Tuesday, March 2, 2010

SAR #10061

Will the corporations give the country back when they're done with it?

Script Outline:  Someone – maybe the EMU, maybe the IMF, probably Germany with France's help – will eventually come the Greece's 'rescue'. The conditions imposed will make the rescue seem more like a rape, and the Greeks will take to the streets and teach Californian's how to cause a ruckus.  Germany (with junior partner France) will try to impose its will and then the whole thing will go into reruns for the summer, with revivals in Spain, Portugal and Italy, perhaps Great Britain.  There will be attempts to impose similar 'belt tightening' (for which read working longer and being paid less while getting ever fewer services from the government) in the US.

Father Buffett Knows Best: The Oracle of Omaha has spoken: Reform health care or die cease to be competitive internationally.  It's the costs, stupid.

Puzzle:  The Chinese have stopped buying Treasuries directly at auction and have chosen to buy through intermediaries in London and Hong Kong. Why?  Are they trying to fool someone about something?  Inscrutable.

Martyr for the Cause:  Jim Bunning is continuing his principled stand against further deficit spending. He thinks throwing 2,000 federal transportation workers out of work and cutting off support to 400,000 of America's long term unemployed is a good way to save money.  But the task is unfinished - another 1.2 million unemployed voters have yet to lose their benefits, so we can only encourage Jim to keep up the good work.  Never mind the backlash, the principle's the thing!

Serfs Up!  Personal income grew 0.1% in January – adding an after-tax extra $1.40 a month to paychecks.  Go out there and consume!

Business Plan:  In 2009 Fannie Mae lost $72 billion – much of which they borrowed from you. Going forward they “expect to have a net worth deficit in future periods, and therefore will be required to obtain additional funding from Treasury... “  Remember the one about the watermelons and the bigger truck?

Sudden (Non-)Impact:  Real estate agents and politicians campaigning for re-election are aghast that unemployed Americans have politely ignored the $6,500 tax bribe designed to get them to buy a house they cannot afford.

Man the Lifeboats:  Illinois is approaching bankruptcy, with a $13 billion shortfall on a $28 billion budget.  Their libraries are closing, 20% of buses no longer run, schools prepare to lay off teachers they can no longer pay – even Sheriff's patrol cars have been repossessed.  California cut teachers pay by 5%, and on it goes . Desperate measures are also being taken in the Baltics, Balkans, Hungary, Latvia and Ukraine.   Greece, Ireland, Spain, Portugal and Great Britain all face enormous reductions in state spending.  The US needs to run a 4.3% of GDP surplus for a decade to stabilize debt at tolerable levels, and yet the administration predicts enormous deficits nearly forever – not the required surpluses.  Any country that cuts spending to trim deficits will be cutting its own throat, killing the economy and lowering tax revenues and accomplishing nothing. What's on TV tonight?

Word For The Day:  Today's new word is DRAG. It stands for Deficit Reduction, Anemic Growth (which means we're in for ten years of deflation, decline and desperation).

Asked & Answered and Answered and Answered: Is global warming inevitable?  Yes. And the fact you wanted some other answer indicates how poorly the science has been explained.

Consequences:  With everyone predicting that the collapse of commercial real estate is going to do serious harm over the next coup0le of years it is hardly surprising to learn that non-residential commercial construction is now at its lowest level since 2006.

Diagnosis:  How many of us have dreaded going to the doctor's for fear we'll be told we have a bad case of tort reform?  Can anybody point me to data that shows the cost of malpractice insurance is in any way related to actual settlements?  Or that tort reform isn't another way to increase insurance company profits?

The Daily Petard:  ”Far more black children, far more of the African-American community, is being devastated by the policies of today than were being devastated by the policies of slavery."  Rep. Trent Franks (R-AZ)


Eric Hacker said...

re: Serfs Up - Personal Income

I can't get the math to work out. $14 a month is $168 a year, which is 0.1% of $168,000 which is a lot more than most people make after taxes.

My real point though, is that most of the personal income increase is going to the top, so that the average joe is getting closer to $1.40.

Charles Kingsley Michaelson, III said...

Eric - Ah, the old misplaced decimal trick - 0.1% is actually 0.001 ! As always, thanks for the assistance.

I was thinking about Walmartarian - Grab&Runers making about $12 an hour, 34 hours a week (and doing so in my head); at $14 a month it was already insignificant enough.


Anonymous said...

Interesting article about Illiinois, but why is that particular state in so much trouble? A simple fall in tax revenues? Yet the real estate bubble, etc., didn't seem as bad there as other places.

Goro said...

Buffett's comments on healthcare are interesting. It would be interesting to see the percentage share of GDP relating to healthcare plotted over time. It should, by rights, be constant but I expect it would show healthcare increasing it's share of the pie. The old arguments about new procedures costing more doesn't hold water as the new procedures are replacing other formerly new procedures which should have carried the same premium at their inception.

Charles Kingsley Michaelson, III said...

Goro - I don't offhand have the data you seek, but memory says that the healthcare % of GDP has increased dramatically over time - in nearly a 'hockey-stick' manner.

As for the new replacing the former new, a lot of the new is added onto the former new and is both far more expensive and far more overused. See today's item 'Diagnosis'.

Anonymous said...

Bunning knows that the bill will pass; he's merely highlighting what's wrong with Washington and folks like you, who whine about our debt but don't have the will to do anything about it.

Why pay lip service to pay-go and then consistently break the rule? Can't congress find 0.1% of the budget to cut to pay for the extended benefits?

Instead of doing the right thing, folks like you demonize the person who underscores the blatant hypocrisy.

Charles Kingsley Michaelson, III said...

Anony 328. For clarification: I am not a Democrat. I am not a member of Congress. I did not vote for or against the bailout of the capitalists but figure that if we can bail them out we sure as hell better feed the masses before they get too restive.

Does the deficit matter? NO, because we will never pay it back. And if we do it right, the losses will go to the bond holders and bankers, come the revolution.

Meanwhile, to pretend that fighting over a rounding error increase in the deficits is an act of moral principal suggests a lack of awareness of the long-standing absence of principal in American political discourse on all sides.

In this case I'd argue the better part of valor is not pissing off the peasantry quite yet. They'll be mightily aggrieved when the time comes to pay back some small fraction of the debts the politicians have run up seeking re-election all these years. I suggest the politicians of both divisions of our One True Party would do well to keep appeasing the beast as long as possible.

Quit pretending any of this deficit spending stuff matters - it's just part of the game.


Anonymous said...


The article (and you) conveniently ignores the CBO analysis of existing tort-reform proposals that would save $54 billion from the federal deficit over the next ten years, and $11o billion for the industry as a whole in the same period.

But since deficits don't matter and the revolution is coming, that doesn't matter.

I apologize for tweaking your apparent psychosis.


I couldn't resist.

Anonymous said...


And while our so-called leaders are certainly worthy of nothing but contempt (including the execrable Bunning who IS part of what's wrong with Washington). I'm supposed to believe a CBO report on "savings" from tort-reform?! So-called reform that is written by industry for industry! The CBO, as a branch of that wholly-owned subsidiary of industry called the U.S. Congress (yes Bunning too), would OF COURSE report "savings" from so-called "tort_reform".