Friday, December 12, 2008

Graft 2.0

[click to enlarge]

Too funny. Too good. Too sad.

From the Illinois Policy Institute, a group we can expect to hear more from over the next few years. (H/T Megan).

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Thursday, December 11, 2008

If they take the bailout - boycott GM and Chrysler. Buy a Ford.

UPDATED: 15-Dec-08
This is the 2009 Ford Shelby Mustang GT 500. I want this car. I've always wanted this car. When I was in high school I wanted the 1967 Shelby Cobra GT 500. Lunchroom debates raged over the merits of the Shelby Cobra vs. the Corvette Stingray. In my mind, it was no contest, even if Motor Trend was clearly in the bag for GM. I'd even be happy with the GT350 - then or now - '67 or '09. In the bailout debate, I keep hearing that Detroit does not build cars that people want to buy. I am here to bear witness that this is simply not true. I want this car. My wife won't let me have one, but I want it. I may still get one some day. Just sayin...

I've been hearing so much negative about the "Big 3" and the bailout, that I wanted to start this post by saying something positive. I'll have some more positive things to say about Ford later, but first - the bailout. Not much positive there. Last night, the House of Representatives voted 237 - 170 to pass the Federal Auto Loan Bill. As I write this, the Senate is debating the bill.

Stephen Green at Vodkapundit sums it up nicely:

The merits of a "Detroit 3" bailout has been debated at Donklephant ad nauseum. Since I cross post and already weighed in there, I won't repeat those arguments here. But there is one point that seems to get lost in all the discussion and is repeated in Stephen's otherwise brilliant ad spoof. The question is not about whether the "auto industry" or the "Big Three" should get taxpayer money. The point is that these three companies are not the "auto industry' and are not even the "domestic auto industry". Moreover, they are not monolithic, do not have the same operational structure, do not have the same financial needs, do not make the same cars, do not have the same competitive status and they should not be lumped together in this debate. These companies are competitors. So in the spirit of this blog, lets divide them up and treat them separately.

General Motors
GM is a basket case, plain and simple.
  • In 2007, Toyota sold 9.37 million vehicles.
  • In 2007, General Motors sold 9.37 million vehicles.
  • In 2007, Toyota made $17.1 billion.
  • In 2007, General Motors lost $38.7 billion.
Source:Mises Blog (H/T Crossing Wall Street)

GM has massive manufacturing overcapacity in workers and plants compared to to the number of cars they sold, are selling, or have any realistic expectation of selling. Nothing short of a meat axe restructuring can make them profitable. It is not the kind of cars they make. It is not their quality. It is their business model. It is their labor costs. It is their overcapacity. The only way they can accomplish the radical restructuring they need will be under the inevitable chapter 11 bankruptcy protection. Every penny they get from the taxpayer between now and then is money thrown into the bottomless pit.

Chrysler
Chrysler was taken private by Cerberus, which is one of the richest and best connected private equity firms on the planet. Michael W at QandO blog has been beating the drum on the Cerberus issue for a couple of weeks, and the story is getting traction in mainstream media and other blogs. This from Forbes and the NYT:
"Buried on the business page of The New York Times Saturday were the details of Detroit's biggest snow job yet—literally as well as figuratively. Turns out that Cerberus CEO John Snow, who spent three-and-a-half lackluster, and some might say lap-doggish, years as President Bush's second Treasury secretary, is leading a who's who of crony capitalists in a lobbying campaign for a taxpayer bailout to "salvage Cerberus' investment in Chrysler."

That's right. Not to save the jobs of Chrysler employees or America's disappearing manufacturing base, mind you, but to prevent "one of the world's richest and most secretive private investment companies" from having to take a relatively modest financial hit and use some of its own capital to prop up the smallest of the major automakers."
This stinks to high heaven. As far as Chrysler is concerned, all the Kabuki theater in Washington has nothing to do with "saving Chrysler". Nothing. It has everything to do with asking taxpayers to bailout the Cerberus investors and seve them from extending any additional risk to support their own speculative investment.

Ford
That brings us to Ford, and a ray of hope. Don't get me wrong. Ford CEO Alan Mulally did not cover himself or his company in any more glory than the rest of the bozos in either of his two appearances before Congress. But this week, with the help of the great-grandson of the man who founded the company, Ford finally got it right:
"Chief Executive Alan Mulally and Executive Chairman Bill Ford Jr. told The Associated Press on Tuesday they are confident that the borrowing, coupled with restructuring and new product plans, will get them through the recession without relying on the government. Ford even said the century-old company that bears his family's name might be able to use the independence from loans to its advantage. I think if they see Ford as a company trying to pull itself up by its own bootstraps, and making it on its own and pulling the right levers, I think that could be a positive for us," Ford said."
Proponents of this bill make much of the argument that consumers will not buy a car from a company operating under Chapter 11 protection. Given the fact that this bridge loan will do nothing more than bridge the time until GM asks for much more money under the single party rule of Barack Obama in March, that argument is becoming moot. Who would you buy a car from? From a basket case of a company that refuses to take the strong medicine they need to survive? From a private equity firm without the balls to back their own investments? Or from a company that has already taken the right steps, has figured out a plan to weather the storm (and also BTW makes some really great cars)? A company like Ford.

If Ford declines the taxpayer money , Ford deserves the support of American car buyers. If GM and Chrysler take taxpayer money, they do not deserve the support of American car buyers.

Polls show that a majority of Americans oppose taxpayer dollars being used to support the Detroit 3 bailout. The bill is facing oppostion in the Senate, and it is not clear whether it will pass, even with administration support. In my dreams, Americans take matters into their own hands if this bill passes. In my dreams, Americans begin to apply the discipline that our representatives in Washington do not. In my dreams, Americans vote with their car buying dollars and stop buying products from any company that solicit government bailouts. This might be tough to do with the banking industry which has effectively been nationalized, leaving few choices. But it is certainly something that Americans can do when choosing to buy a car between Ford, Chrysler, and GM.

I drive a 1999 Jeep Cherokee that I purchased new from a Dodge/Chrysler/Jeep dealer ten years ago. I thought I would replace it next summer. With all the great deals being thrown around, I may move that purchase up. I love that Jeep, it has been a great car for me. But if Chrysler/Cerebrus takes Federal money - I won't buy another Jeep. If Ford declines the loan, I'll be a Ford man now.

I have no illusions about the limited reach of this blog, but for FWIW - in a small token of support for Ford doing the right thing - DWSUWF offers a little free advertising for a great American car company that builds great cars, is capable of making tough decisions in a tough market, and running an automotive business without picking the pockets of the American taxpayers.

Boycott Chrysler/Cerberus. Boycott GM.

Buy a Ford.

Want fast? Consider this ....
Ford Shelby Mustang GT 500

Need a truck? Consider the ....
Ford F150 Pickup Truck

Going off road? Consider the ...
Volvo XC70 SUV Crossover
I'm going to look at this one to replace my Jeep.


Going green? Consider the ...
Ford Escape Hybrid

The Ford Shelby Mustang kicked the GM Corvette's butt when I was in high school in 1967, and with the decision to decline government bailouts, Ford is still kicking GM butt today.

UPDATE 1:

As often happens on the intertubes, after posting this screed I find I am not the first thinking along these lines. Sphere informs me The Lonely Conservative beat me to it yesterday, as did Polipundit (by a few hours). There is even a website - "Boycott the Bailout".

UPDATE 2: 12-Dec-08

Nevermind. The bailout was defeated in the Senate.

UPDATE 3:
Oops. Stay tuned. The President and the Bailout Czar are apparently going to give them our money anyway, as James Joyner notes:
"President Bush may ignore Congress and give the Big 3 the money they want, anyway... That the bailout fund in question was designated for entirely different purposes and is blatantly unconstitutional doesn’t seem to bother the president. One wonders if Democrats will rail against this as an abuse of power or see it as an act of benevolence."
American car buying consumers can yet make the right decision that our representatives in Washington did not, by shunning the companies that take the funds and supporting the auto manufacturer that chooses to not take Federal bailout funds.

UPDATE 4: 15-Dec-08

Thanks to Bobo for linking this post in his fine weekly carnival compilation.

I also cross-posted this at Donklephant, and got the usual intelligent and provocative responses from the commentarium there. Well worth the read. Notable was one particular response from Scott Monty, a "Social Marketing" author, guru and blogger who -since June - has been the Global Digital Communications Social Marketing Director for Ford Motor Company. I responded on both his blog and the Donk. I'll be interested to see if it was just a drive by comment from a corporate flack, or if he actually engages in a dialog. In either case, just the fact that Ford has hired someone to interact with social media and bloggers says something about Ford "getting it" all by itself.

Divided and Balanced.™
Now that is fair.



Thursday, December 04, 2008

Carnival of Divided Government Undêtrîgintâ (XXIX)
Special Bad Attitude Edition

Welcome to the 29th edition of the Carnival of Divided Government. This, the first since we elected a new president, was to be the "Special Thanksgiving Edition" but alas, I am a bit too late for that. Even the leftovers are gone. Frankly, my heart has not been in it. Since the election I have been feeling a bit unmotivated. I think I have a touch of that old Jimmy Carter malaise. It is kind of a nostalgic feeling, but surprisingly relevant. He was, after all, the last Democratic President to preside over four years of single party Democratic rule, as we will now have with Barack Obama. Perhaps a bit of the hair of the dog will help. Perhaps Jimmy can help rouse me from my melancholy - This from his stirring July 15, 1979 speech to the nation:
"I want to talk to you right now about a fundamental threat to American democracy. I do not mean our political and civil liberties... the threat is nearly invisible in ordinary ways. It is a crisis of confidence. It is a crisis that strikes at the very heart and soul and spirit of our national will. We can see this crisis in the growing doubt about the meaning of our own lives and in the loss of a unity of purpose for our nation. The erosion of our confidence in the future is threatening to destroy the social and the political fabric of America."
America agreed and elected Ronald Reagan president a year later. Today I am again feeling that old doubt about the meaning of my life and blog, accompanied by a social fabric destroying erosion of confidence in the future. But there was more to Jimmy's speech than addressing our national malaise. Once Jimmy finished explaining to America that our bad attitude was threatening to rend the national fabric, he went on to talk about the real subject of the speech, solving the energy crisis.
"What I have to say to you now about energy is simple and vitally important. I am tonight setting a clear goal for the energy policy of the United States. Beginning this moment, this nation will never use more foreign oil than we did in 1977 -- never... I will forbid the entry into this country of one drop of foreign oil more than these goals allow...I am asking for the most massive peacetime commitment of funds and resources in our nation's history to develop America's own alternative sources of fuel -- from coal, from oil shale, from plant products for gasohol, from unconventional gas, from the sun...I will soon submit legislation to Congress calling for the creation of this nation's first solar bank, which will help us achieve the crucial goal of 20 percent of our energy coming from solar power by the year 2000. These efforts will cost money, a lot of money, and that is why Congress must enact the windfall profits tax without delay... To make absolutely certain that nothing stands in the way of achieving these goals, I will urge Congress to create an energy mobilization board which, like the War Production Board in World War II, will have the responsibility and authority to cut through the red tape, the delays, and the endless roadblocks to completing key energy projects... I ask Congress to give me authority for mandatory conservation and for standby gasoline rationing. To further conserve energy, I'm proposing tonight an extra $10 billion over the next decade to strengthen our public transportation systems. And I'm asking you for your good and for your nation's security to take no unnecessary trips, to use carpools or public transportation whenever you can, to park your car one extra day per week, to obey the speed limit, and to set your thermostats to save fuel. Every act of energy conservation like this is more than just common sense -- I tell you it is an act of patriotism."
At least we can all be thankful that Jimmy Carter's vision...
  • Centralized government command and control of energy use and production.
  • Government mandated and enforced conservation and rationing.
  • Government dictating and funding the politically correct energy of the future.
  • Energy and industry "czars" and "boards" whose enlightened benevolent dictates could substitute for letting Americans make energy choices for themselves.
  • Expanded executive power to force patriotic sacrifice by all Americans.
...solved the last energy and financial crisis. Anyone remember how that synfuels and oil shale project in which we invested 20 billion or so worked out? Oh well. I'm sure Barack and Harry and Nancy will get it right this time.

Lets face it. I am quite bitter and pessimistic about the current economic situation. Not the least of it is because both our president, president-elect and congress critters from both parties agree that the solution to an economic crisis caused by massive government spending, massive debt, easy monetary policy and intervention in the market to promote social goals can be solved by massive government spending, massive debt, easy monetary policy and intervention in the market to promote social goals.

So lets just call this carnival what it is and move on - The Special Bad Attitude Edition.

As explained in earlier editions, we have adopted Latin ordinal numeration to impart a patina of gravitas reflecting the historical importance of the series. In this, the Carnival of Divided Government Undêtrîgintâ (XXIX), as in all of the CODGOV series, we select volunteers and draftees from the blogosphere and main stream media writing on the single topic of government divided between the major parties (leaving it to the reader to sort out volunteers from draftees). Consistent with this topic, the primary criteria for acceptance in the carnival is to explicitly use the words and/or concept of "divided government" in submitted posts. A criteria that, to our endless befuddlement, is ignored by many of the bloggers submitting posts, which sadly results in DWSUWF reluctantly ignoring their fine submissions.

30 days in the hole.

It is has been 30 days since the election, and the final configuration of our Congress is still taking shape. Republican Saxby Chambliss won the runoff election in Georgia and in the Minnesota recount, it is beginning to look like Republican Norm Coleman may yet win a landslide double digit victory. I don't mean double digit percentage. I mean somewhere between 10 and 99 votes. Assuming Joe Lieberman has now been cowed into toeing the Democratic Party Line, the Democrats have a 58-42 majority, two short the filibuster-proof majority they coveted.

This should provide some small comfort for those, like myself, who prefer their federal government divided. However, as the Republicans in this Congress have already shown a willingness, nay eagerness, to sell their soul, their vote, their dogs and their children's future for a few earmarks and pork, I don't think the Dems will have much of a problem finding those two votes whenever they need them. As the punch line goes "We've already established what you are, now we are just negotiating the price."

Yeah, I need a little cheering up. Or maybe a drink. Or maybe Prozac. Or maybe a three day bender in Tijuana. They say that misery loves company. For this Carnival, we will seek out that company, and sample the attitudes of some others on our sparkling new undivided government. Who knows? Maybe they can cheer me up.

Carnival

On the day after the election, Will Wilkinson quoted some Michael Kinsley nonsense and responded with pithy brilliance in "Divided Government" - complete post copied in full here:
"Michael Kinsley says, “People who want divided government are afraid of politics.” Indeed. For fear is the most reasonable response to the recognition of what politics is. GOP 2010!"
Perfect. But I am afraid that a majority change in 2010 is very unlikely. We will be "enjoying" single party rule for at least four years.

New favorite Kevin Bliss blogging at What Should Be quotes from my 2010/2012 election analysis and articulates the conventional wisdom of Centrists and Moderates who voted for Obama and against "Divided Government" :
"So in a sense what I’m arguing is that Barack Obama will be wise to govern as though he has a more divided government that he actually has. Although not yet settled, it is looking like Obama will not have a filibuster-proof Senate (60 votes). Let that be viewed as a blessing in disguise, a manifestation of divided government that will in the long run do Obama (and the country) more good than harm. This is because the one thing Obama has to fear is a voter backlash in 2010 and 2012 that puts Republicans back in control of the House and/or Senate."
It's a nice thought. But I don't see the 42 Republicans being much of a speed bump to this administration's agenda. The Republicans will pick their shots on a few initiatives, but if recent history is a guide, even then they'll just pick the wrong battles to fight. For the most part I expect the Democratic leadership to play a little "Game Theory" and an expanded version of the Prisoner's Dilemma: Only the first two Republicans to play ball get the earmarks and pork. There is no reason to expect Republicans to show any more restraint or scruples under Democratic leadership than they did under the Republicans.

Todd Beeton blogging at MyDD offers the conventional wisdom of the Left in "Talking Politics":
"...certainly bi-partisanship would be great but not for its own sake. I asked him to think about what's gotten done during two years of divided government versus 6 years of single party government -- far more got done in those first six years; the fact that it was mostly bad is beside the point. Single party Democratic rule is the only way we're going to actually advance a mainstream agenda, which the American people have voted for 2 cycles in a row: ending the war in Iraq, funding stem cell research, increasing access and affordability to health care, curbing carbon emissions to rollback the effects of global warming, closing Guantanamo Bay and restoring our reputation abroad (and certainly the list goes on...)"
Yes, the list goes on and on and on. Pretty much like the list of organizations lining up at the federal bailout window to partake in taxpayer largess. The left, who like DWSUWF, supported the idea of divided government in 2006, now think it a good thing that divided government be sacrificed on the altar of "getting things done". Problem being "getting things done" can and usually does mean getting a lot of things done that would be better left undone. Just like his example of six years of single party rule under Republicans. Few would argue that all that was done during those years was good. His post uses a technique I have seen frequently among the left of center blogs - list a couple of hot button issues where there is broad consensus (like the war in Iraq), then conflate those issues with the entire of litany of tired old liberal Democratic bromides, to come to the conclusion that the entire progressive agenda is now mainstream.

Which is simply false. One last point for Todd - as DWSUWF stated in 2006 - "Divided government ≠ Bipartisanship". Obstruction, blocking bad bills, and stopping bad ideas from "getting done" is a benefit, not a problem of divided government. It was true in 2000-2006, and it is true now. The only difference is that the bad ideas will be coming from the left this time.

Steve Chapman, blogging as A Minority of One at the Chicago Tribune supported Obama but was cheering on Saxby Chambliss in "Sarah Palin campaigns for checks and balances":
"In 2006, I was happy to see Democrats gain control of Congress. And for the same reasons I offered then, I hope they lose this election. The reason: In this country, the best government is divided government. President Bush needed a Democratic Congress to counter his worst instincts, as did Bill Clinton before him. Obama has nothing to check him but himself, which is rarely a sufficient protection from partisan overreaching. For the next two years, of course, unchallenged Democratic ascendancy is a fact of life. But in the Senate, it takes 60 votes to do anything. Right now, the Democrats have 58 seats. If Democrat Al Franken were somehow to win on a recount in Minnesota, they'd be one shy. But a victory for incumbent Republican Sen. Saxby Chambliss today would prevent them from attaining a filibuster-proof majority."
Well, it is good to see that Steve also has high hopes. See previous comment. Others who confuse maintaining a filibuster in the Senate with true divided government include Western Standard, D-Day, Cogitamus, and Mark Hutcherson.

Trevor Bothwell at the Libertarian Examiner has "Two Cheers for Divided Government", wherein he quotes Lew Rockwell finding a divided government silver lining in the first round rejection of the Big 3 bailout in "Not All News is Bad":
"Already the Republicans are toughening up, seeing the light of day. After nearly a decade of signing off on horrible legislation and looking the other way as a Republican president chewed through our liberties, they are new converts to the cause of limiting the government because a Democrat will be president. At the same time, we are witnessing the disgusting spectacle of Bush lecturing us on the merits of the free market. After eight years of wars, the police state, bailouts, and regulations, he is newly concerned about his legacy, and so he is following the path of Hoover, who was horrible in office and better out of office. Thus is Bush, of all people, sounding like a champion of the free society. Already, you can see that the political constellation is lining up in a way that is more friendly to the cause of liberty. The Democrats are up to their old tricks, which are transparently dumb and dated. The Republicans are responding with smart and sound criticisms. The government looks poised for a fantastic gridlock that will let the liquidation take place so that we can move toward a good recovery."
Two problems with Pollyanna's Lew's perspective. It is easy to forget, but the lame duck government in office right now actually is a divided government, with a Republican President and a Democratic Congress. What this government does or does not do tells us nothing about how the government will behave under Single Party Democratic Rule come January. Second, the Big 3 are back before Congress again today, and this time it looks like they will get everything they asked for. Actually, even more than they asked for last time. Even with this divided government and a Republican President. Pathetic.

Malsnay at Malnurtured Snay thinks that some on the left (like Gail Collins) have already lost the plot (ya think?) in "Nancy Pelosi scares the poo out of me...":
"Nancy Pelosi scares the shit out of me. One of the reasons I voted for Obama was because I didn’t believe the “uber liberal” hype and believe that he’d change the political tone in Washington by building consensus with Republicans, an approach necessitating a govern-from-the-middle administration. While I believe divided government is the best government, I also felt that Obama won’t force a Democratic-majority Congress to bend to his will blindly (and that even if he wanted to, Blue Dog Democrats would block him from doing so) …"
I'd like to share Massnay's confidence in the moderating influence of the Blue Dogs. Perhaps there is some sliver of hope there, particularly if the attitude and efforts like those promoted by Glen Greenwald, Jane Hamsher, Daily Kos, and others actually backfires and puts some blue dog spine in the Republican opposition. I'd like to believe it, but I don't. I think they are going to fall into Democratic line. In any case, it'll be interesting to watch the liberal/blue dog tension play out in the 2010 primary season.

If that last post was a bit too optimistic, Jonathon Bean of "The Beacon Blog" throws some cold water on those betting on the filibuster to provide some moderation in the Obama administration. He spins a frightening but plausible scenario in "Cloture Rules - How Obama my bring one party rule to America":
"In 1974, it took two-thirds of the U.S. Senate to approve cloture and force a vote on a bill. After the 1975 reform, it took only 60% of the Senators to shut down debate. This naturally leads to the question: What will prevent the Democrats from rewriting the rules to lower the cloture bar to 51 Senators? In practical terms, that means the gagging of the Republican minority. We will have one-party rule, utterly. The only downside is that voters might see it as a power grab (which it is) but with a smooth-talking president of the same party, who will raise the issue? Surely the Democrats will spin it as as democracy in action; after all, it still takes a majority to shut down debate, correct? But this would be a sea change in the way Congress does business and it may leave the GOP gasping for air... At the same time, many libertarians recognize that divided government is the best real-world check on the short-term growth of government (in a later blog, I will address the long term). By any measure, one-party rule by a left-wing party is not good for the values libertarians hold dear. If cloture reform does not worry you, I will not mention the frequent talk in the 1970s about statehood for the District of Columbia — guaranteed Democratic seats in the U.S. Congress. In a word, gird your loins and get ready for unchecked Democratic rule. If you thought it could not get worse than unified GOP rule, then history may prove you wrong."
Where did I put that Prozac?

Perhaps it is better if I read posts where I just don't understand what is being said about divided government. Offinger Frieidenker explains it all in his post "Das politische System der USA III: Präsidentschaftswahlen, Kongress und Senat":
"Was bei uns Regierung heißt – und dem die Häuser gegenübergestellt sind – nennt sich in den USA administration; der gesammelte Politikbetrieb heißt government. Exekutive und Legislative werden zwar am gleichen Tag gewählt, aber in unterschiedlichen Systemen, so dass split-votes möglich sind (Wahl für Demokraten-Präsident und Republikaner-Kongress). Das Ergebnis kann ein divided government (Präsident und Kongress-/Senatsmehrheit unterschiedlicher Partei) oder ein united government (Präsident und Kongres-/Senatsmehrheit gleiche Partei) sein; die Regel seit 1968 ist das divided government. Gerade in den seltenen Phasen des united government war es allerdings interessanterweise schwieriger für den Präsidenten zu regieren. Die Regeln des Kongresses arbeiten gezielt darauf hin, ein divided government zu ermöglichen, setzen dies allerdings nicht voraus. Seit der starken Polarisierung durch neue soziale Bewegungen und christliche Konservative ab etwa 1968 ist ein divided government noch wahrscheinlicher als ohnehin."
Obviously. Babelfish is here. You figure it out.

The Taoist at Tai-Chi Policy weighs in with some "Good Advice for the Republicans":
"I would point out that these sorts of anti-corruption measures are things that the Republicans should be doing anyways. Divided government is supposed to help fight corruption. So why aren’t they?"
Oh I dunno. Maybe incompetence has something to do with it. Maybe it is because the divided government of the last two years had too much low hanging fruit to choose from cleaning up the corruption of the previous six years of single pary Republican rule. Maybe the GOP is still wrestling with that whole "pot, kettle, black" thing. In any case, I had to include tao's blog just for the logo.

A good show might improve my attitude. I'll just grab some popcorn and sit down to enjoy the Kabuki theater of the Big 3 CEO's appearing before Congress. Nancy Pelosi and Harry Reid will use the automaker's bullshit reports showing how another $59 billion or so will make them competitive, to cover their collective ass as they shepherd billions more down the rathole of these failed companies to support their UAW constituency. Very entertaining.

Dan Kennedy of the Business and Media Institute offers a preview of coming attractions in "Journalists are MIA in Bailouts":
"Investment analyst John Rutledge on Nov. 22 offered “Forbes on Fox” the most succinct argument in favor of divided government I’ve heard: if a mugger is chasing you, you hope he’s slow. President Obama, the Pelosians and other Dems in full, unchecked control of the White House and both houses of Congress is the equivalent of a very, very speedy mugger closing in on you in a long, narrow alley with no escape in sight. We are about to experience purportedly benevolent dictatorship, and it’s hard to like our chances. The problem with benevolent dictatorship is there seem to be very few benevolent dictators... Why can’t we get some real journalism about such financial matters? Dave Ramsey commenting about cutting up credit cards and paying your house off is well and good, but taxpayers deserve a lot more information about the billion-dollar limit credit cards being handed out by Paulson and promised by Obama. We could all stand to learn how they’re creating and assuming debt so enormous our great-grandchildren won’t see it paid off."
This may be the most extraordinary mass delusion I have ever seen. The pervasive notion, the "magical thinking", that this extraordinary spending and debt can be piled up with no consequences to our currency or our financial future. Forget the Prozac. I need a gun, or bottle of pills. Best if we end this Carnival now. I don't think I can deal with any more company.

Miscellany

Traditionally, we conclude this Carnival by including one "off-topic" submission, as a grudging acknowledgment and proxy for the many off-topic submissions received. Off-topic in this context meaning - no mentions of "divided government" or gridlock. For this edition we selected Alli presenting something else for us to worry about in "Rahm Emanuel Advocates Compulsory Civil Service" posted at The Smoking Argus, saying,
"In “The Plan: Big Ideas for America“, co-authored by Representative Emanuel and Bruce Reed, the two lay out their vision of the “Homeland’s” new compulsory civilian service, writing:
“It’s time for a real Patriot Act that brings out the patriot in all of us. We propose universal [mandatory] civilian service for every young American. Under this plan, All Americans between the ages of eighteen and twenty-five will be asked to serve their country by going through three months of basic training, civil defense preparation and community service.”
If the arrogance alone in such sentiments bothers you not, the two “centralized planners” go on to say:
“Republicans will squeal about individual freedom...”
Such blatant disdain for individual liberty is a sentiment only of tyrants. We have seen this ruse perpetrated on us for the last eight years as it relates to the false justification for preemptive war. Let us not now be chastised away from our liberty based upon a centralized planner’s definition of patriotism."
And on that happy note we conclude this edition, and not a moment too soon [Just got to keep that Prozac in reach].

Thanks for stopping by, and thanks for all of the submissions (on-topic or not). Look for the next edition of The Carnival of Divided Government XXX - Special New Year Resolution Edition sometime around - oh.. lets say January 1. Submit your blog article at carnival of divided government using our carnival submission form.

Linkalingus

Some recent posts and commentary of interest:

Divided and Balanced.™
Now that is fair.


Thursday, November 20, 2008

Save Our Salmon - Beat a Bureaucrat

We have one party rule,the market is in the tank (again), Obama promises massive new spending and debt, and the Bears lost to the Packers last Sunday. My "Blue Monday" is turning into clinical depression. I need a break from politics and the economy. Lets talk about fish.

The image above was on the front page of the Chronicle today, headlining this story:
Most state native game fish face extinction
Jane Kay, Chronicle Environment Writer
"Most of California's native salmon, steelhead and trout species face extinction by the end of the century unless the state acts quickly to provide adequate freshwater and habitat, according to a study released Wednesday by the state's leading salmon expert. Twenty of 31 species of the prized fishes are in sharp decline, including the Sacramento River winter run of chinook salmon, the Sierra's California golden trout and coastal coho, according to the study by Peter Moyle, a nationally known UC Davis professor of conservation biology... In the 316-page study, Moyle calculated the survival chances into the next decades of 12 kinds of salmon, 11 kinds of trout, eight kinds of steelhead and one species of white fish."
The referenced study was commissioned by California Trout, Inc. - a conservation and advocacy group founded by a group of trout fisherman. I've always felt the the most effective environmentalists are the hunters and fishermen and women hell-bent on ensuring that their prey of choice is abundant. As an enthusiastic (if mostly incompetent) "catch and cook" trout fisherman, I include myself in that class (I promise to graduate to 'Catch & Release' if I ever - you know - actually start catching trout on a fly line).

Last spring I wrote a post about the causes and ramifications of the collapse of the salmon population, when the state took the extraordinary step of completely closing the salmon fishery for the season. In that post I applied the oft-used metaphor of the canary in the coal mine to the salmon in the watershed. The California Trout web site makes the point more succinctly in their essay Trout 101:
"Trout are an "indicator species:" when trout disappear from a lake or river, that watershed is in trouble. When our streams and rivers slow down, dry out or heat up, trout are the first to feel it. When trout they die off in an area, they leave critical gaps in the ecosystem that cannot be filled by other species."
It is really pretty simple. For trout and salmon to survive, you need clean, healthy, fast flowing rivers. If you prefer to live in a world (or state) where trout and salmon are plentiful (or even exist), you have to look upstream. You have to get landowners, farmers, grape growers, foresters, road builders and electric utilities to cooperate and stop damaging the rivers where trout and salmon live and breed. Most important, you need politicians to understand that a river and environment where trout and salmon thrive is more important than diverting below market-rate government subsidized water to industrial agricultural interests. Even if they give the politicians a lot of campaign contributions.

The full study is linked below, as well as a shorter more accessible brief:

SOS: California's Native Fish Crisis (Summary - (pdf)
SOS: Final Main Report (316 pages) (pdf)

I've just started working through them. These reports are intended as a wake up call for the public. They can also be used as bludgeons to beat federal, state and local politicians, bureaucrats and utilities into behaving in a way that ensures there will be healthy salmon and trout that I can find, kill and eat. Ensuring that the beatings are applied to politicians with appropriate force and frequency will take money and resources. Send California Trout a few bucks. Help bludgeon a bureaucrat.




If the salmon are lost smash the state


Monday, November 17, 2008

Monday Miscellany - Special Bear Market Blues Edition

The blog has been a bit neglected over over the last week or so. I have been mesmerized by the continuing economic train wreck and stock market derailment happening right before my eyes. When I could tear myself from CNBC, I found a few items from around the sphere you might enjoy find informative:

ITEM - Chicken Little was right
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This video is getting a lot of play around the blogosphere. If you have not seen it, or ever wondered why no one saw this financial crisis coming, it is well worth a few minutes of your time. It is not that no one saw it coming. It is just that no one listened when Peter Schiff patiently explained that the sky was falling over these last three years (Hat tip to Justin at Donklephant):



Peter Schiff is a regular contributor to CNBC and Fox Business News, was a financial adviser to Ron Paul's presidential campaign, and is President of Euro-Pacific Capital. In case you were thinking, "Gee, It is too bad that no one was listening to him..." well, it is not too late. We can listen to him now. From his most recent economic commentary:
"With the Big Three auto makers now in a plainly visible death spiral, the automotive bailout debate is kicking into overdrive. The disagreement hinges on whether a bailout is necessary to support an important industry or whether the unprofitable dinosaurs of the past should be allowed to fail as America focuses on an information-age, service sector, and alternative energy future. As usual, both sides have it wrong. The government should let the Big Three fail not because we no longer need an auto industry, but because we desperately do. What we do not need is the bloated, inefficient auto industry that we have today. By allowing the Big Three to fail, their capacity will be turned over to new owners who will be able to acquire the means of production at fire sale prices and hire workers at globally competitive wages. The result will be a more efficient auto industry making cars that people around the world actually want to buy at prices they can afford. Such auto makers could conceivably be profitable and could become the cornerstone of a manufacturing renaissance in the United States. In contrast, Ford, Chrysler and GM are never ending money pits that threaten to swallow a good deal of our economy."
ITEM: About that debt swallowing our economy...
The next time you see pundits arguing for massive new federal spending and borrowing to stimulate the economy, and justifying it on the basis that government debt is still less (as a percentage of GDP) than it was under FDR, consider this graph. Hayman Advisors calls it "the most frightening chart we have seen...
"... is one that compares total credit market debt to U.S. GDP. The average of this ratio over the last 100 years has been around 155%. The ration peaked first heading into the Great Depression at 260% (after then falling back to 130%) but has now risen to an unprecedented 350%."
Lance at QandO quotes Henry Blodgett's explanation:
"From the early 1920s through 1985, the average level of debt-to-GDP in this country was 155%. The highest peak in history (until the recent debt boom) was in the early 1930s, when debt-to-GDP soared to 260% of GDP. In the 1930s, the ratio then cratered to 130%, and it remained close to that level for another half century.In 1985, we started to borrow, and last year, when we got finished borrowing, we had borrowed 350% of GDP. To get back to that 155%, we need to get rid of more than $25 trillion of debt... The banks have written off $650 billion so far. So we suppose that's a start."
Think again about what Peter Schiff was saying about the debt that led to this crisis. Look again at that chart. Consider the solutions being pushed through Congress to stimulate the economy, bail out the big three auto makers, and subsidize keeping people in their homes.

We have a problem that was created by too much government spending and lax monetary policy encouraging easy credit that precipitated too much debt, with a market distorted by the catalyst of massive government intervention to meet the social goals of permitting unqualified borrowers buy homes they cannot afford.

And the solution being promoted?

More government spending, loose monetary policy to provide easier debt, and much more market distortion from massive government intervention to meet social goals of propping up failed companies and keeping unqualified borrowers in homes they cannot afford.

This strikes me as - what is the technical term? - batshit insane.

ITEM: The President-elect inspires confidence.

Steve Kroft conducted a great interview with the new first family on 60 Minutes last night. Obama and Michelle come across as genuine, warm, intelligent and confidence inspiring. It made you feel like the country really made the right choice. Well, it did until the President-elect said this:
Kroft: "Where is all the money going to come from to do all of these things? And is there a point where just going to the Treasury Department and printing more of it ceases to be an option?"

Mr. Obama: "Well, look, I think what’s interesting about the time that we’re in right now is that you actually have a consensus among conservative Republican-leaning economists and liberal left-leaning economists. And the consensus is this: that we have to do whatever it takes to get this economy moving again, that we’re gonna have to spend money now to stimulate the economy. And that we shouldn’t worry about the deficit next year or even the year after. That short term, the most important thing is that we avoid a deepening recession."
Well Mr. President, you might consider whether it is prudent to continue digging furiously, when we are already deep in a hole over our head. But I guess it is best not to think about that right now. After all, it won't be us, but our children and grandchildren that be repaying China for the money we are continuing to borrow to fund all this new spending.

Item: Corporate Welfare and outsourced government monopoly is not the same as a Free Market

Among the most annoying assertions to found in a blogosphere chock-full of mindless claims, are pundits and bloggers declaring that the current economic clusterfork is an example of the failure of free markets. Roderick Long takes this nonsense head-on in the lead essay for this month's excellent series at Cato Unbound: In "Corporations vs the Markets - or -Whip Conflation Now" Long takes Conservatives, Liberals and Libertarians to task for the sloppy linguistic conflation of big business, corporate welfare, and "private-public partnerships" with a free market. Of the three, I find his indictment of Republicans and the Right most damning:
"If libertarians’ left-wing opponents have conflated free markets with pro-business intervention, libertarians’ right-wing opponents have done all they can to foster precisely this confusion; for there is a widespread tendency for conservatives to cloak corporatist policies in free-market rhetoric. This is how conservative politicians in their presumptuous Adam Smith neckties have managed to get themselves perceived—perhaps have even managed to perceive themselves—as proponents of tax cuts, spending cuts, and unhampered competition despite endlessly raising taxes, raising spending, and promoting “government-business partnerships.”

Consider the conservative virtue-term “privatization,” which has two distinct, indeed opposed, meanings. On the one hand, it can mean returning some service or industry from the monopolistic government sector to the competitive private sector—getting government out of it; this would be the libertarian meaning. On the other hand, it can mean “contracting out,” i.e., granting to some private firm a monopoly privilege in the provision some service previously provided by government directly. There is nothing free-market about privatization in this latter sense, since the monopoly power is merely transferred from one set of hands to another; this is corporatism, or pro-business intervention, not laissez-faire. (To be sure, there may be competition in the bidding for such monopoly contracts, but competition to establish a legal monopoly is no more genuine market competition than voting—one last time—to establish a dictator is genuine democracy.)

Of these two meanings, the corporatist meaning may actually be older, dating back to fascist economic policies in Nazi Germany; but it was the libertarian meaning that was primarily intended when the term (coined independently, as the reverse of “nationalization”) first achieved widespread usage in recent decades. Yet conservatives have largely co-opted the term, turning it once again toward the corporatist sense."
It is only when the term "free market" is severed from any historical definition or conventional meaning that the current economic crisis can be explained as a government rescue of a "free market" failure.

To solve a "free market" problem that was created by too much government spending, too much government debt, too much easy government sponsored credit, and a market distorted by massive government intervention (along with a large helping of corporate criminal fraud that slipped through the regulatory framework) we are now given to understand that we need to increase government spending, government debt, and create more market distortions with more government intervention.

Yeah, that should work. I feel better already.

ITEM - Carnivalingus

Some recent collections of high quality blogging punditry which I have neglected to highlight:UPDATED: Fixed typos, added links

Divided and Balanced.™
Now that is fair.


Saturday, November 08, 2008

2010 & 2012 Election Prologue - The Road Back

2010 Senate Races

After a short two year hiatus, we once again have One Party Rule in Washington D.C. Based on historical precedent, we can expect an increasing growth rate for government spending, increasing growth rate in the size and scope of government, constitutional checks & balance undermined, inadequate oversight and a consequent increase in abuse of power and corruption. Arguably, we can also expect to get embroiled in another war. This last seems unlikely with Obama, but... There does seem to be a real appetite from the left for some kind of U.S. intervention in Darfur. And if there is another Rawanda-like genocide somewhere in Africa or Eastern Europe, what will we do? What will Obama do? Tough call.

But on the other hand, we have "Hope" along with our One Party Rule. So, I guess everything will be ok. It is my sincere hope that the Obama administration will be able to avoid these historical pitfalls and prove to be an exception to the One Party Rule. Why not? His campaign and election has shattered historical precedent every step of the way. Reason enough to hope.

But just in case, lets take a realistic look at the prospects for restoring divided government in the next two cycles.

A few days after the 2006 mid-term election I wrote a post looking ahead to the presidential election just completed. In that post - "2008 Election Prologue - Check your assumptions" - I made the easy prediction that the Democrats would expand their majorities in Congress, and further concluded:
"We will need a Republican President in 2008 to maintain a divided government state. Fortunately we have some great Republican candidates. Hagel, Giuliani, and McCain would all make great presidents, and all are a significant improvement from what we have today."
I did not predict a Republican would win, but that electing a Republican President was the only path to continuing divided government.While I got the partisan political environment correct, the voters disagreed with me about McCain as a candidate for president. So it goes.

The predictions were based on nothing more than structural factors in the congressional elections and historical precedent. We'll take the same approach looking forward to the next two elections, and assess the likelihood of reestablishing divided government in pursuit of the expected benefits that go with it. As we did in '06, we'll first explicitly spell out the premises/assumptions, and on that foundation we will build the DWSUWF positions and recommendations for the 2010 and 2012 elections.

NOTE: - You may want to skip this post. It is what I call a "reference post" (more reference posts in the left sidebar). I don't want to have to repeat this analysis over and over in future posts, so I'll keep it here, update it, and link to it as needed over the next two years.

Assumptions

Assumption 1) The Divided Government hypothesis holds true to form.
We had divided government for two years. As outlined in this recent post, we can can document that divided government did indeed begin to incrementally undo some of the damage of One Party Rule along with accruing benefits consistent with historical divided government precedent. One possible fly in the ointment - while 2007 spending growth was indeed restrained, it is yet To Be Determined what the final spending tally will be after we include 2008 spending with bailouts and stimulus packages included. I expect the final conclusion may depend on whether the bailouts are characterized as spending or "investments" as some have suggested. I'll update the blog with a final assessment of our painfully short exercise in divided government in a future post.
Assumption 2) The "100 year precedent" holds for the House of Representatives.
I first learned of the "100 year precedent" from a Ken Fisher analysis predicting election results in 2006.
"A basic rule of politics and a little-known fact: The Senate changes hands so much more easily than the House that in 100 years the House has never changed hands unless the Senate has, too. Since the Seventeenth Amendment allowed for direct election of Senators in 1913, the House majority has never changed hands without the Senate also doing so... For the Democrats to win the House they must win the Senate..."
Fisher used this precedent to predict that Republicans would continue to hold majorities in both house of Congress in 2006, since they had a structural advantage in the Senate races. Here is the interesting part. His prediction was completely wrong, but the 100 year precedent held up! Instead of neither the House or Senate changing majorities as Fisher predicted, both the House and the Senate changed majorities in 2006.

Why is it so difficult to change majorities in the House? Partially because voters tend to like and re-elect their own representative, even if they have a very low regard for Congress as a whole. Approval ratings for Congress were worse than for Bush, but the overwhelming majority of representatives were re-elected. The fact that both parties conspire to gerrymander districts to the advantage of incumbents is another big factor making it difficult to unseat incumbents in the House of Representatives.
After the 2008 election, with 8 seats still undecided, the Democrats picked up an additional 20 seats and will have a crushing 81+ seat majority in the House. Given the difficulty of changing majorities in the House, there is almost no likelihood of Republicans retaking the majority before 2014 and probably longer (even with strong political winds at their back the Democrats only picked up about 20 seats in'08 - do the math).

That leaves the Senate as the only determinant of whether divided government can be restored in 2010. In 2012, either re-taking the Senate or the presidency are possibilities for Republicans. The presidential race will be completely determined by Obama's performance in the first term, and is unknowable now. So, looking forward to 2012, we will also focus on the Senate.

Looking Back

In 2006, the Republicans had a small structural advantage in the Senate races, since 18 Democratic seats were contested as opposed to only 15 Republicans. Nevertheless the Democrats held all of their seats and took six seats from the Republicans and a narrow majority.

In 2008, the Democrats had a huge structural advantage. There were 35 Senate seats contested in 2008 (33 regular and two special elections). Of these, 23 were held by Republicans and 12 by Democrats. Simple numbers - the Republicans had a lot more at risk, and were playing defense. The Democrats had many more opportunities to take seats than Republicans. Big advantage for Democrats. Assuming that the 3 seats that are still undetermined will fall 2-Republican 1-Democrat, the final results will be an 7 seat pickup for the Democrats and a 58 - 42 majority in the Senate.

Looking Forward

In 2010 The Democrats will again have a structural advantage. 34 Senate seats will be contested. Of these, 19 are held by Republicans and 15 are held by Democrats. This is comparable to the advantage that the Republicans held in 2006. It seems highly unlikely that the Republicans will be able to duplicate the feat that the Democrats pulled off in 2006. To retake the Senate, the Republicans would have to hold all their seats, and take more than half of the Democratic seats up for re-election. Obama and the Democrats would have to screw-up on a scale of how the Republicans screwed up in 2000-2006. They would have to pile up a record of corruption and incompetence in two years comparable to what the Republicans did in six. I wouldn't say it is impossible, but it does seem very unlikely. The best the Republicans can expect in 2010 is to either hold serve, not lose any more seats, not lose the filibuster, or pick up a couple of seats and narrow the Democratic Majority.


In 2012 the Republicans will finally have a huge structural advantage in the Senate elections. Of the 33 seats contested, 24 are held by Democrats and 9 by Republican. From this distance, the Republican seats look safe, and after four years of One Party Rule by Democrats, the electorate may be ready for some changes. If the Republicans can pick up two seats in 2010, they will only need to take six of the 24 Democratic seats to regain the majority. As mentioned before, it is probable that the Democrats will retain a majority in the House of Representative, although by then it will have narrowed.

Conclusion / Predictions
  • We will have One Party Rule under the Democrats for at least four years.
  • The next opportunity to restore divided government will be in 2012.
  • The Republicans will have two ways to get there, so I will go out on a limb and make the prediction that divided government will be restored in 2012, either through the Republicans winning the presidency or (more likely) a majority in the Senate. If the latter, we will be in the interesting situation that we have a divided congress, and regardless of which party wins the presidency - a divided government. That's a good thing.
  • No telling what shape the country will be in by then.

Addendum - 2010 & 2012 Senate Races

Year - 2010 15 – Dems 19 – Rep
State ↓ Incumbent ↓ Party ↓
Arkansas Blanche Lincoln Democratic
California Barbara Boxer Democratic
Colorado Ken Salazar Democratic
Connecticut Chris Dodd Democratic
Hawaii Daniel Inouye Democratic
Illinois Barack Obama Democratic
Indiana Evan Bayh Democratic
Maryland Barbara Mikulski Democratic
Nevada Harry Reid Democratic
New York Chuck Schumer Democratic
North Dakota Byron Dorgan Democratic
Oregon Ron Wyden Democratic
Vermont Patrick Leahy Democratic
Washington Patty Murray Democratic
Wisconsin Russ Feingold Democratic
Alabama Richard Shelby Republican
Alaska Lisa Murkowski Republican
Arizona John McCain Republican
Florida Mel Martinez Republican
Georgia Johnny Isakson Republican
Idaho Mike Crapo Republican
Iowa Chuck Grassley Republican
Kansas Sam Brownback * Republican
Kentucky Jim Bunning Republican
Louisiana David Vitter Republican
Missouri Kit Bond Republican
New Hampshire Judd Gregg Republican
North Carolina Richard Burr Republican
Ohio George Voinovich Republican
Oklahoma Tom Coburn Republican
Pennsylvania Arlen Specter Republican
South Carolina Jim DeMint Republican
South Dakota John Thune Republican
Utah Robert Bennett Republican


2012 Dem – 24 Rep - 9
State ↓ Incumbent ↓ Party ↓
California Dianne Feinstein Democratic
Delaware Tom Carper Democratic
Florida Bill Nelson Democratic
Hawaii Daniel Akaka Democratic
Maryland Ben Cardin Democratic
Massachusetts Ted Kennedy Democratic
Michigan Debbie Stabenow Democratic
Minnesota Amy Klobuchar Democratic
Missouri Claire McCaskill Democratic
Montana Jon Tester Democratic
Nebraska Ben Nelson Democratic
New Jersey Bob Menendez Democratic
New Mexico Jeff Bingaman Democratic
New York Hillary Rodham Clinton Democratic
North Dakota Kent Conrad Democratic
Ohio Sherrod Brown Democratic
Pennsylvania Bob Casey, Jr. Democratic
Rhode Island Sheldon Whitehouse Democratic
Virginia Jim Webb Democratic
Washington Maria Cantwell Democratic
West Virginia Robert Byrd Democratic
Wisconsin Herb Kohl Democratic
Vermont Bernie Sanders Independent
Connecticut Joe Lieberman Independent Democrat
Arizona Jon Kyl Republican
Indiana Dick Lugar Republican
Maine Olympia Snowe Republican
Mississippi Roger Wicker Republican
Nevada John Ensign Republican
Tennessee Bob Corker Republican
Texas Kay Bailey Hutchison Republican
Utah Orrin Hatch Republican
Wyoming John Barrasso Republican


UPDATED: Fixed links, corrected typos, edited for clarity.

UPDATED 06-August-09: 2010 Senate Scenario revised and updated in a new post - 2010 Senate Race Redux.
UPDATED 31-August-10: 2010 Senate Race prediction revised and updated in a new post - Ten in Ten.