Just because I'm paranoid...

...that doesn't mean everyone isn't out to get me.

Please please read this article about Congress (with White House backing) is looking to regulate employee salaries for every company that received federal "bail out" money. This would all be retroactive, which makes you wonder whether companies would have been as willing to take federal money instead of just fighting through and possibly restructuring in bankruptcy.

Be vawey vawey quiet. I'm hunting capitawists!

Making Sense of Obama & Autos

Obama's appointment of economist (and UMD professor) Edward Montgomery to a position of uncertain title and scope makes clear who is in charge of the Auto Bail-out and why things are playing out how they are. Why isn't Obama simply encouraging (or even simply allowing) these failing auto companies to restructure under Chapter 11 bankruptcy? Because that would require the rewriting of UAW contracts, the renegotiation of pension plans, and restructuring of corporate/labor relations, which would all hurt Obama's labor base.

Professor Montgomery has been tasked with "aiding" the communities affected by the auto companies' troubles, but that may not be all: "[S]ome auto industry experts predicted Montgomery would also wield influence in the boardrooms of General Motors and Chrysler. 'I think he's been given a very broad agenda that will not get narrower but only broader,' said Gary Chaison, professor of industrial relations at Clark University in Worcester, Mass."

Why is this a problem? Well let's look at Montgomery's past experience that would make him suitable for weilding influence in corporate boardrooms: "University of Maryland economist Edward Montgomery has plenty of real-world experience, including a role in ending a Teamsters strike against UPS in 1997 while at the U.S. Department of Labor. He also has served as the No. 2 official at Labor with oversight of about 17,000 employees." This guy is union, which is the last thing these companies need. Obama wants these companies to be worker focused. That sounds a lot like "Comma-nism" to me.

Lincoln Day Dinner & Young Republicans

There is a saying that you've probably all heard which is "If you are under 40 and aren't a democrat you have no heart. If you are over 40 and not a republican you have no brain." I think the saying is simplistic and biased, BUT if you want to help some heartless young conservatives, please read on.

The Howard County Lincoln Day Dinner (LDD) is April 17th. The keynote speaker is Bob Ehlrich. The tickets are $100 a piece, which is reasonable for the stereotypical GOP demographic, but expensive for any young Republican looking to network and contribute to the cause. The Howard County GOP wants to get as many high schoolers to the dinner as possible, but the $100 ticket as a bit of a hinderence. A friend of the blog, Scott Block, is currently working with Karen Winterling, Vice President of Howard County Republican Club, to find local businesses who would like to help sponsor tickets for our younger constituents.

It is my own personal belief that the younger generation of conservatives will be the brains behind the next great conservative movement. This is easy for me to say as I am in my 20's as well. It is so very important that we try to include as many of these students as possible to expand our base of ideas and actions. If you have the means to help, please e-mail Scott at scott.r.block@gmail.com or leave a comment post.

Capitalism's Conversation with the President

Hey President Obama, how's it going? You know I'm calling because I heard things are going down with GM and Chrysler and I just wanted to make sure we still had that free market capitalism thing going...

what's free market capitalism? Really?...

Ok well free market capitalism is what helped make the United States the most successful country in the world with 18% of the world's GDP. It requires market oversight with minimal tinkering by the government. The concern is that the government may redirect resources in directions that are against the flow of economics. It would be like the government saying we had to make 2 million hybrids when people couldn't afford them...

You're saying that everything is ok and that you're not replacing me. That's great. Like I said the reason I called is that my friend the Press was bragging about how you sacked a duly appointed CEO of GM without the consent of the Board AND that you are requiring Chrysler to restructure their company or be taken to the woodshed. That just sounds...off. I can promise you that I am pretty ruthless when my associates get out of line. I wanted to dole out some punishment on a number of bad actors over the past year (including labor unions that are making American businesses untenable), but you government types keep telling me that you had it under control...

Right, politics of change. I know I know. But if we could stop the pretty talk for a second, I'd like to make sure I'm still going to have a job around here. You say you aren't "running GM", but I can't see any other way to put what you did today...

You need to go...ok, you've got the Daily Show appearance tonight. Right. Ok well I'm just going to go back to sitting on the sidelines for a while. Just remember your promise to let me back in the ring...sooner or later.

Driver's Permit Bill Fails

Maryland is one of four states that allows illegal immigrants to have drivers permits and identification cards. That should have been the first line of this article. Unwilling to back down from what is an unworkable permit regime, House Democrats attempted to grandfather in those that had already obtained permits and allow them to renew indefinitely without showing proof of legal residence. In a time when immigration is down due to the troubled economy, the immediate impact of such a neutered law would be negligible.

Republicans are painted as bigots in their opposition to illegal immigration, but with unshaded eyes it is clear to see the Democrats as the paternalistic racists. The "racism of low expectations" applies here when law makers somehow believe that people of a certain culture cannot use the proper means of legal immigration. I refuse to accept this and I think any citizen that gives the issue due consideration would reject it as well.

Universal Healthcare is Great if Don't Need It

Mitt Romney's promise as a Presidential candidate was heavily based in the statewide health care initiative he had run in Massachusetts, affectionately referred to as "Romney-Care". Showing that the basic fundamentals of economics will not politely wait for political capital to run its course, that system is now faltering.

It is a credit to the news networks that people aren't terrified of government run health care. The government took over our national education system, and now we have kids who are proficient in standardized tests, but lack critical thinking and science skills. The only city that the government runs is the Murder Capital of the United States.

When regular market incentives are removed from a system that depends on them, things fall apart. I heard an excerpt from Obama's Internet presser yesterday where he said "Surgeons will no longer be paid based on how many surgeries they do, but on the outcomes of those surgeries." That sounds nice, but what if there is a surgery that has a 20% chance of saving my life, a 20% chance of having no effect, and a 60% chance of killing me out-right (this surgery appears quite often in Grey's Anatomy, so I will have to assume that such operations exist). If I want to take that 20% chance, Obama-care will incentivize the doctor to refuse! Not only that, but my opportunity for second opinions, rare medical procedures, and the like will evaporate.

A medical market (as harsh as that phrase sounds) will be worried about outcomes, but will also allow patients more options in how they would like their care to progress. The patient is in charge, not the government.

Commentary Submission

Slow morning for me. I worked on this last night and submitted it to the Sun this morning. Let me know what you think:

My mother never let me use the inflatable pool-wear known as “floaties” when I was little. There was a family story about one of my cousins who, after becoming accustomed to having floaties on all the time, jumped into a pool and almost drowned before my grandfather dived in and pulled him out of the water. As a young child, this rule bothered me. While the other children were splashing around in the pool having fun, I had to learn to swim. But as I became older, and the time for floaties had passed, I saw many of these same children continue to splash around the water, no longer out of joy, but in an attempt to stay afloat. These children grew up to hate the pool and never learned to swim.

How often does our government try to make us feel safe and “taken care of”? Our politicians tell us that we shouldn’t have to suffer through difficult times in order to achieve success, while at the same time we are told that the successful have too much. The government grows and we are told it is for our own benefit. A federal government for the people, by the people becomes so large that the populace that is supposed to be running it no longer understands how it works.
I write this editorial a day after Maryland’s 375th birthday. Our state is on the precipice of a dangerous level of dependence founded in a $3 billion federal stimulus that will run out in two years. The state legislature has allowed this money to become a cornerstone of the state budget without a plan for when this stream dries up. The proud “Border State” that has historically set itself out as independent from the power centers to our southwest is putting on floaties.

Our private sector was the first to mass produce the automobile. The United States economy in 2008 produced 18% of the world’s GDP, yet had only 4.5% of the world’s population. We are now told by the Secretary of the Treasury that our system is “fundamentally” flawed and that the power our government holds over our corporations needs to be expanded. An economic catastrophe that had public and private actors alike has now been painted as a purely private evil. Our proud history of economic excellence is being shackled with government floaties.

We as individuals are the frontier of this expansion. The choices will become stark in the coming years as political “soma” is offered in exchange for independence on issues as large as our medical treatment and small as the regulation of your bedside light switch. The hard roads to success will be discounted in favor of the easy road to mediocrity. These changes will be incremental, but our expanded government will be just as the Florida commercial suggests: “Easy to get there, hard to leave.”
In a time when the line between private and public enterprise has become hazy, I hope that we as a people can have an honest discourse about the role we want the government to play in our lives. Are we being taught that swimming is unnecessary? Are we being conditioned to hate the pool? But most importantly, are we still in charge?

I am concerned...

I can't find any Obamaphiles to tell me why the administration is making the right moves with respect to the budget and the PPIP. I can only conclude that one of two things has happened:
1) It is no longer cool to love Obama
2) The Rapture is taking place and all the "good" people have been taken

In all seriousness, I want a debate. All of you that read this, please forward my blog to someone who may disagree with the views espoused herein. And please leave a comment.

Fixed Game of Economic Roulette

I know I joked about it before, but more and more I am thinking that the PPIP is just a springboard for the nationalization of the banking system. Obama's budget out paces revenue by trillions of dollars, yet provides no evidence that any level of recovery could meet these obligations. If the administration nationalized banks, there would be a whole new stream of revenue from what in 2006 was a multi-trillion dollar industry. Even in the downturn the banking industry made almost a trillion dollars in revenue alone!

I've concluded that there is no way the PPIP can succeed in rescuing the banks from their bad assets. First, an auction in a bad economy is only good for establishing when something is worthless. Second, banks will only be attempting to sell assets that they believe to be worthless (or near worthless). Third, the political ramifications of some of these investments falling through and having the FDIC pay out will be enough for Obama to throw up his hands, say "I tried my best", and end the private banking system as we know it.

Here's a great article on what SHOULD have happened to AIG, which would have kept the Government's unwashed hands out of the market's vital organs.

Rahm Emanuel's Politics of Change

The Chicago Tribune reports that Rahm Emanuel's involvement with Freddie Mac during the subprime build up earning him "at least $320,000", was less than benign. The concern here is not that he earned a lot of money. The concern is that this is a continuation of shady backgrounds for Obama decision makers.

Tell me Rahm Emanuel doesn't look like a bad guy from a Bruce Willis movie. The guy creeps me out and this is the hombre that is shaking people down for political favors and doing Obama's "dirty work". I'm not sure they get much more slimy than this.

Mark to Market

You may have heard the term "Mark to Market" thrown about in reference to the subprime mortgage mess. I am not above citing to wikipedia to help you understand what that means. To break it down a little, the SEC required banks to value their assets according to the fair market value, which included mortgage-backed securities. This allowed bank/bank asset investors to see the "true" value of the banks/assets, rather than the set value of the securities at time of purchase or creation. Once the market became distressed, the banks were left holding the ball which made their balance sheets appear insolvent (whether they are in fact insolvent has been debated non-stop for the past 5 months). Banks were forced to sell these assets to maintain cash flow and due to the regulation were forced to sell at tremendous losses. The issue gets further complicated from here, but ironically enough this was one circumstance where actors were over-regulated and were forced to make a bad economic choice (i.e., not capitalism).

Mark to Market rules are being reviewed, but much of the damage has been done. On March 10, 2009, In remarks made in the Council on Foreign Relations in Washington, Federal Reserve Chairman Ben Bernanke said, "We should review regulatory policies and accounting rules to ensure that they do not induce excessive (swings in the financial system and economy)". Great, but who's going to tell Humpty Dumpty's wife?

UPDATE: Further analysis from a fellow Howard County blogger.

Blame America First

Secretary of State Clinton has concluded after less than 50 days in office that Mexico's civil strife is America's fault. I'm not exaggerating. Click the link. I'll wait...

If that did not make you angry, I will presume you are either 1) Mexican or 2) Blind without the means of a braille computer, for which I applaud your ability to find this blog.

It is not that far of a stretch for Hillary to blame Arab extremism on US oil demand, human trafficking on US prostitution, or global hunger on farm subsidies (the latter of which I can get on board with). I will leave the convenient "What is she smoking" as a given. But really, what hot box did she ride in on her way to Me-he-co?

And what diplomatic purpose did this serve? Now she has enabled Mexican politicians to blame the crumbling of their country's government on the United States! This will further enable corrupt politicians and law enforcement officers that are rampant throughout the country.

Get Out Your Foil Hats

Conspiracy ALERT. Evidently not only Rush Limbaugh wants Obama to fail. Obama wants Obama to fail!

When In Rome...

I've made it very clear that I am against the PPIP. I think it is misguided and seems like a last ditch attempt that is coming before a long line of more viable options. However, I also think that I would be incomplete in my review of this plan if I didn't include information on how to get on board the (as of now) hypothetical investment. So here is one financial blog's attempt at boarding the plane.

A couple things to consider:
1) Banks will be selling their worst "legacy" loans/securities. The way the program is structured, a bank is most likely to take a loss on the auction. Therefore whatever they suggest the value of the asset as would not be what they value the asset to be.
2) Ask AIG: the Gub-ment is a fickle friend.
3) Although the risk is small for the private actor, so is an investment in the lottery. It doesn't mean you're not throwing good money away.

Funny Stuff

Check it out. The blog was started earlier this week and is great...until it is silenced.

Treasury Expresses Confidence in Dollar's Success

Secretary Geithner evidently wasn't watching the press conference last night when Obama stated that he was not interested in finding a replacement global currency for the dollar. At the Council of Foreign Relations today, Geithner expressed openness to the proposal by "the governor of the China's central bank, which was widely reported as being a call for a new global currency to replace the dollar, but which Geithner described as more modest and 'evolutionary.'" Still wearing his philosopher hat, Geithner suggested that the "continued use of the dollar as a reserve currency...'depends..on how effective we are in the United States...at getting our fiscal system back to the point where people judge it as sustainable over time.'"

The pilot of our airplane just said that our ability to survive the flight depends on his ability to not crash. Is this what you want to hear? The article concludes with

Evidently sensing a gaffe, moderator Roger Altman told Geithner that it would be "useful" to return to the question, and asked if he foresaw a change in the dollar's centrality.

"I do not," Geithner said, adding several forceful promises, including, "We will do what's necessary to say we're sustaining confidence in our financial markets."

I'm done with this joker. What made us think a guy that couldn't complete his tax forms correctly could successfully draft rehabilitative economic programs and maintain the United States as an economic standard around the world? If he wants to work with hypotheticals he should go back to school.

PPIP Protestors Gain a Nobel Prize Winner

"The U.S. government plan to rid banks of toxic assets will rob American taxpayers by exposing them to too much risk and is unlikely to work as long as the economy remains weak, Nobel Prize-winning economist Joseph Stiglitz said on Tuesday."

The excuse will be "we need to do something". An incentivized structure for investment can be created that will meet the dual goals of providing access to private citizens and limit the potential risk for taxpayers, both of which are not included in the current plan (as one of my Texan friends told me "This plan ain't for us bud").

My suggestion would be to use the tax code to make invested capital tax deductible and potential profits tax free. The only risk to taxpayers is losing potential revenue. It would provide a tax shelter for those in the "targeted incomes" of $250,000 and up. Risk would be be born by the investor, not the government. If anything, a buy back provision could be instituted (similar to Warren Buffet's deal with Constellation) where the risk could be shared with the selling banks.

We also need to get rid of these Fund Managers that have blood on their hands. Investment paper should be drafted and issued via the Treasury department as a go between from the banks to the people. These public servants will have no incentives other than a clean process.

As I repeat over and over again, I'm no economist. For all I know, my suggestions may be impractical. All I know is that me and Mr. Stiglitz are picking up our marbles and going home. This plan won't work.

TARP Candidate Withdraws

Using the "I-think-I-left-my-garage-door-open" excuse, Frank Brosens, a hedge-fund manager and big Democratic donor, withdrew his name from consideration to run the $700 billion bailout program. Mr. Brosens said

[H]e withdrew his name for personal reasons, including wanting to remain at his hedge fund, Taconic Capital Advisors. "I very much wanted to find a way to serve," he said. Among the reasons he cited for withdrawing was the need to commute between Washington and New York, where his son is in school.

For his replacement, Geithner is reported to be considering the current head (since 9/08) of Fannie Mae Herb Allison. Barney Frank is "Fwabbergasted."

Review of Obama's Presser & Recommended Reading

Up until this point, I have referred to the President as "President Obama". I've done this out of respect for the position and for our Commander in Chief. I've also tried my best to use this semantic tool to keep myself from the ad hominem attacks that bring political discourse into the muck. While hoping to stay true to the latter, I'm not going to waste my time saying "President Obama" if our own President is comfortable saying "Bush" when referring to his predecessor, using only the proper title of "Nothing-is-my-fault-because-of".

Today the papers are referring to last night's press conference as "boring", but I'd suggest that it was "shocking". It was shocking that in a one hour press conference that so little was said about the many flaws of the PPIP discussed in my earlier posts, most notably the fact that it is going to be run by the jerks that messed up our sand castle in the first place. Obama is filling the role of magician's distraction, waving his hand and showing us that there is nothing up his sleeve, while his right hand (Geithner) is constructing a financial megastructure that is systemically fused to the core of our economy. Last night, in what my fiancee described as a woman who didn't have a question until she was called on, Obama was asked what role race had played in his first 60 days. Obama correctly gave a "you crazy, woman?" response by saying "I've just been focusing on the economy and how to get us out of this mess."

I'm not a conspiracy theorist. I don't buy into the "Obama Youth" concerns and actually see them as a distraction from what we really need to be worried about. Watch the money. Ask why a newspaper will spend more ink on Obama's nowruz greeting than breaking down a plan that may fundamentally change our economy. What is going on?

Smaller Matters:

AIG employees from the FP division that caused the mess were gone at the time of the bonuses, which probably explains this.

Senator Cardin wants non-profit newspapers. Such newspapers would no longer be allowed to make political endorsements, but I would be concerned at how this may play out in a medium that is "speaking" all the time.

Since they've done such a bang up job so far, I don't think anyone should be excited about the latest power grab by Geithner and Bernanke. What is really fascinating is how the enforcement of contracts has been used as the basis for larger government regulation. There are multiple means of controvening contracts that should be tried before the government seizes a company. That is like Baby Huey trying to play Operation and then smashing the machine after it buzzes at him too many times.

You may have heard the dumb reporter asking the President a hypothetical question (probably covered in Day one of journalism school) about him signing a budget without the cap and trade provision and the middle class tax cut. Senate Budget Committee Chairman Kent Conrad is the guy spitting in Obama's Cheerios.

Canada is scurred.

President Obama's E-ran Problem

Last week, President Obama wished the majority Persian nation of Iran a happy new year (Nowruz). This was seen (by the media and the Obama Administration) as the beginning of a dialogue that will lead to long-lasting peace. Unfortunately, as this briefing from Stratfor indicates, a final resolution of Iranian-US relations that will extinguish Iran's efforts to become a nuclear power will be incredibly difficult and will require the United States to help establish Iran as a regional power.

A few points:
1) Iran will never stop its "meddling" in Iraq, an ancient regional rival that has presented the only real hurdle towards Iranian hegemony in the region.
2) The removal of sanctions is not a real carrot when China and Russia are providing Iran everything it needs.
3) The establishment of Iran as a regional super-power on par with Saudi Arabia would severly threaten US security at a level far beyond the threat of a nuclear Iran.

Public Private Investment Program Review (Part Two)

Here's where it gets complicated. I've reviewed the PPIP investment in "legacy"/toxic mortgages below. This entry will review Legacy Securities, which are those derivatives of the bad loans that were chopped into small pieces, mixed in with baking soda, and sold as financial crack (Copyright 2009). Public financing for this side of the program will be from the Federal Reserve and Treasury through the Term Asset-Backed Securities Loan Facility ("TALF")...(if you are getting the feeling that this is a shell game, you are not alone). TALF will provide the debt financing for the purchase of these securities and will be available to private investors regardless of whether they are purchasing via the PPIP. Basically, as opposed to the objectively safer investment of Legacy Loans, private investors can fly solo on these investments. The problem that I hope to get to later is that in such a circumstance the taxpayers would have the risk without any potential for profit.

The White Paper makes a slight reference to how jacked these securities are by describing them as "tied to residential real estate, commercial real estate, and consumer credit". They are kind of like getting a goodie bag at a dentist's kid's birthday party. You know you aren't getting candy, but you hope you got a toy instead of an apple. Also, TALF loans are non-recourse loans meaning that investors can walk away from these loans if it becomes a bad investment and only lose whatever collateral was put up for the loan, namely the toxic security that nobody wants anyway.

Treasury plays a little trick here by stating that these securities were previously rated "AAA". That is true, but it was under a fradulent rating system that had these notes rated based on the idea that, extending my metaphor, at least one of the goodie bags would have a toy instead of an apple. If you still think Treasury is being 100% with us, I'd like you to go to page 4 of the White Paper and tell me what the following statement means: "Haircuts will be determined at a later date and will reflect the riskiness of the assets provided as collateral." Thanks Tim, but why don't we get back to talking about the financial plan and I'll worry about my grooming later. This out of context statement is the first sentence in a litany of "yet to be determined" areas of the plan that will "informed by discussions with market participants."

If I haven't disturbed you enough, it is about to get worse. In the prosecution of this plan, private investment managers will have the opportunity to apply for qualification as a Fund Manager. Now what would qualify someone for dealing with these messy securities that can be placed as one of the many root causes for this disaster?

Applicants will be pre-qualified based upon criteria
that are expected to include a demonstrable historical track record in the targeted asset classes, a minimum amount of assets under management in the targeted asset classes, and detailed
structural proposals for the proposed Legacy Securities PPIF.

Yes, and actually while you are at it could we please find some drug dealers to help solve the War on Drugs. Just in case you thought there would be copious oversight due to the complicity of these FM's in creating the mess in the first place: "The FM would have full discretion in investment decisions, although the PPIFs will predominately follow a long-term buy and hold strategy."

In the example given by the White Paper, which is just confusing enough to shake anyone off who is still trying to figure it out, there is no auction. In fact, it appears that the government is willing to match monies and loan additional funds to create a pool of money that will be large enough to buy these securities regardless of price, meaning the same companies that have benefited from the bail outs and stimuli will now be able to sell their wares for whatever price they deem appropriate. Why would investors buy into this? It is a non-recourse loan. The taxpayer is left holding the bag...unless it is profitable.

Public Private Investment Program Review (Part One)

I am trying to make heads or tails of the new program featured on this site (which really should have one of those little hardhat animations with an "Under Construction" sign). Part One will address the Legacy Loans program with Part Two addressing the Legacy Securities.

Here's what I have so far:
The Private Public Investment Plan (I guess they spent all their brand brain cells on "legacy loans") will be pairing public funds from the Trouble Asset Relief Program (TARP), which is currently funded at $250 billion, with private funds to create value for the troubled assets/legacy loans (the "White Paper" switches back and forth interchangeably). These funds will be valued via auction, which worked so well for slots here in Maryland.

First, banks will pool residential mortgages that they are looking to divest (sell) with a certain face value. Then private investors will pool funds that will be paired with public monies in order to reach 6 to 1 debt to equity ratio. Here's the tricky part: Investors are bidding to define the value of the troubled loans. Example: If the mortgage pool has a $100 (previous) face value, and the private investors winning bid is $84, then the equity required would be $12 split evenly between private and public investment. The Private Public Investment Fund would issue FDIC backed debt for the purchase of the "asset", which will then be managed by the private investor until liquidated. If I am getting this right, we are trading bad debt of an uncertain value for FDIC backed debt of a defined value. From the example above, an investor can potentially receive $100 in value from an $84 investment (all other trappings removed for simplicity's sake). If they do not receive $100 in value, the FDIC has backed their investment at $84. Again, if I am understanding this, the investment is enticing because it is essentially risk free. If I was an economics professor, I would be figuring out how the moral hazard effect comes into play here.

My ears are bleeding a bit after trying to figure this out. I encourage you to give it a go yourself if you want to check out this "White Paper". I'll try to tackle the much more complicated Securities tomorrow.

UPDATE: Here's a pretty good example similar to the one above from today's Sun

For example, a bank with a pool of residential mortgages that had a value of $1 million could place those up for sale under the program. Private-sector firms would bid to buy the loans in conjunction with the government, weighing the potential gain of holding on to them for several years.

If the highest bid were $840,000, the FDIC would guarantee $720,000 of that, leaving $120,000 to be raised. The Treasury Department then would provide half of the $120,000, with the private investors providing the other half. The private investors would manage the pool of assets.

The government and private investors would share in the profits when the assets are sold at a later date.

"A principle virtue of this mechanism is to use the financial interests of investors to help set the price. Because they have money at risk, they're going to make better judgments about how to set the price for these assets than the government could hope to make," Geithner said. "We have seen and I expect to see a lot of interest from the private sector."

Iron Bridge Wine Co. Vandalized

Nice to see that these people are so civilized in their means of protest.

SC Governor Experiences "New Era" of Politics

For those that haven't heard, Gov. Mark Sanford of South Carolina has rejected the discretionary stimulus funding for his state after first attempting to get permission for the money to be used to pay down state debt. He wrote an editorial that was published in the Wall Street Journal over the weekend.

Two interesting take aways:
1) He remarks that the funding is only to last two years and that states will be at a buoyed level of spending once the faucet is turned off that they then will be expected to maintain without stimulus funding.
2) After asking for stimulus money to be used towards state debt, the Democrat (Rahm Emanuel) machine starting revving up against him.

Legacy Loans = Freedom Fries

Treasury Secretary Timothy Geithner introduced his "Plan for Bad Bank Assets" today. Right off the bat he changes the term "Troubled Asset" to "Legacy Loan". Admittedly, the marketing needed to be adjusted on these things, but do you really need to use the term "so-called 'legacy loans'" as if you are just adopting someone else's lexicon? Why not say "troubled assets, hereinafter referred to as 'legacy loans'"?

Nonetheless, it is a good plan. A few flaws: First, are gains from these investments taxable? I assume that as the plan stands they will be and I can't see people buying "troubled assets", despite the pretty name change, without some additional incentive to buy. Secondly, looks like Secretary Geithner is appealing to those $250,000 and up income levels that were the poop on Barack's boot about 4 months ago. Why should they support this proposal? If there is a windfall profit, what will stop Barney Frank from taxing those profits at 90%? After all, this income level has been freely battered thus far, why not put another needle in the ju ju doll?

So three big problems: 1) Why would someone invest? 2) Who is going to invest? 3) What happens to the profits from those investments?

President Obama on 60 Minutes

I'm not sure if you saw it, but President Obama was on 60 minutes last night. For the past week or so, I've really enjoyed and appreciated the President's appearances on TV as a contrast to Congress' "disgust" at Wall Street and our corporate class. Admittedly, his appearances offered very little substance, but at the same time they gave the impression that Congress was Coo Coo for Populism, and he was taking a backseat for once.

Last night he disappointed me tremendously. There is a tacit understanding that it is bad form to blame present problems on the previous administration. The President addresses those problems as he sees fit and his solution is criticism in and of itself. Last night President Obama blamed President Bush for the current economic mess as well as dispensing a general indictment of his administration for Anti-American sentiment in the Arab world.

First, the economic issue. The 1977 Community Reinvestment Act was signed by Presient Carter and expanded by President Clinton in 1994. We have had a Democratic Congress since 2006. The Senate Committee on Banking, Housing, and Urban Affairs has been chaired by a Democratic Senator (Chris Dodd) since 2007. The House Committee on Financial Services has been chaired by a Democratic Congressman (Barney Frank) since 2007. President Bush and Senator John McCain both urged Fannie Mae and Freddie Mac reform from as early as 2004. Before you say that this problem was unstoppable by 2007, explain to me what the purpose of then Senator Obama's letter to Ben Bernanke may have been (oh, and don't forget that McCain was writing back in 2006). Bottom line, it is bad form to punch someone that won't hit back just because they are a convenient target, Mr. President.

Secondly, President Obama addressed criticisms from Vice President Cheney with regard to the Obama's administration's handling of national security. Without explicitly stating that anything he's done has made the country safer (because his evidence would be lacking) he answered that the Bush administration had fostered the anti-American fervor that put our national in danger in the first place. Umm...WHAT? So when President Bush was trying to figure out how to get our spy plane soldiers back from China, minding our own bees wax, we were subconsciously kicking Osama Bin Laden's kill switch? I don't think we have a chicken/egg issue here. Anti-American sentiment came first, then aggressive anti-terrorist strategems were introduced. I'm not saying that GTMO was a viable resort location, but there was a reason for it. My favorite (read "opposite of favorite") part was when President Obama stated that he believed the US Justice system can handle these detainees, but then when asked how he responded "we're going to have to figure that out." That's like saying, "I'm going to go buy a cheeseburger that will make me skinny" and then not knowing how that would work.


This is long enough, but on a funny note, did anyone notice that President Obama talks a lot like Kaa from the Jungle Book? I'm not talking in a "Barack Hussein Obama is a moo-slim" type way. I just thought it was funny how he's got this weird lisp that makes him sound like a cartoon snake.

Blinded By the Sun: "Patronage endures, even in hard times"

I plan to feature a segment on this blog entitled "Blinded by the Sun", which will attempt to expose biases found between the lines of our predominate state newspaper: The Baltimore Sun. In today's paper (3/22/09) there is a front page story discussing individual efforts in the legislature to "direct hundreds of thousands of taxpayer dollars to projects at nonprofit organizations they help run." This article could have been great. It shows how Democrats in the Maryland legislature are using State money as their own personal piggy bank by donating it to their own nonprofit special interest groups (such as Del. Sheila Hixon's pet non-profit Pyramid Atlantic, which is "dedicated to the creation and appreciation of hand papermaking, printmaking, digital arts, and the art of the book" and received $300,000 of your money). The bold was obviously intentional because the Sun writes as if this issue crosses party lines. According to the facts underlying this story, this is not the case. While stating that House Republicans "have made a symbolic point of not submitting requests this year", the Sun is only able to list ONE Republican (Sen. George C. Edwards) who sought to secure bond financing amongst 24 total projects, 23 of which sponsored by Democrats. Sen. Edwards has not sought funding this year, but 8 projects sponsored by Democrats have been put up for additional funding in an age of furloughs and lay-offs. It appears the Sun has colored a blue issue a deep shade of purple.

An additional bit of shading is invoked for the description of the Maryland Public Policy Institute, which unveiled this system of pork barrel patronage spending. The MPPI describes itself as "a nonpartisan public policy research and education organization that focuses on state policy issues". The Sun, however, describes the MPPI as "the conservative-leaning Maryland Public Policy Institute." Funny, the Sun did not list any of the "foundations" receiving money from the legislature as "left-leaning" despite indications that these organizations had advocacy branches.

I belong to a Board myself. State funding is crucial to our survival. Non-profits are proof that private initiatives are more efficient and effective than the clumsy hand of government programs. However, funding should always be a direct and intentional move by the legislature to serve the public good rather than the private favor-mongering of the powerful.

The Beginning of Something Bad

There is an interesting editorial on Townhall.com discussing this 90% tax on "unearned income" (bonuses) from employees of companies that have received stimulus support. Is this the beginning of a full scale repeal of Reagan's supply-side tax cuts?

I think that despite the rhetoric, most people don't want such a repeal. President Obama himself has even said that he feels this tax is reactionary and a bit too much. However, always be wary of the orchestration of public opinion. Notice how the outrage from AIG bonuses that the administration may have known about for quite some time is quickly followed by a new wave of far reaching government regulation.

Here there is this tax on bonuses that, as noted by the editorial, make an arbitrary attachment at $250,000, the same level that has been in the crosshairs for higher taxation from the start. I noted in an earlier post that Congress may just be trying on its "taxing gloves" and that this may lead to something worse. You may say "I'll never make that much money. This won't hurt me." To that I reply that it won't be too long after there is a "trickle down" effect and the other marginal rates are asked/forced to contribute more and more, as politicians point towards the obscene rates for the wealthy. A 30% rate won't look as bad when those with higher income are paying 60% and so on. This will be under the banner of some "great" national concern such as global warming, the cost of health care, etc.

I'd love to see some comments here. First commenter gets a free "Great Band, Bad Governor" bumper sticker (featured on the left).

Washington Journal -- "Evisceration" of Your Paycheck

As noted below, my friend Christopher Malagisi was on Washington Journal this morning debating a Young Dem named Matthew Segal on all issues affecting our country. Besides Matthew seeming to be working on his "word-a-day" (he said "eviscerated" approximately 20 times), he does not seem to understand that with President Obama's dual goals of stimulating us to death (yuck) and satisfying our national debt, WE (the young people) will be paying higher taxes than we are now. This tax hike on those making over $250,000 a year is not going to satisfy all our national obligations. Chris asked him directly how these higher taxes would help employment and Matthew skirted the question and said "Obama lowered taxes".

Just know dear reader(s?), this view point is out there and should be squashed. Either believe in higher government spending or tax cuts. They cannot co-exist.

Didn't You Get the Memo?

This is great. Howard county school officials are putting reminders to register for kindergarten in Happy Meals at McDonald's. Hopefully none of their target audience is on the Healthy Howard program, because that is NOT a Healthy Howard Healthy Restaurant.

This is obviously not a big deal, but it does seem discordant that our Healthy Howard officials are discouraging McDonald's while our school officials are using the same restaurant to communicate with parents.

Perfect Cartoon

Steve Kelley:

Getcha TiVo Set

A personal friend of mine, Chris Malagisi, will be on CSPAN from 7:30-8:10 am tomorrow morning. This is a must watch. I don't know if they'll have someone representing the "other side" there, but if they do I will pray for them in advance. Chris was earlier described as a "Young Turk" in a recent Daily Beast article discussing the young conservative movement.

He's the first one in this video:

Stabbing in Columbia

A Jogger was stabbed in Columbia last night. The assailant was arrested the same night. This an impressive job by our police force, but an unfortunate sign that things are changing in our planned community.

Meet the Press -- Owned

Did anyone else see NBC's David Gregory own Christina Romer (Chair of the Council of Economic Advisers) on Meet the Press last Sunday? I've been meaning to post this video.
Tim Russert would have rubbed her nose in it a little more, but I thought it was pretty embarrassing as it is.

Oh Schnapp

Looks like there are still some people that can challenge the President and not be chastised by the press.

Tucker v. Jon (Round One and a Half)

I don't much like ad hominem editorials. They don't give the target the opportunity to defend themselves and always end up going one step too far in the face of no resistance. However, Jon Stewart's holier than thou routine has become painful. He pull candidates on his show when they are in vulnerable political positions and had Cramer on after performing an absentee thrashing of "Mad Money" and his employer. Tucker Carlson throws some bows in this editorial that seem to stick. Stewart loves him some Democrats and makes very little sense when he is going improv. Check it out.

Nice Call Mr. President

I appreciate President Obama's comments last night on Leno about Congress's taxation of AIG bonuses. They reflected a reasoned analysis outside of the populist rhetoric that appears to be ruling the day.

As for the Special Olympics comments, give me a break. It was a bad choice of words, but do we really need our President taking time out of his day to apologize for a bad joke? For me, his apology was more embarrassing than the joke.

AIG Political Donations

I'm sure you're as curious about this as I am. Here are AIG's political donations by year. There isn't much to derive from this, except Chris Dodd's reappearance in this mess. He's toast.

Money Back Guarantee

Congress has indicated that the Constitution will not get in the way of a little political theatre. I love the way the NYTimes describes this measure:

Despite questions about the legality of the retroactive 90 percent levy, Democrats and some Republicans said the tax on bonuses for traders, executives and bankers earning more than $250,000 was the quickest way to show angry Americans that Congress intended to recoup the extra dollars. Even backers of the measure noted it was an extraordinary step.

Whenever Congress does anything that is described with the terms "DESPITE QUESTIONS ABOUT THE LEGALITY" check to make sure you still have your wallet. A targeted tax at an insular group of individuals will have a hard time passing Constitutional muster. I admittedly have a hard time defending my position against the likes of a Harvard law professor but also understand that Constitutional law is viewed by many as a malleable Play-do that can me shaped to support those causes that the Constitutional scholar supports.

Here's my issue: The ability to tax is the ability to destroy. This is something we all learn in our high school history classes when discussing the Revolutionary War. Leaving aside this specific measure for a second, we can all admit that Congress is not a body of discretion and discipline. What happens if they decide they like this pin-point taxation and decide that anyone who made a profit in the stock market this year will pay a 10% additional marginal rate on their regular income taxes over those that were at a loss. The possibilities are endless and terrifying.

As for this particular instance, first lets think about how messy it just got. What about he poor schmuck that voluntarily returned his bonus? Does he get it back so that he can pay this 91% tax? What about those employees that no longer work for AIG? Does anyone think this portion of the tax code (possible names being "Self-Righteous Indignation Tax", "Villain Tax", "Look-at-them-not-at-me Tax") will be written with any attention to these items?

Second, (warning: this is a politically unpopular opinion) Congress is putting its hand on the scale again, potentially and probably making the situation worse. AIG needs to retain employees with institutional knowledge of how they work. They also need to be able to hire new talent to help fix a mortally wounded company kept on (questionable) life support by the US government. WHO WANTS THIS JOB? If I had a job that was now being taxed by Congress in a discriminatory manner, I'd be out the next day. I had an argument with a co-worker yesterday on this point (all friendly, see post below) and she said that these people wouldn't be able to find a job. That may be the case but I doubt it. Accepting that premise for argument's sake, there are many things people would rather do than work in a position where they are villainized daily by our fine members of Congress.

Bottom line: This is bad news. The only good thing about this is that Congress was distracted for two days and was unable to cause any more harm.

Political Enlightenment

David Kristof of the NYTimes write a great editorial today criticizing blogs and the "post-fact" world. If you allow your subconscious to go where it wants, you are very likely to get all of your news from sources that provided a shaded view of the facts that leans towards your own disposition. As you may have noticed, I am partial to the Wall Street Journal, but I honestly try to seek out information from those sources I expect to present opposing views. I also freely admit that I take a more critical eye towards those "alternative" sources than I would towards sources I expect to agree with me. But is it ever possible to be a blank canvas with regard to the news without also listing your favorite shows as "American Idol" and "Dancing with the Stars". If you care, you care in certain direction.

What do we do about this? In this "post-fact" world, you need to expose yourself to as much information as possible. In an awkward analogy, Biblical scholars compare all of the gospels and contemporary writings in order to decipher what "really happened." The same is true for ingesting "news". Read everything and see what you are able to digest. The biggest dangers in this world are the Olbermann/O'Reilly/Limbaugh/Maddow voters that are spoon fed their opinions, given a snippy bumper sticker, and sent on their way to the polls. We need to think critically or our ideas are worth nothing. Sports radio host Jim Rome calls his listeners "Clones". That is exactly what talking-head followers become. Polemic clones that develop a hate for opposing viewpoints instead of a curiosity.

I guess the "moral of the story" here is that we need to be willing to disagree with someone and not cringe when two of your friends get into a political disagreement over a couple beers. This is not war. The Hatfields and the McCoys are over. Let's discuss, not to convince each other of our superiority, but to reach some higher understanding of our own views when ground against the stone of another's strongly held beliefs.

Jon Stewart is Even Angry (Sort of)

The Daily Show With Jon StewartM - Th 11p / 10c

That Can't Be Right - Veterans' Health Insurance

Daily Show Full Episodes
Important Things w/ Demetri Martin

Political Humor
Jim Cramer

Why I Love Celeb Politics

I'm not against lowering taxes, I just play that position on TV. In this video editorial, Steve Moore discusses Alec Baldwin's attempt to move the filming of his show 30 Rock out of New York since the city and state are thinking of scaling back tax breaks for the entertainment industry.

Alec Baldwin is hilarious on 30 Rock. I think he is meant for comedy and I don't mean that in a sardonic/sarcastic manner. What bothers me is that celebrities like Mr. Baldwin are able to use their influence in the political sphere despite having no basis for the opinions they support. Alec here understands what lower taxes can do to promote local and national economies, but does not want to fulfill his "patriotic" duty when the collection plate is in front of him. I think "hypocrite" is an overused term that prevents people from promoting a superior view point that they have not themselves embodied, but I do think Baldwin deserves a laugh here. Get real bud.

Update: Here is a more expansive review.

Oh My, Dodd

I yield the floor to the Senator from Connecticut:

Congressional Pay Pause

It will be interesting to see how this plays out:

The Senate passed legislation on Tuesday that would eliminate automatic annual pay raises for members of Congress, wrapping up its wrestling match over whether an annual pay adjustment is in order in such harsh economic times.

But the issue could go to the mat again in the House, where there is no assurance the chamber is on board to clear it.

The news behind the news is that Vitter (R-LA) proposed to cancel the automatic pay raises and Reid (D-NV) proposed a voice vote for the pay raises instead. When I say "it will be interesting to see how this plays out" I mean that I am curious to see how the press plays this. The scheduled pay raise is about $5,000, so the million-dollar outrage sparked by AIG bonuses will certainly not be there, but a pay raise in a bad economy is certainly bad form.

President's Bracket -- A Man of the People

Much has been made with the younger crowd (your young blogger being one of them) of the President completing a bracket for the NCAA tournament. What you may not know is that this bracket implicitly gave all Federal employees permission to speak openly about a subject that was previously taboo, that being "friendly office pools" (normally the winner gets a free lunch -- all within the ethics rules of course).

I thought this was a daft political move, but I also think I have a good idea where the President did his research.

National Bracket (based off of all ESPN user picks)
President's Bracket (based off of his diligent "worksheet")

I'll save you some time. They are near identical. I can't put my finger on what bothers me about this, but it does.

Non-News of the Day

The American Bar Association discriminates against Conservative Judicial Nominees.

You Shouldn't Have Been Standing In the Way of That Shrapnel

It appears that President Obama is making room on the Government's insurance rolls by kicking American solidiers back to private insurers. This is incredibly disturbing. As the insurance markets adjust, serving in the military will now be a health risk, amongst smoking and substance abuse, that will raise premiums for those that fought for our country. How is the President getting a pass on this? I think I saw more articles about the green fountain on the South Lawn than this HUGE shift in the treatment of our veterans.

AIG -- The Easy Villain

Here's a great editorial on what really happened with AIG.

You would be suprised at how many "angry" people have no idea what AIG does/did as a company. Basically AIG sold mortgage insurance on risky mortgages. The fees of these mortgages were then hoisted onto homebuyers, creating what is called a moral hazard. A moral hazard, in its most basic terms, is when the risk one entity takes is not equal to the potential harm they could receive from the risk falling through. These mortgage companies could extend risky mortgages, receive the benefit of the high interest return, and not have any risk of the homebuyer defaulting because they had insurance on the mortgage. It is as if you went to a casino with someone else's money and got to keep whatever you won. AIG allowed the bubble to occur, but whether they made the bubble happen is a different story.

Here's the trick that is not often discussed by the media: politicians forced these bad loans onto the market by saying that everyone should have a home and it was discriminatory for mortgage companies not to give mortgages in the inner city and to low income families. This is market manipulation at its worst and was sure to cause a great deal of harm from the start.

Well, except for those getting 4% 30 year fixed mortgages.

The Start

Good morning to you all. It is an exciting time to be a Republican in Howard County right now. I attended the "Marketing" committee meeting for the Howard County Republican Club last night. We have exciting new leadership with Steve Weissberg and Karen Winterling and they are doing tremendous things to foster a GOP presence "behind enemy lines" in Howard County. One thing that Steve said resonated with me, and that is "value over party." If we can offer the citizens of this county value in what we say and do, the party doesn't matter. This approach is so important in a county that sees itself as Democratic (big D), but has the potential to vote Republican. It is also important in politics in general when people see themselves as distant from their representatives and choose the "lesser of two evils" when they vote.

The purpose of this blog will be to take a critical eye to the facts as they are presented to the public with a focus on Howard County politics. There will certainly be issues of national scope, but, as they say, all politics are local.