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December 20, 2011

DOOM: New car, caviar, four star daydream

DOOOOM

The GOP-controlled house and the Democrat-controlled Senate are still at loggerheads over the payroll tax "cut" bill. The Democrats (and Senate Republican Scott Brown) are painting the restive House GOP caucus as a bunch of Tea Party bomb-throwers, but by my reckoning they're simply doing what they were elected to do: put the brakes on government spending. The problem the House members are struggling with is not the payroll-tax holiday (it's not a "cut") but how to pay for it -- all that money not going into SS now will have to be made up in some way later. The Democrats fully intend to force a massive tax-hike later to pay for this "cut" now, and the House GOP knows it. Meanwhile, the Donks know the tax-holiday will play well with voters going into the holidays and thus help Good King Barack have a very Merry Christmas. The Senate GOP is worried more about the optics of the situation, and not unreasonably so: this kind of brinkmanship during the Holidays runs the risk of souring voters on the GOP. The Senate GOP caucus is also weaker than the House Caucus (i.e., Brown, Lugar, the two ladies from Maine) and may feel that the Senate bill is the best hand they're going to get dealt.

I think I already inducted Maine into the LOTB some time back, but they’ve ascended to the Premier level along with such stalwarts as Illinois and California: Maine now has more welfare recipients than it does net taxpayers.

Here’s a great idea for those who want to learn more about economics but grow faint at the forbiddingly-long tomes filled with dense jargon: comic-book guides to basic economics. Volume 1: Microeconomics and Volume 2: Macroeconomics.


You know, I love optimists. If it weren't for optimists, I'd have no one to mock, ridicule, and ruthlessly exploit for my own gain when things go to shit -- as they always do.

There is a certain amount of irony in an article about the economics benefits of invention being written by a former Microsoft executive. Microsoft in many ways is the antithesis of invention: they are known more for repackaging existing technologies than for creating new ones. Still, Myhrvold does make a good point. If America expects to turbocharge our growth, we're going to have to do it via innovation and R&D.

Governments cannot create wealth. Only people can do that. All the government can do is help to prepare the ground in which commerce might flourish, and protect the rights and wellbeing of the people through a fair system of laws. However, to people like Teh Krugman, the government's ability to redistribute wealth is a mechanism for "fairness", not wealth-building: leftists believe that "fairness" is a physical rather than a metaphysical attribute. To them, it is better to be "fair" even if the result is economic ruin...which like rain falls on the deserving and the undeserving alike.

Fannie and Freddie still have their stout defenders. The malfeasance of the GSE's is so well-known and documented at this point that it led to the former CEO's of those firms being sued by the government. Yet to dupes like Mr. Nocera, the crimes and incompetence of Fannie and Freddie are of no account simply because they are, and have been since their inception, darlings of the Left. It simply confirms my belief that no crime is beyond the pale for the Left so long as the criminal is acting with good left/liberal intentions.

The French are finally awakening to the reality of the catastrophe that is the Euro. It took them long enough. But then, to the French the Eurozone was always more about keeping Germany in check and ensuring French political power than it was about creating a functional monetary union. And now their hopes are dashed: Germany ascendant, France in eclipse, the Euro on the brink of collapse.

The geezers versus the punks: an epic throw-down. As the Boomers continue their march into retirement and younger workers find themselves roadblocked by a weak economy, higher taxes, and a lower quality of life, a conflict is not only likely but probably inevitable. There is no way the government can pay out the money it promised to older Americans: Social Security, Medicare, Medicaid, pensions, all the rest. There simply isn't enough money to do it all, and younger taxpayers will simply not stand for the kind of tax hikes that would be necessary to make those promises good.

Could this be the end of the "China Bubble"? I'm just waiting for Tom Friedman to explain to me how bullet-trains and upscale Shanghai shopping malls will pull China out of this mess.

RyanAir CEO slams the EU at EU innovation summit. This story is notable mainly because this is a European CEO speaking of a European institution. This kind of harsh language used to be pretty rare on the Continent, but the EU chaos seems to be energizing the more free-market elements to speak out.

Inside the mind of a gold bug. We gold bugs do tend to be gloomy, but most of us feel that our gloominess is perfectly justified given how events have played out. It's the optimists who have the harder selling-job these days.

As investment returns dry up, state pension funds are making increasingly-risky bets to make their outlandish returns promises good. And who bears the brunt of that risk? The taxpayers.

Nation, using CalPERS' own data going back as far as it would provide, 1982, ran statistical simulations to forecast the odds of meeting several investment targets. He found there was only a 42 percent chance of meeting or exceeding our current wager on the 7.75 percent rate.

If we want to place a less-risky bet, we should be using an investment rate of 6.2 percent (63 percent chance of success) or, better yet, a 4.5 percent rate (81 percent chance of success).

I've long said that the realistic "risk free" return rate would probably be more in the neighborhood of 3-4%, not 7-8%.

How Illinois became the worst state in the nation for public pension debt. Democrat machine politics, over-powerful unions, crooked politicians, cynical businessmen, and lazy voters. It's not a mystery, really.


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posted by Monty at 08:53 AM

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