In Which I Drive a Lib Nuts

Bumper sticker belief systems do not hold up under fire.

Of Bludgeons and Innovation

Yesterday, I got an email from the White House's propaganda wing, signed by O.  In it, he trumpets the fact that insurance companies "... will be required to spend at least 80 percent of the health insurance premiums you pay on your health care, instead of overhead costs like advertising and executive compensation."

The dolt, and the other dolts up there, seem to believe that these two things are unnecessary to the proper conduct of business.  He stopped short of saying that reform is meant to eliminate profits at insurance companies, but truly, that is the intent.  Since forever, insurance companies spent about 65% of revenues on payouts, using the other 35% for operating the business, so O has more or less appropriated 15% of the insurance companies' revenue.  (Hmmmm....is that an illegal taking?  Probably not, but it is, in effect.)

O's version of health care reform, if it goes fully into effect, will ultimately destroy our health care industry.  We will be left with a system of primary care with little capacity to meet higher level needs and will be bereft of innovation.  It will eventually be used to bludgeon us into compliance, just as TSA is being used right now.  The level of innovation will be governed by that engine of innovation that is our federal government.  You know, the organization that gave us the Post Office, the IRS, the government procurement process, the TSA and the EPA, among others.

One of the Giants Speaks

Bernie Marcus is one of the founders of Home Depot, one of the most remarkable businesses to spring to life in the last 30 years.  He and his co-founders, Arthur Blank and Ken Langone started from nothing back in the late ‘70’s and built a huge, successful business that redefined an entire industry.  In short, Marcus is the sort of man you would want to listen to about creating jobs, since he had a big hand in creating over 300,000 of them.

Being the evil rich man that he is (he’s worth somewhere in the neighborhood of $2 billion), a few years ago he single-handedly kicked in $200 million to the city of Atlanta to build what is now the world’s largest aquarium and has also signed on with Warren Buffett and Bill Gates at The Giving Pledge, (read his nasty letter at the link) where he has pledged to give most of his fortune to their foundation upon his death.

Mr. Marcus was on CNBC today and, well, he ain’t happy.  This is a little over 15 minutes long and worth every minute.  (I tried mightily with my puny HTML skilz to embed the video here, but it is apparently the video that will not be embedded.)

Are you listening up there in your Ivory Tower, Mr. President?

Another One on the Way Out

Yesterday, I wrote about Paul Otellini and his comments on investing in the US from the high point of being a Fortune 500 CEO.  Big picture, you might say.  Well, here is what it looks like up close, from the Washington Post, via Minyanville.

Read down a bit in the Minyanville piece and see what a guy went to engineering school to do in Elkhart, Indiana.

Here’s my theory on doing business with any government entity.  They pass rules and regulations not to get anything done but to keep something from getting done.  Specifically, government employees and manager come up with the regs that they come up with to keep them from getting in trouble.  That’s all.  That engineer is filling out mounds of paper for a stimulus project for no other reason than so a government clerk somewhere can make sure that all the i’s are dotted and t’s are crossed because if that is done, then they really don’t care about the outcome.

It is this that led to the Bernie Madoff scheme.  Harry Markopolos, the man who tried to stop Madoff but couldn’t get anyone to listen to him, eventually came to the conclusion that the people running the SEC were all lawyers who neither had the math skills to understand what Madoff was doing, nor the inclination to understand.  They were merely concerned with making sure all the disclosure documents were properly filed.  Which they were.  How’d that work out?

How to drive businesses out of the US in three easy steps:

• Raise taxes
• Raise uncertainty
• Bury them with paperwork:
• “The United States, by contrast, has offered financing under the stimulus program, but the process has proved too cumbersome for the small company.”

Man, it works like a charm!

Why Isn’t Paul Otellini Being Listened to in the White House?

From CNN, via HotAir.

Paul Otellini is the current  Evil CEO of Intel, the largest computer chip maker in the world.  Intel is, by any definition, a raging American success story and is something that we have all too little of in America today.  Intel is an exporter.  As you will hear in the video at the link, 75% of their revenues are overseas.

Mr. Otellini has some strong, common-sense ideas on how to make the US a more hospitable place for companies to do business in in the long term and on how to get the damn thing back out of the ditch in the short term.  He says in the interview that he has had more meetings with Obama administration officials in the last two years than he had with anyone in the Bush administration in eight years.  The interviewer asks what more he would like to see from the administration and he answers that he would like to see them take action. 

And therein lies the problem.  The White House is full of ideologues and theorists who can talk beautifully about bullshit but don’t have the slightest idea of how to put those theories to work or even if they should be put to work.

I like the juxtaposition at HotAir of Alan Greenspan, one of the Smartest People in the World, talking out of his ass again just above Otellini making practical sense.

Why Government Shouldn’t Try to Pick Winners

Whenever the government meddles about in any given market, trying to designate its preferred winner or outcome, it invariably fails.  Right now, the Exalted One is involved in doing just this on a number of fronts; the auto industry, the energy industry, the medical industry, the financial industry and so on.  In the auto industry, The One gives us the Chevy Volt:

Not a bad looking car.  But you can get a non-hybrid counterpart from Chevy for about $25,000 less.  Chevy had more or less mothballed the Volt until the government bought 61% of them and ordered the Volt to be brought to market.  Obama, you see, knows what we want better than we know what we want.  Prediction:  neither the Volt nor its lower-cost counterpart (the Cruze?).  See, that’s how I know it won’t sell.  I can’t even remember the name of the car.  But, because O wants to see “green” stuff (let alone the fact that there isn’t anything significantly more green about the Volt), the Volt gets built.  It’s suits his political purposes.  Sometime in November, O is going to force GM to go public and it has little to do with whether or not it makes good business sense.  It will happen because it suits O’s political purposes.

For decades, government has mucked about in the housing industry.  Mortgage interest deductions, Fannie and Freddie doing their thing with the sub-prime stuff, flood insurance and so on.  Here is proof that all this centralized planning (and that is what it is) has failed.  18 months and billions of dollars and the Moron in Chief still thinks that throwing another $50 billion or so at the economy will somehow magically cure it.  Here is an open letter to the President by Dr. Jeffrey Harding, an economics blogger that tells him exactly what the problems are and how to address them.  The blogger is right on every point.  (BTW, any time you read an econ blog you must read the accompanying comments.  They are frequently better and more informative than the original post.)  From ZeroHedge:

“Here are some guiding principles for "what works":

1. Economies can repair themselves without a lot of government help. History has proven this time and again.
2. Government interference in the repair process can hinder recovery or even make things worse.
3. Government spending is very inefficient.
4. Individuals can make better choices about what to do with their money than the government.
5. Economic growth only comes from private enterprise. The corollary of this is that government can only spend money, not make money.
6. Since government produces nothing, then real growth and real jobs can only come from private enterprise.
7. If government spending is inefficient and if economic growth comes only from the private sector, then taking vast amounts of money out of private hands and putting it into government hands will hinder growth.
8. Government spending to revive an economy has failed wherever and whenever it has been tried.
9. More legislation increases uncertainty for businesses, making them reluctant to expand (called "regime uncertainty" in economic terms).”

As noted in the comments, this viewpoint and the accompanying advice will be ignored.  It doesn’t fit with O’s worldview.

This just in and related to this post.  Austan Goolsbee is on the Prez’s Council of Economic Advisers and may be up next to replace the horribly inept Christina Romer.  This admittedly wonky piece basically sums up what I have been trying to say here.  So-called “targeted” spending or incentives don’t work, and Goolsbee based his doctoral thesis on this finding.  Now, he has to dance around his own work.  Should be fun.

Finally, here is what happens when a politician goes off the deep end when it comes to spending money based on his own preferences.  Learn about Russia’s Chess City, built in 1998 on the whim of a politician.  Why, he likes chess so everybody must like chess just as much! 

Chess City is crumbling, by the way, and largely uninhabited.  So, what color Volt are you gonna buy?

Maoist Fashion [UPDATED]

 

This is too easy, sometimes.  Here is a photo of White House Senior Advisor Valerie Jarrett that landed in my inbox this morning from Politico. (article here)  Is that a Mao jacket she is wearing?

 

Pretty close.  Here is the original:

 

Does anybody really know what Jarrett does?  Her title is Senior Advisor.  So, what is her area of expertise?  I know she’s President Obama’s best buddy, blah, blah, blah.  But what, exactly, is she good at?  Military affairs?  Economic matters?  Education?  Union relations?  O originally wanted her to be in his cabinet (Can’t remember what for.  Health and Human Services?), but that didn’t fly so now she is in the kitchen cabinet.

Read the opening two paragraphs from the Politico piece:

“White House senior adviser Valerie Jarrett vowed that President Barack Obama will keep up his aggressive outreach to the business community, even as the president steps up his attacks against irresponsible players on Wall Street and in the insurance industry.

“Business is really not a partisan issue,” Jarrett said in an interview for POLITICO’s new video series, “Inside Obama’s Washington.” “What I hear from the business community all the time is that they want a strong economy. That’s a goal that the president shares. They want to create the kind of environment in this country where they feel secure about investing and building for the future, and that’s completely consistent with the president’s objective to create jobs.”

Read more: http://www.politico.com/news/stories/0110/31805.html#ixzz0djCXQhqf “

President Obama is making an “aggressive outreach” to the business community?  He disparages business at every opportunity.  A recent poll showed that 77% of investors view him as anti-business.  He wants “to create the kind of environment in this country where they feel secure about investing and building for the future, and that’s completely consistent with the president’s objective to create jobs.”?  Really?  Really, Valerie?  OK, let me help you.  This afternoon, have the President make the following announcement.  He will probably need the teleprompter so he doesn’t choke on the words:

“In view of the continued economic strains the country is under, I have decided to suspend pursuit of health care reform.  Also, I will be putting on hold any further discussion on the cap and trade bill.  I recognize that businesses view these initiatives as additional costs and until we determine that businesses can absorb these additional costs, we will halt our efforts.”

His all-important popularity will soar, markets will rise and businesses will pick up the pace.  Try it, Valerie, you’ll like it.

UPDATE:  So I went back to trash the article out of my inbox and got another look at the headline that came in with the picture and it struck me as funny to see that picture of Jarrett with this headline:

 

Mao nationalized private business in China. She wants us to believe that she, and Obama, understand how to support business.  My ass.

Country Poised to Prosper in 2010

 

Tax cuts, particularly for businesses, rolling out this year are expected to give dramatic boost to the economy.

Great news, if you live in Germany.

I love to see real world examples of economic theory.  We’ve all been part of a huge demonstration of the forces of supply and demand since Hurricane Katrina as the price of oil and gas has gyrated up and down the spectrum.  People bitch and moan about the price for a gallon of gas and I, being the weirdo I am, study them and try to suss out their decision process.

If you will recall, right after Katrina, the gas pipelines that supplied us here in North Carolina were shut down.  Immediately, the price went from about $1.80 or so to as much as $5 in some places.  I had filled up the day before because I had to drive to Burlington in the morning, about 90 minutes away.  Gas that morning as I left town was still about $1.80.  When I rolled into Burlington, prices were up around $4.50.  I switched to a news channel on the radio and heard what was going on and immediately pulled in to the nearest gas station to top off.  (Of course, they were telling everyone not to do that, but I drove for a living then and some places were already out of gas, so I couldn’t risk not having gas.)  The gas station was no busier than it ever was and that was what was so interesting to me.  People either didn’t need gas or were so shocked by the increase that they muttered to themselves about getting ripped off and drove on in search of cheaper gas.  The latter point was proven to me as I was filling up.  A little ol’ blue haired lady pulled in behind me.  She sat up so she could see over the car door and I watched her study the price on 3 or 4 pumps as she looked for a lower price, each time shaking her head.  Eventually, she left the station.  She didn’t understand that we were not in a position to shop for cheap gas, we had to worry more about getting gas at all.

Which brings me to an observation that I have made and it is that we, as a country, have lost our survival instinct.  We are so cosseted, so far from having to make decisions about food, water and shelter (and transportation) that we cannot even recognize when one of those things is about to disappear.  Because these things are so easy to come by in America, we do not really get too agitated when our property is threatened.  Kind of like it is now by our congress.  Yes, people are pissed off and we are all supposedly poised to vote the bums out.  The town halls of last August were a thing of beauty.  This is a thing of beauty:

But in the end, we have to take action.  Obama and the congressional Democrats are clearly ignoring us.  They seem the think that they are only there to represent the nutroots and not the whole country.  We must keep the pressure on them, we must be unrelenting.  We cannot take our eyes off of them, not for one minute, because they will duck into a smoke filled room and pull off some shit.  They’re doing it right now on health care.  They’ll pay at the polls next time around, but we have to make them pay every day between now and then.  Write them, email them, call them.  Do not back down.

Back to Germany.  The critics there are going after Angela Merkel, as could be predicted.  Merkel has cut individual taxes, among other things, though not by a whole lot.  I am not conversant with the German economy, so do not know if they are in as bad a way as we are.  I assume so, since the whole world is pretty much in the shitter right now.  But this is a perfect chance to see the theories of Hayek and Friedman played out against the theories of Keynes.

I wish we were getting the Hayek/Friedman treatment.  Germany will recover quicker than we will.  Just watch.

Wanna Know Why the Economy Is Still In the Ditch?

Robert J. Samuelson, writing in the Washington Post nails it in the last paragraph of today’s column (emphasis is mine):

 

Obama can't be fairly blamed for most job losses, which stemmed from a crisis predating his election. But he has made a bad situation somewhat worse. His unwillingness to advance trade agreements (notably, with Colombia and South Korea) has hurt exports. The hostility to oil and gas drilling penalizes one source of domestic investment spending. More important, the decision to press controversial proposals (health care, climate change) was bound to increase uncertainty and undermine confidence. Some firms are postponing spending projects "until there is more clarity," Zandi notes. Others are put off by anti-business rhetoric. The recovery's vigor will determine whether unemployment declines rapidly or stays stubbornly high, and the recovery's vigor depends heavily on private business. Obama declines to recognize conflicts among goals. Choices were made -- and jobs weren't always Job One.

 

If you are not familiar with Samuelson, you should read him.  He is always clear, concise and accurate in his economic assessments.  He shows little if any bias, staking his positions based on solid data, not opinion.

So today, we have President Obama hosting a “jobs summit”.  This is a Potemkin village of a summit, put together for show.  He has already said that nothing will happen in the area of job creation until next year.  Of course not, Mr. President.  Because you waited until December to think about the issue.  This incredible prioritizing of issues will cost him re-election more than any other of his actions.  Somehow, it was more important to prop GM up, dive into health care, play with cap and trade, diddle around with bringing the Olympics to Chicago and pass a $787 billion porkulus bill that nobody can figure out exactly how many jobs it has “saved or created”>

OK, I’ve called him out on this clusterfuck he has made of things.  Here is how I think he should have prioritized things from the time that he took office:

• 1.  Address Afghanistan
• 1a. Take over and sell off the big zombie banks.  Get the bad stuff out so that the good stuff can grow.We’ve spent trillions in porkulus, bailouts and so forth.  $1.9 trillion is pretty close to the number, I believe, without trying to chase down the correct number.  Adjust that to $1.5 trillion to be conservative.  Instead of using that money to prop up banks and crappy car companies, buy up the bad assets of those companies and then sell them off, over time, for whatever they can get.  This, of course, is what TARP was supposed to be for in the first place.  This economy is languishing now because nobody knows what to do with all those empty houses and full car lots.  If the bad actors (GM, Lehman, etc.) go out of business, well, then too bad.  Obama has socialized the loss.  Bullshit.
• 1aa. Cut taxes, especially business taxes.  Right now, an estimated $13 trillion in corporate profits is held offshore in order to avoid the 35% tax rate that companies would have to pay if they brought that money home.  That money could have been repatriated with the stroke of a pen by signing a tax amnesty bill that would either eliminate that 35% or reducing it to some much lower lever.  Instead, we went and borrowed trillions when we could have had just as much capital brought in for zero cost.  No interest at all and even gain some tax revenue if that rate were lowered to say, 15%.  This was proposed by a Texas Congressman, but since he had an R next to his name, it wasn’t considered.
• 2.  Go collect undeserved nobel peace prize*, because those assholes were gonna give it to him no matter what he did. 

Had he done this, he would have utterly disabled the Republican party by co-opting their notions for running the country.  And he would have won over a large part of the Republican base in so doing.  And, oh yeah, he would have saved the country a Depression.

*Never capitalized here.

UPDATE:  He’s having this summit without his critics, otherwise known as people who might have some better ideas.  Jeez.  Somebody needs to remind him of how the Hegelian dialectic works.

How to Fix Healthcare With a Healthy Dose of Capitalism

A personal story:  Back in about 2002, my now ex-wife and I were both out of work and thus out of health insurance.  She developed bursitis in her shoulder, a problem that she had had once many years before.  She lived with it for a while, but eventually she couldn’t bear the pain any longer and needed medical attention.  She knew from her previous experience that a cortisone shot would clear it right up, so I set about finding a doctor that would do the job for a reasonable charge.

I started calling doctors in our little town and the story was pretty much the same from all of them; $200 deposit, x-rays, treatment, office charge, etc.  Most of them could not readily give me a price; they didn’t know it but eventually I got numbers and they all came in between $800 and $1000.  All we wanted was the cortisone shot; she knew what was wrong and what would fix it.  We didn’t want x-rays or any of the other crap they were all talking about.

Finally, I found a doctor (and actually got to speak directly to him!), explained our situation and what we needed and he agreed to give her the cortisone for $120.
That is how markets work; a buyer shops for what they need and finds it at a price that is suitable and the deal is done.  In one hour on the phone, I knocked the price down by hundred’s of dollars.  Think what would happen if we all did that every time we needed medical attention.

She got the shot and in short order was as good as new.  Pretty damn simple, if the assholes in Washington would just get out of the way and let it happen.

What To Do If You Are Attacked by a Great White Shark

First, karate-chop the hell out them and then flip them on their back.  Nothing to it.

From article at Daily Mail UK Online

The Press, and Maybe the Left, Are Starting to Have Their Doubts

 

Op-ed piece at Politico here, my comments there are reprinted below.

This is what denial looks like, in print:

"Certain things are not his fault: the unprecedented truculence of the Republican Party, scared silly by right-wing ranters on cable television; the unholy economic and foreign-policy mess that he inherited; the fact that he never had, as so many liberal commentators asserted, the 60 (or 58 or 59) Senate votes that would enable him to get what he wanted from the Congress. It’s not his fault that unemployment rates remain stubbornly high following a traumatic recession."

The Republican truculence is due to the offering by the President of plans and programs that are so antithetical to basic common sense as to make normal people incredulous. Economy crashing? Let's have a stimulus program that in reality is standard political patronage for getting him elected. Jobs slow to recover? Let's pass a health care bill that heaps even more cost to hire someone onto businesses. Gotta make a decision on a war where Americans are fighting and dying? Do it in March and then dither about it for months. GM dying? Let's step in and abrogate centuries of bankruptcy law by pushing secured creditors to the back of the line. Make a public statement that he is open to any good ideas then meet with the opposition and tell them to pound sand because, "I won".  His trip to Copenhagen to try to secure the Olympics for Chicago is one of the dumbest, most openly provincial acts I've ever seen a President undertake. He had absolutely nothing to gain by doing that and much to lose.

And yes, it is his fault that unemployment rates remain so high. He has taken a minimalist, philosophical approach to a real world problem. We needed liquidity in the financial markets and his solution was to borrow more money and redistribute it to large banks. A better solution would have been to offer an immediate tax amnesty for companies and individuals that hold money overseas to avoid our confiscatory tax rates, estimated to be as much as $13 trillion. Offer amnesty and that money comes home and is rapidly injected into the economy. (This idea was proposed by a Texas congressman, whose name escapes me. It was ignored because he is a Republican and because it was a good idea.) Instead, he dithers, mulling over various ways to seize or tax any few dollars that are laying around. He seems to thing that leading consists of making a speech and then handing the details over to Congress to work out, essentially throwing a giant pile of money into a pack of ravening hobos to fight over.

So, Ms. Drew, go back to the Washington salons and dinner parties and tell the people there that they helped to elect the most popular professor on campus, a brittle personality with much hubris and little accomplishment, not a man who was even remotely qualified to be President of the United States.

GM Offers Discounts to Members of the National Community Action Foundation—You Know, Community Organizers

Government at work, picking and choosing its favored constituencies.  The left sees nothing wrong with this, the choosing of what they see as preferred parties to receive benefits.  Such actions are evident in everything that government does, particularly at the federal level and inevitably leads to market failures.

You know, like what happened with Fannie Mae and the whole loaning-money-to-unworthy-borrowers-thereby-causing-the-near-total-collapse-of-the-world-economy thing.

One of two things has happened here; either this incentive came down to GM from their New Boss, pictured here in his customary looking-down-his-nose pose:

Or, GM took it upon themselves to attempt to curry favor with The One.  Supplication to the gods, as it were.  Either way, it is politics-driven, not market driven and that is a problem.

More such shenanigans reported here by NRO.  Any chance that GM had to survive was doomed the minute it took government money.  They were probably going to go bankrupt soon anyway, now they will die the death of a thousand cuts, inflicted by politicians as they slice it up for their own ends.

It’s in Their Nature…

…Democrats, that is.  Specifically, Hilary Clinton.  She doesn’t think the Pakistanis are taxing their people enough.  She seems to forget that most of them are probably subsistence farmers.  At least, the ones who aren’t dug in with an AK-47 and a pile of loaded clips easily at hand.

I’m starting to wonder when the Dems are going to simply propose to hire everybody in the country to be on the government payroll.  That way, they can pay us and tax everything we earn and then just hold on to the money.  Throw us a FEMA trailer and some government cheese to live on.  I hope the Pakistanis toss her the hell out. Oh, wait---they DID tell her to go pound sand.  And heaped a “sharp rebuke” or two on top of that.  I love when that happens.

Seriously, sending an overly bossy woman over to that part of the world who then takes it on herself to tell them what to do as far as taxation and their Israeli policies is just asking for a sharp rebuke. right in the ass.

The Smartest People in the World

God save us from these smart people.  They would tell you that they mitigated their loss and that they did a great job keeping it to only $500 million or as their CFO was quoted,  "In evaluating our liquidity position, we wanted to get some stability and some safety."  Which is the over-diploma'ed way of saying, "Jesus H. Christ, we can't pay the bills if we get tagged for this!  Quick, buy our way the hell out of the deal!"

Herd mentality took them into the swaps in the first place as the article points out that Yale and Georgetown, among others, also got caught.

These smart people are running our financial markets, our government, our media and most of our businesses.  Smart is useless if it is not coupled with both common sense and integrity; without those two things it leads us to where we are now.

And now for some full grown bastards.....

Just announced; the Dems have cleared the way to pass the health care bill via budget reconciliation.  In other words, after a summer of shouting at them and telling them we don't want it, they are going to ram it down our throats anyway.  This is not the way that a representative democracy is supposed to work.  The bastards work for us, not for themselves.

More Smart Diplomacy

If our diplomacy gets any smarter, we're gonna have global thermonuclear war.

Supposedly, the Russkies never believed that we could pull off SDI, or the "Star Wars" defense.  So why have they always been so adamant that we stop developing/deploying it?

Because they know we can do it and they can't.

Man, I love me some smart diplomacy!

Well done, Ms. Secretary.  We all feel much safer now.

Ms. Secretary, you have him eating out of the palm of your pudgy little hand.

Any day now, the Norks will hand over the keys to their enrichment facilities.  The Iranians, too.

The smartest woman in the world, hard at work for all of us.