If I were Joe the plumber I would like to think I’d have answered Obama’s queries a little differently.

I would have bristled at the audacity of his condescension as he stood there and told me that had I had a tax break from the government I could have built my business faster;  as if I needed the government to help me get where I’ve gotten. On my own, thank you very much.

And maybe those firemen and nurses and teachers would have been better off too with that middle class tax cut; but they aren’t building a business. They provide valuable services and exhibit bravery in the face of danger (I’m talking about teachers too);  we need them for sure. But they work for the government. They don’t create jobs. They don’t buy capital goods. They won’t pull us out of this economic crisis.

By the way, I would have asked him why so many of the people he hangs out with hate America so much?

If I were Joe, I would have asked Barack Obama how he can give tax cuts to 95% of Americans when 40% don’t even pay income taxes?

I would ask him why I should believe that a man that has consistently voted for more taxes and more spending would change his stance now? Does he think Joe’s stupid?

I would have asked him what he knows about building anything. What risks, save experimenting with drugs, has he taken in his life?

I would have asked Obama if he could be patient. Cut my taxes and I will grow faster, hire more people, invest in my business, buy more equipment and ultimately my success would create way more tax revenue for Obama and his pet projects.

I would have agreed with Obama: I’m not voting for him, but not because of his skin color. So don’t call me a racist. Joe isn’t going to vote for Obama because he doesn’t get it – despite Obama’s America-hating elitist wife’s pleading to the contrary.

You see America was founded by Joe the Plumber. Guys like Joe are the true pioneers. He’s a self-starter. Joe creates something from nothing. He scratches a business plan on the back of a pink sheet he got from his last employer, asks his wife to make sacrifices, support and believe in him. Joe claws his way to some semblance of success. He creates jobs and buys American trucks and hardware. He is the self-reliant, hard-working risk taker. Joe owns two guns. One to hunt with. One to defend his family with. Joe is what is left of the American backbone.

Joe is as proud as he is concerned that his business pays not only his mortgage and car payments, but also those of his employees and their families. His biggest monthly bill is his company’s health insurance plan and judging by how much government has f*cked up just about everything else they’ve put their hands on, the last thing he wants government to do is get involved there. In fact, he would just as soon give his employees the ability to shop and choose their own health insurance provider. He’d give them a raise if they did.

Joe doesn’t want a handout. He doesn’t want a floor beneath him because he doesn’t want a ceiling above him. He doesn’t want to be penalized for working hard, following the rules and realizing the American dream. He’d just as soon you leave him alone and stay out of his way.

And for his success what does Barack Obama offer him?

Deep down Barack doesn’t want to celebrate his success. Barack can’t identify with a guy like Joe. Barack colors him “wealthy” and wants to take from him and give to those that can’t or won’t do what Joe has done.

Taking from the rich and giving to the poor has left us a bankrupt nation. In the interest of “fairness”, Barack Obama and his liberal cronies want now to take from the almost-rich and give to the almost-poor. It is time-tested formula for national failure. It is exactly the wrong course for America in a time when we need leaders for which more spending and more taxes isn’t the answer to every single issue that faces our nation.

But of late, Joe has become outnumbered. The pendulum has swung from the ranks of the self-reliant individual that values hard work, saving, accountability, investment, financial freedom and wealth creation; The American Dream is dying a slow death by asphyxiation.

Swelling are the ranks of those that have given up on those values; including far too many Republicans.

We now suffer a majority of Americans that see government as some disassociated entity that sends them a check without regard for where it came from. Life is too tough. Government is the answer. We have a right to a home and a comfortable life and we shouldn’t have to work so hard to have it. These are the people that think Joe just got lucky. And maybe he did – it’s the kind of luck that comes from working hard. They don’t see the sleepless nights; the seven-day work weeks; the fear of failure.

Welcome to the Entitlement Society. Where no one suffers and no one rises above. Where the goal is to game the system, and the Democrats will show you how. They will tell you you’re pissed and rightfully so: vote for me.

The Democrats are leading the charge and are ignorant to risks their policies pose to the financial survival of our nation. The takers have stormed the castle of the givers and have breached the outer wall, flooding the courtyard chanting Change, Hope and “Obama! Obama! Obama!”

We all need Joe. We need Joe desperately right now. But Joe may become an endangered species. Obama wants to put Joe on the ropes because Joe doesn’t vote for guys like Obama.

…and when we have no more Joe’s, our nation ceases to exist.

Flash:

 Conservatives heads exploded simultaneously at the announcement of political gadfly Paul Krugman’s Nobel

Nah.  Head is firmly in place.  Being a conservative, I look at issues on their merits, using actual data and facts.

King, who has a vocational reason to remember Nobel Economics Prize trivia, has the inside poop:

If you’ve read here before, you know that I think Paul Krugman is an excellent economist … and a lousy political observer…They indicate that “netting out” bad research is not part of the process, so all the things we might disagree with Krugman about are not part of the record the Nobel Committee looked at…

…His prize is rather obviously…”for his analysis of trade patterns and location of economic activity.”  This is a single analysis.  Basically, before Krugman trade theory was simply a matter of factor endowments.  To take an example I use in class, in the old trade theory we had manhole covers made in India and in Michigan.  India had cheap labor, so focused on making them using a technology that used lots of labor.  In Michigan capital was comparatively cheaper, so the covers were made in a more automated process that minimized labor.  Trade patterns were based on who had more labor or more capital, more land and natural resources, etc.  Krugman changed all that.  Some people have tried to say it’s both trade and economic geography, but I read both as coming out of a single research agenda, one of many he’s had.

Krugman is an example of someone who is perfectly capable – indeed, brilliant – in his actual field; he’s also an example of how excellence doesn’t always translate between fields. 

Sort of like how “being on the Harvard Law Review” doesn’t necessarily mean “great leader”.

Congrats, Krugs (as all of us pals of his call him).  Someday, we’ll teach you how to write a coherently-reasoned column.

Step One…

Governments are “tackling the root of the problem,” said Christopher Wong, who helps manage about $25 billion in assets as investment manager at Aberdeen Asset Management Asia Ltd. in Singapore. “They’re putting confidence back into the market by not just adding liquidity but adding strength to the banks that serve main street.”

Step Two…

Dow Jumps 300 in the First Minute

It’s fun…while it lasts.

Dow Jones Up Over 900 Points.

Biggest Rally in 70 Years

Dow Jumps 938 Points after Historic Weekend

What does this mean?

It means something and nothing all at the same time.

One day does not a trend make.

But at least it doesn’t suck.

Stay tuned to Shot in the Dark for more of this detailed and inspiring analysis.

The Washington Post is already deconstructing the financial crisis, and looking for the upside. That being, we will learn our lesson and be better for it in the long run. It’s a pretty good forensic analysis but Fareed Zakaria got a couple things wrong…really wrong.

Since the 1980s, Americans have consumed more than they produced and have made up the difference by borrowing. Two decades of easy money and innovative financial products meant that virtually anyone could borrow any amount for any purpose. Household debt ballooned from $680 billion in 1974 to $14 trillion today. The average household has 13 credit cards, and 40 percent of these carry a balance, up from 6 percent in 1970.

This is all true, but I don’t know one person that has thirteen credit cards.

But the average American’s behavior was virtuous compared with government behavior. Every city, county and state has wanted to preserve its proliferating operations yet not raise taxes. How to square this circle? By borrowing, using ever more elaborate financial instruments.

True also. When do we get to the part however, where the two combined forces. Where government decided that home ownership, and getting a loan to make it so, was no longer the American dream? That in the interest of “fairness” it was a right; no matter what your income or credit history was.

If there is a lesson to be taken from this crisis, it’s an old rule:There is no free lunch. Now, debt is not a bad thing. Used responsibly, it is at the heart of modern capitalism. But hiding mountains of debt in complex instruments is an invitation to irresponsible behavior.

Okay, I’m still with you.

In the short term, governments must take on more debts and obligations to resolve the crisis. But that doesn’t mean we should stimulate the economy with more tax cuts, as some economists advocate. That would only keep the party going artificially. A far better stimulus would be to expedite major infrastructure and energy projects, which are investments, not consumption,and have a different effect on fiscal fortunes.

…as some economists advocate? Silly economists. Don’t listen to them. Keep the party going artificially? Like the longest and most robust period of economic prosperity ever in the history of America? That was a party? No. It was real and it was brought on by Ronald Reagan’s disdain for ever-larger government and economic growth spurred by tax relief.

…and let’s not forget…one benefit of Ronald Regan’s leadership: revenues to the federal government increased dramatically. Revenues that could be used to pay for those goverment functions that are necessary and practical; revenues that could be used to pay down our debt. Back then we had true fiscal leadership in the White House. It’s been a while.

A far better stimulus would be to expedite major infrastructure and energy projects, which are investments, not consumption, and have a different effect on fiscal fortunes.

Them’s some big words. I love it when a liberal calls government spending an “investment” and hides it among the big words – prose not unlike the financial derivative instruments he (rightfully) lambastes a few sentences ago.

The U.S. economy remains extremely dynamic. Even now, the most surprising data continue to be how resilient the economy has been through the recent shocks. That will not last if the panic persists, but the economy’s underlying virtues would help it recover quickly from a recession.

Underlying virtues..extremely dynamic..resilient? Sounds like our economy is fundamentally sound. You best be careful there…that sounds like you agree with John McCain. That could cost you your paycheck where you work.

The Fed, White House and congress are almost out of options. Pelosi’s proposed stimulus is more of the same and will only contribute to the length and depth of whatever course this crisis is bound to take. The only option – the only proven option – is to cut taxes and allow the free enterprise system – led by small business – to grow us out of this predicament.

Barack Obama’s explanation of his tax plans if elected is instrumental in illustrating the thin line between lying and nondisclosure. His plan to raise taxes on those that employ a great many of his constituents is a failure to realize the benefit of economic lessons learned. It is also proof of his gross economic illiteracy.

His “Tax Cuts for 95% of Americans” ploy, given the fact that 40% of Americans don’t pay taxes defies basic mathematics. The idea that those above $250K represent the Nation’s upper crust defies the imagination.

Being subject to lower taxes will not be relevant to middle-class American families if their breadwinners lose their jobs. Half of America’s workforce draws a paycheck from small business owners. Further burdening these businesses, especially in challenging times like these, will serve only to harm those that Obama professes to be the messiah they’ve been waiting for. In fact, they will suffer the most.

Make no mistake. We are in a recession.

We need small businesses to do what they have done in most every previous recession. Grow. Hire. Invest. Small business has lead us out of tough times in the past, and if given the chance, will do so this time as well. Unfortunately, in the face of this recession, the American voter, in a twisted manipulation of cause and effect, has been lured into thinking that a Democrat is the answer. They will be dead wrong.

It is a sad commentary that the only upside to the current political tide for business owners and investors, and those that benefit from their success, is that an Obama Administration will be another Carter administration. Maybe worse. In this scenario, voters will awaken to the stark postmortem reality that a vote for a true conservative is a vote for economic prosperity.

In all fairness, Republicans deserve this predicament even if it is the American people that will suffer the most. Opportunities for true reform and fiscal restraint were squandered. President Bush has been one of the most fiscally liberal Presidents in modern times; and he’s a Republican.

The fact remains however, that raising taxes and spending any time in the next eight years, given the economic turmoil that we have just begun to suffer, is the polar opposite of what should be prescribed.

Our nation is amidst a time of unprecedented vulnerability. To think that a liberal majority can somehow resist the temptation to push their socialist agenda, even given the catastrophic consequences it will have for our nation, is a pipe dream.

We are on the precipice of total economic collapse as our system unwinds from a forty year super-cycle of growing consumer and national debt brought on by liberal economic policy and the inability of conservatives to exhibit the leadership to countermand its effects. Barack Obama has been consistently aligned with those that planted the seeds of this crisis while John McCain has been one of only a few voices of caution when leading indicators appeared on the horizon.

Do we face another Great Depression? It’s hard to say with certainty. Given our precarious economic status and the near certainty that liberals will gain unfettered control of fiscal policy, there is cause for concern. Great concern.

In the last Great Depression, fiscal policy was exactly wrong, albeit in hindsight. As the economy weakened, the Fed actually increased rates. The President resisted even short-term deficit spending. Unemployment was higher than it is now.

In this case, the Fed has little more it can do. Deficit spending has been the norm for years. We have a ten trillion dollar national debt; closer to thirty if you count future obligations. Interest rates are already close to the bottom.

The only lever left is to lower taxes and allow the free enterprise system to rescue us via the creation of new jobs and wage growth, which will drive consumerism and investment. Even that takes time. Time we may not have. Ronald Regan’s efforts took more than a year to take effect.

Consider this: lowering taxes and incentives to allow the free enterprise system to pull us out of the grasp of recession; does this sound likely given the trend in the affiliation of our elected officials?

Be afraid. Be very afraid.

The Dow Sends a Message to Obama, Carter, Clinton, Dodd, Raines, Frank and the rest of our nation’s liberal social engineering geniuses:

If I have one strength in life, it’s that I’ve done my best to keep myself mobile as far as career options go.  I’m on my third career (fourth if you count my time as a nightclub DJ, and I certainly don’t), and I’ve done my best, so far, to try to make and keep myself as marketable as possible, and to try to rely on me, rather than a job or union or company, to ensure my viability.

In hard times, there are no guarantees; even being adaptible and light on your feet aren’t going to pay the mortgage if things come to a crashing halt.  But every little bit helps, as they say. 

Of course, the news media – especially traditional “journalism” – have been depressing rapidly for quite some time, now.   

Jeff Jarvis, himself a J-School faculty member, judges the journalism biz, finds them wanting, and they’ve brought it on themselves.

The fall of journalism is, indeed, journalists’ fault.

It is our fault that we did not see the change coming soon enough and ready our craft for the transition. It is our fault that we did not see and exploit — hell, we resisted — all the opportunities new media and new relationships with the public presented. It is our fault that we did not give adequate stewardship to journalism and left the business to the business people. It is our fault that we lost readers and squandered trust. It is our fault that we sat back and expected to be supported in the manner to which we had become accustomed by some unknown princely patron. Responsibility and blame are indeed ours.

[The WaPo’s Paul] Farhi’s rationalization on behalf of his fellow journalists makes many bad assumptions and blind turns and Greenslade only follows him down those alleys, piping in with (my emphases follow) an “unhesitating answer” of no to accusations of journalistic guilt. “There cannot be any doubt that journalists themselves … cannot be held responsible for either the financial woes of the industry nor for the public turning its back on the ‘products’ that contain their work.” He piles on: “They are blameless.” They have “no reason to feel guilty…. It isn’t our fault…. The truth is that we are being assailed by revolutionary technological forces completely outside of our control…. We journalists are not [his emphasis] paying the price for our own (alleged) failures…. you are not the cause of the current calamity.”

The hack doth protest too much.

The old model – journalists as high priests of knowledge, passing information down the hierarchy to the unwashed masses – has been dying for a decade.  Drudge put the bullet in the gun; Powerline pulled the trigger four years ago. 

And yet the people in the newsrooms still cling to that old model:

The internet does not just present a few glittery toys. It presents the circumstances to change our relationship with the public, to work collaboratively in networks, to find new efficiencies thanks to the link, to rethink how we cover and present news. No, the essence of the problem is that we thought the internet represented just a new gadget and not a fundamental change in society, the economy, and thus journalism.

By maintaining the newspaper and its newsroom as essentially static entities, Farhi also makes the common and dangerous assumption that their budgets are also fixed: They are what they are because they always have been and so that’s what they need to be. So it’s not their fault that they need to be supported at that level. But newsrooms are terribly inefficient and too many of their expenses were fueled by ego. We bear business responsibility. That is why I am teaching business in a journalism school, so we can be better stewards.

Like most of what Jarvis writes, it’s worth a read.

The markets appear poised to take a breather today as the hysteria subsides (update: ok, maybe not) if only for a moment. The bailout has passed but has not been implemented; it’s effect limited to the psychological benefit to those who value short-term fixes for long-term issues.

In her post-debate analysis of the Presidential debate, Nina Easton of Fortune magazine dramatically called the end of the conservative movement.

“We’re witnessing tonight something quite profound and that was the sinking ship of free-market Republicans keel over, groan, and fall to the bottom of the sea. John McCain, without much notice, proposed a $300 billion dollar plan to nationalize home mortgages…”

Her dramatic punditry was triggered by John McCain’s proposed plan to spend $300 Billion of the bailout kitty on buying down under-water mortgages. I’m not sure if McCain planned this or if it came to him during the debate, but let’s be clear on a couple things today.

First of all, if this action is required to rescue our financial system and preserve what’s left of our economy, let’s not confuse the medicine with the disease. We face unprecedented (at least in modern times) financial challenges that require the consideration of “all of the above”.

If some of these bailout dollars are to be used to acquire appreciating assets, taxpayers can cross their fingers and at least retain some hope of being paid back to some extent, and God willing, realize a profit.

But don’t hold your breath.

To that end, Treasury Secretary Paulson announced this morning that some of the dollars earmarked for the economic rescue plan may be invested in some of the more troubled banking institutions.

Paulson told reporters in Washington yesterday that legislation Congress passed last week to rescue financial institutions gave him broad authority that he intends to use, beyond just buying mortgage-related assets on banks’ balance sheets. He indicated that an option available may be boosting companies’ capital with cash infusions.

“It is the policy of the federal government to use all resources at its disposal to make our financial system stronger,” Paulson said. “We will use all of the tools we’ve been given to maximum effectiveness, including strengthening the capitalization of financial institutions of every size.”

This “strengthening” may include purchasing troubled assets these institutions in exchange for equity in the institution. As such, I wouldn’t characterize this as a pure play socialistic intervention as some pundits have of late.

On the other hand, lets not lose sight of the fact that American taxpayers have unwillingly found themselves party to a violation of epic proportions.

Back to the medicine and the disease: let us not at the same time forget who caused this crisis.

Once upon a time, Liberals in Washington decided that their constituents held a the right (not the opportunity) to home ownership, without regard to their economic relevance to the economy. This pressure was manifested in directives and incentives for their buddies at Frannie Make to acquire mortgages that would otherwise not be considered good long-term investments. All this while the liberals nudged and winked “Don’t worry, we’ll bail you out if this all goes awry.”

(A self fulfilling prophecy if ever there was one)

This created a vacuum that was willfully and eagerly filled by the likes of WAMU and Countrywide who flooded the market with cheap mortgages, sold them to anyone that could fog a mirror, knowing that Frannie Make would take them off of their hands.

Meanwhile, these mortgages were packaged as safe investments and sold to companies like AIG.

In turn, artificial demand for homes elevated their value and created an enormous drive to buy land and build homes to satisfy the voracious appetite for them. These homes, once occupied, continued to artificially appreciate, creating a refinancing craze and providing capital via increasing debt for the purchase of consumer goods including but not limited to the items to fill these homes.

(The Bubble)

Once the inevitable failure of many homeowners to continue servicing this ill-gotten debt ensued, the domino effect followed close behind. So much of our economy hinged on the ability of homeowners to borrow against their homes – or even the psychological effect of the knowledge that they could – that when it vanished, consumerism went with it.

Institutions found themselves in receipt of illiquid assets as the market for them was flooded.

(Pop! )

Clearly it was not free-market “Republican” principles that caused this crisis, and unfortunately, due to the magnitude, it won’t be solved by free-market principles alone. The American people have little appetite for long-term solutions that require short-term pain. Furthermore, I bristle at the fact that domain of free-market and free-enterprise principles have been relegated solely to the Republicans – I’ve always thought of them as fundamental American values.

Liberals have brainwashed Americans for years into thinking that they need government to solve their problems, to take the sting out of life, to shave the peaks to fill in the valleys in the interest of fairness.

Barack Obama is the most liberal Senator in America. He personifies all that is wrong with American fiscal policy. His rhetoric belies his record, his history, his choice of advisers and associates and his claimed intent to lower taxes. His actions speak so loud, his words we should be smart enough to discount. His brainwashed minions follow him and don’t even know why, nor do they realize the damage he and his liberal brethren could do to our economy.

It was the very government meddling that Obama espouses, some years ago, perpetuated by unchecked greed and political power, and despite warnings of John McCain and others, that created a crisis of such proportion that only government intervention could solve it. We can only hope that this truth is not lost on the American people as they consider solutions for our country’s most pressing issues.

House approves historic $700 billion financial bailout bill

Financial-Rescue Package Wins Final Approval With House Vote of 263 to 171

According to preliminary numbers, 172 Democrats voted in favor of the bill while 62 opposed it; and 91 Republicans voted for it and 108 voted against it.

Bush to quickly sign bailout bill

The Market reaction?

Let’s just say it’s not down. (1PM)

“Iceberg? What Iceberg? We were just trying to see how fast she’d go.”

but Still in the Woods, to The House of Representatives we go…

The Senate’s revised bill sweetened the original package by tacking on a number of tax breaks and other perks in the hopes of swaying the House to reverse its original veto.

The add-ons include tax breaks for businesses, users of alternative energy and hurricane victims as well as relief from the alternative minimum tax.

Also, it would boost the limit on FDIC-insured bank deposits to $250,000 from $100,000 for one year.

Additionally, a bill boosting improved health insurance for mental health was wrapped into the package.

Say again? Was that Pelosi’s idea?

In all, the add-ons bring the potential package cost to over $800 billion, according to published reports.

What’s an extra $100 Billion?

The revised bailout received the support of both presidential candidates.

American taxpayers have swamped many representatives’ offices with e-mails and phone calls, with overwhelming majority urging them to vote down the bill.

…and they were listening last time. Brace yourself. This may not be over yet.

The financial markets melt down.

The country teeters.

Barack Obama…

…votes “present” and spends the day preaching to the choir.

Really, what is to be afraid of if he wins?

No, not even close.

But it’s pretty beat up this week. And it’s not even it’s own fault.

Capitalists are advised to gird their loins, keep a stiff upper lip, turn the other cheek and brace for impact over the near term.

Especially in the Twin Cities.

Over the next couple of weeks the downtrodden, the liberal media, and any other self-appointed disenfranchised victims with a pen or a microphone are going to come out of the woodwork and point their ignorant editorial finger at the “capitalist fatcats” who are ruining our country. All the while failing to realize whose name is on their meager paychecks or whose enterprise and the philanthropy it made possible, funded the grant or the foundation that put them on the air or puts their drivel on paper.

They’ll blame unfettered capitalism for all our nation’s troubles (giving Global Warming a break for the time being) and cite the real estate meltdown and it’s newly minted (pun intended) cure.

And the alleged scheme by John Petters isn’t helping either. The timing could not have been worse for free-market proponents.

Oh, and they’ll somehow blame George Bush even more.

They’ll forget how the Kennedy’s made their money (which was has since been outlawed by securities regulators among other authorities), and the Carnegie’s, the Gates’, the Rockefeller’s and the rest of the benefactor families that turned capitalism and the American Dream that is it’s upside into the largest charitable foundations in America. Their foundations fund the arts and education; they fight poverty and disease wherever it is found in the world. No doubt it is done more efficiently than any government agency ever could.

Nonetheless, stand by for the knee-jerking.

Mrs. Roosh and I walked most of Broadway in NYC today, ending up at the New York Stock Exchange on Wall Street.

I asked the guy at the door if there is anything I could do to help.

He said they have everything under control.

Hmmm. Okay.

President Bush, Henry Paulson and Ben Bernanke haven’t been able to push through bailout legislation without pushback from Republicans and Democrats alike.

This is good. For a while.

Time is still of the essence.

The market today agrees so far, rising on expectations that the bailout will happen, and not fretting over the fact that cooler minds are prevailing; giving pause.

Free market purists are calling for a no bailout approach but this situation has devolved to the extent that inaction is no longer an option.

The cause and the action needed to rectify the effect need to be treated separately. The patient needs to be stabilized before we call in forensics. In time, the facts will show the blame will fall across multiple administrations and both parties in congress. True to form in any bubble, irrational exuberance will have been exhibited by all parties involved. Once the market lost its luster, real estate became the highest and best use for capital. For individuals and corporations alike.

Too much money chasing any particular ascendant asset class results in the potential for a bubble to form. Coupled with a congressional mandate to push all citizens, even those that truly don’t qualify, into home ownership, you have the potential for a disaster.

Another perfect storm.

In the wake, the bailout needs to be right more than it needs to be fast. Past examples are rare, but there is a chance, if structured properly, that the American taxpayer could recoup much or all of the bailout dollars. A knee-jerk reaction focused on quick action over prudent action will all but prevent this.

If we are buying the assets, we need to be in a position to benefit from their appreciation in value and/or proceeds of their sale. Congressional oversight and control of executive compensation must also be mandatory provisions.

As for the finger pointing? Blaming this disaster solely on Wall Street is inaccurate and unproductive. This was a systemic failure. A failure of regulation. A failure of ethics. A failure of speculation. We are not bailing out Wall Street, we are bailing out our entire national financial system.

Mrs. Roosh and I will be travelling to New York tonight through Sunday to see what we can do. We will keep you posted on our progress. Okay, it’s more of a vacation, planned since February. I promise if Hank, Ben, or G.W. call on me, I will drop what I’m doing. In the John McCain idiom, we will roll up our sleeves and work tirelessly to restore confidence in our financial systems.

…and we’ll take some pictures.

Update:

Bailout: Lawmakers say they’ve reached deal

The Paulson Plan Will Make Money For Taxpayers

The Next Bailout: Detroit

First came Bear Stearns, then mortgage lenders and borrowers, followed by Fannie Mae and Freddie Mac: They’ve all looked to Uncle Sam for a bailout, and now the word around Washington is that Detroit will be next on the taxpayer supplicant list.

Bear Stearns wasn’t a bailout. It was a buy out, orchestrated by the government to protect our nations financial infrastructure.

Detroit’s political calculation is plain: Having seen the way Washington has bowed to rescue the mortgage industry and Wall Street, why shouldn’t auto makers give it a try? Michigan is up for grabs in the election, so now is the time to strike with a goal of getting the Bush Administration and both Presidential candidates to agree.

Many of us have already done our part. I own two American cars, both rare examples of exceptional design and appeal. A Chevy Suburban and a Chrysler 300C, both with advanced safety features and cylinder-deactivation technologies that allow for fuel efficiency that belies their size and utility.

None of us should be expected to pay to allow Detroit to play. Our American automakers, as much as most consumers would hate to see them fail, deserve their fate. Our political integrity (I know – that’s an oxymoron) should not be allowed to be held hostage.

They are not victims of the fear and economic conditions brought on by an act of terrorism like the airlines.

They are not critical to our financial system as our major banking and mortgage institutions are.

They are public (most of the time – Cerberus-owned Chrysler a current exception) companies that operate in a free (albeit heavily regulated) market.

While they may have been severely impacted by a spike in fuel prices and a concurrent (and resultant) recession, they are not victims of it.

The car makers can also claim with justification to have been hurt as badly as anyone by Washington’s policy blunders. The weak dollar has contributed to the spike in oil prices that has socked their most profitable vehicles. And the nonsensical way that fuel-economy standards force Detroit to subsidize cars that consumers won’t buy has helped put the Big Three in this hole.

Over the last two decades or so, the vehicles with the highest sales numbers have been either a four door family sedan or a pickup truck. The Big Three have dominated one and consistently ignored the other.

Auto industry publications have been imploring the “Big Three” to be competitive in the family sedan segment for decades while the Japanese, primarily with the Camry and Accord, have almost completely poached the market. Market trends have driven fuel economy for decades as well and the Big Three have ignored the signs. I don’t begrudge them the success they have had in the light truck and SUV segment – but at the same time ignoring the rest of the market has for years left them vulnerable to the inevitable day that gas prices would adjust for inflation, let alone represent a crisis as demand has outstripped supply. 

Americans won’t buy the cars that the Big Three have had to subsidize because the product, until only relatively recently, has lacked quality and appeal. When Honda and Toyota build factories in America to build the cars that GM, Ford and Chrysler claim aren’t profitable, their argument falls apart.

There also happens to be a thriving U.S. auto industry outside of Michigan. These plants are owned by foreign companies, but they employ 92,000 Americans and build and sell cars here. Tens of thousands of their shareholders are Americans.

Certainly the UAW shares a large share of the blame. Their myopic strategy of bleeding their host to death, ignoring market conditions and grossly over-valuing their collective services have forced the Big Three to cut content and engineering to compete on price with the Japanese. The result is a widening of the already formidable gap in quality further undermining consumer goodwill and forcing American domestic brand loyalty beyond its limits. In the end the UAW will be left holding the bag.

A bailout at this point is a really bad idea. First of all, it’s been done before – at least once. The result? The Chrysler minivan which simultaneously saved Chrysler and emasculated millions of American males.

More importantly, our long standing economic dominance in the world is predicated on the fact that capital and talent is free to find it’s highest and best use. Pouring billions of capital into a national bailout is exactly the wrong move, evidenced by the extended Japanese recession not all that many years ago. Good money was sent after bad. Capital became scarce. Failed business models and management teams were kept on life support rather than being forced to retool and reinvent.

Regardless of where and why these federal bailouts started, American taxpayers can’t save everyone. The only way to stop this parade of supplicants is to start saying no — and Detroit is as good a place as any.

I have been accusing Obama of economic illiteracy for some time now as our nation’s impending financial crisis should by far be our chief concern for the future of our nation and voters would be well advised to consider this before conferring their will in November.

Obamanomics Is a Recipe for Recession

…despite his obvious general intelligence, and uplifting and motivational eloquence, Sen. Obama reveals this startling economic illiteracy in his policy proposals and economic pronouncements. From the property rights and rule of (contract) law foundations of a successful market economy to the specifics of tax, spending, energy, regulatory and trade policy, if the proposals espoused by candidate Obama ever became law, the American economy would suffer a serious setback.

A setback hardly sounds ominous in the big scheme but I wonder if the average American has a grasp of how close our economy could be to the abyss right now. It’s one thing to hear consumers lamenting the fare the media serves up as market and economic intelligence. It is quite another to hear accomplished, accredited investors and the well informed talk of collapse.

I have always heard the former and have dismissed it as the flotsam that it is and have advised my clients to do the very same. Hearing the latter of late has me concerned.

There is a fair amount of optimism in the marketplace as well but that may be recalled if Obama ascends to the White House. His personal economic illiteracy is not so much the issue, as we all know the President can’t forge economic policy without the boys and girls on the hill.

Some cite Bill Clinton’s move to the economic policy center following his Hillary health-care and 1994 Congressional election debacles as a possible Obama model. But candidate Obama starts much further left on spending, taxes, trade and regulation than candidate Clinton. A move as large as Mr. Clinton’s toward the center would still leave Mr. Obama on the economic left.

Also, by 1995 the country had a Republican Congress to limit President Clinton’s big government agenda, whereas most political pundits predict strengthened Democratic majorities in both Houses in 2009.

Essentially, Obama will presumably make every effort to drain what’s left of our economy (“Hey, cool! What does this button do?”) and there will be no one to stop him.

History teaches us that high taxes and protectionism are not conducive to a thriving economy, the extreme case being the higher taxes and tariffs that deepened the Great Depression. While such a policy mix would be a real change, as philosophers remind us, change is not always progress.

Consider this: January is not that far away. How much do you expect our economy to recover between now and then? We’ve had a credit and housing meltdown, the lava flow of which has not yet stopped its seething march into the lower regions of our economy. This coupled with record high energy prices and reduced consumer spending have culminated in a near perfect storm. There is just one thing missing to set into action a collapse of our dollar and our economy.

A major disruption in oil production or a terrorist attack would do.

Obama in the White House may suffice as well.

It looks like you are getting screwed, even without Obama in office and even if you borrowed responsibly while everyone around you went all in.

It would appear the White House, reportedly run by a Republican Administration, has better things to do than protect taxpayers from covering losses taken by people that either (1) Should have known better (2) were realizing the downside risk in their investment which in no way should have been a surprise or (3) were out to screw people out of their homes, their money, or both.

Housing Bill Hammers Taxpayers

Combine a housing meltdown with election-year politics and the results were not going to be pretty. Add a crisis in confidence in Washington’s favorite quasipublic companies and what we’re getting is a rout for taxpayers, especially those who kept their heads during the housing mania.

The House yesterday passed a housing bailout by 272-152. The White House has thrown its reservations overboard and is begging to sign this boondoggle, despite the less-than-veto-proof majority. A few brave souls in the Senate are threatening a filibuster, which is where the last hope lies for stripping the most egregious and expensive provisions from this monster.

Even conservative estimates by the Congressional Budget Office say the cost for this bailout will run to $41.7 billion, with $16.8 billion offset by higher taxes. No one has any idea of the real cost.

On the floor of the House yesterday, Democrats argued that this bill was the least Congress could do “for the people,” given the way the government had “helped” Bear Stearns. The cost borne by Bear Stearns was having its shareholders all but wiped out and half its employees pink-slipped. Countrywide was likewise sold at a fire sale price. Not so these two government-chartered giants.

Citing the Bear Stearns “bailout” as a precedent, a Democrat has only to open his or her mouth to reveal a view to profound economic illiteracy. Forcing one financial institution to buy out another and at a price just North of zero thereby locking in losses for investors and employees alike (many of which just before being asked to gather their personal effects) is hardly a bailout.

The Fan/Fred Bailout Is a Scandal

This should have been a perfect opportunity for Republicans, struggling to regain some standing with the American people, to rise united and demand real accountability and reform.

Just as House Speaker Nancy Pelosi predicted last week, President Bush withdrew his previous veto threats against the overall legislative package on Wednesday, having gotten virtually nothing in return.

So what will congressional Republicans do? Ironically, a veto-sustaining majority of House Republicans — led by House Minority Leader John Boehner, Financial Services ranking minority member Spencer Bachus, and Republican Study Committee Chairman Hensarling — voted against the bill on the very same day that the Bush administration caved. “I’m deeply disappointed the White House will sign this bill in its current form,” said Mr. Boehner in a statement. “We must take responsible steps to ensure our financial and housing markets are sound, but the Democrats’ bill represents a multibillion dollar bailout for scam artists and speculative lenders at the expense of American taxpayers.”

Multiple polls show that majorities oppose a federal mortgage bailout by a two-to-one margin.

The President could apparently veto this measure with success but won’t. Washington DC will soon become the largest financial sinkhole in the history of civilization and voting Republican is unfortunately no guarantee of relief.