The Obama Stimuless

This Week on ABC is featuring an interview with Barack Obama.

When asked by George Stephanopoulos about tax cuts and the economy, Senator Obama spoke to the differences in the economic theories of his strategy versus Senator McCain’s.

Obama’s plan, tax cuts to the middle class is a bad idea, and an ill-advised one based on the notion that the economy somehow grows from the bottom up, which is in fact how Obama himself described his plan.

Ben Stein, Lawyer, Writer, Actor and Economist: I ADMIRE Barack Obama…But I am a bit worried that his knowledge of economics may not be as extensive as his legal background. In particular, he’s been campaigning with an idea of a second round of economic stimulus to combat the evident slowdown in the economy, to follow President Bush’s first round that is now wrapping up. The first round hasn’t succeeded, and Senator Obama’s ideas aren’t very promising, either.

The failure of the Bush stimuless program clearly confirms this. Tax cuts for the middle class amount to a few hundred dollars per year – essentially, another Bush stimulus check. Obama has said that he would be in favor of another stimulus package, despite recent evidence that it has failed. So how is that change? How is that different than Bush’s economic strategy?

In a nutshell, why have a stimulus program that may not — and probably should not — stimulate much consumption? And why help pay for it through taxes on a group whose members have done no moral or other wrong and who often are not particularly rich, either (not that it’s a moral wrong to be rich)?

These are complicated issues, and

I am not even remotely sure how to solve all of them myself. But some of Senator Obama’s plan is just hard to rationalize.

Our economy is fueled by consumer spending stemming from consumer confidence and job creation through the formation of new businesses. Tax cuts to those that start these new businesses have been shown time and again to stimulate the very growth that creates jobs and bolsters consumer confidence which leads to increased consumer spending and ultimately increased tax revenues.

It’s simple. Whose name is on your paycheck? Do you want the government to help this entity or person or harm them? Do you want them to be incented to hire more of you or not? Do you want them to be profitable so that they can increase your income at the next review or not?

Our economy is like a train. The engine is corporate America and small businesses – employers large and small. The train cars are working Americans – taxpayers. The caboose represents those that don’t pay taxes or are unable to work or provide for themselves.

Government? Government’s role should be to keep the tracks clear of danger and to help people get on the train, or back on the train if they get knocked off. Government’s role has however become the cargo, and to help more and more people become the caboose.

Make no mistake. We need the caboose. There are people that can’t contribute to our economy and the government should play a part in their care and protection. Liberals however are confused as to which end of the train serves the most important role in our nation and our economy.

Tax cuts and rebates to the cars in the train doesn’t make the train go any faster. Gearing our economy to the caboose hurts everyone on the train, including the caboose. Increasing government just increases the load for the engine.

So why do liberals continue to offer up this strategy as an economic policy? Votes. Political expediency. Obama is pushing this strategy to buy votes, plain and simple; just like every liberal predecessor. That’s not change either. That is the liberalism that is just another stripe in the spectrum of socialism.

What liberals don’t understand, and why usually the American electorate swings in the direction of the Republicans during economic challenges, is that in most cases, “wealthy” Americans are just regular people that took risks to leverage the American dream.

After eight years of Republican liberal fiscal policies, the American people are confused, which goes a long way to explain Obama’s popularity despite his lack of executive experience and ill-fated economic proposals.

John McCain is wise to distance himself from the Bush administration’s economic strategy and is attempting to make the case to voters that the solution to our economic woes is to shrink government, to keep money in the pockets of those that earned it and to stimulate economic growth through the creation of jobs.

Gearing our tax code to continue to penalize the “wealthy” in order to redistribute the booty to and eliminate the risks of life of those that would vote Democrat has weakened our nation and serves to drain the incentive of those that create jobs and take those risks that ultimately grow our economy.

Obama’s plan is a failure out of the box.

You Can’t Produce Your Way Out Of Scarcity…

…in the same way that you can’t exercise your way to better health.

And the idea that you might try to (along with demand dropping at the end of summer) certainly looks like it’s starting to kick in:

Oil prices sank to a five-month low of just more than $105 a barrel on Tuesday as traders turned their sights on signs that slower growth was spreading beyond the US into Europe, Japan and even emerging markets.

The fall led some analysts to suggest that oil prices could move back below $100 a barrel, a level not seen since March, after fears that US oil supplies could be severely disrupted by hurricane Gustav proved unfounded.

Make mine a double.

Recession Interuptus


“So I ask you, ladies and gentlemen; fellow Americans, are you better off – “

Aide walks to podium, whispers in his ear “spssss sps spssss spssss”

“uh, where was I?”

“Yes, uh, Change! Hope! Et cetera!”

It would appear that, at least until the election, our nation has averted an economic contraction and has actually grown more than predicted. Our 2nd quarter economy grew at an annualized rate of 3.3% instead of sinking towards what seems like a perpetually anticipated recession.

Not that it has been correlated with Bush’s stimuless check, but I may have to eat my words on the futility of the ill-advised tax rebate as the consumer has once again come to the rescue of our GDP.

More substantially though, the weak dollar has created a surge in exports.

U.S. Stocks Rally as Economic Growth Tops Estimates; Banks Gain

The Economy’s Upside Surprise

The timing may bode well for McCain and the RNC but all indications are this may very well be an economic dead cat bounce as exports rely on the health of other economies which are tenuous at best.

So keep spending until November please.

Obama’s economic recovery plan fails…to exist

And now, back to the issues.

“It’s the economy, stupid”


“Hello, is this thing on?”

A continued and unpopular (but successful) war, high gas prices, increasing unemployment levels, weakness in wages and an economy on the brink of recession, Obama should be doing better than what was characterized on CNN last night as a “dead heat”.

Election history tells us however that Obama should be in the lead.

…and President George Bush’s popularity at near historic lows, even many Republicans thought this year would be a virtual cakewalk for the Democratic nominee.

A fall in real incomes in the months leading up to the election almost always leads to a loss for the party in power, pointed out Nigel Gault, head of North American macroeconomics for Global Insight, in a recent conference call with investors. “The incumbents tend to take the blame,” he said. “This should be an uphill battle for McCain.”

But on the eve of what Obama and the Democrats hope will be their own Rocky Mountain high, that’s not proving to be the case.

Obama has not been able to capitalize on the economic woes to build an electoral lead. “It’s an absolute mystery that Obama has not been able to exploit this issue more aggressively,”

It’s no mystery. The American people are beginning to see that Obama is a wee bit light on experience and accomplishment in any area let alone the economy, and what he does actually spell out is clearly going to be bad news for the economy

“If he is going to win, Obama will have to win on the economy,” says Thomas Riehle, a Democratic strategist and pollster

His lofty rhetoric—and focus on criticizing McCain and the Bush legacy—have yet to demonstrate convincingly to many of these struggling folks just exactly what he would do to turn the economy around.

Even some Democrats may not stomach the huge expense and vast complexity of Obama’s proposals.
This year that gap between promise and reality may be even larger than usual. “Whoever wins will face a big wake-up call as soon as the election is over,” says Daniel Clifton, head of Washington policy research for investment group Strategas Research Partners. “Many campaign promises will need to be scuttled.”

The 2009 economy will offer tough conditions for a President set on bold new policies. The next Administration will face anemic growth, sluggish employment, a housing downturn expected to continue at least through much of next year, and continued tight credit markets as the shakeout works its way through the financial sector.

The American people, also knowing this, may already be answering the question “Under these circumstances, who do you want in the White House?”


Things I Shall Never See

One:  Tom Swift and Mark Gisleson discussion the fine-point pros and cons of Hayek over a bottle of Chilean Pinot Grigio.

Two: The Cubs winning the World Series.

Three:  Any of the Twin Cities’ deep-pocketed leftyblogs showing the faintest shred of knowledge about economics.

UPDATE:  Oops.  Wrote too soon.

Chalk it up to basic economics of supply and demand.

Americans are driving less, and the price of gas keeps falling.

Unmentioned:  The psychological boost of the Republican push to drill and build refineries.

Hey, I did specify “faint shred”, right?

The Value Of Crappy

I spent yesterday working at a Habitat for Humanity project.  It was fun; I hadn’t done contruction work of any sort (beyond the odd bit of inept homeowner handimannery) in over twenty years.  

Most of the day was wrapped up in building things (and I did finally get the whole “hanging drywall” thing straight, thank goodness). 

But the folks at Habitat – a non-profit – did carve out a bit of the day for “education”.  Over lunch hour, we heard a bit about the “affordable housing” mission.  We also learned that Habitat houses – always built to the absolute latest in current safety codes, and they are doozies – take a lot of money to build, above and beyond all the donated labor (from three Twin Cities corporations at our site yesterday, totalling around thirty people, some of whom knew what they were doing). 

Naturally, my mind wandered a bit.

I remebered a lecture I attended, starring former Saint Paul mayor Jim Scheibel, the fellow who served the term before Norm Coleman was elected.  He’d been a dismal, malaise-prone mayor – but he had impeccable liberal credentials, so after he left office he went to work for one “affordable housing” group or another.  In the lecture, he stated his goal; that everyone in Saint Paul (and, naturally, elsewhere) have safe, attractive, up-to-code housing, convenient to mass transit and the amenities of city life, for less than 30-odd percent of their income.

I asked him where the money would come from for that vision.

I don’t think anyone needs me to tell them the answer, do they?

In pondering this, I thought back to the house we were living in when both of my kids were born (although we left when Zam was three months old).  It was drafty; the walls were made (it seemed) out of cardboard.  The carpet was dismal, the kitchen ancient, the windows leaky, the basement pungent.  Mice roamed the place like the buffalo herds in Dances with Wolves

But it was a three-bedroom house for $600, which at that time was about the ragged edge of what we could afford without government assistance (remember that last qualifier).  It was a dingy roof and four drafty walls and, most important of all, we could manage it on what we earned back then.  It was what you’d call a “fixer-upper” (and, indeed, someone bought the house from the landlord a few years back, and fixed it up; it looks nice today).  And when the opportunity came to find something better, we worked our butts off to make it happen. 

And that was a very good thing.

I thought, as I looked around the brand-new house taking shape in Frogtown, that this would be a much better way to be poor!  Of course, Habitat for Humanity gets about 500 applications a year; between new builds and renovations, they put about 50 units a year into commission.

Where does everyone else go?

Until recently, they rented cheap houses; plain asphalt-sided frame houses in Frogtown; old railroad houses with three feet of clearance between buildings in the North End; dilapidated, past-their-prime but livable Edwardians up on Dayton’s Bluff.

But the mortgage craze of the past ten years took a lot of those places off the rental market; the popping of the bubble has left 2,000 of them vacant in Saint Paul, with more coming every day.

As I noted in my “Saint Paul Land Grab” series (Part I, Part II, Part III, Part IV, Part V, Part VI, and more to come),  The City of Saint Paul is requiring all rgistered vacant homes to be brought up to current building codes before issuing them a Certificate of Occupancy, which will, depending on who  you ask, revitalize the city with block upon block of safe, modernized, renovated homes (that was Councilman Bostrom and Councilwoman Lantry’s tack on the issue), or create neighborhoods strewn full of vacant lots, all ready for the city to seize for one project or another (largely to house the vast numbers of people who won’t be able to afford to live in Saint Paul because the cheap housing is gone).  Until these properties’ owners bring them up to current code – meaning $50,000-$120,000 work for a house that might be worth $20,000, counting the land, today – they’re off the market.

No crappy homes equal no cheap places to live.  What are the options for the poor if there are no cheap places to live? 

Liberal governments have long declared war against things that are crappy; crappy jobs, crappy houses, crappy apartments.  “Living Wage” ordinances and minimum wage hikes decrease the supply of entry-level and subsistence jobs – meaning people can’t enter the market or subsist.  Have you seen the teenage unemployment rate lately? 

“Rent Control”, like New York’s infamous rent caps, dry up the supply of rental housing (which is why even twenty years ago it was impossible to find an inexpensive apartment in Manhattan even as huge swathes of the city were covered in slums).  Other cities that try to artificially spiff up the market – San Francisco, Portland – have similar results.

If the Saint Paul City Council’s latest bit of economic jiggerypokery continues as I predict, it’ll soon be impossible to get an “affordable” house in Saint Paul.  Without government assistance, anyway.

There is value to crappy things; jobs, houses, whatever.  They’re a place to start.  They’re a place to fall back to.  They’re something to fix, or to strive to get out of.

And when crappy jobs, houses and apartments are outlawed – what will be the alternatives?

Tastes Great, Less Taxes

An analysis of the purchase of Anheuser-Busch, producer of America’s most iconic brew, by the Belgian firm InBev reveals there was more to the deal than a handsome payday for shareholders.

According to the Tax Foundation, Belgium’s corporate tax rate is 33%, but the effective tax rate can be half the nominal rate thanks to adjustments for something the OECD calls a “notional allowance for corporate equity.” Bottom line: InBev was paying around 20% of its profits in corporate taxes, compared to Anheuser-Busch’s rate of 38.4%. 

Things have gotten pretty bad when U.S. companies relocate to Europe to cut their tax payments. But a research analysis by Morgan Stanley finds the combined company’s corporate tax bill will be lower than in the U.S. and that the tax differential indeed figured into the economics of the sale.

So while John McCain may have benefited from his wife’s ownership of Anheuser stock (estimated at between 40,000 and 80,000 shares), the country will continue to see its competitive edge wither away without a corporate tax rate cut. Mr. McCain to his credit wants to cut the corporate tax rate to 25%, close to the global average. Senator Obama is more interested in raising tax rates than cutting them.

Does the Anheuser-Busch deal represent a precedent? Maybe not. Milller Brewing, long a Milwaukee fixture, is majority owned by SABMiller, the “S.A.B.” being South African Breweries.

Is there more of this to come? With Obama in the White House? Yes and definitely yes.

Wall Street dealmakers tell us to expect more sales of U.S. companies to European rivals thanks to the combination of America’s higher corporate taxes and the weak dollar. They’re right. New data from the OECD for 2008 indicate that the international average for corporate tax rates fell by another percentage point last year, meaning the U.S. is pricing itself out of the market as a corporate headquarters.

When Math Spins Into Semiotics

Jeff “Not The Gun Guy” Rosenberg is a regional leftyblogger who, like most regional leftybloggers, writes at a couple of dozen blogs. I’ve met him, he’s a good guy.

Which doesn’t mean I can’t respond to this post, “Conservative Math”, over at (checks list) The Daily Liberal.

Turns out there’s more to “liberal math” than “multiply the crowd at any lefty protest by an order of magnitude; two if you’re nasty”:

Sometimes I just can’t help but respond to the local conservative blogs. Roosh at Shot in the Dark seriously believes conservatives have the answer to our national debt problem:

Jeff quotes Roosh’s post from last week, “Sheriff’s Sale”. The post’s money quote…

I maintain that our deficit spending habits and their product, our national debt have left our country in an increasingly precarious position and is in fact an issue of national security.

The extrapolation of the mathematics, an element of which is our evolving demographics (i.e. more people getting on the wagon and less people pushing it) will eventually result in a national financial meltdown and the collapse of the American dollar.

…echoes the possibly-fictional but still utterly accurate “Alexander Tytler” quote (I always thought it was De Tocqueville?): “A Democracy cannot exist as a permanent form of government. It can exist only until the voters discover that they can vote themselves largesse from the public treasury.

Liberals oft cited moral imperative to be a compassionate, civilized nation manifested in layers and layers of entitlements will be eclipsed by the fact that at some point we will simply be unable to service our debt let alone borrow more.

Soon we will all be conservatives. Fiscally-speaking that is. The question of what our federal government should or should not do for it’s citizens will become an academic discussion.

Rosenberg responds:

Unfortunately, he and the rest of the conservatives don’t have a leg to stand on. Their hero “W” has the dubious distinction of being the only president to lead us into war while simultaneously cutting taxes. Republicans in Congress fought tooth and nail against returning to pay-as-you-go rules.

Let’s try to get a couple of things straight:

  • “W” President Bush was never a hero to fiscal conservatives. I was a Forbes/Kemp guy in 2000, until the last gavel sounded at the convention; we all knew that Governor Bush’s record was that of a “fiscal moderate”. We warned the party. I never warmed up to Bush, really, until 9/11; history is going to completely vindicate his foreign policy on most counts. But his fiscal policy, especially his spending, have always been disasters.
  • His spending is a disaster because on that issue he is virtually indistinguishable from a liberal. His pre-9/11 Education program and the Prescription Drug benefits, for example, were closer to Ted Kennedy than Milton Friedman.
  • The Republicans in Congress from 2000 to 2006 certainly didn’t help matters much.

But so far, so good. That part is still on the rails.

This next bit…:

In typical Republican fashion, however, they don’t want you to pay any attention to this. The tax cuts aren’t the problem. The war isn’t the problem. Deficit spending–which we didn’t do under Clinton–isn’t the problem. No, the problem is that the terrible liberals want to make sure we provide our citizens with proper healthcare and send our veterans to college.

…not so much.

The tax cuts aren’t the problem – indeed they’re part of the solution. The war is part of the problem (but it did pretty much come to us, and the financial impact of not fighting the war might well have been much higher – which is a subject for a different post).

Deficit spending is surely a problem – see all of us Forbes supporters waving over here? (And Clinton can thank Reagan for the peace dividend check he cashed, and the Gingrich Congress for forcing him to be a moderate, and all of us conservative voters for rejecting the agenda of Clinton’s first two years at the polls in ’94).

Part of the problem, however, is that the left is trying to peddle the soft side of government spending, portraying it as “college benefits for veterans” and “health care”, omitting the bit about “generations of entitlement spending helping destroy the inner cities”, “farm entitlements destroying agriculture”, “government spending, and a generation of federalizing education, have left us with a decayed, failing school system”, “Education subsidies have made college unaffordable to everyone but the wealthy, except with government help” and, soon, “the entitlement and subsidy cultures that the Dems have spent the last four generations building is about to make private health care unaffordable and lead to de facto socialization even if the formal socialized medicine program doesn’t get jammed down our throats” and the big kahuna, “excessive taxation harms the economy”.

Don’t buy the hype. Conservatives these days are not interested in reducing government spending.

Jeff doesn’t hang around many of us. (Closed circuit to Brodkorb; we need more happy hours. Stat.)

They’re just interested in redirecting it: from working families to energy speculators,

This is one of those lefty memes – a non-sequitur, really – that puzzles me.

Conservative policy is to drill more oil, and do it now, to alleviate the shortage that exists now and will no doubt get worse if we don’t get more oil to market. It’ll affect the market psychologically in the short term (knowing the supply will eventually get better), and physically in the long term (more oil!) and will, in the end, be the key to developing a viable alternative energy economy (only prosperous societies can fix their problems; our prosperity at the moment depends on oil).

Speculation profits from scarcity. If a good is in plentiful supply, there’s no motive to speculate.

SPECULATOR 1: “George, are you interested in ten billion in oil futures?”

SPECULATOR 2: “Vot? Are you MAD, T-Boon? Ze Price iss FALLING! Ze zupply iss RISINK! Vy Vould I buy oil? Hell, Lefty propogohnda vebsites are a bettah inwestment! I’d rotha induce a deprezzhion in another emerging country!”

It’s only when a good is in short supply that there’s any upside to betting on its price fluctuations.

So the joke is this; a movement driven by the likes of George Soros – whose entire fortune is built on profiting from shortages, fluctuations, and the misery of others – is yapping at conservatives about “energy speculation”, when the liberals’ current policy is the one that’ll create the conditions that let them make their profits!

No, I didn’t think it was funny either.

At any rate; lefties? Feel free to keep trying to lecture us on math. Practice makes perfect.

I Wonder if Fran Tarkenton is Available?

As everyone knows by now, the Packers have offered Brett Favre $20,000,000 to stay home (I put the zeros there for emphasis instead of the customary $20M or $20 Million to illustrate how unbelievably absurd the NFL has become).

It serves further to illustrate how asinine it is to allow franchise owners to hold major market communities hostage by threatening to move clubs to more agreeable venues. If the Vikings threaten to leave the Twin Cities because we won’t give Zygi $200,000,000 I say fine. There is no way you can justify the expenditure of public money for the construction of a sports facility any more, which is probably why the Vikings stadium issue hasn’t floated to the top of the news pile of late.

I say screw them and the Sex Boat they rode in on.

I get the fact that Green Bay doesn’t want Brett Favre to end up with a division rival but his arrival on the roster is by no means a guarantee of a division title let alone a Super Bowl.

I have a hunch that Brett retired for a reason.

History shows that mature, overpaid primadona athletes are as likely to implode in these scenarios than propel their teams to national championships. Ladies and Gentlemen, Herschel Walker.

As such, how can it possibly be worth $20,000,000 to keep Brett on ice? You can buy a lot of grass seed for twenty million. Crap, you can buy the team a new airplane for that.

Oh, and furthermore, in alignment with the boss around here, …who the hell cares.

Dog Licks Dog.

Sun Rises.

Ice cream falls from cone to ground.

Labor leader writes a misleading and blatantly-omissive article about the push against the “Employee Free Choice Act”.

Look, I’m not anti-union.  Indeed, unlike most DFLers, I’ve actually been a union member.  I’m a firm believer in collective bargaining – and the right of people to opt out of collective bargaining.  Unions give leverage to groups of workers.  They have their downsides as well – which we’ll go into some other time.

You’ve heard of the EFCA; the DFL in a flurry of publicity, sued the Coleman campaign for “lying” about the bill (and got their case promptly tossed for, um, failing to show a single “lie”).

I keep wanting to ask the proponents of the law – who write about the EFCA with the expected gauzy soft-focus – “What about the secret ballot?   Does your union reject intimidation of dissenters? ”
Bill McCarthy – in a piece apparently written before the courts euthanized the DFL’s lawsuit – writes:

In attacking the EFCA, opponents distort the facts and charge that the legislation would end secret ballot elections in union organizing drives. Not true.

Well, then!  We must be headed for some clarity!

The foundation of modern labor law, the Wagner Act of 1935, provided a path to union recognition when a majority of workers in a workplace signed union authorization cards — simple and fair.

And more or less secret.  Right?

When labor adversaries passed the Taft-Hartley Act in 1947 over President Truman’s veto, however, employers gained the right to reject the workers’ union authorization cards and to petition the National Labor Relations Board to conduct an election to determine if a workplace should become union.

But the NLRB election process bears little resemblance to elections to choose our leaders for local, state and federal government. In the run-up to NLRB elections, employers pull out all the stops to intimidate workers into rejecting the union. These abuses are well-documented, including mandatory attendance at anti-union meetings, one-on-one meetings, threats to close the business if the union wins the vote, and even firing workers for pro-union activity.

So what?

Leave aside the screeching hypocrisy (unions did, and do, all of the above as well), a company’s got the right (or should have the right) to keep itself competitive.  Unions make them less so (or at least that’s the perception; in industries with less-elastic markets, it’s arguably less true, but then few markets stay inelastic for long these days).

The EFCA would give workers, not employers, the right to decide how to express the choice about going union: through the card-check process OR through the NLRB election process.

Ahem:  “What about the secret ballot?   Does your union reject intimidation of dissenters?”

If passed, the EFCA will help expand the number of workers who enjoy union wages and union benefits like health insurance and retirement plans.

(And will diminish the number of workers, period)

And, uh, what about the secret ballot?   Does your union reject intimidation of dissenters?

If passed, the EFCA will help expand the number of workers who have a voice on the job through their union.

Leaving aside whether that “voice” is one that workers really want speaking for them, I’ll try again; What about the secret ballot?   Does your union reject intimidation of dissenters?

Or to put it another way – Does your union reject intimidation of dissenters? What about the secret ballot?

Get back to me, Mr. McCarthy.  Thanks.

Master of Disaster

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.

If you pay taxes…

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.

At least for now…

Plymouth, Minnesota: Money Magazine’s #1 Best Place to Live, August 2008 Issue

Some selected stats, however, may not bode well…

Plymouth, MN vs. Best Places Average

Sales Tax:  6.65 vs. 6.60% (Baseball in the freezing rain anyone?)

State Income Tax Rate: 7.85% vs. 5.17% (Highest Bracket)

State Income Tax Rate: 5.35% vs. 2.43% (Lowest Bracket) (That’s not a typo…their lowest is higher than the average highest)

Job Growth 7.89% vs. 18.72% (Anyone think taxes may have anything to do with this?)

Average Property Taxes $4526 vs. $3886

Topnotch schools, good jobs, affordable housing, low crime, an active outdoor culture – yep, they’re pretty much all here. Plymouth could have become just another Twin Cities suburb, but more than 50,000 jobs keep residents working there.

And they’re paying for it too!

Cap (And Trade) It’s A**

Via GeeEminem, Kudlow notes that Mac seems to have abandoned his support for “Cap and Trade”. 

After writing favorably about Sen. McCain’s recent economics speeches, where he clearly shifted toward the supply-side both on tax cuts and producing more energy, I went back last evening and carefully read his 15-page policy pamphlet called “Jobs for America.” Here’s what I found: There is no mention of cap-and-trade. None. Nada. There is a section about “Cheap, Clean, Secure Energy for America: The Lexington Project.” But that talks about expanded domestic production of oil and gas, as well as the need for more nuclear power and coal along with alternative sources. Then it has the $300 million battery and flex-fuel cars. But nope, no cap-and-trade.

Watch for a giggly article from Steve Perry about his “flip flop”. 

This the kind of “flip flop” I can get behind.


So then I asked this senior official if the campaign has taken cap-and-trade out behind the barn and shot it dead once and for all — buried it in history’s dustbin of bad ideas. The answer came back that they are interested in jobs right now — jobs for new energy production and jobs from lower taxes. At that point I became satisfied. Even though a McCain presidency might resurrect cap-and-trade, it will be a much different format. More important, the campaign is cognizant of the conservative rebellion against it.

That’s enough for me.


And for me.


And for me.

Notes From Someone Who Was In The New Economy Before You Were

I don’t normally fisk bloggers – and, indeed, I don’t want to “fisk” this, per se.  There’s just so much in this piece by Charlie Quimby that deserves an answer from someone who’s had to get comfortable with the “new economy” back when most of this nation was still well within the “old economy” [*].

Four bartenders prior to the shift change talk about one of their buddies who worked 100 hours last week at three jobs, including a 7:00 a.m. shift at Starbuck’s “so he can get benefits.” One bartender needs someone to cover for him on an upcoming shift, and though willing, no one could commit because they all had to check the schedules at their other jobs.

Tending bar is one of those old economy jobs that’s likely to be around for awhile, and some of these guys may move on. But it will be to a one-paycheck career?

Good question.  Some others that might need to be answered first to solve it:

  • Do they want a one-paycheck career?
  • What choices have they made to move them toward a one-paycheck career?  They don’t just happen, these days.

Last week the Strib documented the case of a Hmong immigrant who works two janitorial jobs for $9 an hour, earning about $1,800 a month pre-tax, which goes to help support his parents and eight younger siblings. Tong Lee has limited English and no time to go to school.

The future he sees for himself: Just working all the time.
At least the bartenders can be charming and collect tips.

It’d seem Mr. Lee and his family are doing something that’s very “old-economy”, something that people in immigrant families have always done in this country; have the oldest and most able work to help the younger ones succeed (and not just immigrants, either; a woman I knew in college, a black woman from rural Mississippi, started college at age 28 because she’d worked for ten years to put her siblings through school.  Then, esconced in decent jobs, they repaid the favor). 

So is there some reason Mr. Lee’s siblings won’t turn around and help out?

Sure, kids in America can overcome the disadvantages of a broken home and teachers who under-estimate them. But to become a hedge fund manager, it still helps to be born speaking English and win a Harvard scholarship.

Leave aside the fact that speaking English (and speaking it properly) and going to Harvard “helps” whether you want to be a lawyer, teacher, poet, computer programmer, lesbian performance artist, physicist or hedge fund manager; would someone please explain to me what is this fascination liberals have with “hedge fund managers?”  Michelle Obama complained that our “best and brightest” are becoming “hedge fund managers” instead of social workers, nurses and teachers.  So why is hedge fund management the sine qua non of American working life? 

Philip Falcone made $1.5 billion last year betting against the home mortgage industry. There’s someone who’ll tell you his strategy helped some investors, but his outsized rewards required the mortgage market to blow up, so it’s not as if his creativity created anything.

Nonsense.  It created wealth out of an event that would otherwise not have.  It allowed his fund participants to have money to save, to reinvest, to put in their gas tanks or spend at Saks or Dairy Queen, to use in the economy.   

He  just played the speculation game better than anyone else.

And had he not?  Who’d be the better off?  It’s not like his wealth caused the implosion in the mortgage market.

In the next wave of speculation, investors are betting on hunger, more or less. Hedge funds are taking actual positions in food production, where they buy up farm land and warehouse corn, for example, instead of just holding contracts.

The investors plan to consolidate small plots of land into more productive large ones, to introduce new technology and to provide capital to modernize and maintain grain elevators and fertilizer supply depots.

But the long-term implications are less clear. Some traditional players in the farm economy, and others who study and shape agriculture policy, say they are concerned these newcomers will focus on profits above all else, and not share the industry’s commitment to farming through good times and bad.

That “commitment” is utterly relative.  The number of farmers in this country has been in freefall for decades.  There are currently less than half a million full-time farmers in this country who make their living entirely from farming, and perhaps three times as many who make a good chunk of the family income doing other, non-farming things. 

Indeed, the number of farmers has been in freefall ever since society developed the concept of “surplus production”; 3,000 years ago, 99.9% of people farmed (or hunted and gathered); 500 years ago, 95% of people in Western civilization worked the land, mostly for subsistence and to pay taxes to nobles or chiefs.  Today, it’s a tiny fraction of that. 

“Farmland can be a bubble just like Florida real estate,” said Jeffrey Hainline, president of Advance Trading, a 28-year-old commodity brokerage firm and consulting service in Bloomington, Ill. “The cycle of getting in and out would be very volatile and disruptive.”

As opposed to…what?  Letting the market stay in its current, stagnant state?

But there’s some suspicion the investment is is simply a way around limits to speculating on commodities. Having possession of the commodities also helps limit some of their risk.

And this is bad why?

There are other ways to speculate that get even closer to gambling. Joel Stein writes about prediction markets such as InTrade that allow people to place bets on things like politics, the economy, global warming and the top marginal income tax rate in 2011.

It’s like owning a fantasy baseball team: I no longer care about what’s best for the country, as long as I have money on it. I have no idea if Gov. Charlie Crist of Florida would make a great GOP vice president, but I do know it would make me $800.

Quimby and his source ignore the concomitant benefit; when money is on the line, people take these choices much more seriously, and study them much more carefully.  And that’s not just of idle importance.  As Steven Green noted in an article about the same subject as my link…:

The “market” for intelligence works, such as it does, opposite of the stock market. A guy who knows one important bit often can’t effectively share it with another guy in another agency who knows another important bit – and so two plus two ends up equaling something quite less than four. Those who simply have good hunches generally aren’t intel pros, and therefore aren’t given much credence by the government. And so hidden knowledge remains hidden, and good guesses go unheeded. Then people die.  

Now that is a truly grotesque system, yet that’s how the intelligence world has operated for approximately ever.

Would investors put their money on the line if there weren’t any profits to be made? Of course not. Yet today, we ask our military and intelligence professionals to risk their reputations and careers, working mostly in the dark, with zero extra incentive.

I guess it’s just a difference in perspective.


The new economy venture that really ties it all together is gold farming, where Chinese sweatshop workers labor away at online games like World of Warcraft. Their objective isn’t to win, but to harvest “gold” by successfully completing some aspect of the game, often by doing the same part of a quest over and over. The gold, which allows gamers to buy better weapons or create more valuable products, is sold for real money to actual players through online exchanges.

In effect, the gold buyers get richer and become more powerful, while gamers who try to build value added products through honest play find their products devalued because the “investor” players don’t need them to build their own wealth. Meanwhile, in China, perhaps a hundred thousand gold farmers make better money than they could from real farming.

I’m not sure what Charlie advocates, here – Congressional hearings? 

But these things tend to have a solution of their own.  Two words:  Pet Rocks, Beanie Babies, Pokemon Cards.

Oops.  That was six words.

Because the end game of such fripperies as Warcraft “Gold Farming” should be three times as obvious; either…:

  •  people will continue to be willing to trade their real wealth for imagined virtual wealth; no blood, no foul.
  • people will not continue to do so; the “gold” market crashes and ends up as a side note on “VH1’s I Love the ’00s”, complete with snarky comments by Danny Bonaduce.
  • Warcraft fades, fads move on, people forget about it all.

Just saying – we have bigger things to worry about.

Continue reading


Over at Loophole – the blog of MPR’s In The Loop series – Sanden Totten notes the apparently-peculiar power of the word “because”:

A study found that “because” is a powerfully persuasive word. The Economist blog lays out the experiment like this:

In the study, a stranger approached someone waiting in line to use a photocopier and asked, “Excuse me, I have five pages. May I use the Xerox machine?” This resulted in 60% of people agreeing to let the stranger go ahead of them. But when the stranger asked instead, “May I use the Xerox machine, because I’m in a rush?”, 94% of people complied. And even when the given reason was meaningless–“May I use the Xerox machine, because I have to make copies?”–93% of people complied

I’m interested in how language works, so I’m interested in this thesis.

But I’ve noticed that “because I said so” isn’t quite as effective.

Case in point – a piece Molly “Is It White In Here” Priesmeyer wrote last week, in her customary breezy, snarky style, about the thesis that baby boomers’ home values have already evaporated. We wrote about this piece last week, after Learned Foot noted that Priesmeyer’s source was funded by George Soros’ “Open Society Institute” – which also funds the Minnesota “Independent”.

It gets better.

Someone – “Wabbit”, a commenter whom I happen to know, a fella very familiar with both Saint Paul real estate and crunching numbers – questioned Priesmeyer in the comment section.

Priesmeyer’s initial response?

The housing market crashed because of unregulated, subprime lending. This is a fact that cannot be disputed


“Because my source says so, and my source is the only source, to say nothing of viable opinion, on the subject”.

Any real estate people wanna set the girl straight?

Because she seems to need it.

Failure Is An Orphan

And it doesn’t get any orphannier than when your father abandons you.

We’ll get back to that.  Let’s talk history:

As this presidential campaign continues, the candidates’ comments about health care will continue to include stories of their own experiences and anecdotes of people across the country: the uninsured woman in Ohio, the diabetic in Detroit, the overworked doctor in Orlando, to name a few.

But no one will mention Claude Castonguay — perhaps not surprising because this statesman isn’t an American and hasn’t held office in over three decades.

But if you’re a Canadian who’s died waiting for a kidney transpant, or because they couldn’t get a specialist appointment to check out that mysterious growth, you might heard of the name.  He’s Castonguay was the father of Canada’s single-payer healthcare system.

And while American critics of single-payer who pay attention to the horror stories of Canadian healthcare get met with blizzard of non-sequitur stats from the usual US suspects, Castonguay has – well, a different perspective:

Castonguay, the man who championed public health insurance in Canada, now urges for the legalization of private health insurance.

In America, these ideas may not sound shocking. But in Canada, where the private sector has been shunned for decades, these are extraordinary views, especially coming from Castonguay. It’s as if John Maynard Keynes, resting on his British death bed in 1946, had declared that his faith in government interventionism was misplaced.

What would drive a man like Castonguay to reconsider his long-held beliefs? Try a health care system so overburdened that hundreds of thousands in need of medical attention wait for care, any care; a system where people in towns like Norwalk, Ontario, participate in lotteries to win appointments with the local family doctor.

Years ago, Canadians touted their health care system as the best in the world; today, Canadian health care stands in ruinous shape.

Read the whole thing.


A few weeks ago, Rep. Michele Bachmann – the biggest lighting rod for derangement in the entire Minnesota Congressional delegation – predicted that opening up domestic drilling could drive gas down to $2 a gallon sooner than later.

Haw haw haw haw“, tittered the local Sorosphere.

But – oh, boy.  A bunch of actual experts agree with her:

Testifying to the House Energy and Commerce Committee, Michael Masters of Masters Capital Management said that the price of oil would quickly drop closer to its marginal cost of around $65 to $75 a barrel, about half the current $135.

Fadel Gheit of Oppenheimer & Co., Edward Krapels of Energy Security Analysis and Roger Diwan of PFC Energy Consultants agreed with Masters’ assessment at a hearing on proposed legislation to limit speculation in futures markets.

Krapels said that it wouldn’t even take 30 days to drive prices lower, as fund managers quickly liquidated their positions in futures markets.

Wow.  Do you suppose Andy Birkey will update his story?  Perhaps he needs to consult the Twin Cities Sorosphere’s most respected economist, Molly Priesmeyer, for advice on how to dig out of a factual hole.

He Skipped Econ 101 That Day

The Wall Street Journal on Obama’s economics flub:

The “psychological impact” to which McCain refers is quite simple: The expectation of greater oil supplies in the future would make it more attractive to sell oil now, when supplies are restricted and prices are high, thereby bringing prices down in the short term.
Is Obama really too ignorant to grasp this, or does he just think voters are?


Methinks both.
Ladies and Gentlemen, Senator Barack Obama! The man that wants to lead our nation; restore our economy!

Why is the price of Oil so high? Speculation? Not so much. Weak dollar? Getting warmer. Supply and demand? Warmer Still. The anticipation of static supply and high demand? Bingo!

I saw no mention of “ineluctible forces of history” or, for that matter, the Inaudacity of Hopelessness.

Get ready to have to spend a lot of time explaining basic economics to people.

Bought And Paid For

Politicians – mostly Democrats, in this IBD poiece on the subject –  have been on the take from mortgage companies for years.

There’s method, naturally, to the madness:

A number of top Democrats have been caught with their hands in the cookie jar, suggesting corruption in the party linked to the recent home-mortgage meltdown. Will the mainstream media just ignore it?

We’ll come back to that.

The firing of Democrat insider and money-man Jim Johnson a week ago as head of Barack Obama’s vice presidential search committee came as no surprise. Johnson, who served as chairman and CEO of Fannie Mae during much of Bill Clinton’s presidency, was discovered to have received a favorable mortgage loan from Countrywide Financial’s founder and CEO Angelo Mozilo…Now it turns out that Johnson wasn’t the only Democratic F.O.A. — friend of Angelo.

Sen. Chris Dodd of Connecticut, head of the Senate Banking Committee that oversees Countrywide, also was a recipient of Mozilo’s mortgage largesse. So was Kent Conrad, the North Dakotan who chairs the Finance Committee and sits on the Budget Committee.

Both Dodd and Conrad, like Johnson, had potential clout in crafting legislation and regulations that would directly affect Countrywide’s future. And both got favorable loans through Countrywide’s now-infamous “V.I.P.” program.

Dodd’s case is illustrative. He took out two mortgages with no closing costs attached, at fixed rates of 4.25% and 4.5%. Sound like something you’d get?

No, indeed.

Countrywide, you fat bastards?  We gotta talk.

Former Health and Human Services Secretary Donna Shalala and former U.N. ambassador and assistant Secretary of State Richard Holbrooke also benefited, as did one prominent Republican — former Secretary of Housing and Urban Development Alphonso Jackson.

Granted, both Shalala and Holbrooke had left public office when they got their deals. But it was reasonable for Mozilo to think they’d serve again in another Democratic administration.

And what, many wonder, was the quid pro quo for all this?

Oh, what do you think?

Just a month ago, in unusually harsh language, Dodd ripped into President Bush on the subprime mess and defended a $400 billion plan that would bail out the subprime lending industry — including Mozilo.

Friends of Angelo, indeed.

So the initial question was “why don’t the media cover this?”  Indeed, why are so much of the “independent” media so very, very on board with legislation that would distort the mortgage market, to the benefit of the big mortgage companies?  As the number of Tics with their hands in the jar grew, why were they trying to deflect blame to Republicans and past-their-shelf-date Democrats?

It’d be interesting to see what kind of mortgages the principals at Media Matters and the other attack-PR firms that control the lefty alternative media have.

Running The Numbers

First things first:  I’m a free market guy.

One of the arguments I’ve been having for years with my tax-hawk friends is over mass transit.  These friends – David Strom, among others – argue correctly that transit, especially light rail, is a money pit.  And as of the last time anyone checked, they were; a $2 fare on the Ventura Trolley covered about 1/3 of the cost of the ride (which is a relative bargain; Seattle’s new monorail system, after you divide the capital costs across all riders, would have a fair market value of $90 a ride!).  Our bus system wasn’t much better.

And yet…

The numbers that do exist for calculating the cost-effectiveness of transit were run back when gas was around $2 a gallon, and ridership was commensurately lower.  Which isn’t the case now, as a lot of people – being good capitalists in their home budgeting if not necessarily at the polls – start to run their own personal numbers.
John “With an H” Stewart at Night Rider has been crunching the numbers for his daily commute from a southeast ‘burb to downtown Minneapolis, calculating the same tradeoffs we all make…:

Total time to get to the lot: 15 minutes; distance 8 miles (compared to a 12-14 mile drive to downtown Minneapolis, depending on the route I take). The Park & Ride, however, may more accurately be described as a “Park & Walk” as I had about a quarter of a mile jaunt to the depot from my vehicle. I got to the station as a train was pulling up, but the credit card reader on the ticket machine wasn’t working. By the time I’d made a couple of attempts and finally resorted to sliding a fiver into the machine and getting my change (oh, so that’s what they’re doing with all those Sacajawea $1 coins) the train had pulled out. I waited 8 minutes for the next one and it took another 22 minutes to get to my stop downtown. From there I walked the four blocks to my office. Portal-to-portal, it took just under an hour. Driving to work in rush hour takes 40-45 minutes unless there’s bad weather or a traffic accident. The LRT also runs every 7 – 10 minutes during the “rush” hours (roughly 6 – 9 a.m. and 3 – 7 p.m.) so there’s not too much of a time penalty for “missing” a ride.

And time will help John, and anyone else, refine the approach; having a “swipe as you go” Metrocard helps bypass the notoriously balky credit card readers (the ones in New York are worse…); finding the right park and ride helps a lot, too.


How about mileage? Four miles one way isn’t much of a savings in distance, but that equals 8 miles a day. Since my truck gets 16 miles per gallon, that’s a gallon of gas every two days, or 2.5 gallons in a typical work week. At $4 gallon, that’s $10!

As for other costs, I pay just under $80 a month to park downtown, but this will be going up an as yet undetermined amount at the end of the year when my employer stops subsidizing the cost. I can get a Metropass through my employer for $39. So, that’s about a $40 a month savings for “infrastructure”, plus $10 a week on gas. The net result is that for an extra 30 minutes a day in total transit time I could save $80 a month.

I ran the same numbers almost two years ago, when after most of a decade and a half of commuting to jobs in the southwest and northwest ‘burbs, I managed to score a gig in Saint Paul proper.  The math broke down fairly easily; driving was no biggie (12 miles a day = 3-4 gallons a week – but downtown Saint Paul Parking within a distance that would make the combine drive and walk shorter than a bus ride was at least $100.  The bus that picks up on my corner drops me at my office’s back door – and I get the Metropass for $39 pre-tax dollars, which really means $26.  Biking saves me no money or time, but I love it, so who cares? Anyway, that’s about a $125/month savings; nothing to sneeze at.

Yeah, I know the LRT is heavily subsidized by the State, so the fares are not a true reflection of the actual cost to operate it, but since my tax dollars are already going to support the choo-choo, perhaps I can feel as if I’m getting a little of my money back.

That’s how I rationalize it as well.

Still, transit’s bad numbers might need to get re-jiggered:

  • Revenues have got to be up.
  • Of course, so are costs.
  • On the other hand, eventually the capital costs of the light rail lines will amortize, making the cost-per-ride a lot more manageable.
  • On the other other hand, the Central Corridor, which will run over a billion when it’s over (even assuming the ghastly planning flubs get worked around on the relative cheap) is going to take a long time to amortize.
  • The great rail wild-card is Commuter Rail – the North Star line from Big Lake to the Cities, and the long-proposed Red Rocks line from Hastings through Shorewood and then through the downtowns.  Either line is relatively cheap compared to the Ventura Trolley (to say nothing of the Central Corridor obscenity) since they use existing rail lines and right of way, leased from existing freight carriers.  I’ve seen calculations that show that, if the Met Council resists the temptation to spent a gajillion dollars on stations, and buys used rolling stock, either line could actually be self-supporting in a fairly short time.  On the one hand, the Met can withstand no such temptation; on the other, Northstar’s money pit status was calculated back when they figured 6,000 riders a day; I suspect the numbers of northwest-burbs-to-the-cities drivers will rise these days.


Other trade-offs: not as much opportunity to listen to my favorite radio programs, but more time to read; being perceived as an enviro-weenie when I’m really a rank capitalist;

That’s actually the fun part; realizing that while you silently mock the granola-chomping, perfume-eschewing greenies around you are doing it for pseudo-religious expiation, you’re totally in it for the money.

It’s why I still yell “You should be ashamed of yourselves, you gas-guzzling planet-killers” at Prius drivers.

As I pass them on the left.

Speak The Language

When you earn your living by trying to explain things to other people, one of the first lessons you learn is “try to use language your subject can understand – language that is accessible to the person you’re trying to expain to”.

I try to apply this lesson to the rest of my life.

Molly “Is It White In Here” Priesmeyer seems to have drawn the “real estate” beat for the Minnesoros Monitor “Independent”.  This despite the fact that her understanding of key real estate concepts like “equity” seems to be just a tad suspect

…but that’s OK.  We’re all about the teaching today.

In a piece that came out in the  Monitor “Independent” last week, she wrote about Governor Pawlenty’s  veto of the Floyd Olson-style  foreclosure moratorium (emphasis added):

But the homeowners suffering with subprime or negative amortization loans are offered no recourse — including a simple deferment period that still required payments — because, according to Gov. Pawlenty, helping homeowners renegotiate loan terms would make credit more difficult to obtain.

Ms. Priesmeyer states that as if she finds it implausible – which brings up two possibilities:

  1. She is actively trying to disinform the Monitor “Independent” reader,
  2. She doesn’t know any better.

You know good ol’ pollyanna Mitch; I’ll assume it’s really #2.

So I’ll try to explain this concept – the notion of unintended consequences of government action – in a language Molly Priesmeyer might understand.

“So, like, remember when you lent your totally cute feedbag purse to Ashley, your roommate from Saint Olaf/Macalester/Carlton/wherever it was you did your undergrad?  The documentary filmmaker and telemarketer? And on Monday when you wanted it back, she said she didn’t, like, have it with her?”

“And you gave her another week, because the purse is, like, totally cute, but then you like needed it?  And you met her at “Drink” and like asked her, and she totally said she’d bring it to Chino on Monday?”

“And then on Monday, she totally flaked, and said she’d have it for you on Friday?  And you’re like “Byatch, I need my purse?”, but you totally gave her til Friday?”

“And on Friday, you met her, and of course she flaked again.  And you were totally pissed.  But Ashley had brought Justin, this guy from St. Thomas that she buys X from, and he was like totally cute wearing Roc-A-Wear, which is normally kinda  poser on a white boy, but Justin was kinda hot in that bad-boy kind of way…”

“…anyway, Justin said that Ashley would bring the purse back when she could, and quit bugging her or he’d, like, totally slash it up.”

“So like, totally, how likely are you to ever lend Ashley anything again?”

“Like, doyy”.

A guy’s gotta try.

Your Red Roots Are Showing

I caught this piece on Wednesday in the MNPost – a hagiographic look back at former Minnesota Premier Governor Floyd B. Olson by “Iric Nathanson”:

In 1933, a governor moved boldly to halt foreclosures

As expected, Gov. Tim Pawlenty vetoed a bill that would have deferred foreclosure proceedings for up to a year for some homeowners victimized by predatory loans. During this year’s legislative session, the Republican governor signaled his displeasure with the foreclosure measure, claiming that it would discourage lenders from making new home loans in this state.

The bill’s chief authors, Sen. Ellen Anderson and Rep. Jim Davnie, argued that their proposal would help 12,000 Minnesotans in danger of losing their homes as the wave of foreclosures continues to gain momentum in 2008.

Anderson and Davnie, both DFLers, maintained that action was needed this year to deal with foreclosures that are approaching rates not seen since the Great Depression.

Back then, Minnesota’s governor was willing to take decisive action to help struggling families hold on to their homes and farms.

I thought about responding – but as with all things economic, I figured I’d just wait and paste King’s response:

This from the same governor who once said that same year “I do not believe there can be any economic security for the common man or woman in this country until and unless the key industries of the United States are taken over by the government.” (Geo. Mayer, The Political Career of Floyd B. Olson, University of Minnesota Press, p. 149.) Olson had also acted to depress farms by, for example, offering the previous year to use the state militia to prevent the “export” of farm crops to the rest of the country, if other farm states would join in. (They didn’t.)

Indeed, while many neighboring states were hit as hard or worse by the depression, and some reacted with various degrees of government intervention, most shied away from the whole “trampling on the law” bit.

Back to King:

It’s hard to imagine why anyone thinks that, when all discussion turns to a credit crunch, violating the property rights of creditors will make more credit flow. Unless you intend to seize the property itself. A propos today, this column by Jerry Bowyer makes a similar point. The bill vetoed makes banks a target, after which nothing else really matters.


Nobody told Nathanson:

Olson’s bold move at the start of his second term would do much to embellish his reputation as an activist governor who used the powers of his office to combat the economic and social devastation caused by the Great Depression in Minnesota.

Time – and a war – erased many of the unintended consequences of Olson’s actions. Minnesota’s activist DFL clacque probably won’t be so lucky.

That’s Why It’s Called A “Cycle”…

…rather than a “straight line“:

Three years ago the choices for entry-level buyers like Sarah Kiefer were so meager that with a budget of just $120,000 she all but gave up on buying a house.

The down market revived that dream.

This week, Kiefer will close on a Colonial-style fixer-upper in north Minneapolis with 1,800 square feet and a fireplace for $75,000.

Which, eventually and more or less inevitably, brings values (aka prices) back up again.

Just keep that in mind when you read the big-money-backed gloom and doom industry’s broken record proclamations of doom (which will supposedly stop the moment Barack Obama hypothetically gets inaugurated…).