pay you for your travel. Nobody pays me for mine. I pay for it. I pay for the airplane. I pay for the travel. I pay for practically everything I do. We can talk about that, too. I could tell you what that's like.

And once you land, by the way, I have a fleet of SUVs because I have guests here all the time. I have four or five SUVs. I can send a caravan to pick you up. I'll even put you up at The Breakers. It's a five-star resort. I'll do it all on my dime. We don't want the taxpayers footing any of the bill for this -- and my jet burns a lot less fuel than your two and your C-130 to bring your limousine and SUV caravan here. In fact, you know what, Mr. President? I'll tell you what I will do, if you will do this. I will promise to order some Wagyu Kobe beef at $100 a pound, just like you serve at your cocktail parties and your Super Bowl parties. I'll get it from Allen Brothers in Chicago, since you like that. I know you like $100-per-pound beef. You serve it at the White House.

But I'll cover the cost. I will cover the cost, Mr. President, so that the taxpayers do not have to pay for it, as they did your Super Bowl party, and as they do your Wednesday afternoon cocktail party. So you have no excuses. Your flunkies are demanding this debate. Your flunkies are targeting a private citizen with an enemies list that so far has three or four names on it: Mine; Rick Santelli; Jim Cramer at CNBC; and let's not forget Joe the Plumber, who your allies in Ohio also tried to destroy. The difference is that Joe the Plumber does not have his own microphone every day. They're shutting Santelli up at CNBC. They're going to shut Cramer up pretty soon, too, but he'll go down with a fight. That isn't going to happen here, to me.

He finishes with some rhetorical fireworks:

Rahm Emanuel is leading the team going after a private citizen, and the Drive-By Media applaud, get on board and help further the mission. We live in different times. So if you can wipe me out -- and, by the way, Mr. President, and Mr. Emanuel: Don't make the mistake of assuming I'm wiping myself out here in the process. I want to thank you guys for elevating me beyond the stature I already earned and achieved, because now more and more Americans have the opportunity to learn who you really are, what your ideas will really accomplish, and what damage and harm I think your policies will bring for a very, very long time to them and to this country.

I've never been a fan of Limbaugh, so I imagine I'd be in the 89% of people under 40 with whom he doesn't poll favorably. But I also have to admit that my dislike has never been based on actual experience. I also would never assume for a moment that Limbaugh is the "leader of the GOP". If that were the case they'd be a much different party--and perhaps we'd not be in the mess we're in.

If anything this concerted attack by the Administration makes me want to start listening to Rush just to see what ideas and information he's putting forward that the Administration finds so frightening. By making this attack they run the risk of making Mr. Limbaugh the actual leader of the American Conservative movement and putting together a strong enough coalition to give them difficulties in 2010.

The way things are looking now that would be a good thing. Less power in the hands of this Democrat administration may be the only way to save this country from becoming completey unrecognizable by 2012.