Willful Omissions From Paul Krugman

From politicalmath

You may have seen the Paul Krugman post “How Big is $9 Trillion” in which he attempts to defend the Obama administration’s recent announcement that they expect that their policies will increase the national debt by $9 trillion. His tack is to “explain” that $9 trillion isn’t really all that much when you understand it in context.
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(Krugman's explanation)

Right now, federal debt is about 50% of GDP. So even if we do run these deficits, federal debt as a share of GDP will be substantially less than it was at the end of World War II.

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First of all, the national debt in WWII was initiated by an existential threat to the very continuation of our country. Mr. Krugman does not make even attempt to make the case that we have a similar crisis that justifies this kind of debt.

Second, implicit in his observation is the concept that since we did fine after WWII, we’ll do fine now. But the years after WWII saw drastic reductions in the inflation-adjusted debt driven by drastic reductions in spending. Mr. Krugman points to no similar possibility in the post-Obama world.

Third, we have something now that we didn’t have in the 1940’s. Back in the 1945, at the height of the spending that saw our national debt rise so dramatically, entitlement spending and interest on the national debt made up a meager 5% of our total budget.

Invisible Hand Kills Hybrid Car Sales

From the Financial Buff:

Sales of hybrid vehicles dropped 43% in December 2008 compared to a year ago. While sales of other cars also dropped, hybrid car sales dropped a lot more. The obvious reason is lower gas prices. When people were buying Toyota Prius above MSRP with a long waiting list, they said they were doing it for the environment, which is partly true. The payback time from fuel savings was already pretty long back then. Now that the payback period is even longer, apparently the environment is no longer a priority for a lot of people.

You’ve got to give it to Adam Smith. The invisible hand regulates people’s concern for carbon footprint or dependence on foreign oil. When they have money, they care about the environment. When they don’t have money, many people no longer need a good citizenship status symbol. It makes sense to me.

http://thefinancebuff.com/2009/01/invisible-hand-kills-hybrid-car-sales.html

Detroit Blames the South

Uncivil War

Karen De Coster
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Posted on 12/30/2008

"Some of the old guard still hold on to pipe dreams of an all-conquering Union."

The Union is squaring off against the South again. This time it's Detroit's union — the UAW
— partnering with the auto manufacturers, politicians, and media
supporters of the domestic auto industry to wage warfare against the
entire South.

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Detroiters continue to embarrass themselves by placing the auto
industry collapse into an us-versus-them framework. In the midst of all
the whining and begging for a bailout, the South has been declared the
new enemy, along with the foreign-car manufacturers who are producing
cars — in Southern plants — that consumers want to buy. The
army of politicians and opinion columnists in Michigan who lay the
groundwork for resuscitating this fading industry don't bother to
acknowledge that it is in the best interests of any public company to
maximize quality for its customers and efficiency of production and
profits for its shareholders.

Jousting

Arrogant Conceit

http://www.realclearpolitics.com/articles/2008/12/arrogant_conceit.html

Barack Obama wants to use the recession to remake the U.S. economy.

Jon Stossel
"Painful crisis also provides us with an opportunity to transform our economy to improve the lives of ordinary people," Obama said (http://tinyurl.com/67x8ec).

His designated chief of staff, Rahm Emanuel, is more direct: "You never want a serious crisis to go to waste" (http://tinyurl.com/5n8u58).

So they will "transform our economy." Obama's nearly trillion-dollar plan will not merely repair bridges, fill potholes and fix up schools; it will also impose a utopian vision based on the belief that an economy is a thing to be planned from above. But this is an arrogant conceit. No one can possibly know enough to redesign something as complex as "an economy," which really is people engaging in exchanges to achieve their goals. Planning it means planning them.

This is not the first time a president chose reform over recovery.
Franklin Roosevelt did it with his New Deal, and the result was long
years of depression and deprivation. Roosevelt's priorities were
criticized not just by opponents of big government but by none other
than John Maynard Keynes, the British economist whose theories
rationalized big government. Before FDR had been in office a year,
Keynes wrote him an open letter(http://tinyurl.com/9f8hb4),
which was printed in The New York Times.

Jim Rogers

"McChesney Martin was the guy who said the job of a good central banker was to take away the punchbowl when the party starts getting good. Now [the Fed] - when the party starts getting out of control - pours more moonshine in."

Washington Bailout Moves from Dumb to Dumber

From Net Gain Real Estate

http://tinyurl.com/5qguu4

It’s official: On December 1st, 2008 (one year late), The National Bureau of Economic Research, said the United States economy has been in recession since December 2007......

Meanwhile, executives who’ve mismanaged their corporations can look forward to the federal government providing tax dollars to bail them out. Additionally, those individuals with questionable credit who overextended themselves with mortgage debt can look forward to the federal government providing tax dollars to bail them out. Not to worry - the politicians who are overseeing all this tax money being used for bailouts are the same politicians that are responsible for the biggest monetary losses in the history of the planet.

Currently, the government appears to have a three-pronged approach to kick-start the economy: (1) Provide cheap mortgages to avoid foreclosures. (2) Keep poorly run companies afloat to avoid increased unemployment. (3) Provide government supported jobs to fix America’s infrastructure. All warm, fuzzy, feel good programs. Meanwhile, there is no mention of creating civilian jobs supported by well run companies that make products which are in demand.

Chapter 11 is the right road for US carmakers

Financial Times By Joseph Stiglitz

http://tinyurl.com/5z89kj

The debate about whether or not to bail out the Big Three carmakers has been mischaracterised. It has been described as a package to help the undeserving dinosaurs of Detroit. In fact, a plan to bail out the carmakers would benefit shareholders and bondholders as much as anybody else. These are not the people that need help right now. In fact they contributed to the problem.

Financial markets are supposed to allocate capital and monitor that it is used to good effect. They are supposed to be rewarded when they do that job well, but bear the consequences when they fail. The markets failed. Wall Street’s focus on quarterly returns encouraged the short-sighted behaviour that contributed to their own demise and that of America’s manufacturing, including the automotive industry. Today, they are asking to escape accountability. We should not allow it.

What needs to be done is to help the automakers get a fresh start and allow them to focus on producing good cars rather than trying to juggle their books to meet past obligations.

The Worst Car in Creation

Competition is tough for The Worst Car in Creation, but the Yugo easily trumps the others for unadulterated incompetence and unintentional hilarity.

The subcompact car was based on the Fiat 127 and 128 - not a good move it you intend to build a car for the ages, or even just something with 4 wheels and an engine. You might say the only thing wrong with the Yugo was everything.

Callers to “Click and Clack," the Tappet Brothers' radio show on NPR, summed up the Yugo experience like this:

“The Yugo’s first stop after the showroom was the service department: ‘Fill ‘er up and replace the engine!’”

Another caller said, “I once test drove a Yugo, during which the radio fell out, the gear shift knob came off in my hand, and I saw daylight through the strip around the windshield.”


www.minyanville.com/articles/index.php?a=18395

Meatball Bubble Gum - Gift for Idea for Xmas

These meatball-shaped, bubble gum flavored gumballs are super tasty and
extra chewy. If you don’t believe us, just look on the back of each
package where Manny the Meatball proclaims, “Atsa chewy meatball.” How
can you doubt the emphatic assertion of a talking meatball?

http://www.mcphee.com/items/11898.html

Friedman quotes

“Nothing is so permanent as a temporary government program”

“If you put the federal government in charge of the Sahara Desert, in 5 years there'd be a shortage of sand”

“Nobody spends somebody else's money as carefully as he spends his own. Nobody uses somebody else's resources as carefully as he uses his own. So if you want efficiency and effectiveness, if you want knowledge to be properly utilized, you have to do it through the means of private property.”

“The power to do good is also the power to do harm.”

“Concentrated power is not rendered harmless by the good intentions of those who create it.”