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January 23, 2012

The Daily DOOM

DOOOOM

The wheel of history can turn backward as well as forward. I’m always amazed that more people don’t realize that.

The IMF's Christine Lagarde warns that Europe faces a "Depression-era collapse". This isn't exactly news to anyone who's been following the Daily DOOM for a while.

I’m a great fan of Michael Ramirez’ cartoons, but this one is just about perfect, and it sums up very succinctly my own views on the real cost of our enormous public-sector debt.


Obama’s “bring jobs back to America” pitch isn’t exactly resonating in the tech industry. The simple fact is that high-tech manufacturing is a low-margin business, and American labor isn't competitive, in skills or wages. But even if this weren’t the case, our manufacturing base isn’t even set up to do the kind of high-end electronics manufacturing that Obama wants to repatriate. Televisions, Blu-Ray players, computers -- we couldn’t make most of that stuff even if we wanted to, at least not with a major investment in our industrial base that probably wouldn’t be worth the effort or cost in the long run.

Public-sector unions and employees know full well that California’s budget is a catastrophe, and that their gold-plated benefits packages are not long for this world. What you’re seeing is a desperate last stand, a rearguard action designed to protect the benefits of a comparatively few people, not the onging fiscal health of the state as a whole. They would rather see the state go into bankrupt chaos than accept cuts to their benefits. The spirit of pubic service has been a grim joke for years, but in places like California and Illinois I think we can declare it officially dead.

Warren Buffett is the kind of creature who can only evolve in a crony capitalist state. The only people who think he's actually a capitalist are people who don't know him or his business very well.

To protect (to the limit of our legal liability) and serve (as long as our lawyers say it’s okay).

Public sector union leaders: don’t listen to what they say, watch what they do...and where they put their own money.

Going into the middle-term, equities aren’t looking all that great...but they beat the hell out of bonds. Your return may be smaller than you wish for, but at least it won’t be zero. And I think the chances of pervasive sovereign default -- whether officially or unofficially via inflation -- are bigger than anyone is letting on.

The man who bought North Dakota. This man is the living embodiment of everything Barack Obama and his ilk hate. I wish we had a million more just like him. Hell, ten million. Does he remind anyone else of the Ellis Wyatt character in Atlas Shrugged? Man, the parallels between that book and reality are just getting creepy. Let’s hope Mr. Hamm sticks around, unlike his fictional counterpart -- we need all the people like him we can get.

I link this story mainly to point out that the 30-year private home mortgage is actually a modern artifact (and probably an unsustainable one). I have a feeling that a “reversion to the mean” is underway in terms of home financing. Which is all well and good, but this doesn’t explain what we’re going to do with our huge and increasingly-unsalable national housing inventory.

Thomas Sowell: Does a college degree really “pay off” in a financial sense? It depends on what course of study you follow. This is the problem with sending too many people to college: many find themselves overwhelmed by the work required in the “hard” STEM fields, and drift towards “softer” subjects where the work is easier and grade-inflation practically guarantees a good GPA. But STEM fields are where the payoff for an education is the highest, whereas many liberal arts and “women’s studies” majors tend to be virtually unemployable in their fields (or any professional field, actually) after graduation. But even a STEM degree is no guarantee of success: the world only has so many paying jobs open for astronomers and theoretical physicists.

Ayn Rand’s Atlas Shrugged was not a novel; it was prophecy. His Majesty will now ask for a “Reasonable Profits” board to oversee how much money a private business enterprise is allowed to make in His Majesty’s new Socialist paradise. It’s a brave new world, comrades! (I loathe these collectivist turds with a hate that burns brighter than the sun. And despite my DOOM-y nature, I am not a man to whom hate comes easily.)

S&P, having been caught napping during the real-estate meltdown of 2006-2008, is determined to prove that they still have teeth. I would say, however, that it doesn’t take a financial genius to see that Europe’s economies are unraveling; it would take a concerted effort of will not to see it.

Democrat math: A 1.4 mile rail extension somehow creates 43,000 jobs! Using the same abstruse DonkMath equation, I calculate that my neighbor kid created 1,000 jobs with his lemonade stand last summer. Behold the miracle...of Hopium!

Back in the old days, being lauded as a “hero” meant that you had to go above and beyond the call of mere duty. Now...well, apparently, just doing your damned job is cause for celebration in some quarters. This is what comes of debasing the coin of honor, nobility, and sacrifice...and of trying to abolish the whole concept of “shame”.

This is why I like Greg Mankiw: in addition to being a good economist, he’s funny and he’s humble.

When you think of wages as the price for labor, it’s no surprise that the price for Greek labor is dropping. If the money itself can’t devalue the employers will simply pay less of it, but in one way or another the price of labor will fall until it reflects the real worth of that labor in the marketplace. Demand falls but supply stays the same, so prices go down.

Does the Internet facilitate or retard good discussion of economics? I think it has done wonders for the field, actually, particularly in letting economists engage in more direct conversation with their audience (and their foes), rather than lofting the occasional book over the walls of academe with trebuchets. If there is much bad economics being done on the internet, that was true in ages prior too; but there is much good stuff as well, more easily accessible than ever before. The challenge, as always, in every age of the world, is to know how to sift the wheat from the chaff.

Milton Friedman: This clip is two minutes and and twenty three seconds of pure, unadulterated WIN. And the fact that it comes at the expense of that liberal old dinosaur Phil Donahue just makes it all the sweeter.

Until the 2012 elections are over, take any claim of drops in the jobless rate with an extremely large grain of salt. As I have said before, the media is going to be a on 24x7 “All is well!” push to help their boyfriend get re-elected, and they can be counted upon to push any shit Obama’s government lackeys throw their way.

The perils of governmental interference with Nature -- and in economics, which is simply one facet of Nature at work in the world. I’ve often said that if there was one quality in public servants above all that I wish I could impose by fiat, it would be humility.

Greece’s game plan. It basically boils down to blackmail: “Don’t let us go under or we’ll drag you down with us.”

I link this story mainly to point out Bastiat’s justly-famous “Candlemaker’s Petition” parable. This just proves that the economic stupidity of our own age is hardly remarkable; politicians have been dunderheads for aeons. The wonder isn’t that world economies fail so often, but -- given the political incompetence on display -- fail so seldom.

Chicago managed to go for a whole 24 hours without anyone getting murdalated. Apparently this is cause for celebration in the Windy City.

More (anecdotal) evidence for a substantial slowdown in the Chinese economy.

Your dog doesn’t own your entire house, and the government doesn’t, either.

Technology will radically transform higher education in the next decade or so. And, as a salutary side-effect, it will break the power of the professoriate and teachers and their unions. It may also kill off the long-outdated concept of tenure. Never has a systemic change been more desired, or more needed, by this society.

Five cretins arrested for tax evasion. What? Oh. Cretans. Sorry about that.

You’ve heard me talk about Japan’s in-progress demographic crash before. (And Russia’s demographics are nearly as dire, by the way.)

This story reminds me of the famous Milton Friedman anecdote: If it’s a jobs project, why not give them spoons instead of shovels?

American Airlines fails to make the full payment to its pension plan. The required amount: $100 million. The amount AA actually put in: $6.5 million. Yet I’ll bet that everyone is going to act shocked with the pension fund goes bust at some point.

The political economy of Chuck Berry.

Is the American middle class really shrinking? I guess it all boils down to what you mean by “middle class”, and what you mean by “shrinking”. I also think that our traditional measures of upward mobility and financial well-being are about to go non-linear as the public-sector liabilities at all levels begin to lay waste to our economy.

“Complexity risk” is a very real and pressing danger in His Majesty the King’s dysfunctional kingdom. There are a raft of problems with the current regulatory regime -- or, rather, the galaxy of regimes that currently have the force of law. Dodd-Frank, for example, did not replace Sarbanes-Oxley but operates in parallel to it. Both legal requirements are complicated, full of hidden pitfalls, and place enormous auditing and reporting burdens on companies...and yet neither regulators nor companies can ever be sure that they’re fully in compliance. It’s quite possible to run afoul of the law despite all efforts to the contrary.

When it has become only possible but nearly inevitable for a company or individual to break the law without intending to, it means that the government has run amok. If I were given power as dictator for just one year, my writ would be to make the United States Code -- civil and criminal -- smaller. The job of politicians would not be to create any new laws, but to destroy ones already on the books, to remove or at least pare down the ridiculous mountain of legislation this nation labors under. I would use the dictator’s prerogative and declare that no new law could be passed unless five old ones were stricken from the books. I’ve always thought that the entirety of the United States laws should fit into a slim paperback book that could fit into your pocket (and that’s allowing room for the Declaration of Independence and the Constitution). Part of our problem as a country is that we just have too many goddamned laws on the books.

One bedrock rule for passing any new law ought to be to prove why existing laws are insufficient to solve the problem. (Bryan Caplan has more, from a decidedly different angle.)

NPR: The original “concern troll”. In the age of podcasts, YouTube, satellite radio, streaming video, and hundreds of cable TV channels, I am mystified as to why anyone bothers with the endlessly boring and monotone NPR any more. Never mind the smarmy liberal bias -- they have all the pizzaz and excitement of a glass of lukewarm water. I guess it serves the same basic purpose as Rolling Stone does: to keep aging Boomers from becoming too alarmed at the passage of time.

If you work in foundation-laying, concrete-mixing, framing, drywall hanging, or other residential construction area...you might want to start training for a different career.

Time to unplug electric car subsidies. I’ve long thought that electric cars are just a dumb idea, technologically. They really don’t make any sense. We would have been much better served to have taken all the public billions we’ve wasted on electric cars and spent it on nuclear energy research or better petroleum refining techniques instead.

UPDATE 1: Remember what I told you about the "All Is Well!" chorus in the media? It's only just beginning.

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posted by Monty at 08:51 AM

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