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As the Screw Turns

bill — Sun, 07 Mar 2010 15:31:31 +0000

This week I found interesting relationships between seemingly unrelated events.

As Senator Bunning tried to make his case that now is the time to start cleaning up the debt crisis, he was pilloried by Republicans, Democrats, and the press for being heartless to the unemployed. It was during these discussions I came to the conclusion that unemployment insurance is more like triage rather than part of a larger solution for unemployment. The question of whether to extend unemployment insurance seems to be most closely related to the prevailing political winds at the time. At this time the political winds are to extend unemployment. Several people showed that the unemployment figures remain mostly unchanged at the beginning and at the end of the unemployment insurance extensions. So the plan is we spend a lot of money to kick the can down the road.
Greece passed an austerity budget and there were strikes and rioting, Clashes in Athens as Greek PM seeks EU debt help (AP). By the end of the week it looked like the Greek population is finally coming to grips with the reality that budget cuts are inevitable.
I ran across an intriguing slide presentation, “The Nightmare Scenario: How The U.S. Government Would Look Under An Austerity Budget”, on The Business Insider. This presentation uses the Irish austerity measures as the template.
There was a referendum in Iceland to repay Britain and the Netherlands for a failed Icelandic bank, Icelanders balk at Icesave deal, 93.3% vote ‘no’ (AFP). It appears that Icelandic population do not feel obligated to pay for the mistakes of others.
Barney frank threw a scare into the mortgage backed securities markets when he casually “noted that debt issued by the two mortgage finance companies is different from bonds issued by the Treasury Department” . This evidently caused a panic among investors. On Friday the Treasury Department was forced to reiterate their financial support for Fannie Mae and Freddie Mac.
Finally we see that Rick Perry Wins Heated Texas GOP Primary. Populism is alive and well in Texas as he said , "From Driftwood, Texas, to Washington, D.C. we are sending you a message tonight: Stop messing with Texas!".
Although I doubt the Democrats will not agree, the Instapundit is wondering if our economy has gone beyond the triage stage, HAS OBAMA DONE IRREVERSIBLE DAMAGE YET? Neo-Neocon says “yes.” I’d say it depends….

Although I doubt the United States will install an austerity budget as severe as Ireland, I think it is inevitable that some states and cities will balance their budgets with “Irish”-like budget cuts. Extreme situations will require extreme solutions. Eventually a federal austerity budget will become inevitable because entitlement cuts are intractable political issues. As shown in California neither party was willing to cut the budget until they are forced to do something embarrassing like issuing IOUs. I think that the wise men and women in Washington will try and put a muzzle on Barney Frank to avoid an Icelandic-type public opinion blow up the mortgage market before it has a chance of recovering.

Things that make me go hmmm…. Geithner: No change to Fannie, Freddie until 2011 (AP) To the average person the mounting debt being accumulated by...
What a real gov does – NYPOST.com In the NYPost.com editorial, What a real gov does, I...
Rape jokes that have failed. When will they ever learn! Clayton Williams stirred controversy during his 1990 campaign for governor...

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Senator Bunning’s Unappreciated Gifts

bill — Tue, 02 Mar 2010 11:32:20 +0000

Up until Senator Bunning’s actions our legislators seemed to be acting more like the parents of an addicted child. Parents initially hope they can buy their way out of their child’s problem. Eventually they realize the compassionate solution is tough love. I suspect that Senator Bunning’s actions reflect this thinking and that there is probably wide spread support for our legislators to stop the shell game style financing schemes. It is time for our legislators to embrace tough love.

By Alan Reynolds

Sen. Jim Bunning (R., Ky.) blocked “extended” unemployment benefits beyond their scheduled expiration on February 27. That thwarted bill would also have put off, again, a scheduled 21 percent cut in Medicare payments to physicians. Democrats were outraged. But why?

Bunning just wanted to use leftover “stimulus” money to pay for the benefits. Why not? Such transfer payments accounted for over 80 percent of stimulus spending last year.

Besides, as Federal Reserve policymakers noted, the evidence is overwhelming (see here and here) that extending unemployment benefits from six months to nearly two years has raised the unemployment rate by a percentage point or two. I’ve waited since 1991 for someone to prove I’m wrong about that. Nobody has, because nobody can.

If the maximum duration of jobless benefits were trimmed by 13 to 20 weeks (which is all that’s at stake), they would still be far more extended than ever before. But the unemployment rate by the time of this November’s elections would be much lower than otherwise. Would Democrats prefer to go into the elections with an unemployment rate near 10 percent or a rate below 9 percent?

As for Medicare, slashing payments to physicians is the Democrats’ favorite way of paying for expanding Medicaid enrollment and health-insurance subsidies for the non-poor. If they really think that will work, how can they possibly object to saving money sooner rather than later?

[Cross-posted at The Corner]

Senator Bunning’s Unappreciated Gifts
Alan Reynolds
Sat, 27 Feb 2010 22:39:00 GMT

An open letter to America Here’s what I think one of our “dis-respectful” elderly might...
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Phys Ed: Can Running Actually Help Your Knees? – Well Blog – NYTimes.com

bill — Sat, 27 Feb 2010 20:12:56 +0000

A nicely written article that encourages me to continue running.

Bookmark this on Delicious – Saved by to running health exercise knees arthritis fitness nytimes aging nyt blog – More about this bookmark

Phys Ed: Can Running Actually Help Your Knees? – Well Blog – NYTimes.com
Sat, 27 Feb 2010 00:00:00 GMT

Instapundit » Blog Archive » MORE PUBLIC-PENSION PROBLEMS, IN CINCINNATI: City’s Pension Funds Tank. Losses Drive Up Long-… Ouch! This hits close to home. Living outside Cincinnati I...
Health reform: Hit the Reset button | Cincinnati.com | The Cincinnati Enquirer Here’s a nice article on health care from a local...
Hot Air » Blog Archive » Heckuva job, Termy: Californians balk at budget compromise Following the California budget soap opera is Chinese water torture....

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Things that make me go hmmm…. Geithner: No change to Fannie, Freddie until 2011 (AP)

bill — Thu, 25 Feb 2010 12:50:16 +0000

To the average person the mounting debt being accumulated by the Federal Government is a clear and present danger. According to nationwide polls this is the second most important issue confronting voters. One of the biggest spending areas that appears out of control is the subsidies for the mortgage market. At present most of these costs are being kept off of the Federal books despite the complaints of the CBO and Republican legislators. Ironically sometime before March 31^st the Federal Reserve needs to convince someone other than the Federal Reserve to buy the mortgage backed securities. I doubt Mr. Geithner reassured prospective investors with these explanations. It should be interesting to see how high an interest rate will be required to move these securities. Will they resort to selling these securities at speculative rates just to move the securities into private hands? How could a fund manager consider investing in these speculative mortgage backed securities when the Obama administration’s plan is to ignore critical mortgage problems until 2011?

AP – The Obama administration will wait until 2011 to propose an overhaul of mortgage giants Fannie Mae and Freddie Mac, Treasury Secretary Timothy Geithner said Wednesday, arguing that he wanted to put some distance between a new system and what he called "the worst housing crisis in generations."

Geithner: No change to Fannie, Freddie until 2011 (AP)
Wed, 24 Feb 2010 21:27:04 GMT

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The admissions will be seized on by sceptics as fresh evidence that there are serious flaws…

bill — Sun, 14 Feb 2010 15:20:05 +0000

I agree with Ann Althouse that the admissions make the non-skeptics, scientists and media, look bad. By failing to effectively criticize their own arguments for global warming, these non-skeptics have done more harm to the global progress on environmental issues than anything the deniers could say or do. Now we are confronted with a large amount of global science research of questionable scientific quality and set of global priorities which may be unjustified. This is probably a good time to re-examine the priorities advocated in The Skeptical Environmentalist by Bjørn Lomborg and to re-read the article, The Case for Due Diligence in Policy Formation, by Bruce McCullough and Ross McKitrick. Bjørn Lomborg argues that we are spending too much time on th wrong environmental and social issues. Bruce and Ross argue that faulty scientific research is consistently leading us to make poor government policies on major issues. As an example we may have a cleaner environment with more jobs if we can unlock the EPA from its view that carbon dioxide is a pollutant that they need to regulate. The article, Time to Repeal New Source Review? (Up to 30 GW of coal-plant upgrades hangs in the balance), makes the argument that the EPA is holding up a lot of jobs and a cleaner environment for the sake of regulating carbon dioxide.

Original link to Daily Mail article:

http://www.dailymail.co.uk/news/article-1250872/Climategate-U-turn-Astonishment-scientist-centre-global-warming-email-row-admits-data-organised.html

What a real gov does – NYPOST.com

bill — Sun, 14 Feb 2010 13:46:20 +0000

In the NYPost.com editorial, What a real gov does, I think we are likely seeing a break through in the process of constructing a balanced budget. If the polling confirms his position of “no new taxes”, we will likely see major cuts in those school districts, cities, and states across the country “who kicked the can down the road” for the next group of legislators to deal with. I would not be surprised if the polling reveals a preference by the voters to deal with these budget deficit problems now rather later. Although these budget cuts will be very painful the more interesting question is whether the legislators will cut deep enough to start offering modest tax breaks for new business startups and expansions that create jobs in the private sector.

New Jersey Gov. Chris Christie clearly is serious about doing what he was elected to do — getting the budget under control, without reflexively raising taxes.

Noting that Jersey’s current budget contains "the same worn-out tricks of the trade that have become commonplace in Trenton, that have driven our citizens to anger and frustration and our wonderful state to the edge of bankruptcy," Christie on Thursday declared a new day.

Facing a $2.2 billion deficit in the current budget, the governor imposed fiscal emergency measures: By executive order, he froze $1.6 billion in unused state funds and started chopping in the areas where the money is — education and health care.

California governor signals key budget concession (Reuters) I was wondering when some pragmatic souls in the California...
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AudioOwl – Pride and Prejudice (version 3) by Jane Austen

bill — Wed, 10 Feb 2010 13:21:02 +0000

For kicks I downloaded Pride and Prejudice (version 3) by Jane Austen from www.audioowl.com. It’s free! I listened to it on the way home from work and loved it. Karen, you did a great job reading it!

Another Way to “read” the Bible and literary classics About two years ago I decided to read the entire...

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Saving Private Keynes

bill — Tue, 09 Feb 2010 13:28:02 +0000

Like the movie Saving Private Ryan it is time for the Keynes economic ideas to go home. It is not that the ideas are necessarily wrong but as Allan Metzer argues in How Obama Got Keynes Wrong, the bPOR(Bush-Pelosi-Reid-Obama) administrations have used the name of Keynes to justify bad fiscal policies.

While the Obama team is laying out huge sums of money, Meltzer says it’s neglecting a key part of Keynes’ plan: You can’t run up a debt without a way to cover it.

Running up huge debts without a plan to pay it off is a bad plan in almost all economic theories. Keynes’s ideas are tainted now so it is time for some ideas that actually have a chance at working. Hopefully our Congress men and women will not need a California IOU moment to spur them on to fiscal responsibility. If they do not start acting responsibly we will probably throw out as many of them as we can in the November elections.

FORTUNE: How Obama Got Keynes Wrong….
Glenn Reynolds
Sun, 07 Feb 2010 19:10:03 GMT

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Obama’s Bank Tax: Missing the Target

bill — Mon, 01 Feb 2010 04:03:30 +0000

I must give a hearty thanks to the Heritage Foundation for this article. I have been pursuing a better understanding of Fannie Mae subsidies ever since the Wall Street Journal published Katrina’s no-brainer idea that everyone should rally around the idea to tax the big banks to recoup the taxpayer-funded bailout. In an interesting twist of word meanings I agree with Katrina that taxing the big banks is no brain idea. It is difficult to understand how the average person finds the wisdom of picking a fight with commercial banks while we ignore the continuing financial disaster at Fannie Mae and Freddie Mac. So while the CBO and the Administration quietly debate when to recognize the increase in the national debt due to Fannie Mae and Freddie Mac and the Federal Reserve frets who will buy the mortgage backed security debt in April, the average person is presumed to be more interested in taxing banks rather than efforts to fix the biggest financial crisis of our generation.

In his State of the Union address Wednesday night, President Obama repeated his call for a tax on banks, calling it “a modest fee to pay back the taxpayers who rescued them in their time of need.” That sounds good, everyone agrees the taxpayer’s money should be paid back. But there’s a bit of misdirection going on here.

As shown in the chart above, most big banks have already paid back the government money they received, with interest. On the other hand, most of the big companies that still owe billions to taxpayers, including Fannie Mae and Freddie Mac, and auto firms GM and Chrysler would not be subject to the tax. Only two big firms, AIG and GMAC, owe the government and would pay the tax. Even in these cases, the “modest fee” won’t add anything to the government’s coffers — any taxes they pay would simply reduce the amount the amounts they pay back.

The plan will do nothing to help taxpayers or get bailout money returned to the Treasury. It makes for good rhetoric — what politician doesn’t want to sound anti-bank nowadays? — but is no substitute for real policy.

Obama’s Bank Tax: Missing the Target
James Gattuso
Fri, 29 Jan 2010 14:51:59 GMT

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Douglas Adams

bill — Fri, 29 Jan 2010 13:19:05 +0000

I love deadlines. I like the whooshing sound they make as they fly by.

Douglas Adams

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