GDP falls 6% and the market goes up. The government passes a $3.4 trillion budget that will explode the deficit and the market goes up. The UAW hammers Chrysler's lenders in a bankruptcy scandal and the market goes up.
On top of this, consumer confidence has shot skyward. People are thinking of spending again and feeling much better about the economy in general. But why?! I don't get it. We're still in a mess.
Taxes are about to skyrocket. As Milton Friedman said, the real rate of taxation is equal to the rate of government spending. In other words, if the government spends it, they must tax to get it back. And government spending, if graphed, would look a lot like the hockey stick graphs used by would-be dot.com founders during the tech craze.
Banks are actually bulldozing foreclosed homes instead of taking possession. Granted, these were homes that were abandoned before construction was complete, but destroying them does not exhibit confidence in the market.
We are set to shed roughly 600,000 jobs for the last 30 days, bringing us dangerously close to 3 million jobs lost in 2009 alone! People are still losing work, which means they are losing income, and the poor rate of savings we have in this country leads me to believe that most people cannot live long without a paycheck.
So why are we up in the markets? Simple, it's denial. It ain't just a river in Egypt. It is a very human reaction to sustained bad news. We simply start to choose to ignore things that don't bring us joy. But denial won't keep the market up. I'm doubling down on my short positions. This thing is bound to tank again soon.
Tuesday, May 5, 2009
Monday, May 4, 2009
Unions Win Again : (
Chrysler may be bankrupt, but the unions have pulled a major victory from the jaws of defeat. Instead of dealing with bankruptcy like every other party that had contracts with Chrysler, the union has already cut it's deal, and it is unusual at best.
The union liabilities (pensions, health care, high wage packages, etc.) were a prime reason for U.S. automaker troubles. Unionized factory workers make over $100,000 in this country, while our competitors pay labor rates that are less than half of that amount. But instead of using bankruptcy to allow these companies to renegotiate their union contracts, the government has already agreed to have the "New Chrysler" take on the debt.
Why is this unusual? Well, for starters, it means that the unions have been given special treatment and allowed to skip the legal process that everyone else with a claim against Chrysler will have to go through. I guess the legal process doesn't apply to unions.
Last month president Obama chastised the entities that have loaned Chrysler millions, saying that they were unwilling to cut a deal that was fair, leaving the president with no choice but to allow Chrysler to go into bankruptcy. But the truth is a much bigger story. After seeing the union get special protection at better than 60% of their contract value, those that had made loans asked why they should quickly accept 30% on their deals. The answer? Because you are not the union.
So even in bankruptcy unions get special treatment. It doesn't seem to matter that there is no legal precedent for such treatment. It doesn't seem to matter that such a deal endangers any future U.S. automakers may be trying to build. And it certainly doesn't seem to matter that taxpayer money is being used to make this whole mess work out.
Boo Unions. I hope this comes back to haunt you.
The union liabilities (pensions, health care, high wage packages, etc.) were a prime reason for U.S. automaker troubles. Unionized factory workers make over $100,000 in this country, while our competitors pay labor rates that are less than half of that amount. But instead of using bankruptcy to allow these companies to renegotiate their union contracts, the government has already agreed to have the "New Chrysler" take on the debt.
Why is this unusual? Well, for starters, it means that the unions have been given special treatment and allowed to skip the legal process that everyone else with a claim against Chrysler will have to go through. I guess the legal process doesn't apply to unions.
Last month president Obama chastised the entities that have loaned Chrysler millions, saying that they were unwilling to cut a deal that was fair, leaving the president with no choice but to allow Chrysler to go into bankruptcy. But the truth is a much bigger story. After seeing the union get special protection at better than 60% of their contract value, those that had made loans asked why they should quickly accept 30% on their deals. The answer? Because you are not the union.
So even in bankruptcy unions get special treatment. It doesn't seem to matter that there is no legal precedent for such treatment. It doesn't seem to matter that such a deal endangers any future U.S. automakers may be trying to build. And it certainly doesn't seem to matter that taxpayer money is being used to make this whole mess work out.
Boo Unions. I hope this comes back to haunt you.
Sunday, May 3, 2009
Is Violence Ever OK?
My kids are 9 & 10. We regularly teach them not to hurt others. We try to teach fairness, openness, and tolerance. But there are times when those approaches break down.
I believe that there are times when violence is not only acceptable, but required, a view that seems extremely unpopular these days. But when might violence be required?
1) When you are afraid for your life.
2) When a bad person attempts to harm an innocent.
3) When the harming of a bad person will save innocents.
When bad people actually act on their threats it changes all of the rules. Talking is a great way to meet verbal threats, but once bad people move to action talking is no longer of much value. You see, I have been held at gun point. And during that very short and uncomfortable time, diplomacy was not an option.
I suspect that most of the liberal politicians that are so against torture (even though they were well aware of it's use ahead of time) would change their tune if their own family and friends were threatened. It seems that a very strong argument for softer tactics is the idea that the threat we face is not really that bad. In fact, the threat we face may be entirely imagined!
But 9/11 says otherwise. Iran says otherwise. North Korea says otherwise. The taliban say otherwise (I won't capitalize their name).
Maybe I'm wrong. Maybe all Iran needs is to be convinced that it's policy of wiping Israel off of the face of the earth is too harsh. Maybe North Korea just wants to be included in global talks. Maybe the taliban, who believe women are second class citizens, just need to be heard.
Then again, maybe they just need to see that such evil will lead to the quick and painful death of their kind. Maybe shooting them is the best diplomacy there is.
I believe that there are times when violence is not only acceptable, but required, a view that seems extremely unpopular these days. But when might violence be required?
1) When you are afraid for your life.
2) When a bad person attempts to harm an innocent.
3) When the harming of a bad person will save innocents.
When bad people actually act on their threats it changes all of the rules. Talking is a great way to meet verbal threats, but once bad people move to action talking is no longer of much value. You see, I have been held at gun point. And during that very short and uncomfortable time, diplomacy was not an option.
I suspect that most of the liberal politicians that are so against torture (even though they were well aware of it's use ahead of time) would change their tune if their own family and friends were threatened. It seems that a very strong argument for softer tactics is the idea that the threat we face is not really that bad. In fact, the threat we face may be entirely imagined!
But 9/11 says otherwise. Iran says otherwise. North Korea says otherwise. The taliban say otherwise (I won't capitalize their name).
Maybe I'm wrong. Maybe all Iran needs is to be convinced that it's policy of wiping Israel off of the face of the earth is too harsh. Maybe North Korea just wants to be included in global talks. Maybe the taliban, who believe women are second class citizens, just need to be heard.
Then again, maybe they just need to see that such evil will lead to the quick and painful death of their kind. Maybe shooting them is the best diplomacy there is.
Friday, May 1, 2009
Torture Convictions Lead to Increased Violence
Everyone is up in arms about the use of water boarding and other torture like events. Seriously?! Are we really going to turn on the military personnel and federal agents that worked on interrogating terror suspects?
The cycle we are in looks like this:
1) Get lazy and soft because we feel safe and nothing has gone wrong for a while (Clinton years)
2) Have something terrible happen and get tough to protect our families (Bush years)
3) Regret the idea that you got tough and claim that it wasn't worth it (Obama months)
Not a good cycle for anyone. The agents learn that they can't trust orders, and fear being penalized for being tough, so they decide to play it safe. The bad guys learn this and get even tougher. Then the bad guys do something terrible, and we react with even tougher methods. Instead of being a path to peace this actually leads to increasing violence (by encouraging attacks and overreactions).
But I really want to focus on a bigger question: are we willing to do what is necessary to win wars and protect our families? Bad people force us to react harshly. And I am willing to react harshly to protect this country. At some point we need to be confident and secure in our willingness to kick some one's ass that has or is threatening us! Not everyone is going to be persuaded by "talking it out". Some people push until they get their asses kicked. It is a fact of life (albeit a terrible one).
It is one thing to regret having to go to harsh lengths to protect the United States. It is another thing entirely to regret that you did what was demanded of you by the situation. In other words, I regret that you have forced me to shoot you, but I do not regret shooting you when you forced me to do so. The difference is vital to our future as a free country.
The cycle we are in looks like this:
1) Get lazy and soft because we feel safe and nothing has gone wrong for a while (Clinton years)
2) Have something terrible happen and get tough to protect our families (Bush years)
3) Regret the idea that you got tough and claim that it wasn't worth it (Obama months)
Not a good cycle for anyone. The agents learn that they can't trust orders, and fear being penalized for being tough, so they decide to play it safe. The bad guys learn this and get even tougher. Then the bad guys do something terrible, and we react with even tougher methods. Instead of being a path to peace this actually leads to increasing violence (by encouraging attacks and overreactions).
But I really want to focus on a bigger question: are we willing to do what is necessary to win wars and protect our families? Bad people force us to react harshly. And I am willing to react harshly to protect this country. At some point we need to be confident and secure in our willingness to kick some one's ass that has or is threatening us! Not everyone is going to be persuaded by "talking it out". Some people push until they get their asses kicked. It is a fact of life (albeit a terrible one).
It is one thing to regret having to go to harsh lengths to protect the United States. It is another thing entirely to regret that you did what was demanded of you by the situation. In other words, I regret that you have forced me to shoot you, but I do not regret shooting you when you forced me to do so. The difference is vital to our future as a free country.
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