Club Tril

No substantive post for today, but I urge everyone to follow Mark Titu's "Club Trillion" blog. Not only does he worship Bill Simmons as I do, but I can easily call Titus the funniest person on the internet. Enjoy!

Blago

Now that the Rod Blagojevich media blitz is in full gear, I thought I should devote a bit of time to him. Those of you used to long entries will probably thank me for today's brevity. 

Politico contributor George Simon's "The Rod Blagojevich Show" puts a dry and witty spin on the situation. At the end of the article, he maintains that Blagojevich is innocent until proven guilty, but in the same sense as Bernie Madoff. Only time will tell, but Blagojevich may be trying to soften up a future jury for a criminal trial. It doesn't appear that way from his comments, but if Blagojevich is anything, he's calculating. OK, he's well-coiffed as well. I'm just surprised he didn't shed a tear with the ladies of "The View."

$10 House

I'm not talking about a shanty, playhouse, or doll house. I'm talking about a $13.7 million seaside mansion on Juniper Island in Florida. The lucky buyer? Ms. Kathleen Fuld, better known as Mrs. Richard S. Fuld, wife to the former Lehman Brothers chairman and chief executive. That's right, the house was recently transfered from husband to wife for 10 bucks. This isn't just fishy, it's killer whaley. It's the oldest pre-bankruptcy play in the book, but with a transfer price of $10, it isn't going to work, even with some of Florida's protectionist laws for homeowners. The insanity continues for Dick Fuld. 

First Weekly Address

Below is a video of President Obama's first weekly address to the nation. In this address, he outlined his recovery plan and warned against inaction in these trying times. 

I really liked the proposition of a new, smarter energy grid. Part of the reason the United States has an energy problem is because we use energy so inefficiently. Hopefully a smarter energy grid will help resolve this problem. I also liked the idea of putting medical records online within five years. I'd prefer if this was done by someone other than the federal government (Google offered to do so - FOR FREE), but I think it's a step in the right direction. Maybe now when I go to the doctor I won't have to fill out the same five-page form for the umpteenth time. Finally, I strongly support recovery.gov, a website that will outline where every dollar goes in the stimulus package. Hopefully President Obama and his administration can win back the trust of the American people after eight years of secrecy and obfuscation under President Bush.

That said, I didn't like his infrastructure improvement programs. While I'm sure President Obama has good intentions, this approach hasn't worked in the past. It didn't work for FDR, local and state governments, or even the Japanese. The twentieth century is littered with examples of this policy failing to bring about substantive results. It might be a psychological boost for those who are back at work, but that's all it is. Also, I don't think the answer to solving our educational problems is more money. Compared to other nations, we spend by far and away the most per pupil, yet receive mediocre math and science results. It's not about the money. It's time to start looking at school administrators, teachers, parents, and the students themselves. There is more than enough blame to go around.

So that's my take. Your thoughts?

War on Drugs

OK, so here it is, my favorite piece thus far! Radley Balko's "The Drug War's Collateral Damange" gives a good history lesson on the "war on drugs," a term coined by President Richard Nixon in 1971. In his article, Balko argues that said war "militarizes our police, enriches our enemies, undermines our laws and condemns our sick to suffering." I couldn't agree with him more. Nixon argued that the American people must accept collateral damage in the drug war to improve society. Unfortunately, we've sacrificed everything, but have seen virtually no positive results. I'll give you a hint as to how well the war on drugs is going. The government can't keep illegal narcotics out of buildings surrounded by armed guards, barbed wire, and twenty-foot high fences in which every person or piece of mail entering the facility is scanned and searched. Yes, drugs are even a reality inside prison. 

Billions of dollars have been thrown at the war on drugs. Where has all this money gone? Well, our tax dollars have funded thousands of new SWAT teams, civil wars in Mexico, disaster in Colombia, environmental degradation in Ecuador, anti-Americanism all over South America. The drug war has also served as the Taliban's greatest financial supporter and recruiter. If that isn't enough for you, Steven Duke, a professor at Yale University Law School claimed that the Fourth Amendment has been "virtually repealed by court decisions, most of which involve drug searches." Large amounts of cash can now be confiscated on suspicion of drug involvement. A greater percentage of Americans are in prison than ever, with over ten percent of inmates imprisoned on non-violent drug charges (trafficking or possession). Murder rates? Higher than ever. 

Moreover, as Balko points out, it is just as easy now to get an illegal high as it was in 1919 or 1971, maybe even easier. Even if the drug war were successful, would it be worth the costs? I don't think so. We might as well legalize and tax drugs. Much as I despise it, we have to pay for the welfare state somehow.

Cliffnotes: The Economy

As the stimulus is discussed on Capitol Hill, and politicians race to microphones to call this the worst economic downturn since the Great Depression (worse than 1982?), most Americans are left to wonder whether the stimulus will actually work. We all know it will be extremely costly, but will the stimulus stimulate? Bruce Bartlett (no relation), a contributor to Forbes Magazine and former Treasury Department economist, wrote a terrific article outlining America's economic downturns since the Great Depression, the steps taken by the government in reaction, and the consequences. It's a guide to American economics, the cliffnotes version. 

Not surprisingly, the government and its agencies usually drop the ball. Neither the Federal Reserve nor Presidents Hoover or Roosevelt could correctly time monetary and fiscal policy measures to effectively fight the Great Depression. It was blind luck that WWII forced FDR to play a winning hand. Keynesians sent inflation to the moon in the 1960s and 1970s by thinking that budget deficits were the answer to every problem. Finally, investors inflated a bubble in the 1990s believing that the "Greenspan put" would never allow it to pop. Talk about when genius failed. Testifying before the House Government Oversight Committee last October, Alan Greenspan admitted to "flaws" in his policies and philosophy in wake of a "once in a century credit tsunami." Astute observation Alan. 

Will the stimulus stimulate? No one can be sure right now, but there is a lot of infighting among economists all across the US. In this case, the Bartletts think alike in that both of us believe controlling inflation following the stimulus will require deft touch. I sure hope it works by 2010. I need a job!

Karma

Walking to class yesterday, I was approached by a man hawking a book on Eastern philosophy and spirituality. I listened to his spiel, brushed aside his request for a donation, and went on with my day. Ironically, I was reminded of that man after my Dad sent me an article from today's Wall Street Journal.

Over the past six months, I have checked Yahoo! Finance's currency page religiously. I have prayed for a global slowdown, lower oil prices, and complete carnage in hope that investors all around the world would flock to the US dollar as a safe-haven, no matter how bad our situation is. Lesson learned: sometimes when you pray for the worst, your prayers are answered. Following the Royal Bank of Scotland's jaw-droppingly horrendous earnings estimate, the pound fell to a twenty-five year low against the US dollar. (1.36 USD/GBP) Economists estimate that UK GDP could fall by two percent for Q4 '08. A deflationary period is right around the corner. As far as I am concerned, London, the overcast city of pessimism, is all smiles and sunshine. Life couldn't be better for us Yankees in the UK. 

While the exchange rate could very well reach 1.20 USD/GBP by the time I leave, I fear that the dollar will only be strong in the short run. Karma will probably punish the greenback for my malevolent wishes. With trillions of dollars of recently-created currency sloshing around unmonitored, it's easy to see a scenario where the dollar loses significant value as the economy recovers. Since the inception of the Federal Reserve in 1913, the dollar has lost 96% of its purchasing power. Let me repeat, ninety-six percent! I say it goes even lower, any takers?

The national debt has burgeoned to $10 Trillion and is expanding everyday. Economists estimate that if current spending patterns remain the same, the national deficit will be 400% of US GDP by 2050. How long until our credit rating is cut? It's a scary thought. Unless there is real change (a drastic cut in the size of government, the end to an interventionist foreign policy, etc.), the dollar's days of strength are numbered. Don't say I didn't warn you. Karma's a bitch. 

Too much hope?

Yesterday was a great day to be an American. The forty-third successful and peaceful transition of power is not something to take lightly. Unfortunately, President Obama takes the reins at a very turbulent time. While his messages of hope and a brighter future for America are inspiring, will President Obama be able to deliver results? I have stated to friends, Republican and Democrat alike, that I'm going to give him a two year grace period. It's unrealistic to expect magic immediately. I feel as if others aren't giving him the same courtesy. There are a lot of Americans with very high expectations for the President. We'll see if he can clear the bar. 

Like me, Politico contributors Jim VandeHei and John Harris are skeptical. With our national debt spinning out of control, can President Obama and Congress spend us out of trouble? What about inflation and our credit rating? Will genius fail? Do good things come from legislation with bipartisan support? Will we be able to navigate a storm previously unseen? At this time, no one can be completely confident in their answers.

Less than four years from now, Republican candidates for all offices will surely echo Ronald Reagan and ask the American people, "Are you better off now than you were four years ago?" What will be the answer to that question, the most important one of all?

Inauguration

Happy Inauguration Day everyone! It's an exciting day to be an American, even if you're a traditional conservative (see Ron Paul) like me. Regardless on your thoughts on the election, you do have to marvel at the seamless transition of power on Inauguration Day. I know Europe wasn't very supportive of McCain during the campaign, but while in London I have talked to people from all around the world and they keep coming back to one thing: McCain's graciousness in defeat. Eastern Europeans are especially floored by how McCain has accepted defeat and resumed his service in the Senate. It may be old hat for us, but on days like today you have to reflect on what makes the United States a destination for the jilted, destitute masses all around the world. As we read about election tampering in Zimbabwe, Russia, and other nations around the world, we must remind ourselves that a lot of people don't have it as good as we do. No matter how bad things have gotten, just remember that people don't risk their lives to travel by raft to Cuba. 

That being said, check out this article from ESPN's Tom Farrey that urges Obama to get kids active again. While a lot of attention is already and will continue to be paid to Obama's stimulus package and his actions in directing our troops abroad, I think this cause has some merit. Children are less active today than ever before. Obesity levels have skyrocketed. I think Farrey makes a good point in that President Obama could make pick-up games cool again. While organized teams have thrived over the past two decades because of helicopter parents looking to schedule every minute of their child's day, overall participation in sports is down because kids don't take it upon themselves to meet at the sandlot, field, rink, court, pitch or playground to just play. 

Ferry writes, "The economic consequences of Americans' physical inactivity are huge, costing more than $76 billion a year in direct medical costs alone, according to one academic study." Nothing a few pick-up hoops games at the White House couldn't fix. 

Kim Jong Il is gonna blow up the world...

Big news, folks! In a news conference in Beijing yesterday, Selig Harrison, a US scholar with access to senior North Korean officials, announced that in recent meetings with said officials, they claimed to have "weaponized" their stockpile of plutonium.

Now, before I get to my analysis, check out this video with my favorite impersonator Frank Caliendo. He is hilarious and spot on with his impressions, but pay close attention to the Charles Barkley bit (5:56). It gives North Korea's ailing leader a shout out. Enjoy!

Hopefully that got some laughs! Now, let's all take a deep breath. For the more paranoid neo-conservative crew, a paper bag might be necessary to ease the anxiety. I really don't see any reason to overreact to this news. First of all, North Korea only has enough plutonium for four or five warheads. While one nuclear strike on the US would be catastrophic, much less five, North Korea would never push the button. The North Koreans may be a bit crazy, but they're not stupid. It would be an instant death wish. The entire eastern hemisphere would be under a mushroom cloud compliments of Uncle Sam, to say nothing of what would happen to North Korea. Secondly, at the peak of the Cold War, the Soviet Union had over 30,000 nuclear weapons and we're all alive today to talk about it. Thirdly, and most importantly, don't you think it's a bit hypocritical for the US to criticize other nations for building a few nuclear weapons when we have the largest nuclear arsenal by far? The state of North Dakota houses more nuclear weapons than any foreign nation!

If the US were asked why we have built up such a large nuclear arsenal, our government would surely respond that it is for our protection. If so, why should it be different for other nations? North Korea has a right to prepare for its defense, like it or not. With the way President Bush has thrown our military into countless conflicts around the world, the North Koreans are probably worried that they're next.

We didn't solve our problems with the Soviet Union in the 1980s by nuking Moscow, just as we shouldn't take any military action against North Korea today. This should, however, serve as a wake-up call telling us that the current course isn't working. We need to stop our unconstitutional, unsuccessful, and pointless wars around the world and embrace friendship, commerce, and diplomacy with all nations. Wars and threats aren't working.

$100 Trillion! Oh, wait...

Check out the link below which provides the latest on the economic disaster occurring in Zimbabwe. Enjoy!

"Zimbabwe to Print $100 Trillion Note"

The Zimbabwean government has just announced that they will begin printing 100 trillion dollar notes in order to keep up with hyperinflation, an epidemic that has brought the once prosperous nation to its knees. For all of you that are dazzled by large numbers, don't be. With a loaf of bread currently selling for 300 billion Zimbabwe dollars (and increasing everyday), this note will eventually become useless as well. Combine that with an announced inflation rate of 231 million percent (as of July 2008), one has to figure the debut of the $100 Quadrillion note isn't far off. Even more likely though is the phasing out of the Zimbabwe dollar. Doctors and nurses have been on strike since September after demanding to be paid in US dollars. Said strike carries an enormous price - no pun intended - as a cholera outbreak has already claimed 2,000 lives. Teachers have now walked out as well, leaving exams ungraded. Vendors already greatly prefer to be paid in foreign currencies, and it is only a matter of time before they refuse to exchange their goods for Zimbabwe dollars altogether. 

I'm posting this article partly to introduce some levity this weekend, but also to forewarn my American comrades of the inflationary period that is sure to come as our economy starts to "recover." While we will never see inflation soar to levels anywhere near 231 million percent annually, I fear that the US will be smacked with double-digit inflation by 2010. Creating credit and currency out of thin air to bail out every Tom, Dick and Harry willy surely have its consequences. As if the TARP fund wasn't enough, the incoming Obama administration, with the backing of the US Congress, just rolled our plans for a $750 Billion stimulus package. Now this wouldn't be so bad if we were talking Zimbabwe dollars, but unfortunate this is 750 billion US greenbacks. If you think it will stay at $750 Billion, you're crazy. It will reach $900 Billion easy, maybe even $1 Trillion. Keep in mind that is is on top of a budget deficit that already tops $1 Trillion and a national debt that has reached fourteen figures, as in $10 Trillion. Every time bailouts and spending programs are introduced, it just means more money is borrowed from China, India, Japan, and many other nations around the world, friends and foes alike. 

Don't say you haven't been warned. You'll know things are bad when bread is in the billions. Just ask Mugabe. 

Undue Praise

Now I'm not a regular viewer of "The View," but a segment from this Monday's episode grabbed my attention. The segment posted below shows the ladies' conversation with far-right critic and best-selling author Ann Coulter, whose new book Guilty is now in bookstores. See below:

Before I continue, I'd like to wonder aloud how these women are allowed to talk about real issues. I don't watch "The View," only certain clips on YouTube, but every time I see a clip, I am aghast at the lack of intelligence sitting around the table. Half of Joy Behar's statements are grossly incorrect. Elizabeth Hasselbeck is pretty, but also pretty dumb, and Whoopi and Sherri Shepherd are the most lilly-livered apologists going. The only person I have an ounce of respect for is Barbara Walters, but don't push it Barbara. 

That said, let me also say that I am not usually a supporter of Ann Coulter, as I feel that she represents the neo-conservative takeover of the Republican Party, a movement that I despise, but I have to give her credit where credit is due. Coulter is spot-on when it comes to single mothers and their portrayal in American society. Isn't it bizarre that we portray these women as heroes? Coulter is just citing facts: 80% of prison inmates are products of single mothers, 70% of juvenile delinquents are products of single mothers. Coulter even goes on to point out that when single motherhood is taken out of the equation, black and white crime rates are the same! Yet somehow, the most irresponsible members of society are exalted.

The response? Sherri Shepherd says Coulter isn't "compassionate enough." Whoopi Goldberg says that Coulter doesn't have kids and isn't married, so she wouldn't understand. Whoopi is right, the facts Coulter cited would change if Coulter was married, had the picket fence and 2.5 kids (please imagine sarcasm dripping off of your monitor). Ridiculous. Now, I'm not trying to attack all single mothers. There are undoubtedly millions of single mothers who don't have juvenile delinquents for children. All I'm saying is that the numbers don't lie. If we want to fix some of our problems in the United States, we're going to have to stop being apologists for every race, culture and religion and address our issues head on, no matter how politically incorrect they may be.

While Ann and I don't often agree, she is correct on this one and does have "thirty or forty years of social science evidence" to back up her claims. What do you think. It surely is a hot button issue. Hopefully I get some passionate comments. 

Déjà vu?

OK, so here it is, my first post! Now that I've officially started, I promise to do my best to post interesting articles with my comments on a daily basis. It's a New Years resolution, sixteen days late. Hold me to it, check out the link below, and let's get started!

"The Futility of the Government Airline Bailout"

             - Paul A. Cleveland and Michael D. Tucker

US Airways Flight 1549, originally scheduled to arrive in Charlotte from New York LaGuardia on Thursday, has gotten me thinking over the past forty-eight hours. Much has been said and written about the heroics of Chesley B. "Sully" Sullenberger III, the flight's captain who artfully guided the plane to a successful emergency landing in the Hudson River. While I was happy to hear that all 155 passengers and crew-members survived the crash, my mind started to wander elsewhere. As stated before, Flight 1549 came to its demise in the Hudson River, only a stone's throw from the Ground Zero. While most Americans have returned to their normal routine and put 9/11 in the rear-view mirrors, it seems that there is one item that connects us to that time just over seven years ago. 

The bailout. A little more than two weeks after the attacks, Congress passed the Air Transportation Safety and System Stability Act, a $15 Billion aid package to help the airline industry in the wake of 9/11. $5 Billion was paid out immediately, with $10 Billion set aside to guarantee loans. Unfortunately, the Air Transportation Stabilization Board (ATSB) was given such loose regulations that they were able to extend loan guarantees for just about any request that came across their desk. As a result, the federal government poured billions of dollars into inefficient "hub and spoke" airlines, many of whom would ultimately fail within two years of receiving government aid. The playbook was the same as it is today with the banks and auto makers. The government agreed to provide emergency funding in return for a few concessions by the airlines, centering on executive pay. Does this sound familiar? It should. 

All told, US Airways, whose Airbus A320 was just dragged from the murky Hudson, received an $800 Million initial cash infusion and $900 Million in loan guarantees. It's important to note that before they received government funding, US Airways executives tried to get financing from the private sector, but were summarily turned away by no less than twenty-five banks after their credit was downgraded to "junk" status by the major credit-rating agencies. Does this mean that the US Treasury Department is a better judge of credit than the private sector? Of course not! It just means that US Airways' credit worthiness was irrelevant, because what the hell, if they defaulted, the taxpayer would cover it. Does this sound familiar? It should.

US Airways filed for bankruptcy just eighteen months after receiving said funding, a fate shared with many in the industry. They eventually merged with America West, but kept the US Airways brand name. The main point is that US Airways didn't make the drastic changes necessary to compete with JetBlue, Southwest Airlines and the new, smaller, and more efficient competition that was and still is gaining market share from the dinosaurs (US Airways, American, Delta). Not making the significant changes necessary to compete in a forever altered marketplace...does this sound familiar? It should. 

All told, the taxpayer has been skinned and gutted again. In laying out $700 Billion for the TARP fund to rescue the banks, auto makers, and insurance companies, Americans have been saddled with an obligation that 90% of eligible voters didn't want. Oh and, of the $350 Billion that's already been spent, we can't account for most of it! Henry Paulson is doing for Timothy Geithner what Bush did for Obama, screwing up so badly that his successor can't help but be viewed in a good light in comparison. It's time for the bailouts to end. No one is too big to fail. While this philosophy might've caused the recession to deepen in the short-term, our short-term pain would lead to long-term stability. Now, with the Fed and the US Treasury Department intervening at every turn, we are only setting ourselves up for an even bigger meltdown. Trillions of dollars have been created out of thin air. Can you imagine what it's going to be like when inflation hits? The US dollar will be worth almost as much as its Zimbabwean counterpart. Find your wheelbarrow...you're going to need it to haul your money to the market.

By the way, been to an airport lately? Some return we've gotten on our investment...