Posts Tagged ‘budget’

The fascist chick peeks out from the Democrat shell.

Sunday, March 22nd, 2009

UPDATE #2: Here is an interesting discussion of the sources of the AIG meltdown and the contribution of CDSs.

Let’s start by looking back to the dot-com era, which also happened to be the era of the day trader. Remember them? A successful day trader in the late 1990s could gain a following over Internet chat then use that following to make money by becoming an alpha trader. He’d say “I’m selling this” or “I’m buying that” and copycat day traders would do the same. If enough of them acted they could influence the price down or up and – since the leader was leading – he could almost always liquidate his position with a profit. The quickest of his acolytes would make profits, too. Those who didn’t profit weren’t seen as exposing the inherent flaws of this system, they were just viewed as too slow.
To a certain extent, the heirs of day trading have taken the lessons of that earlier era and applied them with devastating effect in the Twitter Age.
If a bunch of wealthy traders get together at Starbucks and agree to short-sell a company or a financial instrument, driving down that price ideally to the point where it never recovers, well that’s against the law. But with trading automation and the Internet as a platform it is possible to accomplish this same end WITHOUT it being explicitly illegal. It is even possible that the perps don’t know the level of damage they are inflicting, though I doubt that’s true. The trick is to avoid communication. If there is no communication between traders there is no chain of causation, no conspiracy, just an unhappy accident.

Read the rest. Cringely is the best source of info on the computer industry.

UPDATE: The Wall Street Journal comments on the disastrous precendent being set with the punitive 90% tax on bonuses passed by the House.

The financial system will suffer in particular, just when the Obama Administration is desperately seeking more private capital to ride out future losses. Facing such limits on the ability to reward talent, every bank CEO will try to pay off the TARP as soon as possible, whether or not this leaves the bank with a weaker capital base. Hedge funds and other investors that Treasury needs for its new Public-Private Investment Program, or for the Federal Reserve’s TALF, will also be warier, if they’ll play at all. Treasury may promise nothing punitive for these programs, but that’s also what it said about the TARP.

The Washington Monthly crowd are excited at the prospect of secret votes on Obama’s legislative priorities. The plan is to deny the Republicans the opportunity to debate the bill by introducing it and voting it into law in secret.

Senior members of the Obama administration are pressing lawmakers to use a shortcut to drive the president’s signature initiatives on health care and energy through Congress without Republican votes, a move that many lawmakers say would fly in the face of President Obama’s pledge to restore bipartisanship to Washington.

Republicans are howling about the proposal to expand health coverage and tax greenhouse gas emissions without their input, warning that it could irrevocably damage relations with the new president.

“That would be the Chicago approach to governing: Strong-arm it through,” said Sen. Judd Gregg (R-N.H.), who briefly considered joining the Obama administration as commerce secretary. “You’re talking about the exact opposite of bipartisan. You’re talking about running over the minority, putting them in cement and throwing them in the Chicago River.”

The budget reconciliation process was devised to iron out differences in House and Senate versions of the same bill. The bills would originate in the respective committees, be debated and passed, first by the committee and then by the entire house.

With 58 Senate seats, Democrats need the support of at least two Republicans to block a filibuster. But they could pass a reconciliation bill without any Republican votes — and without the support of troublesome moderates in their own party.

Some moderate Democrats are arguing that reconciliation would empower their party’s liberal wing while undermining a critical aspect of Obama’s popular appeal — his promise to work across the aisle.

The “moderate Democrats” just happen to be the same ones up for election next year. That suggests how popular this is likely to be with voters.

It looks like fascism to me. And, if you doubt that, look at this.

With almost no public attention, both chambers of Congress in the past week advanced an alarming expansion of the Americorps national service plan, with the number of federally funded community service job increasing from 75,000 to 250,000 at a cost of $5.7 billion. Lurking behind the feel-good rhetoric spouted by the measure’s advocates is a bill that on closer inspection reveals multiple provisions that together create a strong odor of creepy authoritarianism. The House passed the measure overwhelmingly, while only 14 senators had the sense and courage to vote against it on a key procedural motion. Every legislator who either voted for this bill or didn’t vote at all has some serious explaining to do.

Last summer, then-candidate Barack Obama threw civil liberties to the wind when he proposed “a civilian national security force that’s just as powerful, just as strong, just as well-funded” as the regular military. The expanded Americorps is not quite so disturbing, but a number of provisions in the bill raise serious concerns.

But he plans to cut Defense to “reduce the deficit.”

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Posted in politics | 5 Comments »

Buyers remorse ?

Wednesday, March 4th, 2009

UPDATE: The Senate blocked the Omnibus spending bill last night with two Democrats decining support. This may be a sign of more disillusionment.

There are the first small tremors of buyers remorse showing up. Even Chris Matthews is sounding disillusioned. Even David Brooks has made a small quibble.

But the Obama budget is more than just the sum of its parts. There is, entailed in it, a promiscuous unwillingness to set priorities and accept trade-offs. There is evidence of a party swept up in its own revolutionary fervor — caught up in the self-flattering belief that history has called upon it to solve all problems at once.

So programs are piled on top of each other and we wind up with a gargantuan $3.6 trillion budget. We end up with deficits that, when considered realistically, are $1 trillion a year and stretch as far as the eye can see. We end up with an agenda that is unexceptional in its parts but that, when taken as a whole, represents a social-engineering experiment that is entirely new.

I’m sure that Obama is trembling in his shoes at this moderate assault.

Christopher Buckley is waving a pinky goodbye to his love affair with Obama.

Hold on—there’s a typo in that paragraph. “$3.6 trillion budget” can’t be right.The entire national debt is—what—about $11 trillion? He can’t actually be proposing to spend nearly one-third of that in one year, surely. Let me check. Hmm. He did. The Wall Street Journal notes that federal outlays in fiscal 2009 will rise to almost 30 percent of the gross national product. In language that even an innumerate English major such as myself can understand: The US government is now spending annually about one-third of what the entire US economy produces. As George Will would say, “Well.”
Now let me say: Unlike Rush Limbaugh, I want President Obama to succeed. I honestly do. We are all in this leaky boat together—did I say “leaky”? I meant “sieve-like”—and it would be counterproductive, if not downright suicidal, to want it to go down just to prove a conservative critique of Keynesian economics.
But let’s all be honest about this: No one knows how all this is going to turn out in the end. Do you, really? If we learned one thing during the runup to this rancid enchilada, it is that most of the smartest people in the room were wrong, and the other ones were crooked.

Oh well, Buckley has had his moment of fame and I’m sure his trust fund is safely invested in the Cayman Islands, like Teresa Heinz Kerry and the Kennedy family. Still, even David Gergen is muttering a bit. Well, a little bit.

It isn’t popular to say right now but there is growing reason to question whether this is the wisest course in terms of our most urgent and pressing challenge: a collapsing world economy. News on the economic front has to be sobering to even the most optimistic among us. Last Friday, we learned that the economy contracted in the 4th quarter by over 6 percent. Over the weekend, Warren Buffett warned that the economy would be in a “shambles” through 2009 and possibly beyond. On Monday, the government issued its fourth bailout for AIG, European ministers rejected a general bailout for Eastern Europe, and the Dow sank below 7,000 – down some 25% since its run-up in January. This Friday economists expect the latest U.S. unemployment numbers to be dismal. Already, the administration’s optimistic economic forecasts for next year look way too rosy.

Well, Obama is not listening to these people. Does he listen to anyone ? Michelle, maybe ?

Even Stuart Taylor is speaking out. Where were these guys last fall ? Buying a pig in a poke, that’s where.

Hang on ! This will be rough. If any of my children who voted for Obama read this, you know who will pay. Even if you don’t want to know, you know. I won’t be there to pay for you.

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Posted in financial, politics | 2 Comments »

The coming California bankruptcy

Thursday, December 25th, 2008

Governor Schartzennegger has announced a huge budget deficit this year. He tried to cut spending a year ago, and got nowhere.

Schwarzenegger’s $141 billion budget for the 2008-09 fiscal year proposes cutting 10 percent from every state agency, even as California struggles to provide for millions of [illegal] new residents, fix failing schools and address myriad problems in its overcrowded prisons.

The across-the-board spending cut is the kind of draconian tactic his Republican Party colleagues have long sought to realign state spending and revenue.

But it touched off a firestorm of criticism among the state’s ruling Democratic majority in the Legislature and promised to put his pledge to move California beyond partisan politics to the ultimate test.

If ultimately passed, Schwarzenegger’s budget would cut hundreds of dollars in classroom spending for every California student and release 22,000 inmates back to the streets. It also would close nearly one in five state parks and eliminate dental coverage and other benefits for millions who rely on the state for health care and welfare.

The governor painted his spending plan as tough love and the only option left for the state after a housing market meltdown and years of deficit spending by California lawmakers. It was a pattern he helped perpetuate by borrowing to cover past deficits and increasing spending for popular programs on the eve of his 2006 re-election bid.

Now the deficit is three times as large. He has said that, by March, the state will no longer be able to pay its bills. One option, used in past budget crises, is to pay with IOUs or scrip, redeemable after the crisis is over. The public employee unions have already announced that this is illegal and they plan to fight any attempt to cut salaries, such as with unpaid days off. It must be reassuring to have the power to demand to be paid, no matter what is happening to the employer. The alternative for the state, becoming more likely as the unions dig in, is bankruptcy. The more one looks at this option, the more it seems the only one available.

The city of Vallejo—population 120,000—declared bankruptcy earlier this year because it was locked into spending 74 percent of its $80 million general fund budget on public-safety salaries. Police captains were entitled to receive $306,000 annually in pay and benefits, while 21 firefighters earned more than $200,000 a year, including overtime. After five years on the job, all were entitled to lifetime health benefits. Now two smaller towns north of San Francisco, Isleton and Rio Vista, also appear on the brink of bankruptcy.

My own small city of Mission Viejo has similar problems with pensions and excessive employees. I have been a member of a local activist group trying to get control of the city council but the group has found that, even if we succeed in electing our own candidate, the new council members quickly adopt all the bad practices of the old guard. The city has seen its reserves fall steeply over the past eight years and it has become dependent on sales tax revenue, dangerously dependent on retail sales, especially auto sales.

What will happen ?

In a preview of political fights to come, both New York State and California budgets are being crippled by outsized public sector union pension obligations that are now coming due in a perfect storm—a combination of an aging population, a declining tax base, and a fiscal crisis.
The Democrats who narrowly control both state legislatures have a notoriously cozy relationship with unions and they will be unlikely in the extreme to bite the hands that feed. But the unsupportable absurdities of the current arrangement are becoming evident.

The average state and local government employee now makes 46 percent more in combined salary and benefits than their private sector counter-parts, according to the Employee Benefit Research Institute—including 128 percent more on health care and 162 percent more on retirement benefits. New York City, for example, not only spends 10 times more on pensions than it did ten years ago, it now spends more on pensions and benefits for firefighters than it does on firefighters’ salaries.
These tax-payer sponsored paychecks cannot be renegotiated in tough times to balance a budget. They can only go up, never down.

This will head to a showdown in March and bankruptcy seems inevitable. California is the 8th largest economy in the world but Democrats can spend faster than an economy can generate tax revenues. One major factor is the erosion of the tax payers class in California. Millions of illegals exist in an underground economy like that of a south American banana republic. Middle and upper class taxpayers are leaving. The tax base is dangerously narrow with 380,000 Californians paying 40% of all income tax revenue. That is down from ten years ago. People are leaving and the state can’t afford the loss.

With large employers leaving the state, fed up with the tax burden and offered better business environments elsewhere, we have to protect the jobs we have. We just lost 1,000 jobs when the largest manufacturer of hybrid cars chose business-friendly Mississippi. The increased business tax rate proposed as a Democratic budget “fix” didn’t appeal to Toyota any more than it did to a major California employer, AAA auto club. The company is taking its business — and 900 jobs — elsewhere.

But the taxes do not stop there. The tax rate on the citizens who together already pay $9 billion of our state’s revenue will become twice the national average. It is clear why wealthier Californians choose to leave for economically sunnier pastures, leaving even more of the burden on middle income workers.

When the rich leave the state, those in control of the legislature simply change the definition of rich. Democrats have proposed to stop accounting for inflation when defining “middle income” Californians. Conveniently, this allows higher tax brackets to apply to more and more people every year, including those earning more than $100,000 — despite the fact that they already foot almost 85 percent of the state’s tax bill.

Soon the absence of taxpayers will be irreversible. My chief concern is to sell my house while there are still buyers. Then I’ll be gone.

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Posted in financial, local, politics | 10 Comments »

Has Bush lost Texas ?

Saturday, April 26th, 2008

Peggy Noonan has an interesting column today on the consequences of the Global War on Terror and Bush’s presidency. I don’t agree with her completely but she has some good points.

And, as always: Why do we do this when you know I am not a terrorist, and you know I know you know I am not a terrorist? Why this costly and harassing kabuki when we both know the facts, and would agree that all this harassment is the government’s way of showing “fairness,” of showing that it will equally humiliate anyone in order to show its high-mindedness and sense of justice? Our politicians congratulate themselves on this as we stand in line.

She is writing about the annoyances of air travel and the general angst of ordinary people who have had to give up some privacy for what seem like trivial benefits. A frequent guest on Hugh Hewitt’s radio show, and former Israeli security officer, comments that the TSA security system is not really a security system; it is a system to annoy people. The purpose, as he sees it, is to prove that the government is doing something to protect us.  Profiling of travellers to make the system less intrusive was rejected by the then Secretary of Transportation, Democrat Norman Mineta who was reacting to memories of the internment of Japanese-Americans during World War II. Less understandable is the rejection of a system for frequent fliers who could be screened and then allowed a less intrusive (and less time-wasting) security check once they had been identified by biometrics. Apparently, this would not be sufficiently “nondiscriminatory.” Even pilots must go through the entire procedure when it is obvious that, if a pilot decided (like the Egypt Air flight 990 pilot) to crash a plane in a suicide mission, he has only to do so with the controls.

Also, ground security for aircraft not in service has been exposed as a weak spot.

The TSA mess is not the only reason why people are unhappy with Bush. The political left assumes that most of the unhappiness is due to the war but I don’t agree. The left would be antagonistic no matter what was happening in the war because they are still angry about 2000. I am about 1/3 into Doug Feith’s book on the decisions that brought us to war in Iraq. He points out a fact often lost in the debate. As a consequence of the Florida vote debacle, and the Democrats’ anger, the Bush administration had only a skeleton crew until the summer of 2001. Feith was not confirmed to the #3 spot in the Defense Department until July 2001. That was true of most Bush appointees and it had a lot to do with the failure to “connect the dots” that is the subject of the 9/11 Commission Report.

The reasons for the quiet break with Mr. Bush: spending, they say first, growth in the power and size of government, Iraq. I imagine some of this: a fine and bitter conservative sense that he has never had to stand in his stockinged feet at the airport holding the bin, being harassed. He has never had to live in the world he helped make, the one where grandma’s hip replacement is setting off the beeper here and the child is crying there. And of course as a former president, with the entourage and the private jets, he never will. I bet conservatives don’t like it. I’m certain Gate 14 doesn’t.

I don’t completely agree here and some of the comments on the WSJ site side with me in this matter. Bush has lost a lot of Republicans when he has acted like a Democrat. The Republican Congress lost its way after Gingrich destroyed himself with personal foibles similar to those of Bill Clinton. The incumbents began to act like incumbents. They spent and earmarked and generally made themselves indistinguishable from Democrats. Bush did not veto a spending bill. I have read that this was the advice of former Speaker Denny Hastert. If so, this was bad advice.

“I think to some extent you’re seeing a liberated George Bush,” Mr. Wehner said, discussing the current spate of veto threats. “When Hastert was speaker, one of his red lines was that he did not want any spending bills vetoed. That, to some extent, restricted the range of actions that we had. It made it difficult to veto certain bills like the transportation bill and the other ones conservatives didn’t want.”

The election of 2006 ended the fantasy of permanent incumbency bought with high spending. If Republicans act like Democrats, the voters may decide they want the real thing and elect Democrats. The unhappiness of many conservatives with Bush stems from this issue. Also, we had a series of high profile scandals like Mark Foley (Who had planned to retire from Congress and the clueless RNC convinced him to run one last time.)

Then came the issue of immigration. The Wall Street Journal is unlikely to emphasize this issue in a recital of Bush’s mistakes but it was a big one. It is also the source of much uneasiness with McCain. I have previously posted my concerns about McCain and his conversion may or may not be permanent. I would be happier if he got rid of that advisor.

Of course, the State Department makes McCain look good when you see their advisors and the policies they seem to be advocating.

I don’t know how Bush will look in ten years but I think Iraq will be the least of the problems with his presidency.

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Posted in History, politics, terrorism | 10 Comments »