Thursday, April 29, 2010

- An Email That's Going Around



The latest I get up on a weekday is 5:00AM (usually it's 3:15AM) and I work most days until 7:00PM or so. I haven't had a vacation (a real one - where you do nothing but enjoy yourself) in nearly a decade. I took my family to DisneyWorld over spring break and worked every day I was there. I was up every day at 5:00AM, dialed in on a laptop from the hotel room, and made trades with my blackberry from the Pirates of the Carribean ride.

I'm the walking definition of a guy who got where he is by refusing to take no for an answer, so you can imagine how gratifying I found this email sent to me by a friend today.




We are Wall Street. It's our job to make money. Whether it is a commodity, stock, bond, or some hypothetical piece of fake paper, it doesn't matter. We would trade baseball cards if it were profitable. I didn't hear America complaining when the market was roaring to 14,000 and everyone's 401k doubled every 3 years. Just like gambling, its not a problem until you lose. I have never heard of anyone going to Gamblers anonymous because they won too much in Vegas. Well now the market crapped out, & even though it has come back somewhat, the government and the average Joe's are still looking for a scapegoat to blame. God knows there has to be one for everything. Well, here we are.

Go ahead and continue to take us down, because you are only going to hurt yourselves. What is going to happen when we can't find jobs on the street anymore? Guess what, ...we are going to take yours. We get up at 5am and go out after work till 10pm or later. We are used to not getting up to p*ss when we have a position. We don't take an hour or more for a lunch break. We don't demand a union. We don't retire at 50 with a pension. We eat what we kill, and when the only thing left to eat is on your dinner plates we are going to devour them as well.

For years teachers and unionize labor has had us fooled. We were too busy working to notice. Do you really think that we are incapable of teaching 3rd graders and doing landscaping? We are going to take your cushy jobs with tenure and 4 months off a year and whine just like you that we are sooooo underpaid for building the youth of America. Say good bye to your overtime and double time and a half. I'll be hitting grounders to the high school baseball team for 5k extra a summer, thank you very much.

So now that we are going to be making 85k a year without upside, Joe main street is going to have his revenge right? Wrong!!

Guess what....we are going to stop buying the new 80k car, we aren'tgoing to leave the 35% tip at our business dinners anymore, no more free rides on our backs. We are going to landscape our own back yards, wash our cars with a garden hose in our drive ways. Our money was your money, because we spent it.

The difference is- you lived off of it, we rejoiced in it. The Obama administration and the Democrat National Committee might get their way and knock us off the top of the pyramid, but its really going to hurt like hell for them when our fat asses land directly on the middle class of America and knock them to the bottom.

We aren't dinosaurs. We are smarter and more vicious than them, and we are going to survive. The question is, now that Obama is making Joe Main street our food supply... will they?

- Over The Socialist Waterfall



Or down the rabbit hole, depending on how you look at it.


I've been arguing in conversations that the credit downgrade of Spain will eventually spell the end of the modern social welfare state as we know it. Socialism has always required external support to make the books balance out. But now there is no more 'external' sources left to tap, and the whole philosophy has come to the end of the road. Market discipline is being enforced now... for the Socialists in Europe (and in places like California) there is no more pretending.

The question now is ... what comes next.

One thing you can be pretty sure of is that it's unlikely to be a laissez faire system based on personal liberty. Yes it's true that a system like that has done more to elevate people from poverty than all the top down 5 year plans and 'targeted benefits' ever conceived by our leaders in Washington. But for them it's always been about power. And history tells us that the person with power won't usually give it up willingly.

In Washington the only interests they're worried about are those that are likely to get them reelected. If the surest way to see another term as speaker of the house was to put all the Jews in America in concentration camps, then Nancy Pelosi would spend all of her time dressed like Jesse James's prom date. They don't care about helping America - they care only about helping themselves. If Americans can benefit at the same time it's a nice side effect, but to them it is by no means essential.

So the truth is, I have no idea what we get after this. But whatever it is, I'm betting that for almost all of us it will be less fun than what we have now.

All the talk in the media about 'economic contagion' across Europe seems to me to be particularly ironic. they don't realize that the disease has already spread. It was all those academics who praised the collective and 'social justice' that spread it. They demanded that governments become players in the markets instead of just referees, and called it a moral imperative that government funds be spent in the least productive ways. They were all strong supporters of labor unions even though their express purpose is to remove the economic consequences of being uncompetitive. And they cheered when all the western governments decided to punish the most productive and reward the sedentary.

The disease has already spread to every western country in various degrees. The all have it... the only question now is whether it's terminal or not.

Wednesday, April 28, 2010

- Thank God For Joe Kernan



Today on CNBC’s squawk box, a venue known more for it’s major media style of liberal ‘impartiality’ than it’s recognition of financial reality, Joe Kernan said what so many of us were thinking yesterday about the Goldman Sachs hearing.

To paraphrase, he said that CNBC’s least informed viewer apparently knows more about how the markets work than the most informed member of that congressional committee. He expressed his annoyance and disgust at the politicians involved in a way that made it clear that like me, he was screaming at his television yesterday at the way the truth was being twisted.

Personally I was aghast at the whole thing. I don’t think much of the character of politicians in general. If they were decent honest people then it seems to me they would make their way in the world in basically decent and honest ways. But instead they’ve chosen to go into politics. And although they would have you believe they’re doing it out of a desire for selfless public service, the reality is, the vast majority of them have done it because lying to people and stealing from the public are the only skills they possess.

But even by that cynical standard yesterday’s hearings were a travesty… very likely the worst display I’ve ever witnessed. Reality was twisted to the breaking point, and both political parties showed themselves at their worst. Rather than an effort to expose the truth, the whole thing was an effort to hide it. It was a fishing expedition for sound bites that could be used later to damage Goldman’s reputation and make their employees sound unscrupulous, even though it’s clear that in this case they did nothing wrong.

I have a friend in the office who says that we don’t have to worry about them coming for us next because they need us. At the end of the day they have to have people to manage risk, no matter what story they tell to the mob. This strikes me as terribly short sighted. If the average American is so under informed (or mis-informed) that they’re persuaded by a shameless display like that hearing yesterday… then I think they probably believe that they can get by without a modern financial services sector. And if they feel that way, and they empower their regulators to make speculation illegal (as they seem prepared to do) then there will be no saving our modern economy.

Anyway… I was so worked up about the whole display that I couldn’t write anything about it, but then Joe Kernan went off. He said at least a few of the things that I was saying, and it calmed me down enough to be able to say something. Thanks Joe… it’s nice to know that the entire world hasn’t gone done the rabbit hole.

For those of you in financial services who are reading this, you should remember how much this political sham looks like the French revolution. You can cheer today because they’re guillotining people you don’t like, but as sure as the sunrise they will be coming after us tomorrow. I know a few people at Goldman, but I don’t really have any idea what they do. In this case though, I think it’s abundantly clear that they did nothing wrong. And if you can guillotine people who did nothing wrong for no reason than their unpopularity, then there is no reason we won’t be next.

Monday, April 26, 2010

- Being Ruled By The Obami



Blaming Quants for what happened on Wall Street is like charging Enzo Ferrari with murder, every time someone drives one of his cars off a cliff. Senators and Congressmen demanded that banks do profoundly stupid things. In an effort to keep them happy the heads of the banks turned to the quants to find a way to make this possible. The fact that they did as they were asked shouldn't be an indictment.

Think of it another way. Congress writes a regulation repealing the law of gravity. Engineers respond by building an airplane, hot air balloons, and dirigibles. These things come with major caveats when it comes to gravity, but most people don't listen and don't care. Instead the NYTimes writes a series of stories praising the (no doubt Democrat) Congressmen who had the foresight and vision to free us from this pernicious downward pulling force.

The engineers stand there saying "Yes but..." as people sell their homes and move permanently into blimps to live among the clouds. No one listens to the engineers because those details are just getting in the way of the 'new normal'. they are preventing people form enjoying the 'new age of man' as an avian creature. And when the inevitable begins and the dirigibles begin to fall, the very first thing the congressmen do is have every engineer in the country arrested for failing to obey the law against gravity.

PJ Orourke seems to be the latest 'man of the right' to forget this. Okay... maybe he's not really a man of the right... maybe he's just a man from the bar stool to the right.. but still. It's not the intelligent that are at fault here Peej, it's the insecure. That condescension that you so dislike from Obama doesn't happen because he's smart, it happens because he needs you to think he is.

The difference between someone who is really smart and someone who just pretends to be on TV is that the person who is really smart can admit how little he actually knows, while the faker can't admit not knowing anything. It's that insecurity that makes them natural Democrats. The self congratulation that defines leftist policy is too sweet a nectar for the insecure to say no to.

All those derivatives came with caveats and we told you all of them. No one who understood them ever thought they eliminated risks. But no one in power cared because they brought us all one step closer to the great socialist dream where everyone will have everything they want whether they've earned it or not.

They thought that ignoring reality was in their self interest. And since the only people who have come out of this whole thing as big winners are congressmen and the other people in government, maybe they were right after all.

Thursday, April 22, 2010

- There's your Problem Right There

Obama to Scold Wall Street

Among the various ways the brilliant financial minds of the Democrat leadership plan to 'reform' the banking system is by banning all swaps trading by banks. This will have the same effect on the American banking industry as banning the $1 dollar bill would have on the economy. Or rather, it would be the same as if we outsourced the $1 dollar bill to offshore banks. The business will continue same as before, it just won't include any US domiciled players, who will be forced to round all their business up or down.

You can always tell when someone is trying to scare the public because they specifically mention the notional size of the swaps market, which is in the trillions of dollars. but those are virtually meaningless numbers that never get paid out. Only the daily difference in pricing is every paid between the counterpaties. Those counterparties by the way, are all proffesisonal investors. No one is selling an interest rate swap to a miami beach widow.

How is it that the people in charge of writing the regulations can have so little idea of how the industry they're regulating works? How can they have so little idea the benefit that comes from it? A benefit which they're doing their best to see is eliminated. You can't have capitalism without capital or capitalists but Obama and the Democrat leadership are apparently going to try.

I know this is a bold statement, but this may very well be the STUPIDEST thing I've ever heard coming from Washington. It will do for banking what Jimmy Carter's energy policy did for the gas station business.

Tuesday, April 20, 2010

- Look Thou And Repent Thy Sins



Some truly awesome pics from the Icelandic Volcano.


The Eyjafjallajokull volcano seems to be intentionally misspelled in several different languages at once. And from the looks of it the gods are really angry about that name.

When I was in Indonesia I wanted to go have a look at the local volcano, but our driver was REALLY frightened about taking us closer than two or three miles.

"What's the big deal?" I said "It's not erupting right now... besides I don't want to go peer into the mouth of the thing, I just want to get close enough for a picture with it in the background.

"That's a very bad idea." was all he said to me, and he stopped the car.

It takes a a hell of a lot for a guy making 12 dollars a month to say no to a 20 dollar tip, but he made me walk a half mile or so closer on my own to get a photo. He wouldn't go any nearer the thing for any money.

After seeing these pictures I guess the reason was that he wasn't really expecting me to come back.

Sunday, April 18, 2010

- Goldman Charges: Retribution Not Justice



More on the Goldman charges:

First... We can say with some certainty that as the evidence stands today, Goldman probably did nothing illegal. If they had, someone would be up on criminal charges right now. The only remaining question then, and this is the allegation of the SEC suit, is whether what they did was unethical or not.

Second... It seems to me that the question of whether they did something unethical revolves around the role that Paulson & Co played. Yes, Goldman shorted the CDO's they were selling but that's how market making works when the markets are illiquid. Those brilliant traders of the internet chat rooms might not like it, but shorting is not an unethical practice, and it doesn't suddenly become unethical just because you made money doing it. Some Goldman customers lost money, but other Goldman customers made money on the same deal. Some people win... some lose... that's why they call it 'risk management; and not 'certainty management'.

So in effect... if the role that Paulson played wasn't uncommon... if Goldman had other advisers play the same role with regard to the collateralization of other instruments, then that was simply a standard case and Goldman didn't even do anything unethical. I don't know what the standard practices were in that market space... but it doesn't seem unreasonable to me to have your customers tell you what products they would like to buy, and then you design products to meet those specs. We did similar things in the SWAP business continually when I was on the sell side, (back before "Banker" became synonymous with 'enemy of the state') and no one ended up in court over it. To some extent that's just how things work in a custom derivatives market.

Third... None of this will matter in any way because the Frenchman involved is such a massive tool that he's going down if the SEC and the Obama administration have to break every law on the books. The theme today is that all capitalists are evil. If you're a super arrogant, condescending, Jack off of a capitalist, that only makes it worse. They will never let an A-hole like this guy survive an event like this. Obama will personally lead an angry mob of union thugs and community organizers to burn the Goldman building to the ground first.

This isn't going to be about justice... it's going to be about retribution. And this guy is very nearly a perfect target on that score. Unless he's donated all the money to a group of starving community organizers somewhere, he's as good as finished.

Friday, April 16, 2010

- The Goldman Charges

On the surface, and without knowing the full details of the allegations or evidence, I'd say it sounds like a witch hunt to me.

First... it's civil charges not criminal. That means that the SEC doesn't have evidence enough to prove actual fraud.

Second... as I understand the allegation, the SEC is upset because Goldman did not disclose the method it used for selecting the securities used to collateralize a specific CDO, even though the disclosure of it's selection method was never required under the law. But their logic is that since it all went bad soon after that... there must have been some wrong doing somewhere. I hope that sort of retro-active justice isn't the way our legal system works, but these days who can say.

Third... this story has all the salient catch phrases for enraging people in Washington, or who don't have any inkling of how markets work. They are in the best order I can manage Goldman Sachs, Hedge Fund, CDO, and Short Selling. "If it has that many things involved it must be really bad, and someone needs to go to jail for it" says the logic in all the fashionable liberal salons.

I admit I don't know the whole story so I may be way off, but so far this sounds like the precisely the kind of Anti-Capitalist event that you get when you have a far left administration in DC calling the shots. As near as I can tell none of it was illegal, and all of it was dependent upon things that happened later so no one knew them at the time...but the SEC doesn't care. That is to say... if the credit market hadn't collapsed it would have never been heard of. But since it did, the Democrats running our government need a scapegoat and that scapegoat is Wall Street's most convenient company, Goldman Sachs.




%%%%%%%%UPDATE%%%%%%%%


After having read some of the email the accused VP has written I'd just like to say that being an arrogant egotistical jerk isn't against the law. Maybe it should be, but it isn't today.

- Post Racial Zimbabwe



As it turns out, if you use the government to heap enough institutional abuse on enough people, they will eventually stop caring about race. Who knew? Apparently the NY Times, in it's (tragically) laughably myopic way, has discovered this transcendent new truth of human behavior from Robert Mugabe. I hope no one from the Whitehouse is reading this.

I'm sympathetic to the plight of Douglas Rogers, the author of this piece. But to me it seems specifically designed to subscribe to all the ridiculous biases and self congratulatory nonsense that the Times editors can't do without.

I mean think about it, Robert Mugabe seized the assets of all the most productive citizens in many cases driving them out of the country, dispatched mobs of machete wielding thugs to cut off the ears, lips, and heads of those who dare to remain, reduced the currency to an international joke through hyperinflation (which slashed the value of his citizens savings to zero, and increased the prices of basic staples beyond the reach of the poor) and through it all sustained a racial propaganda program that even Jesse Jackson would envy. He basically reduced what was once one of the most productive and stable economies on the African continent to a country with all the productivity and hope for the future as Haiti. And when it was all over and the newly destitute and starving masses were finally finished burying their dead... the people forget about race. Hooray! What a glorious transformation.

Boy... I really REALLY hope no one from the Whitehouse is reading this.

Thursday, April 15, 2010

- Tea Party Barbie



My wife actually wear's a shirt with a target and a bunch of bullet holes in the 10 ring that says "Why Yes I do shoot like a girl", she's a brunette, has had lasik surgery, and her hand made sign is 5 feet high x 15 feet wide, and take's two people to carry. But apart from that....

Wednesday, April 14, 2010

- Picking All Of The Winners And Losers



I’m not a political strategist, but as I said in a recent comment I am an interested amateur. And with that caveat I can tell you that I see a big problem off on the horizon and it’s going to require immediate action to prevent it - if it can be prevented at all.

Let me start with my conclusion first. In my mind, the Tea Party Movement has to adopt a transparent broad based tax policy immediately, and use it as a litmus test for support among Republican congressional candidates, or what’s left of our liberty will finally be going over the waterfall. Let me explain…

Between now and the 2010 election, a gaggle of left and right wing think tanks will release study after study describing the kind of tax rates we’d need in our current system to address the deficit. These studies will be more designed to scare Americans than to educate them. There will be lots of apocalyptic language, and the rates described will all be 75% and above. The right will think it reflects badly on the left… the left will think it reflects badly on the current tax system. Both may be right.

Immediately after the 2010 election President Obama’s ‘deficit committee’ (staffed with political hacks like union boss Andy Stern) will come back with a recommendation for a VAT. The rate described for it will be tiny, especially compared to those recent studies. And it will be compared endlessly to those studies in the network media while they carry their typical amount of water for Team Obama. They’ll present it as a better way to “increase” taxes than with our current system, and will minimize the fact that it’s actually a way for Obama to break his campaign promise to raise taxes on EVERYONE. Democrats will draft legislation and with the help of people like Scott Brown and Olympia Snowe, will ram it though quickly in the hope that people will forget it all before the 2012 elections. This will be an unprecedented tragedy for America.

Without their own broad based tax plan, the Republicans will be in the uncomfortable position of arguing FOR larger deficits, and the network news media will roast them over an open fire for it. They’ll stammer and squirm like John McCain talking about home ownership rates or trade deficits, and the Democrats will get the REAL prize of the Obama administration… a totally obfuscated, highly effective tax that they can use to virtually every single economic winner and loser based on their political popularity. The ’free market’ will become political in a way that we’ve never experienced here.

But if the Republicans have already established a flat income tax or a completely transparent national sales tax as a part of the party platform, then they have a positive alternative to the Democrat’s positions. They’ll have a way they can be against deficits and still oppose the Democrats. The problem here though is that the insiders of the Republican party will probably also support a VAT. They’ll think it’s a better way to go for the same reason the Democrats do. A VAT is a great tool for increasing the power of the central government, and when the Republicans retake the helm they will be inheritors of all that power even if it’s Democrats that give it to them.

That’s why it has to come from an outsider group with the power to make a transparent broad based tax a part of the party platform. The Tea Party has to embrace it immediately, and begin pushing hard for it. It doesn’t matter which kind of tax really… at least it doesn’t’ to me. The key is that it must be transparent. It has to be a tax that everyone knows they’re paying, every single time they pay it. It can’t be something that it hidden and worked into the end product price (or not ... based on the state of the political give backs) and that no one knows they’re paying like with a VAT. It has to be something that is both clear and simple, because that will make it harder to change later, and much harder to give every interest group a special favor of a VAT give back.

One way or the other we are getting a broad based tax because the numbers don’t work out any other way. But I can’t possible overstate this…the pernicious thing about a VAT is how easy it is to hide. No one ever knows they’re paying it, and when they do, they don’t know how much it is. And it’s that obfuscation that will allow the congress to ‘direct’ or ‘target’ or ‘focus’ the tax on whoever they don’t like, and provide relief to whoever they do. That’s the real threat to America here.

So like I said… I’m no political strategist, but as someone who cherishes what’s left of his own liberty, the last thing I want to see is a tool in the hands of congress that gives them even MORE power to decide the winners and losers than they have now. The VAT will be just that. And to stop it, the Republicans had better have something to propose in it’s place. I don’t care what… but we had all better decide quickly because time is running out fast.



%%%%UPDATE%%%%%



Jonah Goldberg provides some supporting information for my view from Irwin Stelzer.

Tuesday, April 13, 2010

- The Tax Man Cometh



When I was in school I sold cars for a while. It was a fun job most of the time and helped me get over what was then an almost paralyzing shyness. But the best part of that job was all I learned about managing people.

In fact I was taught one tactic which never failed. When people would come in to pick up their car, there was almost always a financing contract to sign. We salesmen were paid a portion of the financing cost so the contract usually had little fees etc worked into it and the rate was usually a little higher than expected. Between that and the taxes, the buyer's monthly payments would usually be somewhere between 5% and 10% higher than they expected based on their negotiation.

The way I was taught to handle this was that I'd take the contract out and point quickly at the sales price (which was what always exactly what they thought it would be) and the registrations fee (which was also exactly what they would expect) and then I would point at the sales tax and tell them that it was their monthly payment. That number was usually anywhere from 3 to 5 times their actual monthly payment so they would always react with a combination of shock and horror.

"Its' WHAT?!!! What do you mean my payment is $1,237 dollars per month?! I was told it would be about $300"

Then I would look carefully at the contract, get a surprised or embarrassed look on my face and say say... "oops I'm so sorry... that's the sales tax... geez... I'm really sorry about that....the payment is this number right here... you were expecting it to be $300 per month and it is... it's $311.45 ... just about what you expected. I'm really sorry about that but it's all right here on the contract... please... look carefully at it before you sign it and make sure I'm not making some other mistake."

After a shock like that they would look at that extra $11.45 as if it were nothing but to me it represented about $400 bucks in commission. No one would ever even blink at the difference. No one... not ever.

This is how I know that all this talk about a maximum tax rate of 78% or 90% or whatever it is that Obama needs to pay for all his promises, is no more than that... just talk. They can raise the tax rate to anything they like on high earners but they aren't going to see a dime of it. Make it 100% if it makes you feel better because there won't be a penny of taxes ever generated from it. The wealthy will just relocate and Obama and the IRS can suck their Carbon Footprint.

the truth is, like my 'sales tax as monthly payment tactic', all of this is just a cover for the coming VAT tax. That little tiny .9% (or whatever) VAT tax will look like a real bargain to most people after the numbers that the Brookings Institution is throwing around. they'll say... "Do you want to see a .9 VAT tax or a 78% maximum income tax?" and the voters will shrug and choose the VAT.

As usual, the American public is being totally played. The media is helping, and there is no doubt in my mind that the voters will fall for it. They always do.

- My Bet For Obama's Supreme Court Pick



I wouldn't put it past him to nominate this guy, and the whole resignation thing is just a setup. On every other issue Obama is doing the exact opposite of what will achieve America's goals, so I don't see why this issue shouldn't be exactly the same. Weakness aboad and fiscal bankruptcy at home.... how's all that "hopey changiness" working out for you now?

No ... not really. Even someone as arrogant as Obama wouldn't try to get away with a nomination so overtly anti-American. But I doubt we've seen the last of a pit viper like him. He'll surface in some other appointed position where he can continue to influence policy. So much the worse for all of us.

Monday, April 12, 2010

- The Moral Abyss



One of the most important aspects of liberals and how they think is that most of them simply don’t. They don’t reflect on the philosophical origins of their beliefs. They ignore the similarities that their ‘new’ ideas bear to ideas that have been offered in the past. And they are quick to dismiss any unintended consequences of their programs as subject to ‘external’ forces rather than their failed plans. In short, they refuse to analyze their own thinking in any way, particularly those ways that so often define the thinking of conservatives.

And since that’s so, Michael Knox Beran’s superb piece on how Liberalism has become the morally bankrupt social ideology of the 21st century will be totally wasted on them. Most of them will simply ignore it because it bores them. But from those liberal’s who are professional ‘defenders of the faith’ (who have no choice but read and address it) we can expect the usual slurry of misdirection, straw men, personal invective and indictment of intentions (along with the requisite mind reading), as well as the standard set of analogy abuse and tangential arguments that no debate with a liberal can be without.

One of the great disappointments of my life so far has been my inability to explain the more than adequately demonstrated falsehood of modern liberalism in a manner so concise and so logically inescapable, that even a liberal must confess its accuracy and repent. But these days I’m coming to see liberals as being driven by a sort of common psychosis. They are all terribly, horribly insecure and have abandoned objective morality, in most cases, out of a deep sense of guilt. With no road map left to guide them, they cling to the social politics of self congratulation like a non swimmer would cling to his inner tube if dropped into the middle of the pacific.

Tell them to let go of the thing they think is keeping them afloat, and they react with a fear and rage that usually surprises most conservatives. We have a consistent ideology based on empirical observation rather than emotional need, so their thought process is kind of foreign to many of us at first. But taken from that perspective you could describe what I’m trying to think of as a kind of ‘cure’ for liberalism. So I shouldn’t beat myself up for not getting it solved on my first few tries.

Anyway… this is a really great piece, but it’s so logical, consistent, and historically relevant that it won’t convince a single liberal. All it will do will make them furious by challenging their core beliefs. But readers of this blog might enjoy it for those very reasons.

The Descent of Liberalism

Friday, April 9, 2010

- The Neccesity Of Broad Based Taxes



According the 3 inch red flashing headlines now on my monitor from Drudge, roughly half of all US households no longer pay any federal income taxes. This raises that trope about how a Democracy is really just 51% of the people picking the pockets of 49%. Well apparently it’s time to check your watch and wallet because we have finally become that very nation of thieves.

Not that this will surprise readers any of you…I’ve been referring to our elected officials as ‘thieves, liars and cheats’ for ages now. It seems the most accurate label. And to be fair to the leftward portion of the general population, when it comes to the actual stealing it’s the congress-critters who are the ones committing the act itself, the rest are just benefiting from it.

My younger and more liberal friends in the office are quick to point out to me that it was actually that compassionate conservative GW Bush who was responsible for the specific tax code change that made this possible. They are mistaken in their belief that I care. In fact, I find that this is a mistake that Democrats make a lot. They assume that if it’s the party that I generally find less reprehensible who has enacted a terribly policy, then it somehow negates my revulsion to the terrible idea itself. They don’t get that it’s the policy I have a problem with and not the party that enacted it. I think that all the elected officials of both parties are all more corrupt, less honest, and of generally poorer character than almost all of their constituents. If the Republicans enacted nationalized energy production or the systematic dismantling of the military I’d still think it’s a bad idea.

But I digress…. what I actually wanted to talk about was the tax code. It’s become obvious to everyone who passes for rational, that the current tax code is not going to cut it going forward. Obama has promised that 95% of all Americans will get tax cuts and that last evil 5% will be forced to carry the burden for everyone else. This was always a stupid idea, and not just because it’s totally unachievable. The people in government simply aren’t smart enough to get any more money from those people and history bears this out. Increases in maximum tax rates have never managed to produce anything like the increase in tax revenue that their proponents hope, and no one who knows better seriously thinks they ever will. It’s a resolved issue for economists, and only the few remaining Marxists from America’s various English literature departments and law schools still cling to the fantasy.

Of course, the best taxes; that is to say those which are most effective at raising revenue and least distorting of other economic activity, are those taxes that are ‘broad based’. This is an economic code word for saying that ‘everyone pays something’. It doesn’t’ jive with the leftist world view, but the fact is that you raise much more actual tax revenue by increasing the taxes .1% on everyone than you do by raising them 1% on only the top 10% of earners or 10% on the top 1% of earners. What’s more… you do less damage to your economy. The fact is, a dollar invested by a ‘rich person’ contributes more to the economy than a dollar consumed by a poor one.

So if the government takes all it revenue from the people that would otherwise help the economy the most, you get more unemployment, and lower growth than you otherwise would. This is the hard fact that team Obama, and America is about to learn. It’s not a t “conservative” opinion; it’s just the hard realities of tax policy. Political posturing aside, Economists have reached a consensus on this stuff ages ago and it isn’t seriously debated anymore by anyone you should take seriously.

But this is the kind of financial algebra that not only violates the specific campaign promises of team Obama, but violates the basic principles of liberalism as well. The left wants ‘the rich’ (whoever the hell that is) to pay for the poor and for the poor to pay nothing. “From each according to their means, to each according to their strength as a voting block”, is one of the founding principles of the Democrat party I think…isn’t it? Well even if I didn’t get that quite right… it’s clear that they don’t like broad based taxes. And in the end, that makes their entire fiscal policy unsustainable.

The CBO this week came right out and said that our current tax policies WILL NOT BE SUFFICENT to address our future deficits. That means that like it or not, unless we want to witness the inevitable economic collapse of the nation, we must switch to a broad based tax. And that means that even though they may not like it in DC, taxes are going up on people that Obama has promised will never have to pay more. That’s the fact Jack.

Inside the beltway with will be used as the justification for a European style VAT. But that would be the worst of all possible tax options because it will give the government an extremely effective way to hide what they are pulling away from the private sector. At the same time it would give those in congress the ability to custom tune the tax to only punish those people they have a political reason to punish. We’ll have to go with a broad based tax eventually, but a much smarter way would be for the new tax to be clear, simple, visible and fair. And when I say fair I mean ‘a single rate for everyone’. A progressive tax, one where the percentage increases based on a metric, works contrary to productive economic activity. And whatever nonsense you may believe about social justice, you don’t really want your tax code to punish ‘productive’ behavior.

But the far the biggest problem with the current tax code is not the way it distorts behavior but the way that no one can really tell what they have to pay up front. Its current state is one where obfuscation is the norm and clarity the exception. And if we allow the implementation of a VAT, we take that problem and make it worse in quite possibly the only way we could. We don’t want the congress to have any more control over choosing winners and losers than they do now.

The new ‘broad based tax’ that’s good for America will be the one that’s worst for Congress. That is… they’ll certainly like it the least. It will be the one that denies them the power to custom tune and direct the ‘tax savings’ to people they prefer, and that treats everyone essentially the same. A flat tax or a single rate sales tax would probably be best, but since they are both completely transparent and ‘fair’, they’re naturally wildly unpopular inside the beltway.

This is just another place where the interests of those in government are contrary to the people they represent, and if recent history is any example, the people will be getting the short end of that stick.

- Union Memo Pray's For Christie's Death



Can't say I didn't see this coming:

Union Memo Hint's At Gov's Death

Christie is a Republican so he's laughing about it. What else can he do? But if he were a member of one of the victim classes, there would no doubt be howls of outrage and demands for inquiries from every level of government as well as all the traditional media outlets.

I reiterate that if Christie is angering this group, then he's doing the Exact right thing.


I'll tell you a little secret. when I was being driven out of Westchester by my 30,000 a year property tax bill (yes really) I considered moving to Connecticut first. But my brother, a resident of western Somerset county, convinced me to move to NJ instead.

"That's the land of liberals for you up there" he said to me, "but mark my words... this state is going Republican in the next few years." Turns out he was right.


Chris Christie is the best shot this state has for avoiding the fiscal abyss. He may not be popular with the unions, but that just means that he's doing the right thing. I hope whoever ends up running for President in 2012 takes a page from his book.

Thursday, April 8, 2010

- News Without All The Annoying "Information"



I think the best way to watch the congressional financial crisis hearings is to watch it online from Bloomberg news. The Bloomberg News talking heads are obviously less intelligent and more prone to leftist media group think than the people on CNBC or Fox business, so it dispels even the wafer thin illusion that anything relevant will be learned from this political farce. I know that’s setting the bar awfully low, but the brain dead chumps at Bloomberg News manage to slither under it all the same.

Boy… they really are a bunch of chumps too. I don’t think much of the opinions of a boot-lick like CNBC’s Steve Leisman, but while I disagree with his models, I think he does represent a legitimate view, and he does it fairly cogently. His ideas may be wrong, (or at least I disagree with a great many of them) but they are certainly his. In general terms he’s seems to be a smart guy who is doing his best, and is in fact trying to get things right based on what he was taught about how the markets work.

But the drones at Bloomberg don’t even seem to care about that. They ooze the kind of personal insecurity that liberals always seem to, and you get the impression that they are a lot more worried about how their hair looks and what their next job will be than they are about figuring out what’s actually happening in the markets. They are all about the cult of personality, and would be just as happy interviewing Jesse James about his tattoos as some no-name congressman about regulatory reform. To be fair, I don’t really know how the whole “TV news” thing works… they may just be reading the lines off the monitor in which case all this would be the fault of their atrocious writers. But it seems to me that they manage to suck away whatever light and knowledge may be accidentally slipping through the cracks.

Maybe they know I’m the only one who’s watching so they don’t care about content. But if that’s the case, then maybe they should try going the other way and just admit that they don’t have any idea what’s going on, and that this congressional hearing is all just a political show trial. Maybe they should get people on who will make it clear that even at their best, there is no way these dim wits in congress will be able to understand even the origins of the crisis let alone what to do about it. Maybe their best tactic would be to openly ridicule the members of the committee or ask them highly technical questions that they couldn’t hope to answer so that we can all see them for the circus clowns they really are. That’s the kind of honesty that would be certain to boost ratings.

We already have enough shallow, vain and vacuous taking heads in NY. We really don’t need any more.

- Here Comes The VAT



We now know for certain that the Obama administration is serious about a VAT tax. Wanna know how? It isn’t because Paul Volcker is saying that it’s “not as toxic as it used to be”. That, by the way, is a political assessment, not an economic one. He’s saying that although it will cause the same soaring unemployment and lower standard of living for us that it does in Western Europe, those things are more politically palatable to an increasingly duped American public than they used to be. To be honest about it, although I think it's obvious that a VAT will be a disaster in terms of policy, I think I agree with his political view... Americans as a wehole are more duped than ever.

But to get back on topic… the reason I know a VAT is certain to come down the pipe is not because Paul Volcker’s expert political opinion says it’s politically workable, but because the spin-meisters at CBS News (otherwise known as the ‘other Obama press office”) are now calling it a “national sales tax”. The obvious idea here is that it will be a small and clearly delineated tax like most state sales taxes, and not some highly obfuscated, cleverly hidden, and maliciously and politically ‘targeted’ behemoth like it is in Western Europe.

Whatever they call it, we have to find a way to stop it. Enacting a VAT will be the last thing a free America does. After that, we might as well make the Presdient a King, and elevate the Senate to a peerage, because we will all be their ‘subjects’ again. That would probably suit the Democrat leadership just fine.

Wednesday, April 7, 2010

- Obama's Loser



Put him behind the wheel of a 1973 Buick in 2 mile long line of cars waiting to get to a Gas pump, and he looks just like Jimmy Carter's "loser" too. It's a shame liberals can't seem to learn from history, because when they "try - try again" we all have to repeat it.