30 January 2009


The stimulus bill passed by the House includes just about everything on the liberal Democratic wish list. All sorts of interests are lining up for a piece of it. Government has never been good at picking winners and losers, and it is mostly losers that are lining up. 

It is worth noting that conservatives are the ones committed to free market capitalism. The capitalists are committed only to self-interest, untroubled by principle, and if that means dealing with the government or the devil himself, they’ll do it.

28 January 2009


The Obama administration has made a series of rash decisions that will come back to haunt us. Never mind the closing of Gitmo. The restrictions on coercive interrogation, rendition, restrictions on the CIA, etc. are a disaster waiting to happen. This is a surrender in the war on terror in favor of the civilian justice system. It is totally asymmetrical and deprives us of essential weapons to protect the nation. 
Treating terrorists as, in effect, ordinary criminals opens the door to endless legal challenges, including getting the courts to force open national security secrets. CIA interrogators now have to be nice to these people and cannot force any information from suspects. Al Qaeda will have a field day as people worried about their careers and possible prosecution avoid taking any risks.

This is compounded by leftists in the congress who unbelievably want to "investigate," and prosecute Bush administration officials for "war crimes," i.e. taking steps to protect our country. Congressmen Conyers and Senator Levin of Michigan should be "renditioned!" If the left proceeds with this war on common sense we must be ready to reciprocate and give fair warning it will cut both ways. 

What we really need is a squad of assassins to go after the terrorists. We should also encourage the CIA and other field officers to ignore these restrictions with the promise that when conservatives return to power they will be absolved of any wrongdoing. This means if a terrorist has information about a pending attack it should be obtained by any means necessary to prevent the murder of innocents. The liberals would treat such people as "war criminals" when they in fact are heroes.

These actions have once again left us vulnerable. Let there be no doubt who is responsible when the next attack occurs and may they pay accordingly.

19 January 2009


The new administration is arriving with what seems to be a split personality and a degree of mystery, chiefly regarding Obama himself. His history shows a man who has been consistently left-wing, yet he has stated he wants to be “post-partisan,” and seems to be moving towards the center. He is in many respects a blank slate people have projected various wishes and feelings upon, anointed with greatness by the media before he has actually accomplished anything. It is worth noting that McCain was a POW more than twice as long as Obama served in the Senate, and when he finishes his first term it will be the longest time he has held one job. The real question for a man who set up his Office of the President-Elect with his own seal, is whether he is an empty suit whose idea of the presidency consists of the ceremonial trappings of office, or something more substantial.

As far as the split personality goes, on the one hand he has appointed relative moderates to finance, defense, and security positions, but on the other committed leftists in the environment, justice, and labor fields, not to mention the FDA, all of which spells trouble for business and economic activity. This could mean that the B team frustrates everything the A team is trying to accomplish in reviving the economy through mandates, overregulation, rules, and restrictions. This is made all the worse by a liberal-dominated Democratic congress determined to push hard left on a whole range of issues. 

It is hard to see how economic recovery is possible if they are intent on eviscerating the petroleum, coal, and pharmaceutical industries in favor of an industrial policy that decides what industries to support, such as subsidizing “green” industries for which there is no evident market, and thus picking winners and losers. The biggest losers will be the taxpayers. In fact we may already be seeing a “capital strike” forming as the productive are forced to support the unproductive with priorities given over to “community” organizations and race, gender, and class pervasive in all decisions. 

For better or worse we now have the most left-wing government in American history. Ironically this may only be moderated and tempered by Obama himself. At this point we can only wish him well in this.

10 January 2009


Citigroup has effectively been nationalized with its government stake. I’ve had an account there since it was First National City Bank, and have owned its stock since it was the first bank to set up ATMs. At that time Citibank was the largest bank in the world and a solid blue chip stock. But then Citicorp merged with a patchwork of finance companies controlled by Sanford Weill, and became the ridiculous sounding Citigroup. That always reminded me of some third world outfit with a prefix called “Grupo.” It now is apparently going to break away pieces it should never have had in the first place, its stock price is in the low single digits, and due to the amount of money the government has put into the bank that equity has been diluted even further. That also explains why Citigrupo came out in support of legislation to let judges rewrite mortgage terms at the behest of the feds. I hope they at least change the name back to Citicorp.

07 January 2009


What should Conservatives and Republicans do now? That has been the subject of much discussion.  The short answer is nothing. At present they should just sit tight and wait and see, apart perhaps from some organizing activity. Let the Left have its moment of celebration, finally positive about something, until they are inevitably disappointed.

The reason for this is simple. We have to wait for Obama to do something to have something to respond to. Until that occurs there is little point in much criticism, and will only seem like sour grapes given that he will enter office with good will and high approval. That will not last once he is President, and given the Democratic congress much that is objectionable will soon come to the fore.

What should be done now is organizational, grass roots work. The party has to be rebuilt in places like California and New York, where it has totally collapsed and where the Republican line is for rent.

Meanwhile those in foreign countries who so loathed Bush and couldn't wait to see him leave may come to regret it as economic and trade policies change; in other words what most effects them directly.

05 January 2009


Here in New York the big story continues to be Caroline Kennedy Schlossberg’s quest for Hillary Clinton’s senate seat. Such blatant self-promotion in public is virtually unheard of, even in this egocentric, celebrity-centered age. It is unabashed chutzpah. There was a time when people would maintain some measure of dignity and wait to be called upon by others based upon their virtue. 

Her father once remarked that Richard Nixon had “no class.” The same is obviously true of his airhead daughter, who seems incapable of expressing a sustained thought without a series of “you knows” (168 times in an interview) in between left-wing clich├ęs. It is also unfortunate that this family clan has strayed far from where her father was on the political spectrum. JFK was a moderate in ideology as well as in his administration. He favored a strong defense, tax cuts, etc. However, Bobby became radicalized in the 1960’s and the phony theme of martyrdom for liberalism became amplified. 

That is apparently why the Triboro bridge has been renamed RFK by politicians who had nothing to do with it. Logically if it were named after anyone it would be Roosevelt or LaGuardia, since it was built in their era. Anyway it always is still going to be the Triboro Bridge to me. 

It is also worth noting that it was only seven years from JFK’s announcement to an actual visit to the moon. It is a testament to the breathtaking incompetence of NY politicians that seven years after September 11 there is still nothing at ground zero.

01 January 2009


This year begins with economic turbulence continuing throughout the world. Statistics in the Wall Street Journal each day are discouraging, and the economic gloom everywhere is palpable. Most people alive today have never seen anything like this. If this were a normal post-war recession we would be almost halfway through it at this point. But this is not a “normal” recession judging by the market meltdown and the continuing financial paralysis. Projections for an upturn by the second quarter of this year are very optimistic, and it is more likely to be prolonged because nobody knows what they are doing and the government will likely make things worse. If there is growth at all it will be anemic because of industrial policies that are likely to be put in place by the new administration. 

It is well known that the root of the problem began with the Community Reinvestment Act, and Fannie Mae, and Freddie Mac overextending credit to people who never should have received it ,which in turn encouraged banks like Countrywide and Washington Mutual to push out loans to anyone, with virtually no credit standards or safeguards. Although this began during the Clinton administration, George Bush liked to brag about increasing home ownership and continued to encourage these policies. People could lie with impunity on applications while suffering no consequences. Ironically during the Savings and Loan crisis other people were actually prosecuted for doing the same thing. Thus, all players dispensed with standards and created the resulting housing bubble. Loan originators could be lax because they would sell loans to other institutions or in packages with slices of mortgages, which presumably spread the risk and seemed virtually guaranteed because the good mortgages would more than make up for the few bad ones. Wall Street further muddled these securities through credit default swaps and excessive leverage. The problem now is that no one knows what these securities are worth as they are unable to unravel the labyrinth of slices spread across the market. Until this is resolved there can be no stability in the housing or credit markets. 

But let’s just look at the loans that haven’t been securitized, and are still on the books of the banks as nonperforming loans. Because so many mortgages were made on houses with little down payment, and which are now worth less than the original mortgage amount, homeowners can simply walk away. It all really comes down to this: there is a spread between what these houses were worth during the bubble and what their current market value is. The question then becomes who is going to take the hit- the homeowner, the lender, or the taxpayers? This is further complicated by the fact that these assets have no fixed value and eventually may appreciate again. That argues for the homeowner to sit tight where possible, but mark-to-market rules are making financial balance sheets appear far worse than they are. If the taxpayers eat the difference on the assets everyone describes as “toxic,” who gets the benefit when these assets appreciate again? 

Right now the best stimulus the economy has is low oil prices, which have the added virtue of hampering unfriendly states like Iran, Venezuela, and Russia. Government spending on public works such as roads and bridges will take years to have any impact. Leaving aside the merits of these projects, and although I naturally oppose any tax increase, if ever there was a time to increase the gas tax this is it, with oil prices so low. Such projects should properly be funded this way rather than through more debt. It is also a far better way to encourage the sort of behavior this government desires, as opposed to more regulation, management of auto mileage and production, CAFE standards, Cap and Trade schemes, and “green” expenditures there is no market for. But tax cuts are still the surest and fastest way to encourage growth. 

However this is the sort of situation than feeds upon itself. Psychologically, people believing that things will be bad makes things worse. When things get tight people stop spending on stuff they don’t need, which is a considerable portion of our economic activity. When they do not spend, there is no investment, and less investment means less innovation, and less innovation means less growth. On the other hand with deflation there is more savings and less debt, the downside being increased unemployment.

It seems as though we should know more after so many decades of study and experience, and economic swings should not be so severe. But clearly this situation shows that we know less than we thought we knew, which should also inspire some prudence in attempting to solve the problem. We already have a $1.2 trillion deficit in FY 2009 before the Obama spending program arrives and congress is about to expend another trillion or so. But what if it doesn’t work?


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