Friday, November 27, 2009

- Who You Callin A Servant... Boy!

My buddy Tim, having nodded vigorously to my rants about public sector unions for the better part of 20 years now, has finally started to outpace me in terms of his level of outrage.

He sent me this really great piece about how the public 'servants' in California have set themselves up as an upper class of citizen while contributing zero to the living standard of the people paying the taxes:

Government employees use various scams to boost their already generous benefits, which include fully paid health care and cost-of-living adjustments. The Sacramento Bee coined the term “chief’s disease,” for example, to refer to the 82 percent (in 2002) of chief’s-level employees at the California Highway Patrol who discovered a disabling injury about one year before retiring. That provides an extra year off work, with pay, and shields 50 percent of their final retirement pay from taxes. Most of these disabilities stem from back pain, knee pain, irritable bowel syndrome, and the like—not from taking bullets from bad guys. The disability numbers soared after CHP disbanded its fraud unit.

The same thing is going on in NJ, NY, CT, VA, MI, IL and everywhere else that public sector unions are strong. think 'Blue States'.

When the states start declaring bankruptcy it's going to be quite a shock to these people who are all counting on the rest of us keeping them in considerable comfort for the rest of their lives.

There are too many great quotes in the piece to mention them all. Read it here.

Wednesday, November 25, 2009

- Still Thankful

This will be a very short post… not because I because I don’t have lots to be thankful for, but because I’m so busy right now that I have very little time. Principle cause of that is that I’m doing the ‘single dad’ thing this year. My mother in law just passed away, so my wife has gone to Florida to tend to her dad and handle the details. My daughter and I are getting by OK on our own, but it’s a heavy workload even for someone who sleeps as little as me.

All the same though I could really use a nap.

I haven’t decided if I’m going to write a longer piece about my mother in law. She and her husband took on enormous and terrifying challenges in their lives, many of which had to do with guard dogs, barbed wire and machine guns. But she always considered herself a small person with a fairly ordinary life, for whom her family was by far the most important priority. There is a great deal more to say about her, and like I said, I may write about it; but not today.

Even with the tragic news, we have lots to be thankful for. We have our close connections (many made closer by the tragedy of loss), and we all have each other. Since she was little I’ve always told my daughter that people are much more important than stuff, and thankfully she seems to have taken that to heart. She’s terribly sad about it, but she’s handling the loss pretty well, as kids her age all surprisingly seem to do.

In an odd twist this year, I even find myself being thankful for president Obama, because as I said in this email to Jonah Goldberg, I’m not happy about what he’s doing, but he’s doing it in such a predictable way that I’m making a fortune on it.

Anyway… we’ve had bad news, but we are getting through it. And we haven’t lost sight of what’s important. But if you don’t hear from me until a week or so after the holiday, now you’ll know why.

Best to you and yours for this holiday.

Monday, November 23, 2009

- Why Republicans Suck

The RNC has written a pathetic bunch of talking points for vetting candidates. Clyde Middleton over at The Patriot Room has added some improvements. A sampling: (his comments are italicized)

THEREFORE BE IT RESOLVED, that the Republican National Committee identifies ten (10) [It's not eleven - see below] key public policy positions for the 2010 election cycle, which the Republican National Committee expects its public officials and candidates to support:

(1) We support smaller government, smaller national debt, lower deficits and lower taxes by opposing bills like Obama's "stimulus" bill;

[Poorly drafted. You are pigeon-holing a single piece of legislation. This isn't high school. You need to add "less regulation" and revise the tax bit to read "lower taxes on individuals and businesses covering income and profits, including capital gains." Then you need to say - in addition - that you "oppose a stimulus bill not designed to support the jobs-engine of this country - small business."]

(2) We support market-based health care reform and oppose Obama-style government run healthcare;

[Wow. You guys REALLY suck. Let me write it for you: "We support market-based health-care reform including insurance-company competition across state lines and Med-Mal reform including caps. We do not support government intervention or involvement in the nature propose by President Obama."]

(3) We support market-based energy reforms by opposing cap and trade legislation;

[That's IT? Really? What about an accelerated program to develop domestic energy resources including oil and natural gas? What about building new refineries and new nuke plants? You OPPOSE something and that's IT? You see why we don't like you? You commit to NOTHING.]

As it stands if the RNC hires clyde to run the communications office, I'd actualyl consider giving them money again day.

The rest of his well written suggestions are here.

Friday, November 20, 2009

- Lets Put On A Show Trial: Part 2

Charles Krauthhammer thinks this is a very bad idea too:

What happens if KSM (and his co-defendants) “do not get convicted,” asked Senate Judiciary Committee member Herb Kohl. “Failure is not an option,” replied Holder. Not an option? Doesn’t the presumption of innocence, er, presume that prosecutorial failure — acquittal, hung jury — is an option? By undermining that presumption, Holder is undermining the fairness of the trial, the demonstration of which is the alleged rationale for putting on this show in the first place.

Thursday, November 19, 2009

- Lets Put On A Show Trial!

No miranda rights, no discovery rights, no right to remain silent, special interrogation techniques, no chance of acquittal, and even if acquitted, no chance of release. And after this trial (for KSM) these are the legal precendents we'll all be forced to cope with.

This is Bad, Bad, Bad, Bad, Bad. Holder and Obama are trying to prove a point, and will destroy our legal system in the process. Stalin would be proud.

Tuesday, November 17, 2009

- American Pride

Cultural tradition my eye.

If I ever meet Obama, I want him to prostrate himself at my feet.

- Pulling Another Torch...

Apparently the Democrat machine is concerned with Frank Lautenberg's increasing age. Here he's pictured about to consume one of the many children whose blood he's forced to drink daily to continue to preserve his life.

No ... not really... but the Democrat machine really is really concerned. So what they now plan to do, in the musical chairs style so typical of Trenton, is to have Corzine retire before leaving office in January. That will make Richard Codey governor again. Then if Lautenberg will retire as well (again), Codey can then appoint Corzine to Lautenberg's empty seat. This musical chairs act (which happens every 4 or 5 years or so) is known locally as 'pulling a torch' so named after former Senator Robert "The Torch" Toricelli's timely resignation when corruption allegations started to make his poll numbers look bad in a recent election.

All this is important to the Democrat machine because if Lautenberg were to have his coffin discovered by the gathering mob, or accidentally go outside during the daytime or eat soemthing with garlic in it or whatever, incoming governor Chris Chritie could then appoint his own Republican candidate to replace him in the Senate. Can you imagine ?! A Republican ... in the Senate...from NJ ... gasp... oh the horror...

I'm not really surprised, but I am as embarrassed as always. NJ and corruption...perfect together.

- The Cult Of Celebrity...

One of the discouraging things about American politics is that we don't vote for people who we think will be good at their jobs, we vote for people who remind us of ourselves.

The left believes that we on the right like Sarah Palin because she's attractive. But as much as we may agree with them about her appearance, it's not the kind of thing that drives decision making on the right. For the left who have cast aside the pedestrian trappings of western morality, attractive = virtuous, famous = competent. That's how Paul Krugman avoids public ridicule, and how anyone takes a boob like Joe Biden seriously.

Now Sarah Palin is taking the new morality of fame and making them eat it. She is everything they have trained themselves to like...she's attractive, and famous. And it was one thing to attack her when she was a threat to their annointed one, but now that she's just an author and ex-governor, I'm quite sure they find themselves reacting to her differently than before.

I hope it's enough to rehabilitate her image with the media, but I'd bet against it. The truth is, in their heart of hearts, they know they're full of $4it too. and they would sooner be accused of hypicrosy than admit they were wrong.

Monday, November 16, 2009

- Well Worth A Buck

Would you pay a dollar to watch Al Gore be forced to defend his global warming hyperbole and exaggeration on international TV? Me too.... here is your chance.

Saturday, November 14, 2009

- The Eloi King And The Emperor ...

Nothing makes a people prouder than seeing their duly elected leader debase himself before every foreign dignitary in the world.

Maybe while he's at it, he can apologize to the emperor for Pearl Harbor.

Friday, November 13, 2009

- Public Pension Trouble: Part 3,299,873

California's public pension system (CalPers) is in "deep financial doo doo" according to the Sacramento Bee.

Hey ... you know what might help them out? If the government were to take over all their health care costs for retirees. Then the taxpayers would pick up that tab instead of the pensions having to go to politicians for a direct bailout. That would probably be much more politically palatable... they can even call it 'health care reform' so it sounds like an overall improvement.

Man... that's just genius ... even if I do say so myself.

Now if I could just think of someone someone in government who is sympathetic to the issues of big labor who can champion a plan like this... That will be tough, but what might make it easier for them is if they can find a way to make it seem like it will reduce overall health care costs. Maybe if they included 10 years of tax revenue but only 7 years of benefits so it seems like it's deficit neutral...

I don't know... not even the US taxpayer is stupid enough to believe an obvious ploy like that. but I'll keep thinking about it.....

- While The Eloi King Fiddles...

Today the king of the Eloi is meeting with the Japanese prime minister. They’re missing every salient and important point between the two countries, and instead focusing on the no nukes movement. Which as you know has been recently revived from it’s suspended animation tank in the Whitehouse basement, where it had slumbered undisturbed since the end of the Carter administration.

That they are focusing on this idiotic stuff is criminal and that the dimwit press is letting them is negligent. Of course Japan is no nukes… who else if not them. But if we can set aside the pacifist movement (as most Americans did a generation ago), there are issues of today that should really be discussed. Japan’s economic condition is deteriorating rapidly. It will be the first country to go over the economic waterfall, and rather than addressing that and dealing with the all but certan disaster, Obama continues to paddle us closer to their position.

Japan is about to face that crisis of all social crises, a haircut for their pensioners. The after affects of that will be dramatic to say the least. (To imagine what this means, just picture what would happen if we told everyone in America that we're cutting social security payments in half regardless of what was promised or what you may have paid in.) Japan will no longer be in a position to help support the dollar or to buy US debt. Their domestic economy will go into freefall as the price of commodities soar, and they’ll try to cope with the social changes when energy becomes so expensive in yen that the worlds second most modern economy will begin to more closely resemble the 15th century.

But not to worry … the Eloi king is on the job. He’s got a rousing speech about ‘international cooperation’ and our ‘shared goals’ and world without nuclear weapons. He’s so much like Carter that the secret service should start carrying small gauge shotguns to repel all the rabbits that are bound to attack.

Carter was an incredibly weak president; so weak that even herbivores scared him witless. The same is obviously true of Obama. But Obama has an ability to ignore the facts that Carter never had. At least Carter tried to run the country, but all Obama seems to be doing is continuing the election campaign.

God help us all.

Wednesday, November 11, 2009

- Intrade Odds On The Public Option

In most cases I think these intrade markets are useless and stupid because they ask questions where the public perception holds no sway. What can we possibly learn about reality from asking questions like "Will Michael Jackson's Doctor be charged with Manslaughter?"

The answer of course is nothing at all. In this particular case however, I think there may be some small (OK very small) merit in looking at the intrade odds. Much of the future of the healthcare bill relies on the public perception. If it really does look like a kamikazi run at the good ship capitalism, then it's going to be very hard for the Democrat leadership to find pols who are willing to fly the plane. But if it turns out to be anything else, then big labor says they won't support it. And what's the point of paying the political price of implementing an expensive new bill over the objections of the voters, when the interest group who gives you your marching orders says that they don't want it anymore?

I know the talking heads of the right say that this is all a power grab... it may be that as well. But what it really is, is a bailout for the unions. Big Labor's pensions are hopelessly underfunded, and shamefully mismanaged. Many of them will never be viable again. In the case of the public sector unions, the taxpayers will be forced (by law) to make up the difference, but that will mean that the pols will have to raise everyone's taxes, and that means that they'll be voted out. As you can imagine, they don't want to be put in that situation.

This healthcare bill and particularly the public option, are really just a little political sleight of hand. It's a way for the congress to transfer money to the pension plans of the public sector unions without having to tell the voters about it. When the public option is adopted, the unions will fold up their benefit plans and put their membership on it immediately. And with that cost absorbed by the taxpayers, their plans become viable for a few more years at least.

Of course, the public plan will then end up costing 2 or 3 times what we're told it will, like all government plans. But the pols know that once the deed is done it's unlikely to be undone, so there is no point in worrying about underestimation.

This is all just another case of the people in government (the union people in government) demanding a bigger slice of pie for themselves, and telling us it's for our own good. No one really believes that a public option will 'increase competition' or 'lower costs', not even the people who say so. When in all of human history has a government plan ever done either of those things? And if you are so stupid that you do believe it just because some self interested politician told you so, then you'll be getting exactly what you deserve.

I think the most common mistake finance industry professionals are making when looking at the hopey-changey crowd is that they are underestimating the high degree of importance that big-labor is playing in defining policy. We give the pols too much credit, and assume that they know things that we see as obvious. But the truth is that they have no idea. Even the most basic rules of reality for us are deep and abiding mysteries to them.

While we all spent the last 20 years learning how markets and economies work, they were reading "A people's history of the United States" and banging undergrads. They don't know that borrowing is connected to interest rates, is connected to bond prices, is connected to currency rates. Even the law of supply and demand isn't universal as far as they're concerned. They think that the price of something and the cost of something are the same thing and that if you lower the price, you've lowered the cost too.

To us that seems unbelievable... it's totally breathtakingly in it's stupidity. But I assure you... it's what they really think. For them wisdom went on hiatus when Reagan was elected. Since then they've been frozen in amber, the permanent adolescents, waiting for yet another chance to make the same old mistakes.

Just think about some of the horrifyingly stupid things that Nancy Pelosi says... or Harry Ried... or gasp...Joe Biden. Even the simplest most obvious facts about how the world works remain totally unlearned by them. And because that's so, the people who hold internal sway in the Democrat party don't know anything useful, and the people among them who do are all hopelessly marginalized.

That's why Obama seems like he's always campaigning... because it's quite literally all he knows how to do. And whats worse.... he's so shut into a bubble and so insulated from reality, that he probably has no idea of how quickly the edge of the cliff is approaching, or how the childish and simplistic 'stimulus' plans he promotes every couple of months are speeding us faster toward the edge. He doesn't see it, and neither does any of his staff. I know this will seem hard to believe, but from his perspective, he probably thinks he's helping things.

Anyway... if the intrade numbers can be believed, then the public option is finished. And that could very well mean that Obamacare is finished too. At least that's one change we can all hope for.

Monday, November 9, 2009

- The Cost Of Socialism

This is the 20th anniversary of the fall of the Berlin Wall. For those of you too young to remember, that event even more than the collapse of the soviet government, was the moment we won the cold war.

But now, among the young in this country, the sins of totalitarian socialism have all become 'theoretical'. They forget that real lives were effected and runied by central planning. So I offer this clip from the brilliant German movie "The Lives Of Others", about life in East German just before the wall fell.

What you don't see here is that the young man was consigned to purgatory for that joke. He appears much later in the movie sorting cards in a windowless basement, not quite in prison but all but. His life was destroyed because he made a joke in front of someone who had the political power to harm his career. And what's much worse is that I'm quite sure Nancy Pelosi and Rahm Emanuel look at the Stazi officer who did it to him with envy.

Socialism is a bad idea. It's always been a bad idea. It's not 'different this time"... it never is. And it's a little ironic that most of the cost of socialism, is actually social.

Thursday, November 5, 2009

- I Really Laughed At The Wet Spot

Offered without Comment.
(Although the temptation to mention Howard Dean is really pulling at me.)

Wednesday, November 4, 2009

- The California Decline Continues

There has been much discussion in my sewing circles about what it looks like when a government collapses. Well here we have yet another chapter. The government of California has raised the amount withheld from workers income taxes by 10%. They'll simply take it and keep it. But there hasn't been any corresponding increase in Taxes to correspond with it, so they are actually calling it a 'no interest loan'.

The Wall street journal gets right to the salient question and that is: "What happens come April if the state doesn't have enough money to pay the tax refunds it owes its citizens? Will taxpayers get IOUs the way state contractors did last year when Sacramento ran out of money?"

At least when the Fed's try something like this Texas will secede. It will be the first civil war in history that owes it's beginning to a mandatory no interest loan and poor credit.

- Two Lions Fight Over One Antelope

I guess it’s no stretch to say that I see the Republican victory in NJ a little differently than most others. Chris Christie is a machine Republican who will be friendly to continuing the current distribution of government benefits in Trenton. And at present, most of the benefits of government spending go directly to those running and working for, the government.

If the people in government (1 voter in 9 in NJ not counting teachers) had gotten the idea that Christie would be standing up for the tax payer instead of them, then they would have turned out to the polls in droves. That would have given him a 16% disadvantage at the outset, and even against a wildly unpopular candidate like Corzine, he almost certainly would have lost. But instead, Christie made it clear that he has no plans to really change things in Trenton at all. He spoke in the broadest generalities but no specifics. And that gave them the confidence to believe that they had 2 candidates on their side, the same as always in NJ.

The Election in NJ was two lions fighting over an antelope. And whichever one wins, it’s tough to call it a victory for the antelope.

Does that mean I think Christie will be as bad for the state as another Corzine term would have been? No, I don’t think so. But the fact of the matter is the system is so deeply broken in NJ that it’s outside the power of any governor to fix. Much of the taxes we pay are as a result of mandates set by the State Supreme Court, and the unions reap the benefits. They won’t allow any bill to be brought up that might change any of that. For 99% of the issues, the Christie administration will be more of the same old thing for NJ’s taxpayers.

What’s more, it’s about to get much worse. The population continues to drop but it isn’t people in government moving out of the state. The businesses and individuals who generate the taxes are the ones leaving. The tax base is shrinking but the burdens on them are not. The cost to each taxpayer will almost certainly continue to increase. So too will the pension liabilities for public employees, and the degree of mismanagement of the state and local finances. Eventually it will become too much of a crisis to ignore, but not yet. Since Corzine was from the party doing the most direct damage, he probably would have made it worse. But even though Christie is a Republican, the most we can hope for from him is that he keeps kicking the can down the alley for 4 more years.

So am I pleased? Sure. Am I looking at the event as a game changing moment? No. In NJ the lions will continue to fight, and I, and the rest of the private sector, will continue to be the Antelopes. And with a future like that it's hard for me to celebrate.

Monday, November 2, 2009

- A Goldman Sachs Shout Out

I just wanted to give a little shout out to the 40 or 50 Goldman Sachs employees who, according to my hit tracking software, are reading this blog on a regular basis. Over the last year I've received uncountable thousands of insults and one completely serious online death threat all because I work at a hedge fund. And even I'm amazed at how the public has reacted to you guys.

I'm a JPMorgan alum myself. I've never had any problem with Goldman, but I do kind of get how maybe if you've come up from a second tier firm, you might find it annoying how Goldman always seems to come out on top. There is a lot of that over at zerohedge I think... I can only describe it as Goldman - Envy. Then when you mix a little of that (partly joking) Goldman bashing in with an uneducated online investing public that doesn't really understand the ins and outs of the corporate finance world, then add to that 800 billion in banking industry bailouts and I get how people are a little put out.

But even so, I think it's way over the top. So I just wanted to let you all know that not everyone thinks you're the problem. Some of us know that a great many of you are part of the solution. Or that is... you would be if we ever get the idea to start solving things in this country ever again. So take heart. Not everyone in America thinks your evil. And the people who do are more interested in fashion than in information. Eventually they'll get tired and go away.

- When The End Comes...

... this may be what it will look like.

My buddy Rob sent me this piece on the current state of the Japanese collapse:

"The debt situation is irrecoverable," said Carl Weinberg from High Frequency Economics. "I don't see any orderly way out of this. They will not be able to fund their deficit. There will be a fiscal shutdown, a pension haircut, and bank failures that will rock the world. It is criminally negligent that rating agencies are not blowing the whistle on this."

They had a bit of a real estate crisis about 20 years ago. They decided to solve that problem with some keynesian fiscal stimulus and some quantitative easing on their currency. They then had 20 years of anemic economic growth where the emphasis was on rich pensions for their rapidly aging population. If this sounds familiar, it should. this is us in 20 years.

But maybe it will be even sooner. For instance, if Japan collapses tomorrow (an entirely believable scenario) then we're hardly in a position to brace them up are we? In fact, we're in a desperate enough circumstance to potentially be pulled over the edge along with them.

But either way, they are where we will be in 20 years under the current policies.

- There's That Word Again...

Duncan Currie - The Swamps Of Jersey:

Corzine’s decision to raise taxes in an election year indicates the rickety condition of New Jersey’s fiscal house. “Public spending in New Jersey doubled in real terms, as a percentage of GDP, between 1971 and 2008,” write Mercatus Center scholars Eileen Norcross and Frederic Sautet. Government spending represented over 7 percent of GDP in 2008, compared with 5.4 percent in 1997. Corzine has touted the spending cuts in his fiscal year 2010 budget, which took effect on July 1, but New Jersey’s nonpartisan Office of Legislative Services projects a structural budget deficit of around $8 billion for fiscal year 2011. As of June 2008, the state had an outstanding debt of roughly $31.8 billion (one of the highest burdens in the country). It also faces the daunting long-term challenge of shoring up public liabilities: As Norcross and Sautet point out, “New Jersey’s pension fund faces a potential $56 billion unfunded liability (up from $18 billion in 2006), which rises to $130 billion when post-retirement medical and prescription drug benefits and stock market losses are factored in.” In early August, Moody’s Investors Service bumped New Jersey’s credit outlook down to “negative.”

The frightening details can be found here.

- The Public Pension Disaster

I've been writing about this for years, but I strongly suspect no one cares ....yet.

My friend John Derbyshire posted my "Civil Servants Gone Wild" piece in the corner once. In that one I said that most economic terms cause spontaneous narcolepsy and that 'Unfunded pension liability" is no different. I tried to make the lighthearted parallel between the way our public pensions are being run and the way a college kid uses their parents credit card while on vacation in Mexico. If you understand the ins and outs of institutional finance, it's a better comparison than it probably seems if you don't.

Here is a TownHall piece by Bruce Bialosky which puts some harder numbers on the problem, using California (natch) as an example. But I can assure you that the very same thing is occurring in NJ, NY, Mass, VA etc. Since the process is self sustaining there is no way to break the chain. Large benefits leads to big union gains, which leads to big political contributions, which leads to politicians friendly to big benefits etc. Round and round we go until the music stops and we realize that we just burned the last chair for firewood. that's when we typically realize that not only is there nownowhere for anyone to sit, but winter is coming and there is nothing left to burn either.

That's progressive America.

Sunday, November 1, 2009

- Are You Serious?

When asked where the constitution gave congress the authority to order Americans to buy health insurance, that Constitutional Scholar Nancy Pelosi's answer was: "Are You Serious?"

Afterward, her Staffer then rushed the reporter to tell him that the speaker's comment wasn't on the record.

Nothing but class that woman.

- Benefits Neither Public Nor Good

Interesting piece on how the High Tax - High Benefit model chosen by blue states like California and New Jersey, just doesn't seem to work out:

California's interlocking directorate of government employee unions, issue activists, careerists and campaign contributors has become increasingly aggressive and adept at using rhetoric extolling public benefits for all to deliver targeted advantages to itself. As a result, the political reality of the high-benefit/high-tax model is that its public goods are, increasingly, neither public nor good. Instead, the beneficiaries are the providers of the public services, and certain favored or connected constituencies, rather than the general population.

I know the feeling. But when 1 in 9 people in the state work for the government (not counting teachers), it's almost impossible to elect someone who isn't on their side. Anyone who tries to run on the side of the taxpayer starts the election with a roughly 16% disadvantage in the polls.

I think Chris Christy will get elected. I'm certainly going to vote for him. But if a few years from now you're wondering why he didn't manage to get anything done, that's why.