Saturday, April 04, 2009

The Deaf Oracle

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a viewer asked Buffett if he believed what his father Congressman Howard Buffett believed, which was this: "So far as I can discover, paper money systems [like John Law's] have always wound up with collapse and economic chaos."

"Sounds like my dad, yeah," Buffett replied, "I heard that every night at the dinner table for a long time." The Oracle admits that the printing of paper money is inflationary, but being a consistent proponent of expanding government, he constantly dismisses gold and proposals to return America to a gold standard.

His father Howard understood the evils of unchecked government money printing.

"The paper money disease has been a pleasant habit thus far and will not be dropped voluntarily any more than a dope user will without a struggle give up narcotics," Congressman Buffett wrote.Download PDF "But in each case the end of the road is not a desirable prospect."

The Congressman's son may have heard his father at the dinner table, but he wasn't listening.

Friday Night AIG ORemix

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The Obama administration has mastered the art of the Friday Night Disclosure.  They tried to avoid media scrutiny over the revelation that National Economic Council chair Lawrence Summers made millions from the same people demonized by Barack Obama and the Democrats for the economic collapse:

Lawrence Summers, director of President Barack Obama’s National Economic Council, earned millions working at a hedge fund and speaking to banks such as Citigroup Inc. that later received taxpayer bailout money.

Obama’s “choice going forward is to choose unknowns of modest means who may be less controversial in terms of their connections,” Schmidt said. “Except those people would be far less knowledgeable and thus less of an asset to fix these very same urgent problems.”

You know, the same argument could be made with, oh, AIG and the people they need to retain to fix their problems.

Messy Questions And The Robots Of War

Large-scale military operations are less useful directly against transnational terrorists, however, who are few in number, dispersed across populations and often borders, disinclined to fight direct battles, and more efficiently targeted through narrower means.
Law enforcement utilized outside the United States, on the other hand, has also discovered its outer limits.
Moreover, the political costs for any U.S. administration taking and holding detainees are now enormous.
Politically, the most powerful institutional incentive today is to kill rather than capture them. The intelligence losses of killing rather than capturing in order to interrogate them are great. But since the U.S. political and legal situation has made interrogation a questionable activity anyway, there is little reason to seek to capture rather than kill. And if one intends to kill, the incentive is to do so from a standoff position, because it removes messy questions of surrender.

The World's Greatest Orator?

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"A question for you both, if I may. The prime minister has repeatedly blamed the United States of America for causing this crisis. France and Germany both blame Britain and America for causing this crisis. Who is right? And isn't the debate about that at the heart of the debate about what to do now?" Brown immediately swivels to leave Obama in pole position. There is a four-second delay before Obama starts speaking [THANKS FOR NOTHING, GORDY BABY. REMIND ME TO HANG YOU OUT TO DRY ONE DAY.] Barack Obama: "I, I, would say that, er ... pause [I HAVEN'T A CLUE] ... if you look at ... pause [WHO IS THIS NICK ROBINSON JERK?] ... the, the sources of this crisis ... pause [JUST KEEP GOING, BUDDY] ... the United States certainly has some accounting to do with respect to . . . pause [I'M IN WAY TOO DEEP HERE] ...
My answer -- in Ogabe's voice -- if I could make him say anything I wanted for parody's sake:

"The unaccountable private banking cartel called the Federal Reserve by creating a huge inflationary bubble together with their bought and paid for, boot-licking toady politicians like me pandering for votes by giving away free houses did it. So France and Germany would be right except we're not sure whether they're part owners in the Federal Reserve and also responsible themselves. Since as I pointed out the Fed is completely unaccountable.

And of course none of that nearly $200 billion poured into AIG went to European banks -- especially French and German ones -- well other than a huge portion of it I'm guessing.

Oh, and I'm going to give the Federal Reserve more power to regulate so this doesn't happen again. That will teach those nasty bankers a thing or two. And no, Fed created inflation doesn't fund political agendas and it isn't a tax on the stupid. That would be you.

I know the Fed should be abolished in any sane world but us sneeringly manipulative liberals are great at hypnotizing you to blame everything on the "free market". Even when we're about an infinity away from having a free market.

Oh, and Fannie and Freddie had nothing to do with this problem. And they weren't backed by the taxpayer's wallets at all ... until they were."

John Galt Is Smiling

The biggest under-appreciated political story of this year is the astonishing surge in the sales of Ayn Rand's epic 1957 novel Atlas Shrugged.

In the past week, the ranking page which shows the top sellers among all of the books offered through showed the novel surging into the top 20, climbing as high as #16. Remember that this is a thousand-page-long, 52-year-old novel that is heavy on philosophical content. And those rankings surely understate actual sales, since the novel is listed under at least three separate editions, each showing strong sales in its own right.

Looking at Amazon bestseller lists in narrower categories, Atlas has been steadily in the top ten in Literature & Fiction (briefly hitting #1 during the past week) and has been switching between the #1 and #2 spot in Classics, routinely beating out lesser works like The Federalist Papers, Nineteen Eighty-Four, and To Kill a Mockingbird. Heck, the Cliffs Notes to Atlas Shrugged rank in the top 20

An Austrian Fisking Of Krugman

Money is NOT goods. Inflating the money supply is not the way to prosperity. Government spending is consumption not production. This “plan” is idiotic and will fail, as would your plan.

People are going to starve if this keeps up. Not just here but all over the world. We've had central monetary planning and it doesn't work just as Austrian Economics predicts. That's science. Nationalized banks aren’t going to help. This whole mess was caused by government sponsored entities in the first place. The Fed, Fannie and Freddy, etc.

Setting interest rates below market is a price control. Like all price controls it causes producers to produce less and consumers to consume more. For interest rates that means low savings (the producers) and high borrowing (the consumers). So that's economics 101 in ANY school of economics. Shame on Alan Greenspan for not following those metrics and shutting down the monetary pumps.

Shamelessly Propagated In Whole: The True Meaning Of Pitchfork

Obama is now quoted as saying, "My administration,“is the only thing between you and the pitchforks" to AIG officials giving out bonuses.

Obama, let me clue you into the true meaning of Christmas the pitchfork.

This Pitchforks for You, Politician

My pitchfork was aimed at the politicians and their appointees.

Politicians are the ones that interfered in free markets to cause this economic crisis. They’re the ones throwing my money in the air around their rich friends. They are the ones who attempted central monetary planning with the Fed, and GSEs.

Obama, Bush, Clinton, Paulson, Geithner, Bernarke, Franks, Raines, and most importantly Greenspan, all need the business end of a pitchfork.

Friday, April 03, 2009

The Full Partner

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According to Dr. Herbert London, president of the Hudson Institute, Professor of Humanities at New York University, and a New York resident, in New York City 1% of the population pays 52% of the states taxes. “By the time you get to get to 2 or 3% you’re talking about almost the entire New York State tax burden.”

New York City taxes are apparently going up by 5 % (to 10%).  When you include the New York State tax burden (5%) and add both to the the top federal income tax rate (which the Obama administration wants to raise to 40%) the total is 55%.  “That  means that the tax collectors are now more than a full partner in your life,” said London.

The Missing Mocks

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PHONY PETITION NUMBERS? “The DNC arrived at its 642,000 figure by making three photocopies of each petition.” If the Tea Party folks did this, they’d be loudly mocked by Jon Stewart and Stephen Colbert.

How Widely Used?

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There are a number of data sets seeking to capture joblessness in that period. (Remember, they didn’t have all the tools we have today.) The annual data set which I used in THE FORGOTTEN MAN, and which Dr Krugman deems misleading, originates with the government Bureau of Labor Statistics and the great scholar of employment, Stanley Lebergott. Richard Vedder of Ohio University actually addressed/broke out employment month by month using the same data, so sometimes TFM cited him. Anyhow these data show average annual unemployment in the twenty percent range for a number of years – 1933, 1934, 1935. At points in 1937 or 1938, unemployment gets back to 20%, which I mention in TFM.

These “misleading” data, Lebergott/BLS, are widely used. How widely used? Even by the President-elect, apparently. Mr Obama, talking on Sixty Minutes spoke about unemployment in 1932 and 1933. Mr Obama said:

“Well keep in mind that 1932, 1933, the unemployment rate was 25 percent, inching up to 30 percent.”

90 Percent?

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SOME OF US HAVE BEEN NOTING THIS FOR A WHILE: The Myth of 90 Percent: Only a Small Fraction of Guns in Mexico Come From U.S. “While 90 percent of the guns traced to the U.S. actually originated in the United States, the percent traced to the U.S. is only about 17 percent of the total number of guns reaching Mexico.” Gee, most guns traced to the United States come from the United States. Now there’s a meaningful statistic. I thought the Obama Administration was going to fearlessly follow science without distortion.

Well, okay, I never actually thought that, but a lot of people did claim that. But wait, there’s more:

So, if not from the U.S., where do they come from? There are a variety of sources:

– The Black Market. Mexico is a virtual arms bazaar, with fragmentation grenades from South Korea, AK-47s from China, and shoulder-fired rocket launchers from Spain, Israel and former Soviet bloc manufacturers.

A Fine Last Word

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Greenspan's monetary excess was also crucial in setting off a chain of bad government policies. As Taylor argues, Greenspan Loose was amplified by the popularity of subprime mortgages, especially adjustable-rates, which promoted risk taking. And it made for a lethal brew in a pot of policies to promote homeownership.

Greenspan pulls out many stops in his defense. He even quotes the great Milton Friedman's approving assessment of Fed policy between 1987 and 2005. Well, Friedman died in 2006 and, in 2009, his equally great colleague, Anna Schwartz, has this to say: "There never would have been a subprime mortgage crisis if the Fed had been alert. This is something Alan Greenspan must answer for." As for Greenspan's argument that the whole mess is China's fault, she says tartly: "This attempt to exculpate himself is not convincing. The Fed failed to confront something that was evident. It can't be blamed on global events."

As fine a last word as there could be.

Thursday, April 02, 2009

What, Me Worry?

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MR. ORSZAG: Well, let me answer that second question first. Again, I don’t know what spiraling debt you’re referring to, but we’re inheriting a budget situation that is a mess, and that we’re working our way out of. And under both budget resolutions, the deficit is reduced in half — by more than half by 2013, and actually then is either stable or declining between 2013 and 2014. So I guess I just — I take issue with the conjecture that we’re — you know, there’s spiraling debt here.

One has to bear in mind that Orszag was the man who presciently set the odds of a Fannie Mae/Freddie Mac failure at 3,000,000 to 1, and that such a failure would only cost the government $2 million.  That cutting analysis came at the behest of … Freddie Mac.  While at the CBO, Orszag also helpfully corroborated the claims from the controlling party of Congress — Democrats — that Social Security would have surpluses for the next eleven years.  Eight months later, the surpluses have disappeared.

Napolitano and Woods: Uncle Sam Will Audit You For The Next 5 Years

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Frozen Over

Alinsky's 1971 book, "Rules for Radicals," is a favorite of the Obamas. Michele Obama quoted it at the Democratic Convention. One Alinsky tactic is to "Pick the target, freeze it, personalize it, and polarize it." That's what the White House did in targeting Rush Limbaugh, Rick Santelli and Jim Cramer. (The president's press secretary, Robert Gibbs, went so far as to lash all three from the White House press podium.) It may also explain Mr. Obama's comments to Mr. DeFazio.

After all, Alinsky's first rule of "power tactics" is "power is not only what you have but what the enemy thinks you have." Team Obama wants to remind its adversaries it has plenty of power, and it does. The question is whether the White House will wield it responsibly.
Melanie Phillips wrote more on Obama's Alinsky tactics at The Spectator last month:

But as I pointed out here, such use of community organisation also follows to the letter the template for social revolution laid down by Saul Alinsky

Mr. Jefferson

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Schiff: How Little The Government Understands

Wednesday, April 01, 2009

The Rookie

Someone once said that, for every rookie you have on your starting team in the National Football League, you will lose a game. Somewhere, at some time during the season, a rookie will make a mistake that will cost you a game.

We now have a rookie president of the United States and, in the dangerous world we live in, with terrorist nations going nuclear, just one rookie mistake can bring disaster down on this generation and generations yet to come.

Barack Obama is a rookie in a sense that few other presidents in American history have ever been. It is not just that he has never been president before. He has never had any position of major executive responsibility in any kind of organization where he was personally responsible for the outcome.

Inconvenient Economics

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China’s current-account surplus, the source of the funds for its Treasury purchases, has dropped precipitously as the global economy has contracted over the past several months.


And, the oil-exporters are in no shape to be buying anything right now, as oil prices have collapsed since last summers $147/barrel peak. Russia is busy selling foreign exchange to prop up its currency.


Brad Sester of the Council of Foreign Relations reports that foreign demand for long-term treasuries has faded, and notes, ominously, that “global reserves aren’t growing”.

Accordingly, borrowing does not look like an option. Which leaves really just one choice.

Printing money in a down economy, which will have to be done, increases inflation and saps purchasing power (potentially leading to hyper-inflation). We may be able to pay off our debts this way, but we’ll wipe out the wealth of the nation doing so.

In short, our government is currently cashing checks that our economy can’t pay.

Unless You're A Bad Person Of Course

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WASHINGTON (AP) - One of President Barack Obama's campaign pledges on taxes went up in puffs of smoke Wednesday.

The largest increase in tobacco taxes took effect despite Obama's promise not to raise taxes of any kind on families earning under $250,000 or individuals under $200,000.

This is one tax that disproportionately affects the poor, who are more likely to smoke than the rich.

To be sure, Obama's tax promises in last year's campaign were most often made in the context of income taxes. Not always.

"I can make a firm pledge," he said in Dover, N.H., on Sept. 12. "Under my plan, no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes."

He repeatedly vowed "you will not see any of your taxes increase one single dime."

The Concrete Wall

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Counterintuitive action makes a fellow feel smart. When I first got my driver's license, I took my old Ford Falcon into the Greenfield Public High School parking lot when it was freshly covered with fresh powder on top of wet slippery Western Massachusetts snow and ice. I turned fast, gunned it and lost control of the car in a skid.

I trusted my Dad that turning into a skid would work. I trusted my carny mentor, Doc Swan, that closing my mouth around a burning torch would put it out. They were right. Maybe the United States borrowing more money than I could imagine in a billion years with a billion computers and a billion monkeys typing on them, will get us out of financial trouble. I really don't know. It's certainly true that many counterintuitive things are true, and when you have the guts to do something counterintuitive that works, it's really cool. It's a superpower under our yellow sun.

I way hope we're turning into a skid and not accelerating into a concrete wall.

You're Fired

Guess Who?

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Our Simpleton "Leadership"'s Simple Misunderstandings Continue

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On “This Week” Sunday, Treasury Secretary Tim Geithner told me that there was about $135 billion left in the TARP fund, the government’s financial rescue package. But the Government Accountability Office, a non-partisan federal agency, reports that figure is closer to $32 billion, which is what ABC News and other independent analysts thought.

In other words, Geithner was off by $100 billion dollars. That’s not a rounding error; it’s a gargantuan mistake. Or a lie. Take your pick. It’s like choosing between “tax evasion” and “simple misunderstanding”.

It has become very obvious that the Obama administration and its Treasury Secretary are floundering on the economy. Not only have they not been able to find staffing for the effort, now they can’t count. How much longer will this go on before Congress demands a change at the top?

So There

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REMEMBER WHEN IT WAS BAD TO POLITICIZE THE JUSTICE DEPARTMENT? A Split At Justice On D.C. Vote Bill: Holder Overrode Ruling That Measure Is Unconstitutional. “Justice Department lawyers concluded in an unpublished opinion earlier this year that the historic D.C. voting rights bill pending in Congress is unconstitutional, according to sources briefed on the issue. But Attorney General Eric H. Holder Jr., who supports the measure, ordered up a second opinion from other lawyers in his department and determined that the legislation would pass muster. . . . In deciding that the measure is unconstitutional, lawyers in the department’s Office of Legal Counsel matched a conclusion reached by their Bush administration counterparts nearly two years ago, when a lawyer there testified that a similar bill would not withstand legal attack.
This may look bad, but “Holder portrayed the basis for his override of the OLC ruling as grounded in law, not politics.” So there.

Tuesday, March 31, 2009

COTD: Deflections

Huh? Capitalism? Do you mean capitalism as in ‘free markets’ and ‘private property’?

The scam view that "regulations drive activity elsewhere" is just as false as the view that capitalism, ‘free markets’ and ‘private property’ even exist. Its doublespeak bullshit.

The fifth way that people hand over money to financial institutions is through the deception used when the wealthy ruling elite purchase the politicians to craft the legislation that favors them exclusively. We are suffering aggregate generational corruption of the scam ‘rule of law’ in all areas of society. And it is now intentionally on roids for a whole range of reasons that need to be explored.
Its scamerica -- get over it -- the old vanilla ‘safety, security and transparency’ are gone. Democracy is a sham myth!
We are experiencing across the board hyped up intentional corruption that is consolidating power globally and decimating the middle classes. When you use their gangster doublespeak you assist in their deflections.

A "Cure" For Universal Health Insurance

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None of us has health "insurance," really. If you develop a long-term condition such as heart disease or cancer, and then lose your job, divorce or outgrow your parents' plan, you can lose your coverage. You now have a pre-existing condition. Insurance will be enormously expensive if you can get it at all. This can happen to anyone, with devastating consequences.

Most proposals, including the Obama campaign plan, try to regulate this problem away.

Regulations reduce competition. That's not an unintended consequence; reducing competition is in many ways their central point. Regulators feel that if insurers can compete freely, insurers will grab the healthiest customers, leaving no one to cover the expenses of people with long-term illnesses.

The key innovation is "health-status insurance." If a health shock causes your medical-insurance premiums to rise, it pays a lump-sum payment sufficient to pay the higher medical-insurance premiums.

Long Term Money

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Alan Greenspan responded to his critics on these pages on March 11. He singled out an op-ed by John Taylor a month earlier, "How Government Created the Financial Crisis" (Feb. 9), for special criticism. Mr. Greenspan's argument defending his policy is two-fold: (1) the Fed controls overnight interest rates, but not "long-term interest rates and the home-mortgage rates driven by them"; and (2) a global excess of savings was "the presumptive cause of the world-wide decline in long-term rates."

Neither argument stands up to scrutiny. First, Mr. Greenspan writes as if mortgages were of the 30-year variety, financed by 30-year money. Would that it were so! We would not be in the present mess. But the post-2002 period was characterized by one-year adjustable-rate mortgages (ARMs), teaser rates that reset in two or three years, etc. Five-year ARMs became "long-term" money.

But I Stole For You ... Well, OK, Just For Me

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The person to whom the Navy recently bestowed the formerly prestigious Distingusihed Public Service Award had this to say:

“If I’m corrupt, it’s because I take care of my district,” Mr. Murtha said.

Because, you know, there’s obviously no other way to do that than be corrupt.

Shades of Georgia’s Eugene Talmadge:

 “Sure, I stole. But I stole for you,”

Dependency Update

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But this time around, the government wants to limit the charitable deductions and raise tax rates to make way for more spending. What government is really saying is that it doesn't like the competition from private charities. It wants more people to depend on government.

Monday, March 30, 2009

The Paradox

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But I have noticed what I think is a paradox in the Geithner plan. He is asking the most unregulated parts of the financial system—, private equity firms—to bail out the most regulated part of the financial system—the banks. With government help, or subsidy, of course. But of course the government isn't really regulated either, is it? Except, I suppose, through the political process.

The Very Best Of Hands

 blog it

Holy Hannan!

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Again. Wow. Just wow. Someone who can outtalk Ogabe but has an education advanced beyond the 3rd grade. Hannan 2012.

Exit question: How can we move that up to 09?

You Know You're In A Leftist Nightmare...

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Arkady Dvorkevich, the Kremlin's chief economic adviser, said Russia would
favour the inclusion of gold bullion in the basket-weighting of a new world
currency based on Special Drawing Rights issued by the International
Monetary Fund.

Mr Dvorkevich said it was "logical" that the new currency should
include the rouble and the yuan, adding that "we could also think about
more effective use of gold in this system".

The Gold Standard was the anchor of world finance in the 19th Century but
began breaking down during the First World War as governments engaged in
unprecedented spending. It collapsed in the 1930s when the British Empire,
the US, and France all abandoned their parities.

It was revived as part of fixed dollar system until US inflation caused by the
Vietnam War and "Great Society" social spending forced President
Richard Nixon to close the gold window in 1971.

The world's fiat paper currencies have lacked any external anchor ever since.
... when Russia and China are outflanking your government on the right and headed toward the gold standard. And they're absolutely correct of course.

But the consequences for us are not going to be pretty.

Schiff On The Missing Production (Part 76,393)

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Washington is telling us that our problems result from a lack of consumer spending. Therefore, the solution is for government spending to pick up the slack. However, if Americans are too broke to spend, then how can our government spend for us? The only money they have is taken from us through taxation. To postpone immediate tax hikes (adding interest for good measure), Washington plans to borrow more from abroad. However, if our foreign creditors refuse to pony up, much of the money will simply be printed instead.

Printing money is merely taxation in another form. Rather than robbing citizens of their money, government robs their money of its purchasing power. Many people assume that if government provides the funds we can spend our way back to prosperity. However, it’s not money we lack but production. If the government simply prints money and doles it out, we will not be able to buy more stuff; we will simply pay higher prices. The only way to buy more is to produce more.

Did I Forget To Mention That This Is The Brit I Want For President?

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NYeT Again (Part 35,935)

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A lawyer involved with legal action against Association of Community Organizations for Reform Now (ACORN) told a House Judiciary subcommittee on March 19 The New York Times had killed a story in October that would have shown a close link between ACORN, Project Vote and the Obama campaign because it would have been a “a game changer.” 
The former worker, Anita Moncrief, told Ms. Heidelbaugh last October, during the state committee’s litigation against ACORN, she had been a “confidential informant for several months to The New York Times reporter, Stephanie Strom.”
“Upon learning this information and receiving the list of donors from the Obama campaign, Ms. Strom reported to Ms. Moncrief that her editors at The New York Times wanted her to kill the story because, and I quote, “it was a game changer.”’

Executive Power Update

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I‘m still in rather stunned disbelief about the White House ousting GM’s CEO.  

It’s not about how good a CEO he was or whether I agreed with his plan, his leadership style or his results.  It’s about the White House going so far as to ask him to step aside.  And, according to Obama’s own statement today, his “team” will “working closely with GM to produce a better business plan”.

Why, that sounds like something we’ve seen pass this way before and firmly rejected:

Italian Fascism often involved corporatism, a political system in which economy is collectively managed by employers, workers and state officials by formal mechanisms at national level.

Now I’m sure there are those out there who will argue that this is hardly a “formal mechanism”. But of course that’s simply not true. It is formal enough that a CEO is gone.