Saturday, April 24, 2010


The so-called financial-reform bills now working their ways through each house of Congress are, like the health-care-reform bill before them, not about reform at all. They do not reform anything. Instead, they make the federal government the major player in a major industry. Just as the health-care-reform bill will transform private insurance companies into the equivalent of public utilities, whose every major decision needs government approval and whose returns on capital are more or less guaranteed, these bills would do the same for big banks and other financial institutions.

It is the business of business to take risk and seek profit. It is the business of government to regulate business to ensure that the public interest is not put at risk. That’s exactly what government failed to do before 2008.

The Obama administration’s ruthless pursuit of ever greater concentration of power in Washington — and calling it reform — just keeps getting scarier.

O Scamming

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Uncle Sam gave GM $49.5 billion last summer in aid to finance its bankruptcy. (If it hadn't, the company, which couldn't raise this kind of money from private lenders, would have been forced into liquidation, its assets sold for scrap.) So when Mr. Whitacre publishes a column with the headline, "The GM Bailout: Paid Back in Full," most ordinary mortals unfamiliar with bailout minutia would assume that he is alluding to the entire $49.5 billion. That, however, is far from the case.

The vast bulk of the bailout money was transferred to GM through the purchase of 60.8% equity stake in the company

he means not the entire $49.5 billion--the loan and the equity. In fact, he avoids all mention of that figure in his column. He means only the $6.7 billion loan amount.

But wait! Even that's not the full story given that GM, which has not yet broken even, much less turned a profit, can't pay even this puny amount from its own earnings.

Friday, April 23, 2010

Social Banking

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It’s spring, and this spring a young man’s fancy lightly turns to thoughts of speculation. The Fed’s promises look good and, as long as you’re not a small business, you can borrow to invest or speculate at no cost. The market has had a near record rally, sprinting far past our estimated fair value of 875 for the S&P 500. Bernanke is, in fact, begging us to speculate, and is being mean only to conservative investors like pensioners who cannot make a penny on their cash.
Oh, for the good old days when we could just settle for a normal market-clearing rate of interest. But that, I suppose, would be wicked capitalism, and we had better get used to bank- and speculator-benefiting socialism. - Jeremy Grantham, GMO


As with Webb’s Fabian socialism, one will never be able to say of Obama’s developing doctrine, “now socialism has arrived.” On the night the House of Representatives passed the health-care bill, Obama said, “This legislation will not fix everything that ails our health care system. But it moves us decisively in the right direction.” Then, speaking specifically of another vote to be taken in the Senate but also cleverly to those not yet satisfied with what had been achieved, he added, “Now, as momentous as this day is, it’s not the end of this journey.”

Under Obama’s neosocialism, that journey will be endless, and no matter how far down the road toward socialism we go, he will always be there to tell the increasingly beleaguered marchers that we have only taken a “critical first step.”

RTWT. Now.

Grave Metaphors

But Antarctica isn't melting away, and Arctic ice has slowly increased since its big low in 1997.

But no one seems to have told Tom, who soon found his extremities freezing.

Two weeks ago he nearly called off his trek after suffering excruciating pain in his fingers and thumbs, forcing him to call in emergency help.

And last week he had to be rescued by Canadian soldiers after falling through the ice sheet.

"(I) came very close to the grave," he said, on being flown out.

This is actually now the fourth year running that warming alarmists have had to be rescued from expeditions to prove the Arctic is warmer than it actually is. It's a metaphor.

Not Fighting Himself

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Christies predecessor addressed a huge unionized rally of public employees, vowing to "fight for a fair contract." Who was he going to fight? The negotiator across the table would be ... himself.

Saying "subtlety is not going to win this fight," Christie notes that New Jersey's police officers, the nation's highest paid, can retire after 25 years at 65 percent of their highest salary. In the state that has the nation's fourth-highest percentage (66) of public employees who are unionized, he has joined the struggle that will dominate the nation's domestic policymaking in this decade -- the struggle to break the ruinous collaboration between elected officials and unionized state and local workers whose affections the officials purchase with taxpayers' money.

Thursday, April 22, 2010

You've Been TARPed

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You may have seen the announcement yesterday by GM’s CEO that it was paying back a portion of the money it had been loaned by the taxpayers (who borrowed it to loan it) to keep the company from going under and providing it the room for the government to own 61%.

The White House was exultant:

No one was cheering louder than the White House about General Motors’ repayment of $6.7 billion in loans from the federal government.

Uh, not so fast.  If you were skeptical, you had a right to be.

Jamie Dupree brings us the rest of the story:

The issue came up yesterday at a hearing with the special watchdog on the Wall Street Bailout, Neil Barofsky, who was asked several times about the GM repayment by Sen. Tom Carper (D-DE), who was looking for answers on how much money the feds might make from the controversial Wall Street Bailout.

“It’s good news in that they’re reducing their debt,” Barofsky said of the accelerated GM payments, “but they’re doing it by taking other available TARP money.”

Dial "M" For Global Warming Morons

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[Image below added by Anthony. Here is the METAR report for Eureka, via Weather Underground, the error is highlighted in yellow, note the jump in temperature followed by a fall the next hour]

Eureka METAR coded and decoded 07-13-09 click to enlarge

As Anthony Watts pointed out at Watts Up With That, the Eureka station registered the biggest rise in temperature probably seen on the Earth’s surface: 86ºC in one hour, on March 3, 2007! Now this data is available on Weather Underground, but seems not to exist in Environment Canada. The graph differences are clear below:

[Here's the METAR data with the missing "M", note at  11AM the M reappears]

Trashed Reality

So, just as drug companies and insurers used Republicans to kill the public option before using Democrats to mandate insurance and subsidize drugs, big banks are using Republicans to kill a bank tax while using Democrats to erect barriers to entry, to institutionalize bailouts, and to restore confidence in Wall Street.

Lobbyists working on the issue report that the big banks aren't fighting against the Consumer Financial Protection Agency anymore. It's not a big deal to them -- it will probably cost them only the salary and benefits of one more lobbyist or lawyer. Citigroup might hire another Barney Frank staffer. Goldman already has Greg Craig.

Pretty soon, the left will be complaining about how Wall Street has "captured" the CFPA. But regulatory agencies aren't kidnapped -- they are born in the custody of the businesses they regulate. This is the nature of the game. And it's a game rigged in Goldman's favor, regardless of Obama's trash talk.

Wednesday, April 21, 2010

Off With Both

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If you've noticed that socialism is emasculating, you won't be surprised by this tale of terror from Britain's socialized healthcare:

A patient lost a testicle during an operation because the surgeon cut it off by mistake, a General Medical Council (GMC) hearing has been told.

Dr Sulieman Al Hourani was only supposed to cut out a cyst, but removed the whole right testicle instead.

The reason British doctors have names like Sulieman Al Hourani is that it isn't worth it to go through the rigors of medical school just to become a government slave. So they import doctors from the Third World. Fortunately, most don't try to car bomb airports.

If they start cutting them both off under ObamaCare, we'll know it isn't a mistake, but the latest population control scheme by BHO's Science Czar John Holdren.


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Apparently the fear of increased premiums in reaction to the new Health Care Reform law recently passed by Congress is prompting Senate Democrats to propose a bill that would
give the federal government the power to regulate health insurance premiums.

Of course, you never saw this coming, right?

It appears our overlords simply do not trust those greedy insurance companies to not raise their premiums in reaction to the new law.  Or as Sen Tom Harkin explains it:

“Rate review authority is needed to protect consumers from insurance companies’ jacking up premiums simply because they can. Protections must be in place to ensure that companies do not take advantage of current market conditions before health reform fundamentally changes the way they do business in 2014.”

You have to laugh (or throw up a little) at the economic naiveté and pure hypocrisy contained in that statement.

Tuesday, April 20, 2010

Stretched A Little Thin

Hayek Lost


And then there's record-breaking campaign cash: Goldman executives and employees gave about $950,000 to Obama for America -- the most a politician has raised from a single company since campaign finance reform. It's also more than the combined Goldman haul of every Republican running for president, Senate, and the House.

A powerful alumni network plus bundles of campaign cash mean Goldman will get what it wants -- and contrary to the media narrative, what Goldman wants is not laissez-faire.

Politico quoted a Goldman lobbyist Monday saying, "We're not against regulation. We're for regulation. We partner with regulators." At least three times in Goldman's conference call Tuesday, spokesmen trumpeted the firm's support for more federal control.

Sunday, April 18, 2010


We're not quite back to the pre-plane era, but air travel over and around the north Atlantic might get a lot more disrupted in the coming years.

Volcanologists say the fireworks exploding from the Eyjafjallajökull volcano on Iceland, which is responsible for the ash cloud that is grounding all commercial flights across northern Europe, may become a familiar sight. Increased rumblings under Iceland over the past decade suggest that the area is entering a more active phase, with more eruptions and the potential for some very large bangs.

"Volcanic activity on Iceland appears to follow a periodicity of around 50 to 80 years. The increase in activity over the past 10 years suggests we might be entering a more active phase with more eruptions," says Thorvaldur Thordarson, an expert on Icelandic volcanoes at the University of Edinburgh, UK. By contrast, the latter half of the 20th century was unusually quiet.


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Glenn Reynolds, the blogger at, fired off an item saying, “Everyone should pay at least some income tax. And everyone’s tax bill should go up or down whenever federal spending does.”

Don’t hold your breath waiting for that to happen, but it got me thinking. Like everyone else, politicians respond to incentives, and the incentives they face are disastrously perverse.

When they cut spending, they’re penalized; their chances of re-election sink. When they open up the Treasury, their chances of re-election rise.

Is there a way to more closely align politicians’ incentives with the nation’s long-term financial interest? It’s a lot tougher than it sounds, because the incentives facing voters are perverse as well.

The problem is highlighted by a branch of economics called public choice theory, which analyzes the way people behave while making collective decisions, as opposed to how they behave in the marketplace.