For those of you who don't live in a part of the world where journalism is a reflection of political affiliation, let me woefully inform you of the case in point of the United States joining the ranks of places where what you believe politically is reflected in the news organs available. In some nations, such as Germany or the United Kingdom, the press is indeed free to publish whatever it wants. Yet there is an additional consideration when media organs produce their product, namely what political party or political faction they have selected to serve. This goes far beyond the considerations of segment publishers of books or periodicals as has always been the case in the United States. For example you can pretty much guess who the target market is for Utne Reader or Democracy Now. The consumers of such materials represent a fractional point of view that feels outside of the mainstream media outlets. There is nothing wrong with this because although they collectively represent a very small minority viewpoint as to what they would like as media consumers, they are a commercially viable market that exists for the most part outside of mainstream media considerations.
And it is this consideration which is of current issue. While it is perfectly expected that a fringe publication or media outlet caters to the unique points of view of its consumers, it has never been the case that the mainstream media has also gone to the equivalent extremes in catering to the generalized public consumer of media. One would expect that a media outlet like EWTN exists to provide media that most Catholics would find concurrent opinions about. One would also expect most other faiths to pretty much ignore the "Catholic Network" because its focus is centralized on people who happen to be Catholic. The same types of points can be made across the media spectrum. Somewhere around fifteen million people listen to Rush Limbaugh every day representing a fraction of the United States population. Even though he has a huge market penetration on the radio, he still only can garner a tiny minority of listeners of radio in general and an even smaller comparative share of all people who don not ever even turn on a radio in the first place.
The point is that while the United States has always had such media providers and segmented markets that make such providers economically viable as a business model, the overall media market has largely been apolitical. The reason why this has been the case is tied directly to the emergence of wire services and the additional broadcast technologies that developed in the early 1900's. News and information needed to be of a generalized importance to all consumers. This meant radio networks would tailor their news and information content to reflect a genuine utility for the consumer. News events, social commentary, and even entertainment offerings reflected the idea that if people could generally use the media served to them, they would in turn pay more attention to the media outlet providing the service. With more attention, the media outlet could charge more for the advertisements that provided the funding for the outlet as a business.
Because of this media outlets that wanted to expand or dominate markets on a regional scale, and later a national scale, had a vested interest in being neutral in their presentations of content so as to appeal to the broadest market segment possible. A listener might not always agree with a news story or an entertainment show, but the theory was that if he found news or content he agreed with socially or politically at least half the time, then he would continue to listen or read or watch the media outlet in question.
Unfortunately the neutrality became threatened by several factors. The explosion of cable accessible and satellite channels made it possible to create upstart news outlets very cheaply. One need look no further than CNN or Fox News Channel for an example. Another example would be ESPN, started with a single satellite uplink and a couple thousand dollars. Another thing that has lead to neutrality being effected is the consolidation of media outlets into conglomerate media outlets that centralized almost all media content decisions into a handful of companies based out of New York City. You may read a paper from Boston, but 95% of its content comes from its parent company in New York City now. Even CNN which once operated out of Atlanta and was once known for having a crack pot news staff willing to hop on a jet to broadcast from anywhere around the globe, now tends to have an all New York based staff that gets most of its international feed supplied from Reuters or Associated Press pool agents.
The most impact to neutrality in media outlet production has come from the internet. It takes literally no effort to produce a site like the Drudge Report or Democratic Underground. It really all comes down to who staked out the claim first and was able to get Google to notice what was being created. Suddenly we have millions of sites that reflect the ultimate in market segmentation. Whatever your political stripe is, there is indeed a web based media outlet that agrees with your personal point of view 100% of the time. People can access information in an almost self censored manner. If you don't like Obama, you can be sure that you can get your news from a source that will never tell you Obama did anything good.
Bringing us back to the mainstream media outlets. They still have a business model that reflects the earlier neutrality. But thanks to the ease of segmenting people via cable broadcast networks or the web based internet media outlets, if they manage to piss off their consumer a few times-they can go get their media content from somewhere else besides the mainstream media. Politically the people of the United States have indeed shifted their political viewpoints to the left. How hard a transition is hard to quantify. But JFK today would be classified as an staunch right wing Republican as would most of the Scoop Jackson Democrats of the 1970's and 1980's. The media has also reflected this shift. The Pew Research Center points out that in terms of political bias the major outlets not only get their facts wrong 71% of the time but also show strong media bias 82% of the time when reporting political news. To make matters worse- as if that isn't already bad enough- the places where most people get their news from, namely network broadcast news and the New York Times affiliated newspapers are the most biased of all.
What this means is that partly due to segmenting of the market, the generalized leftward shift of all Americans, and the pronounced decline in reporting accuracy and increased leftward bias, the news media outlets have become particularly vulnerable to loss of consumers for their products if they choose to be neutral.
The consequences of this state of affairs is not prohibitively bad even if you happen to be an ultra right wing Republican. As the market place and the subsystems that work to create media streams mature, there will indeed be a case where bias or utter inaccuracies will become impossible to maintain if a business wants to be anything other than a controller of a fractional minority share of the media market as a whole. As technologies converge making it possible for people to get all their content on a single device like an iPhone, the most successful media outlets will need to return to a neutrality of content or risk becoming a modern equivalent of the print version of Mother Jones.
The only thing that might threaten this is if the current dominate media providers intentionally choose political alignment as many of their European cousins have. If you become associated with a political party- and by extension the voters who support that party-you not only can pre-capture nearly 50% of all voters but also become vested in the success of that party. It is a pattern that has occurred in Europe, where national media outlets are openly conservative or progressive and take great joy in vilifying the political opponents of the party they happen to be closely linked to. It is still possible to get a fair accounting of politics in Europe, but you have to read the conservative and progressive news side by side so you can then read between the lines to determine for yourself what is really going on.
Which brings me to the current sitting President and one of his disgraced predecessors. Nixon once told the Washington Post that their reporters were persona non grata in his White House and if any other media outlet wanted to retain access to the White House they had better treat the Washington Post as if it were something less than toilet paper. To the credit of the media in general, the major news organizations of the time told Nixon to go fuck himself. President Obama, his press secretary, and his communications coordinator have specifically told the media that Fox News Channel is not welcome in the White House, should not be considered to be a credible and respected news agency, and other media outlets should take great pains to not reciprocate or associate with Fox News Channel. Those media outlets that choose not to follow the President's command run the risk of also not having access to the White House. So far the media has remained silent.
Which brings us full circle to the start of this commentary. If the media outlets choose not to replicate their stance of 1973, they will essentially become beholden to reporting news as the President wishes it to be reported. At some point these outlets will become so beholden to him that they will not be able to be neutral at all. Given that they are currently factually wrong and biased a combined 80% of the time already- they don not have too many percentage points left to lose before they become completely biased and report news based on how the President wishes it to be rather than what the news really is.
Tuesday, October 20, 2009
Party Specific Press
Saturday, June 6, 2009
Judicial Ethical Stance and Limiting Generic Enumerated Rights
I don't want a judge, who because of a certain ethical stance, will make a ruling that is exceptional or definitional in nature which solidifies a right in an extremely limited manner.
For example, I want justices who will make rulings as to the case law body that exists, instead of the specific case presented. Instead of applying a definitional ruling to define, say pornography, as being definitionally valid so that a ruling that agrees with the judge's ethics or morals can be decided as the judge could personally agree with. I don't want a judge who will declare that if you refuse to promote a blue skinned person because you want diversity, then promoting an orange skinned person is always valid because that is the ruling definitions of race/poverty/ access/ affirmative action that the judge personally agrees with. Because, if they do rule in such a way, then they are establishing that the right to fair opportunity in workplace promotion no longer applies equally to people with blue skin or orange skin.
Instead, such rulings create a measurement of rights that are applied on situational basis, instead of legal principle. Most of the "bad" rulings that people complain about are rulings that are done in this fashion. Instead of ruling on pornography as being definitionally explicit, the court ruled in a way consistent with case law and also in such a way that pornography could be effectively regulated. That is the type of ruling required. People who make pornography, watch pornography, ignore pornography, hate pornography all were equally served by the United States Supreme Court in this matter.
What is dangerous in a ruling is when the court decides to limit explicit rights and enumerated rights. Any time you declare that no white or hispanic firefighters with demonstrated objective assessments of their tested abilities have a right to promotion when you are declaring that since blacks have less quantitative representation they are constitutionally qualified to be promoted beyond the abilities of their peers or even the merits of their own abilities, you have defined that EEOC law does not apply to a certain class of people.
Bad ruling and it weakens the EEOC as legislative law because it specifically circumnavigates the requirements of the law, so that a judge's personal ethics or morals can be assuaged.
It is stunning to see people declaring Obama's nominee Mrs. Sotomayor is qualified because she is willing to rule on ethics and morals. If it was enough reason to disqualify Bork- who was and remains by far one of the nation's leading Constitutional Law scholars, then it should disqualify her.
If in order to justify your ruling you must also restrict the generic rights of all, and you also see nothing wrong with doing this on ethical or moral grounds OR heaven forbid because you personally feel that your wisdom goes beyond others because of ethnic background, then maybe you should recuse yourself from the bench.
Sunday, May 31, 2009
Military Rape & Murder in Iraq.
The claims of barbarity being part & parcel of the policies carried out by the American military is the common fodder of the liberal media, watchdog groups like Amnesty International & Doctors without borders, terrorist movements like Hamas, Hezballah, & AlQueda, and even governments of the second and third world. Not to mention depending upon political season even other governments of the first world decry American actions as being ones based upon barbarity and needless force.
The screaming of our barbarism is commonplace enough to have even effected Ornery. For example look up Murdock and his replete series of threads where he proposed and advocated that the American military is simply killing a million Iraqis without even a moment's thought. And many of you here who still contribute joined the argument behind such claims. Charges of rape, murder, thievery, extortion, and common battery were all just part of how the vast majority of our military conducted itself day to day.
The fact is that our military was exceptional in that we didn't have the issues either the British or Australians had in terms of charges of abuse and brutality towards civilians to the degree and initiation they did. And it was their own domestic media that pushed for and demanded their withdrawals partly because there were rapes, murders, thievery, battery, and extortion being committed multiple times by their own forces. Whereas the American forces were not guilty of such things. Of course we were guilty of far worse by taking pictures of naked piles of men who were being humiliated in an attempt to stop the perception by the insurgents that being a member of jihad was without penalty.
Knowing that if you were caught you would be paraded in front of female Americans naked & forced to wear women's thong underwear had a massive crippling effect upon insurgents wanting to continue the fight. Even the issue of the trumped up and ultimately revealed to be a hoax example of what truly would have been violence towards a prisoner just barely would have crossed the lines of battery. Yet we tried, convicted, and imprisoned nearly 50 soildiers/sailors/& CIA agents for things that even our allies don't bat an eye at.
Fact is our military is an anomaly amongst the standing armies of the world, with the plausible exception of Israel, in that we do the least harm to civilians during engagements and deployments. It really is a record that has no equal compared to what has gone before in history. You want to know what our military holds dear and important about the issue, mission, and policies?
Try reading some of the stuff Stray wrote about how they treated civilians. He could easily have been a shoot first ask questions later kind of person. But he was surrounded by people who also thought the only way to be successful was to conduct engagements with the civilians in as peaceful a manner as possible even if it ultimately meant that that generosity and civility would be taken advantage of by an enemy which saw no problem killing civilians as long as some Americans died as well.
The School of the Americas taught soildiers from nearly every country in the world that the military should be a tool of last resort controlled by civilian laws. People come to us to learn how to have a civilian controlled military which doesn't routinely brutalize civilians.
Unfortunately, what we have tried to teach and routinely practice as a military has yet to catch on in the majority of the world. You want to talk rape & murder? Try looking into Sri Lanka, the Philippines, North Korea, Congo, Zimbabwe, Venezuela, Nicaragua, Zambia, Nigeria, Egypt, Lebanon, Jordan, Saudi Arabia, Pakistan, India- hell just about any other military currently engaged in the world to see REAL RAPE & MURDER as policy.
You know who conflates the almost incident free performance of the American military when dealing with civilians? People without perspective who find that the half dozen improper policy executions in regard to civilians comitted by Americans must be morally equivelent to the thousands of deaths and rapes daily commited by other militaries as policy goals.
I found a total of 8 American soilders who have been implicated in three rapes in Iraq since the war began. Two of the soildiers convicted were not even aware of the rape being done by people under their command but are still in jail because they did not control their men.
That speaks volumes as to our performance and destroys any argument that rape is a policy of the American military.
Of course finding concrete evidence of Americans murdering civilians is almost impossible due to the fact that googling "American Military murdering Iraqis" brings up so much left wing drivel that we have systematically "murdered" at least 1 million civilians that you can hardly find the three examples that were investigated and the one that was prosecuted but ultimately found to be baseless in Haditha.
I guess if you BELIEVE RAPE IS POLICY then the objective facts that rape is not policy don't matter. Nor does it matter that our behavior in not Raping and Murdering is seen as a concrete example of our weakness as far as our enemies are concerned, while also being an example of our uncontrolled imperialism when judged by our liberal media and politicians at home and amongst our allies.
http://www.globalpolicy.org/component/content/article/168/37155.html
Read this and then tell me how anyone can fairly claim Rape & murder are policy.
Saturday, May 30, 2009
Obama's Supreme Court Nominee
Is she worthy of the office?
She has had four cases ruled on in the Supreme Court of the USA. Three times she was overturned on Constitutional grounds. One time she was upheld. She has a new case that should be brought before the Supreme Court in the upcoming term concerning the fire fighters. That will make it her 5th case to be reviewed by the Supreme Court of the USA.
I have issues with her rulings and the basis for those rulings. I don't want case law enshrined for moral reasons ala Roe v Wade. It appears to me that she is a type of Justice who has a personal agenda large enough to edge her towards convolution of case law to make something she agrees with to be Constitutionally valid. We don't nee another justice on the court who will willingly engage in the style of legal sophistry that brings forth asinine rulings like Roe v Wade that most people- regardless of what you think about abortion- find to be a fundamentally flawed ruling that has had the unintended effect of conflating Abortion into one of the single most divissive political issues.
So yeah its 5, she has some problems, and I really don't agree that she is qualified in terms of her judicial ruling accumen or her ability to look at precedent, settled case law, and the legal constitutional basis compared to what the appelants want to settle.
I don't think she is qualified to do it based upon her track record, her racist remarks, her advocacy for a group whose members frequently demonstrate in the street calling for amnesty & reclamation of USA territory, and I find it insulting to a large degree that she thinks just because she has personally been discriminated against she is so sensitive to such abuse that she sees no problem in inflicting reverse discrimination by way of judicial rulings and vacating.
So yeah I got real issues with her legal competency.
Friday, May 29, 2009
Justice Department Motions for Dismissal of Voter Intimidation Convictions
The Justice Department does stand for protection of the right of citizens to vote. It even won its case- proving in trial that the men were guilty of voter intimidation.
The crux of the outcome however is racial. The NBPPSD could be counted upon to get out the vote for Democrats- and Obama- by what many at the time called outright intimidation and fear mongering. It was poopooed at the time by Obama's supporters. Obama is simply directing his JD to not uphold the law because in this case it was of direct advantage to his being elected and presumably he wants to make sure that in cities where the NBPPSD is powerful will again deliver vote blocks that will keep Obama in power during the next election.
Very cut and dry.
This is the "Change We Can Believe In" that about half of the voters voted for. I hope that you are all enjoying the progressive installation of a traditional fascist system. He took over your banks. He took over your mercantile exchange markets. He is about to take over your health care. And he is in the process of ensuring that the automotive industry becomes part of a corporative state structure where the government directly owns private firms while also assuring that the unionized labor groups are beholden to the continuation of government influence in exchange for 50% ownership of non-governmental stock.
It truly is breathtaking.
Monday, May 4, 2009
Legalize Illegals and Save Healthcare
You know we have done the whole "Let us simply declare illegals legal and then become serious about controlling the borders..." bit three times. And each time, the sudden legalization results in no improvement in the continuation of illegal immigration and has always resulted in a net drain on social entitlements now "legally" paid to the former illegals. Making illegals legal so they are qualified for government health care entitlements won't solve the medical cost gaps we have now.
If I thought legalizing them would work, I'd be all for it.
Understand this simple and indisputable point. If you seal the borders, expel current illegals, and introduce a sane streamlined and simple immigration policy to legally allow people to come to the country, you would in turn see many- if not all- problems caused by having 10-15 million illegals draining entitlements of funding cease to be a problem. Over night if you adopted my point 3 solution, hospitals could resume their former charity towards those legally in the country who no have no other access to emergency health care.
It really is that simple.
ANY PLAN ADVOCATED BY ANYONE THAT DOES NOT ADDRESS ILLEGAL ALIEN COSTS INCURRED BY HEALTH CARE IS EITHER A SHAM OR A POLITICAL PAYOFF.
Period. End of story. Access to health care is not the issue. Thanks to national and state laws, anyone needing health care is granted that care regardless of the cost of that care or their ability to pay. The problem is that illegals after receiving such health care do not provide the hospitals with any means of service recovery even on a wholesale basis. The result is hospitals are either shutting down or instituting draconian measures against one of the few costs they can control- namely employee compensation and doctor reimbursements.The hospitals are collectively telling their workers to work for less because between 10 and 30% of the customers do not pay a dime.
Watch as Obama's Health plan suddenly includes a unionization plan to set national wage standards and force unionization as a means to effect a controlled spending environment. It will be a boon to the AFL/CIO, but won't save a cent and put the nail in the coffin of people having an economic incentive to become a health care worker.
You think there are health care access problems now? Wait until the nursing and doctor shortage becomes exacerbated by the fact that 10 years of schooling and hundreds of thousands of dollars of tuition debt makes no sense if it only nets you a job that makes you 50k a year and is no longer a profession but instead a regulated skilled trade governed by a national union.
Sunday, May 3, 2009
National Health Care
Actually a lot of people choose not to have health care. The bulk of people who are legal citizens or aliens without healthcare coverage also happen to be between 18 and 25 years of age. The time in people's lives where short of a catastrophic accident, they tend not to need even a doctors visit. It is also the time in people's lives where they get starter jobs and have other priorities to pay for such as housing or taking a cue from Tommy, beer money.
The 40 odd million uninsured that keeps getting bandied about is made up of between 10 and 15 million illegals, 20 odd million young adults, and 10 million people who could truely be considered to be without health care due to economics or chronic conditions that make it impossible to get private insurance.
If you want to fix health care...
1 Institute a mandatory insurance pool for otherwise omitted pre-existing chronic disease.
2. Replace the current medicare/medicaid payment system with one that pays net 15 days, pays the actual cost of procedures, and criminalizes abuse by both patient and provider in cases of fraud with draconian mandatory prison terms.
3. In cases of illegals receiving health care, if they are incapable of paying
If you do those 3 things healthcare would effectively cover the 10 million people who need it but cannot get it. It would solve the problem of private insurance subsidizing the unrecovered expenses of Medicare/Medicaid. And would eliminate the current drain of funds from most large hospitals as a result of treating illegal aliens.
It doesn't take a National Healthcare plan to solve these problems. And if you did enact a National Health Plan as offered by Obama, it specifically does not address these three problems and potentially exacerbates problems 2 and 3.
Automotive Concept Cars Don't Work
Well taking a cue from Great Britain's TopGear television magazine, the reason why no one wants American cars is because they tend to have very poor fit and finish, have cheaply configured and produced sub-assemblies, and have woefully antiquated engines.
It really is that simple.
If you like cars, expect them to last at least a decade, want minimal upkeep costs, and expect that the fit and finish of your car to be at a minimum an A- execution, then most American cars will not fit those parameters. The concept car of the future offered ever single year at the Detroit Automobile Show was always that---a concept for the future. Things like engine control, multivarible port injection, advanced drivetrains, active suspensions, integrated advanced safety, advanced fuel types, and even green technology implementation of car life-cycles were all something the Big 4 offered.
Except year after year, the concept vehicles never seemed to come into an recognizable existence. When they did you got vehicles like the Aztec which was a nightmarish amalgamation of plastic body panels glued on to a truncated truck chassis or it was something like a Prowler which is a great car that sold well but would never be more than a niche car with a cult following. You cannot maintain a company as a broad market competitor if most of its cars are ill-conceived to the point that few buy it because it serves no obvious purpose.
Why buy an Aztec? It isn't a passenger coup. It isn't a truck. It isn't an SUV. It doesn't go very fast either on or off road. It was just a very ugly car that people talked about after seeing it in concept at the auto show circuit. GM mistakenly thought that the "buzz" and "gravitas" surrounding the Aztec concept meant people would buy it. Obviously they didn't.
But the irony is that while Detroit dwindled from the Big 4 to the Big 3, to the Big 1 with two destitutes, the rest of the world manufacturers were doing something other than just building concept cars that caught people's interest. Detroit collectively saw concept cars as they had since the 1950's. A concept car was intended to bring image branding to the market perception. When Detroit built a concept car, it wasn't intended as a proof of concept that would indicate the future engineering and styling cues to be expected on production cars. Also compounding this problem was the simple fact that the Detroit automakers did not engage in competitive racing on multiple levels. Meaning the rate of innovation in American production cars was almost exclusively the result of a handful of American designers and engineers who had somehow managed to eek out small micro niches of competitive motorsport in the Detroit factories.
Oldsmobile, Corvette, and Chrysler Vipers were the only remaining venues of direct competion left where the world leading manufactures were pitted in true competitive racing. And for all you NASCAR fans, realize something. NASCAR is now a very staid formula competition where the only difference between the cars comes down to the stickers on the fender wells and what decals get put on the front end to signify a "manufacturer. Aside from engine blocks, NASCAR has little to do with development or unlimited competitive adaptation during racing. Meaning it became Detroit's favored venue of "competition".
Unfortunately for Detroit, this form of competition yielded nothing in terms of technology or reliability that could be diverted back to the manufacturing of passenger cars. Like the concept cars made by Detroit, the choice to virtually exclude itself from competitive racing resulted in a situation where there was little benefit aside from marketing penetration.
In 1998 Toyota made a conscious decision to become the #1 automobile maker in the world in three respects. The first was in total numbers of vehicles sold. The second was in total net sales volume. And the third was to be the ultimate manufacturer in Formula One. By some estimates Toyota Formula One Team Motorsports has spent no less than $1.2 Billion in the last 11 years.
What did they get?
Well for starters they did get the world's most advanced car design center in Germany, with the wind tunnels and super computers to go with it. They also became very advanced in composite engineering and manufacturing. Having gone from 10 cylinder to 8 cylinder engines to the now required 16,000 RPM limited 8 Cylinder engines that must last 4 races in a row, Toyota directly imparted the design and reliability lessons learned from racing to their current passenger cars. Electronic engine management and multivarible transmission shifting technology went straight from their race cars to their passenger cars. They also got laughed at for generally finishing at the back of the pack for 10 straight years.
Until this year. Toyotas are now the terror of the Formula One campaign. BMW, McClaren Mercedes, FIAT Ferrari, and Renault are all now witnessing the results of driving competitively with a goal of excellence no matter the cost. And it is also translating into Toyota becoming the leader in numbers of cars sold and getting close to eclipsing Porsche as the world's most profitable car maker.
When consumers look at cars, almost all of them are simply looking for a reliable cost effective means of transport that meets their expectation of durability and usability. There are some who demand far more in terms of the vehicle being a pinnacle of some sort. Be it pure speed like a Buggati, style of a Citroen, ruggedness of a Pinzaguar, or durability & practicality of a SEAT. But almost without exception, the leading manufacturers are very similar to what Enzo Ferrari maintained as the reason for making passenger cars.
Put simply, Enzo Ferrari built cars for sale to consumers so that he could afford to build and race cars competitively in the leading motorsports competitions around the world. If you doubt it consider the examples. Porsche-Volkswagen-Audi own Lemans, Gruppe B & GT racing. Fiat Ferrari owns formula One. BMW owns track racing. Citroen owns WRC racing. Mercedes owns DTM, Formula One, and Truck racing. Renault is a bit down on its luck in Formula One, but it still competes and wins in rally racing as well. Nissan competes in Asia in endurance, road course, and Lemans racing. Honda supplies engines for open wheel racing, rally competition in WRC, and dominates motorcycle racing. In short the World's leading automobile manufacturers all compete heavily- Toyota even going so far as to compete in NASCAR.
And Where are the American manufacturers?
Oldsmobile of course died several years ago. The Viper was bought out by its designers and is now sold for short endurnce track racing to privateers. And GM's Corvette will see the end of its racing in American Lemans this season as well as make its last stop in the 24 Hours of Lemans as well. Meaning that in 2010 there will be ZERO factory backed efforts in any F.I.A. sanctioned competitions anywhere in the world.
If you intend to be world class, should you not compete against world class rivals? Do you expect to innovate your cars for sale to the public simply by picking motes from the ether? If you want things like active suspension, ABS, engine management, KERS, carbon fiber brakes, ultra efficient exhaust systems, and reliability engine mapping- which all resulted from Formula One- to appear on your production cars, do you not need to have a competition platform?
The whole point is that the American consumer began realizing that American automakers weren't making even a fraction of what they presented to be plausible in the concept cars. When European cars all began coming standard with ABS systems that they had developed in Formula One, American automobile makers were offering hastily cobbled together 3rd part ABS systems and then only offering them as expensive options on their highest profile car models. It doesn't take a genius to realize ABS is a pretty good idea. And it wasn't as if Detroit hadn't offered concept cars with ABS on them since the early 1970's. But in a void of competition development, Detroit never actually had to make a working ABS for mass implementation in all product tiers. By 1993 even lowly Volkswagen was slapping ABS on all its models. Detroit was still offering it as an expensive upgrade to its mid-level offerings, made it standard on the flagship premium brands, and still didn't have it for its entry models.
In 1995 I bought a Volkswagen Jetta GL for $15,000 brand new off the showroom floor. It had a 6 cylinder engine. AC/PW/PD/sun roof/Premium CD system/ leather interior/ ABS/Airbags/Active Suspension/Hella light package/ Sport rims/ and half a dozen other features I cannot remember. The Pontiac Sunfire I looked at had a 4 cylinder engine and AC. Sunroof, PW/PD/ABS/and airbags were available options. Active suspension and lighting improvement package was not an available option. The Sunfire also cost $17,000.
It isn't the case that Detroit screwed up because they didn't offer hybid or electric cars that turned off consumer demand. What turned off consumer demand for passenger cars made in America was the reality that in order to get a comparable car to the mid level import, you had to pay a super premium price purchasing the additional equipment needed to make an American passenger car comparable. The only thing holding up Detroit was the truck and SUV. The rest of the world simply doesn't have the market for either vehicle.
Consider that the Ford F-150 is the world's number one selling car by volume. More of these are sold every year than any other car in the world. But there is an exceptional caveat to that figure. The Ford F-150 is sold only in the United States and Canada. It isn't directly exported anywhere else in the world. The American market is very absorbent in terms of trucks and SUV's. Toyota and Honda both brought out full size trucks over the last few years to compete for market share. But when fuel prices skyrocketed Honda nixed the Ridgeline and Toyota scaled back its fullsize truck- but they could afford to because their passenger cars sell very well.
Detroit has been living on trucks for 20 years. And with the combination of high fuel costs and the emergine concept that not everyone needs a truck to commute to work in, the sales of Detroit's mainstay has collapsed. Add to this the reality that their passenger cars are essentially junk compared with the competition on the market and you get 50% declines in American manufacturer sales year on year.
It really is time for Detroit to take its medicine. Offering concept cars of a future that never comes, will not solve their problems. Chopping off brands and car models simply to stave off red ink won't work either. The only thing that will work is if Detroit eschews marketing promotions and style trending and instead realizes what every other manufacturer of automobiles in the world already knows.
Compete in automobile racing, take the technologies you develop and put them into the passenger cars you build for sale to the public.
It really is that simple.
Saturday, May 2, 2009
Being a Bond Holder
Well if someone told me that my bonded security in a company "should willingly" be swapped at 27 ¢ on the dollar for non-securitized common stock I'd tell them to go screw themselves too.
The whole basis of buying corporate bonds instead of corporate common/preferred or corporate grade investment paper is that it is SUPPOSED to be the most secured form of credit ownership an investor can grant to a corporation. Meaning, although you don't get high yields or actual controlling and voting rights, you are supposed to get a guaranteed return of a modest rate and further be protected as a creditor class should the company falter or capitulate.
The US bankruptcy courts have ALWAYS ranked corporate bond holders as the First in line to get payments after the company's debts to suppliers and B to B liabilities. Meaning that if you own anything else other than a corporate bond, and the company goes into bankruptcy, you get paid LAST and often at pennies on the dollar. Because bond holders get the lowest return on their investment & because they have almost no influence on the ownership or operation of the company, they are seen as being the least able to mitigate their loses when a company goes south. Preferred and common stock holders have the ability to dump stocks easily or even force board room changes as well as block the actions of a company before it goes into bankruptcy.
So until now the rock solid rule was that whenever a company enters bankruptcy, after all the company's debts due to operation costs are paid, bondholders get paid in full if possible depending on the liquidity and total amount of assets possessed by the bond holders.
In the case of GM, the bond holders were owed approximately 3 billion in GM debt. GM if entering bankruptcy has in its assets more than enough money to conclusively pay off its debts to suppliers and the UAW and have enough cash and asset value to retire the entire bond debt. Stock holders of course would get squat after the bond holders were paid- but the stock holders could expect to be issued new shares in the company that emerges from bankruptcy, so their losses would only be paper loses assuming GM goes on to survive.
I saw the Treasury enforced offer to buy GM bonds in USA Today last Monday. GM basically said that bond holders would be forcibly converted to shares of common stock by the Treasury. The conversion of bond debt to stock was literally 27¢ on the dollar----FAR BELOW WHAT THEY COULD REASONABLE EXPECT TO GET IN A BANKRUPTCY----and to add insult to injury- although bondholders represented a claim to more than 60% of GM's current net worth, the Treasury had informed GM that the bond holders would not be allowed to collectively be represented at all on a future board whether GM enters bankruptcy or not.
In short the Treasury told GM that if it expects any government money- the bond holders get the shaft. Instead of collectively owning 60% of the asset valuation of GM, bond holders would be reduced to under 2% of the asset values.
Chrysler's fate for its bond holders is even worse. Essentially Obama said if you don't take take a beating and smile you are unAmerican. So if the offer is lose your secured debt, lose your dollar amount on that debt, gain no equity, and get less than 2% liability assets in a new GM or Chrysler or be declared un American I guess your options suck.
In plain English, the Administration has told the bond holder < which thanks to 401 K and mutual funds really means most Americans with conservative investment holding in corporate bonds> take a 83% hit on your investment and be thankful we aren't threatening to prosecute you in court.
This is the biggest sea-change in bankruptcy law in 200 years. And if you are wondering, it represents a direct and hostile corporative seizure by the federal government due to a politicalized policy agenda of the current Administration. For all of you who screamed about the Patriot Act or how malevolently incompetent President Bush was, I hope that you will be equally outraged at what Obama has done in the cases of the automakers and the banking system.
Saturday, April 11, 2009
Violence as an Unintended Drug Consequence.
The way we enforce
If we were serious about drug interdiction/etc then we wouldn't have the city of Atlanta as being the central shipping point and merchandizing center for drugs East of the Mississippi. I mean Atlanta is hundreds of miles from the closest sea port and is generally not considered to be a land border state. How lax does our drug enforcment have to be to result in a city a thousand miles from Mexico being the center of the drug trade in the USA?
I really think drug laws should be enforced to a draconian extent because that is the only way you could effectively limit the drug criminal industry. If you made the consequences severe enough and actively sought out users and suppliers, you could prevent 90% of the drug industry from functioning. But do you really want potheads in jail for 25 years for having a joint? And do you want to have to effectively prevent any and all cross-border movement that isn't inspected for drugs?
The drug law enforcement could work. But then again the public tolerance to actually enforce the laws is limited. I'd give people 18-25 a bit of a break for their first offence. Say 1 year in a halfway house and 5 years community service. For other people, I'd give a graduated scale. Having Mj nets you 10 years in federal prison no parole. Cocaine or a derivative there of 15 years federal prison, no parole. Amphetamines/Speed/Meth/Ludes/ Fraudulent Prescription 20 years in federal prison, no parole. For Acid/Dust/ any other morphine/opiate derivatives or mind altering drug 25 years in federal prison, no parole. And all the above sentencing guidelines are despite how little or how much quantity of drug is found at the time of arrest.
If a user realizes that he can get 25 years in prison for doing a speedball, he may stop buying it. If a dealer realizes he could get 25 years in prison just on the cocaine and hash residue in his vehicle- he might change lines of work. The dubious distinction of being a well connected drug user or supplier would seriously impeed your daily life until you either quit cold or got busted by the feds. Offer bounties of $5,000 for each drug tip that leads to a conviction.
Pretty quick people would get the message drugs, or being around someone who might have drugs, or tolerating drugs in your personal life ultimately is a risk no sane person could or would tolerate. The meth heads, crack addicts, and potheads would all disappear quickly from the free environment. Those homelss people who have mental handicaps and drug addictions would be incarcerated and undergoing forced treatment for their mental illnesses- something that they don't get right now. Fact is that even a recreational level of use has negative consequences at some point. The weed you buy or the coke you score, or the hash that gets gifted to you for your after work week personal relaxation came from somewhere.
And more than likely that somewhere at some point in time involved a pointed gun and people under duress as the drug moves from origin to end user. It is a horrible reality to know that almost all drugs that are illegal and of illicit nature cause unmitigated suffering far beyond even that caused by the user of the drug.
But if we aren't going to get serious about enforcement, then it is time to make it all 100% legal. At a very least result, the duress and violence that accompanies your drug supply line would end. Narco states would probably still be run by former narcotics dealers, but their access to easy cash would be gone and with time their ability to influence their governments would cease. On the downside, a lot of idiots will OD or otherwise self destruct. And for the friends and family involved it will be a horrible experience. But in the grand scheme of things, most addicts are not of the redeeming type as Coleridge, Black or Doyle. Meaning their self destruction is probably a net good to society rather than a loss.
When I think of it on that scale and point of view, I really do think drugs should be totally legalized. It would eliminate much violence and rid the world of a lot of dead weight to society. It might even cause the inner American city to diversify its economic activities away from the thug-gangsta/drug dealer/pimp popularity contest that it is now. Without drug money and without the inequity of the relationship between user and supplier due to criminalized drugs, most users would be able to more from the margins of the society to at least a functional basis. Spending money treating the chronic abuser of drugs will likely be cheaper than attempting to enforce drug laws as they exist right now.
Call me crazy, but the world would be a much more peaceful place with legalized drugs.
Friday, April 10, 2009
OS X or Vista
I have used both over the years. And I used to be a near absolute Microsoft fanboy. I think the problem with Windows became most noticeable during the early launch and adoption of Windows XP. I'll skip the reasons for this to get to the punch line that XP was a can of worms when used by the average office pool secretary. By this I mean the layout of Teletubbie land on the new XP systems prevented her from installing her prefered media player, the email she wanted to use, the chat software she wanted, etc. So one of two things happened. Either she was the "local administrator" who "knew more" about computers than her boss and proceeded to screw up her system unknowingly or the IT guy would simply give up having to constantly allow her account to install some stupid piece of software and simply set the secretary to run as an administrator at all times.
XP really did seem to offer the end user an Apple like desktop, but the XP systems run by idiots unfairly added to the reputation that Windows XP doesn't work. It did work, but people tended to use them without any training or understanding of how much more jacked up both XP's capabilities and settings were over Win98se or even Windows 2000 Pro. You may have had an Apple like startbar and dock area, but it wasn't OSX.
I found that it was increasingly common for systems in offices to start out like they all had Porsche computers and a month later they had Yugos needing a complete rebuild. It really was not Microsoft's fault. The real problem is the user.
As a uber geek, having access to everything to tweak and otherwise customize within the limits set by Microsoft was great. But for an average user it was like giving someone who has never even held a gun a fully automatic M-16 with a grenade launcher and a night vision scope and laser sites. Most people have no idea- or even need to have that level of equivalent power vs responsibility. Most XP users- and for that matter most Windows users currently- who are suffering problems are the result of self inflicted wounds.
The reality is that if you purchase a Windows based system, and you intend to customize software installations or otherwise move beyond simple web browsing, email, and media activities you will find yourself soon having issues. From conflicting drivers, software, inconsistent hardware compatibility, or unintended consequences from installing different hardware and software from different vendors, the average user will find himself having issues. It has gotten progressively batter through the years as Microsoft has strengthened the vendor certification standards for hardware and software. But the fact remains, a windows based system may have a proprietary software operating environment but the hardware and other software is a series of independent products produced with conflicting goals, standards, and ideas.
And that is why unless Microsoft starts building computers, the problem will never go away.
The Apple path is certainly more costly upfront. Fact is Apples cost comparatively more compared to a comparable Windows Vista system. On a Vista system you can get more memory, hard drive space, and a bigger display compared to an Apple iMac for example. And often the cost of this hardware on the Vista system is hundreds of dollars less. Further, if you buy a Vista system, virtually any store with a computer department will have tons of additional hardware you can buy that is pre-certified to be Vista compatible. You don't have to drive an hour to find a store with a single shelf worth of Apple specific hardware. If you need a Windows compatible caple or slot card, odds are you can get it in minutes.
The Apple though has several features which over the long haul make it a better purchase for most people. The first is that Apple is both a proprietary software operating system and a proprietary hardware system. What this means is if it has an Apple logo on it- it will function exactly as advertised. There is no issue as to whether the software you just bought will work or if the new hardware you bought will inadvertently fry your graphics card. To a do it for your self kind of person, that simple feature means that it won't require any technical capacity to use your system in a reliable manner. The other feature which makes Apples generally superior to Windows systems is that natively out of the box an Apple system does both what an average computer users wants to do as well as also do what the most hardcore computer user needs a computer to do.
If you consider that most computer users want something that lets them check their email, surf the web, video conference with family, and write the Great American Novel, then they will find that an Apple does exactly that right out of the box. Further, with the iLife suite that comes pre-installed, just about every common user task is supported without you ever even needing to buy another piece of software. To explain the difference better, an Apple computer is like buying a very high quality razor that never needs a new blade. To a user that simply wants to have a computer unobtrusively contributing to his productiveness instead of being a hinderance to the process of using a computer, the Apple wins hands down.
If you happen to be an uber geek the Apple is something that appeals to you since the Apple comes out of the box in a form factor that is pretty bullet proof. It runs faster and leaner. Gets its kick from Unix, and lets you run virtual Windows Vista, XP and Linux flavors to your heart's content. You want to render graphics or otherwise engage in processor intensive activities- you can without the chug found on comparable Vista systems. In short, the uber geek that hacked you two ways to Sunday last night and wiped out you bank account probably used a mac Pro to do it.
The potential flaw of being proprietary in both hardware and software OS is somewhat mitigated by the fact that Apple has jumped on the open source bandwagon and even released a lot of its code and hardware specifications. Because of this, Apple gets tons of free quality development. See the iPhone for an example of this fact. Who knew someone would create a dyno program that lets you accurately use your phone to time your car's horsepower over a quarter mile? So unlike Microsoft, Apple does get a large degree of stability of hardware and software simply because they base their OS on a public domain Unix.
The real benefit of having an Apple however is how long you go before you have to replace it. People use Apples long after they ceased to be supported by anyone. The numbers of people still using Apple OS9 systems is staggering. And they often are using it on systems that have had nothing done to them since they opened the packaging. To put it in perspective it would be like someone using a Windows 95 system today who can still use the system as though they just bought a new Windows system.
When you look at the cost of entry it is indeed steep. I could have bought four computers for the price of the two Apple computers I bought this year. But I can reasonably expect that I won't be replacing either computer for the next 8 years barring a critical hardware error or Web 2.0 becoming Web 6.0. When you amortize the cost over that time it makes my computers cost about $200 a year- and that also includes my terrabyte Apple Time Machine, a new iPod Shuffle, and two Apple TV.
Couple years back my father in law asked me what I would recommend he buy now that he was retiring and would no longer have a government supplied laptop PC. I told him point blank he should buy an Apple iBook based upon both his utter lack of computer expertise and also what he intended to do with it. He promptly ignored my advice and went out and bought a Toshiba laptop running Vista. A month after he bought it, he had me removing some virus files and undoing several items that I should have charged him $500 for. Last week he told my wife on the phone that the system was unusable and it would cost him $500 to get it wiped, cleaned, and then have the OS reinstalled.
He spent $2,000 on that system.
The particular model he bought now shows up on eBay for around $300. The iBook I recommended still sells for $600.
Windows Vista is an excellent OS if you are equipped with the personal capcity that enables competent computer software and hardware administration. Apples are generally best for most users with the qualification that you have to either be willing to pay a lot upfront or pay a lot of money for a used Apple if you cannot afford the new ones.
Monday, April 6, 2009
Pax Americana
Simply put the Roman Republic, Roman Empire, and Byzantine Empire < early stages of the latter> were really the first time in human history where the majority of humans on the planet were not worried about being exterminated by the people one valley over to the left if they ever made contact. From about the time Sumer became a going concern, there were enough people concentrated to the point that actual warfare was plausible.
So from the region of Iraq to Egypt on today's map, you had city states at war. And the war was continual and increasingly the focus of more an more peoples. People tended to build up a local population, then kill the next door neighboring city state. It really wasn't until the Republic of Rome began expanding that the largest concentration of people on the globe- i.e. Mediterranean/ Near East were actually living at "peace" By the time of Imperial Rome, unless you lived way far out on the borders of the far North, if you lived within Rome or one of its vassal states, you had a reasonable expectation of living well into your early 70's.
Of course if you lived outside of Rome your life expectancy was only 30 odd years even if you were lucky enough to live in the more advanced Chinese city states or the more laid back principalities of the Indus Valley.
Prior to Rome's dominance, people who lived in the territories that eventually made up Imperial Rome had life expectancies of middle 30's at best for males and late 20's for females on average. Once you had Rome as your overlord you tended to be able to survive as a civilian. After the fall of the Western Empire, life expectancies in the former Roman territory dropped back to what it had been before the Roman Republic. Same thing happened with the Eastern Empire. As it contracted in size, those that lived outside its territories suffered a precipitous fall in life expectancy.
So the Pax Romana can be accurately determined by simply looking at life expectancy. For a very long time even before Rome ruled the world, the Romans had substantially longer lives than their neighbors. The expansion in physical territory combined with the explosion of populations as they came under Roman rule marks the beginning of the Pax Romana. The end can be determined by reversing the standards.
Being fair, Rome had a PAX that lasted at least 300 years. A fairer argument would be that the Pax lasted at least 600 years for the majority of people living from Gibraltar to the borders of India & from the Baltic Sea to the northern limit of the Saharan Desert. Compared to what came before and after, the Pax was most definitely a "peace" It would be almost 700 years before a majority of the world's population enjoyed Roman standards of life expectancy under Pax Britannia. That doesn't mean the people who benefited from the PAX in both instances were either Roman or British.
What it means is that the influence of any particular Pax often is greater and longer than the geographical and temporal extant of a leading power. Gibbon may have judged Rome to be at its zenith for 200 years, but the actual impact on peacefulness lasted far longer.
With the collapse of Rome the effects of the Pax evaporated. Then again when the Pax Britannia collapsed we had two World Wars that made the Napoleonic Wars look like a nursery game. You have to wonder that if we are indeed in a Pax Americana, and that when a Pax collapses it is followed by an amazingly intense period of open conflict and plunging life expectancies as a universal rule of human history----what will the post Pax Americana world go through before the next great power?
Obama Wants to Control the Banks
"Obama Wants to Control the Banks
There's a reason he refuses to accept repayment of TARP money."
STUART VARNEY Wall Street Journal
Obama Administration and TARP 1 Reimbursement
TARP 1 is a case where the government forced the leading domestic commercial banks to do something that the well run banks didn't need or even want to do. But even though competently run, these banks had to take TARP 1 money to obscure the banks that took the money who really did need it.
Imagine if tomorrow one of the top ten domestic commercial banks comes out and states publicly two things.
A. It does not need/never did need TARP 1 and is giving it back.
B. It also recognizes that the TARP liquidity injection has not worked at all, therefor a better solution would be to allow healthy banks to compete for the market place.
The healthy banks of course would repay TARP1 money immediately and protest loudly if the government refused to take the money back.
The weak banks? They would be silent or stammering about how its a liquidity problem.
The public would get the hint really quick. The banks that got TARP 1 and needed it would fail- and the public would have had it up to their eyeballs with the entire bailout process. 60% of American registered voters no longer supported TARP I or a TARP II. The issue of the reinsurance costing far more than expected has wiped out TARP 1 funds anyway-as much as 38% more than originally thought.
It is time for the reinsurers- also known as AIG to pay up with their own investment pool instead of collateralizing taxpayer monies. AIG owes banks big. If AIG fails, several of Europe & China's biggest banks and re-insurer firms will collapse as well. It will send Europe and China straight into a severe recession. But it won't cost the American tax payer another $2 Trillion in public debt load. The cascade of bad American banks would be impressive to see failing. The rumor mill is 4 of the now 10 top American domestic banks would indeed fail were it not for TARP 1.
Let them fail.
It would mean liquidity for free. Instead what we have right now is liquidity for public debt. The fact that liquidity isn't the real issue is another issue. If it was liquidity in the first place, then ramping up $2 Trillion in public spending in 10 years, directly providing cash to the banks via TARP I, and the issue of the US Treasury "printing" nearly $1 Trillion in unbacked Federal Reserve Notes should have improved the credit markets or lending to commercial enterprises.
Economists in The Economist are starting to point out that this hasn't worked yet. The GAO agrees.
But then again, that doesn't seem to be the point. The point it would seem is to indirectly control the entire American commercial banking system by directly having federal ownership in the top 10 commercial NA banks. The federal government may be a minority holder, but its stock is an entirely new classification of stock never before seen in the American capitalist markets. It isn't a common stock, a preferred stock, a non-voting stock, or even a bond stock. Instead it is a stock that acts as an identification for specialized treatment.
If a company with this identification doesn't follow the government agenda, then it can see its executives fired, earnings taxed at 90%, or otherwise see day-to-day control removed from the other owners of the bank. If they do follow what the government wants as policy, then the bank gets tax payer funded cash infusions and an almost virtual assurance that the bank will never be allowed to fail.
So when you have a bank attempt to give back money- especially now that no one is even remotely worried about any bank runs or bank holidays, you have to wonder what utility is served by refusing to accept back a gift that wasn't needed in the first place.
Sunday, April 5, 2009
Former Senator Stevens- crook or innocent politician?
A little of both. The telephone recording of him talking about his political relations to contributers is largely dependent on your personal bias context in how you understand his guilt or innocence. I have not been a fan of Stevens for years. I think that when a person gets as much power as Stevens or even Byrd has without attempting to blow it all on a Presidential run, it is more than likely that the man is in office for the sake of personal power. Therefore, when I listened to the audio/ read the transcript, I was predisposed to think he was caught in an admission of corruption.
Thing is, while I think it is a good thing he lost his re-election, the more I read about the charges and the more that became public in the prosecution's case, the less I thought Stevens really was guilty of the charges presented against him. As someone else pointed out, many of the charges were based upon things that on consideration are pretty petty. It was more a situation where he was seemingly being prosecuted on the technical limits of the laws behind the charges instead of the spirit and intents of the laws behind the charges.
Someone here once commented that once a person achieves a political office beyond dog catcher, they become increasingly corrupt to the point that many choices they make may not be technical legal violations, but they certainly cross over into the realm of being violations in spirit. Stevens is undoubtably a text-book example of this process. The man was in power for so long that he rose up the Senate seating charts to the point that Alaska wielded far more senatorial clout than just about any other state in relation to its population. There is a reason Alaska got so many "Bridge to Nowhere" projects.
So while I think the charges that were actually prosecuted are in hindsight pretty trumped up, the reality is that Stevens has had so much influence for so long that undoubtably he has concealed far greater violations of the laws. The best the Department of Justice could come up with was technical violations. They certainly did a poor job of arguing their case. And their procedural choices were so bad that their argument has no basis on appeal.
When Capone was convicted of tax fraud, he was in technical violation of the law. And compared with the extent of his criminal actions, being convicted of failing to pay a federal tax seems almost amazingly petty considering that we routinely have famous and infamous people not paying far greater taxes. Capone got 11 years for not paying $215,000.00 in taxes. In today's money that doesn't even come close to sums owed by people like Nicholas Gage or Wesley Snipes even if you adjust for inflation. Capone was also so corrupt that he could almost flaunt his criminal status. Everyone knew he was a criminal, but no one attempted to prosecute him on the real activities of his enterprise because it would have been impossible. He was instead convicted of a concealed weapons charge, contempt of court charge for failure to appear in a timely manner, and tax underpayment.
Of course he never was charged with the Saint Valentine's Day Massacre.
So too I guess it goes with Stevens. I still think he is a crook, but even though his prosecution was realistically a accumulation of trumped up technical violations, the existence of "The Bridge to Nowhere" style pork projects to Alaska represents Stevens own personal Saint Valentine's Day Massacre.
Monday, March 16, 2009
Banking Crisis?
17 Banks since January 1, 2009 does not make a situation where you can claim banks are failing left and right. The fact is yes, there are more banks closing. But the closure of banks is more often a reflection of an FDIC insured bank not meting minimum standards. And in some cases as was the one the closed in Georgia a few weeks back, it was a case of the FDIC declaring that the bank "might" get into trouble due to a preponderance of CRA loans on its books.
It is certainly a faster clip than 2004 or 2007 4 and 3 respectively. But it isn't even remotely close to the failure rates of banks during the start of the Depression. It isn't the same as when FDR took office on March 4, 1933 and immediately declared a Bank Holiday to prevent dozens of banks failing every day. Nor is it even as bad as the Savings & Loan collapse.
The fact is the vast majority of FDIC insured state and local banks are fine and are in no need of even potential bailouts. The N.A. banks are shaky in so far as they are more exposed to the average national trend in real estate and commercial activity due to the very fact they are N.A. banks. As far as cash flows go there isn't much of an issue except when you get to the N.A. banks and the now non-existent investment charter banks. In fact, the shaky nature of the N.A. banks is almost directly a result of them snapping up the investment banks at bargain basement prices.
The issue is that the N.A. banks bought up their main rivals for commercial level banking at a really cheap price. But they didn't suspect the degree to which the mortgage backed securities were no longer fungible so the paper sheet balance was much worse than they suspected it would be.
Sunday, March 15, 2009
Printing Money
The Bank of England is deciding to simply "print" money in an effort to create positive cash flows across the United Kingdom's economy. This is usually not a good thing for governments with debts of substantial proportions. Examples of recent failures of this policy are cases like Argentina or for that matter any of the former Soviet governments shortly before their collapses where they literally turned on the printing presses in order to keep their collapsing systems running. Is China soon to feel a sting?
China CAN print as much Yuan as it wants. For that matter they still make their coins out of aluminum and their bank notes are still cheap ink on a paper that might as well be rice paper. The reason why they can do that is because their currency is still about as convertible as the Soviet Ruble was. The "independent" banks and commercial markets do not control the money supply inside China, the government does. If they say a Yuan is worth 1:1 with the US Dollar then it does.
They can do this because their central banking system enjoys the side benefits of having a closed communist consumer market dependent upon what the government declares the prices of goods and services to be & the fact that they can make such a determination because they convert the profits from selling consumer goods abroad into government securities of the nations they trade with. Meaning, while their economy may have a worthless currency, it remains wholly stable because the Chinese government holds the national government debts of most of its trading partners in a majority status.
As long as China can get the government securities of other nations, it can afford the policy of simply printing its own currency as it wishes. The Premiere of China bitterly noted however the fatal flaw in this system. Now that we are not buying as much consumer goods from China, they are unable to buy as much government debt in the form of Treasury Bills. Further, the T-Bills that they could buy are potentially now becoming upside down investments if held to maturity. That means that suddenly China as a government cannot simply print money to fuel its growth without also risking a deflation in purchasing power of their domestic currency.
As long as they had a physical good to sell and a means to convert the payments for those goods into securities that would return more interest than the effect of continually printing money for their domestic markets, they were fine. Now they are stuck holding a paper mountain of debt that could crush them because we are considering "printing" money as Western Governments seek to force their own domestic credit markets into life again.
The important point is that we won't be backing our printing by the debt paper of a greater economy. We are just going to print the stuff. If China stops buying our government debt, then what they currently hold will become meaningless as far as it being able to allow them to simply print their own domestic funds. If they do keep buying, and we do print money ala Bank of England, they run a substantial risk that their past purchases will turn to upside down investments and their current and future purchases will not allow them to simply print money to enable a monetizing of their own domestic goods and services.
Either way, China's government leaders are bad because whatever they do means a downturn in their projections and also means the fueling of China's growth with cheap domestic currency is at an end.
Monday, March 9, 2009
Military bases and where Local Federal Grants Come Into Play
The unintended negative consequences of military bases as far as economics goes is pretty well documented. In most- but not all- places that have gone through the BRAC process and have then been decommissioned the local economies tend to perform better overall after only a couple of years. For example in my city we have a base closing in about 18 months after having been emplaced for nearly 75 years. The projections as to what the economy will do as a result of not having the military base anymore is that we should see a doubling of economic activity in the immediate area around the base. Further the base will now pay property and sales taxes- something which it hasn't paid for in many years.
And there are other examples in my state as bases have been closed or realigned. Warrner Robbins AFB for example was realigned and the city went into conniptions when it happened. Yet the reduction of base activity has ironically- though not unexpectedly lead to the first economic improvement for the city since the base popped up during World War II.
The perception is that military bases have scads of civilian contractors running about and getting paid to do things for the military so that the military can use its manpower for actual mission and training. The reality however is that unless it is a base like Dobbins AFB in Marietta, Georgia where the facility is actually a shared site with Lockheed-Martin's aircraft assembly plant, there isn't much local employment derived from on base activity. The reality is that while there is some service industry benefits to a local economy- for example the strings of fast food places and bars that abut many military bases, there is little transfer of wealth from the actual cost of the financing of the base to the outlaying economy that the base occupies.
As far as military base distributions you can just look at a military installations map if you want to to see my point. For example in all of New England you have two military installations, Brunswick in Maine and New London Connecticut. In New York you have a single Army base. Then you have Otis AFb in Massachusetts and McGuire in New Jersey. As Senator John Kerry pointed out, Congress and the BRAC process have set up a situation where most military installations now reside in the South and in the West. He found it to be political in that about the only places we now have military bases are those in "red states" or places where the congressional district in an otherwise blue state happens to be red.
To be clear, the BRAC process has largely removed politics from the decision on whether a military base should be maintained or established as well as when they should be shut down. It is also interesting to see that one of the standards by which the determination is made is "community commitment" to the base under review. Often one of the grounds for decommissioning of a base is the determination that the political leaders of a district support a base being maintained or not.
When Moody AFB, Robbins AFB, and Athens Naval Logistics & Supply School facilities were placed under the last round of BRAC, Moody and Robbins were determined to have political leadership support as well as community support. Athen's political leaders did not want their base and the left wing political advocate and activist groups in Athens also did not support the base. In keeping with Senator Kerry's thoughts on the red vs blue placement, Moody and Robbins AFBS happen to be in staunchly red districts. Athens happens to be a blue district in a sea of red.
As far as the South being a beneficiary of having more of the 110 Federal Prisons you are correct 56 of them happen to be in the South with 54 spread across the rest of the country. However the number of Federal Prisoners in total is somewhere north of 200,000 people. That isn't much of an offset, and is even less of an offset when you consider federal prisoners are still considered to be residents of their last state while not incarcerated. Meaning Federal Prisoners don't cant when it comes to determining Congressional representatives allocation by Census.
Before BRAC, Congress members did fight tooth and nails for bases in their districts because given Cold War realities, many voters thought having a military presence in their district was good insurance. I always thought it was kinda a stupid conclusion for people to come to given that ICBM's look at military bases as targets to hit. But there was some justification especially during the Reagan years that military bases were one of the few reliably funded Federal expenditures that could prop up local economies during the late 1970's and early 1980's.
With the fall of the Iron Curtain however, the need for baeses made little sense, and when people started crunching the numbers, often they realized that in an environment of reduced military spending by the Federal Government, the bases were in fact a net drag on local economies. No one in Congress wanted to have to say closing down the local White Elephant was a good idea, so they set up BRAC to let non- politicians make the determination for them. That is why you have seen less Congressional leverage being placed on maintaining bases because now a member of Congress essentially has little say on the process.
As to the differences in Federal outlays in terms of cities
http://www.census.gov/govs/www/estimate06.html
By way of example local Georgia political entities received $1,069,146,000 in direct government funding.
Delaware $64,537,000
Illinois $3,097,223,000
Maine $119,495,000
The breakdowns are interesting and you can indirectly see the funds used by the Federal Government to run Federal facilities at the local level in each state. Note however that this does not mean that that money is part of the local budgets that actually get used by local administrations. Instead for example the existence of a Federal Building will be accounted for in "general public buildings" but often the costs associated with those buildings are what the Federal Government spends to run the building. It does not indicate that the Federal Government gives the money to the local level to run the building on behalf of the Federal Government.
When you start to break out these funds from the total federal expenditure at the local level, you can determine what Federal Funds go directly towards the actual local government level. After you do this you will see that on a generalized basis cities, counties, and municipalities at the local level in the South get less direct money aid than is generally seen in the rest of the country.
Hope that helps.
Saturday, March 7, 2009
Secession a Second Time
If the South did leave the Union a second time I wonder if Kentucky & Missouri would be retained by force again? For that matter I wonder if Oklahoma, Arizona and New Mexico would be forced back under Union control as well.
Then again it might also allow Virginia to reclaim West Virginia.
All that aside, the South has the weapons this time- whereas the North doesn't have the huge military districts and permanent encampments that the South has. And for what it is worth, the military is held in generally higher esteem than it enjoys in the North East or West coast. Look at it this way- if the Confederacy ever attempted to leave agin, it could shut down the petrochemical supplies for most of the North East in minutes. The South now has modern industrial facilities and factories that simply have no equal in the Northeast or Midwest. Plus we have the Marines, Kings Bay, and Norfolk and even the B2 base in Georgia.
In military terms, unless the Union was willing to launch ICBMs from the overflight country and risk a response from the Trident submarines in the Atlantic as well as the air carrier fleet, there is very little potential that the Union could force a Confederacy to return by conventional military forces.
As to why the CSA might not just be Whistling Dixie in a Graveyard? The cultural differences that get aped and laughed at by the Hollywood film industry & the general disdain that people in the Northeast and Midwest have for someone from the South as a stereotype wouldn't be the issue. The grounds for secession would this time be due to the fact that the South is generally more conservative and less amenable to socialism. The impacts on the South due to acts taken by the Federal government still tend to be as considered as the actions taken towards a red headed step child. Meaning aside from military spending- which the rest of the country doesn't want in its own backyard- the South gets perennially shafted in terms of net outcomes of federal programs. We tend to pave our own roads. Build our own factories. And simply find alternate means of making do without depending on often vanishing Federal funds.
The issue of Southern Governors not accepting the Federal loans intended for unemployment insurance is just one of these examples of the difference between the South and the rest of the country. They aren't declining the aid because the cannot use it. Rather they are declining it because in the fine print, after the Federal aid runs out, the states agree to maintain the newly established levels of payments in perpetuity. Southern Governors know how the Monty Shuffle is played and understand that if history is anything to go by, the Fed will live up to its perpetually unfunded mandates to the South.
The stereotype of hick-seed rednecks driving pickup trucks with ten shotguns in a window and two brain cells is laughed at by the rest of the country as being presumably true. Larry the Cable Guy is nationally popular because the rest of the country thinks people in the South really are that way. But like a Joel Chandler Harris story, all is not what it seems. People in the South laugh at the stereotype because they know it isn't true and is indeed a vast underestimate of the abilities and intelligence of people in the South.
There is a limit to how much anyone will put up with before people start voicing opposition to a government. But in an odd twist, despite being underserved by the Federal Government, I suspect that the South would fight tooth and nail if required to keep the Federal Government in existence. I would expect that if there were to be a secession for a second time, places like the Four Corners, California, or even places like Michigan would be those to reach the end of their fuse first in terms of seeing Washington D.C. as a solution provider instead of an obstacle to be removed by force.
Community Recovery Banks & Not Selling Derivatives.
Not directly. They could and usually did sell the mortgages to either Freddie or Fannie. It is highly unusual for even a local community bank to hold the mortgage paper of loans they provided for even a few days. I checked in to this recently and was told that standard policy in my bank, as well as their local competitors is to close on a mortgage and then almost immediately sell the mortgage paper to Fannie or Freddie. Even now despite all the problems both corporations have. In my case I required the mortgage to not only be initiated by the bank but also held by the bank and not sold to Freddie. As my banker said such a circumstance is highly unusual. Despite being a CRA bank, and the bank clearing over 40,000 mortgages a year, the mortgage department consists of three people who do the paperwork and a single agent at each branch. Meaning less than 20 people are the mortgage department of my CRA qualified/compliant bank.
How many mortgages does the bank hold directly? According to my agent somewhere under 1000. But my bank sure is healthy.
The CRA banks cannot sell their own bundles or create mortage back derivatives. Absolutely true. But the standard industry practice for all small/mid cap banks writing loans is to simply sell the paper to an institution that can. In the case of CRA lending institutions the only market they are allowed to sell to is either Freddie or Fannie.
Saying that CRA banks/lending institutions cannot directly participate in the derivative markets and securities is a bit disingenuous because although true on face value, it neatly overlooks the reality that they were the institutions that were selling to Freddie and Fannie. Of course CRA banks can say "We didn't sell or create derivatives!" because they didn't.
What they aren't making plain to he people of the United States is that they SOLD it to Fannie and Freddie. So obviously since Fannie and Freddie made the bundles that included CRA mortgages, it is now the fault of Fannie and Freddie. Instead of realizing it is the consequence of a progressive social policy law that shirked common business standards of credit, and overlooking the fact that the nation's two quasi-independent mortgage clearinghouses were fully aware of the plausibility of insolvency by including the CRA loans, people are happy to say its the fault of the investment banks in Wall Street .
I have heard this argument before. Except usually it is the one advocated by people who want to legalize drugs. Except when they make the argument that the end users aren't responsible for the negatives of drug economics. They a;ways say that the violence and negative costs of drugs lie almost exclusively with the manufacturers.
With the CRA banks taking the position of the drug producers and the former investment banks of Wall Street taking the roll of the junkie who just got some bad smack, I have to wonder why people are so eager to blame the investment banks in this case. They were fed an adulterated cut of drug, and the people who created the drug are getting away with it because it is simply implausible to any progressive liberal that a social program that tinkers with market economies could cause any harm at all.
Mortgage Loan Causality
The point which is being overlooked by those who find neither fault with the government creating a Community Reinvestment Act or the banks that agreed to do the loans on terms that often were based not on a person's ability to pay but instead upon their ability to be defined as a minority of some sort < race/gender/national origin/disability> is that while only 20% of them went bad, that 20% was bundled in resellings of the mortgages.
Consider in conforming loans, the default rate was less than 3%. Of those in the purview of the governmental program 20 % failed.
So when you had a 20% failure rate embedded in bundles of mortgages, suddenly instead of the normal default rate of only 3%, the holders of these securities began finding out that the default rates were maybe as high as 10%. In the mortgage security business your profit margins are razor thin. Normally 2%. Which is fine when you look at the cost of borrowing money at the time. But in the last 18 months, not only were these bundles seen to be seriously overvalued but also they represented additional costs in terms of what happens when a loan defaults. In markets heavily served by CRA loans, the number of foreclosures contributed directly to the decline in real estate values. People who had jumbos or ARMs suddenly couldn't sell their properties before the balloon payment came due or the mortgage interest rate expanded.
For the holders of mortgage bundles or derivatives based upon bundled mortgages, the decline in values in markets further depressed the value of their holdings. As more defaults and foreclosures happened, the valuation of mortgage securities declined. Meaning even if a mortgage bundle had no CRA mortgages within it, the market for existing real estate as it declined inherently made the bundles less valuable.
So anyone who says the mortgage loan practices of the federally backed home ownership programs, or the clearinghouses of Freddie and Fannie, or the fact that the community reinvestment act loans has nothing to do with the collapse nationwide of the mortgages and home lending business cycle is smoking something funny.
Are there other things that have contributed to the current recession? Yes. But considering the slice of the economy represented by the housing industry, when that industry gets hit with the negative effects of a government policy, the fall out will be massive.
By way of example. What if the Congress had initiated a "everyone gets car financing" plan? Suddenly lenders and auto dealers would be chomping at the bit to participate in the government's policy plan. But eventually, a lot of people would have car loans they cannot afford. The holders of those loans now find that they cannot turn them into secure assets that can be commoditized. Which then gets further compounded by the fact that now lots of people are having their cars repossessed. And a lot of other people who normally could get a car can't even get the financing. At that point you would have the big 3 coughing and wheezing.
Thing is the collapse of the housing market hit the financial sector so completely that it dried up any credit for day to day normal activity. So you have seen it transfer over into consumer credit markets. You have seen it trickle over into durable goods purchases. You have seen it cause a situation where automobiles cannot be purchased by average consumers.
This whole collapse was the fault of Bush not vetoing the measure. Even though he opposed the bill's expansion. It is also his fault in that he did not use the Federal Reserve board and the SEC to adequately investigate the degree of holdings the nation's top banks had in securitized commodities backed by mortgage derivatives. He could have stopped this 18 months ago. He didn't.
And it isn't as if he didn't realize the tidal wave was coming because even the people on the internet knew something was up.
The CRA compliant banks are coming out fine because most are local, small and sold the actual mortgages to Freddie and Fannie who in turn sold them to the investment banks and derivatives brokerages. To say that the CRA banks are "fine & dandy" avoids the reality that they already took the origination fee and didn't hold the paper anymore- often within a day of each closing. The evidence is that the government policy, served and implemented by small local banks became a poison which turned the investment banking industry on its head.
Saturday, February 28, 2009
Government Action Creates Fair Markets
Actually, it wasn't the government that collectively set labor and health standards. Or for that matter, determined a scope of week weeks, child labor, retirement pensions, profit sharing, or even basic human resource benefits. It was rather the chief efforts of the labor union movements that grew out of the 1870's industrialist cartels and the advent of yellow journalism that brought the excesses of the industrialist cartels to the attention of the emerging middle class.
This point has been argued often and conclusively on Ornery to the point that even people who have strong misgivings or even oppose the current unions today have to admit that the work environment enjoyed by everyone is primarily the result of union activities from the 1900-1950 time range. It was only after unions became a strong political force that the government codified what had already been won by unions for everyone. OSHA would not exist had there not first been unions operating in the private sector demanding employers pay attention to worker safety rights.
As to government reductions in poverty, the CBO has oft notified Congress that the impacts of the social programs that originated with the Great Society have at best plausibly stemmed some poverty. But the unvarnished truth is that the social programs started by and maintained by the government have had no impact on poverty. The periods when people tended to do best more recently include the Reagan, Bush, and Clinton tenures where the growth of the economy combined with reduced social spending actually raised the living standards of the poor in the country and even managed to get people to move beyond Federal poverty standards.
The issue isn't whether the government can mitigate the needs of people on a temporary basis. Because the government can. Look at Katrina and Rita as examples. In unusual circumstances where a free market cannot function, only government action can restore a market and maintain a population until the market recovers. But then again, look at the Katrina and Rita policies that have allowed people to live rent free ever since the hurricanes until now. The unintended consequence of government emergency aid is that the people receiving it often delay or do not even attempt to remove the need for such aid. If you haven't recovered from Katrina or Rita by now, it isn't because the free market has not recovered. It is because you have learned that by your own inaction, the government will secure your needs for you.
What this spending plan amounts to is a mechanism by which disputed or redundant public policy spending items have been bundled together into the ultimate wish list. Cheifly, the items contained in it are those spending items that have Democrat advocates supporting the agendas that are the basis of such spending items. Whether it is a local pork plan to widen a road, build seafaring canoes in Hawaii, or give block grants to ACORN- the majority represents plans and spending agendas that predated President Clinton's declaration that the Era of Big Government was over.
If even Clinton thought these types of spending plans were bad, how then can we now see this jump-start of all things government to be good? If the Patriot Act was a direct attack on our personal freedoms, then surely the stimulus packages of the last 8 months has to represent a direct attack on our market economy and the level of government control that will accrue during the planned disbursement of funds from these plans.
Saturday, February 21, 2009
Making Choices
One of the biggest concerns when making a decision that represents a major change in life is obviously how it effects both yourself and your family. The biggest decision we ever make in our lives is the one we make upon the realization that we alone are responsible for our own choices. Before you ever make any decision of import, you have to first recognize it inherently lies within your own make up the ability to make such a choice.
Many people never reach that point in their lives. While many people wake up one morning with the idea that they can indeed decide for themselves what to do in their lives, many more people probably never make it to that point. It is still not uncommon to come across people who have never left their birthplace or childhood home. They are born, raised, live, and eventually die in the same place. Often these people never make a conscious choice to do so. Rather, the inability to make a choice of life altering consequence is abrogated in exchange for a continuity and ease. It is often easier to make no choice and simply accept what comes to a person without effort.
I am not trying to say that people who never leave their place of origin are all universally incapable of making a life changing decision. The fact is often those people have come to the individual choice that their life altering decision is to indeed remain close to their origin. But the examples offered by many people who never make a major life altering choice are cases such as not wanting to risk making the wrong choice.
It is a big deal to choose to leave home for college for example. The choice to get married. The choice to move from one state or region to another. The choice of leaving a family business for a far flung dream. In these examples, you have a case where the alternatives are often easier and often require no effort on the part of the person making them.
By way of example I offer my sister in law. She and my wife are close in age. They grew up in Warner Robbins, Georgia. Very small military town with little else in the way of culture or uniqueness apart from service industry jobs and the occasional high school football game. Do not think that I consider living in a small town to be silly or provincial. Rather, understand that what I am trying to impart here is her adoption of a small vista by default. There isn’t much to the town except a single street with strip mall after strip mall filled with services that focus on the military community. There are indeed great people who live there by choice. But my sister in law lives there not by choice, but instead she lives there by default.
Yes, her parents live there. Yes, she still lives with some of her friends she grew up with. But when she had the opportunity to make a choice to expand her vista she neither chose to implicitly attempt to expand them or limit them. In a sense life just happened to her. She chose to go to a small college and live at home with her family because she didn’t even consider applying anywhere until it became obvious that her sister who did choose to leave home was becoming a successful college student far from home. She even chose her profession by default.
Many of her choices were not choices at all but rather emulation of her sister on a small scale. She bought a house when my wife did. She bought a car when my wife did. She became a nurse because my wife did. She even planted roses and put up a fence because my wife did. What is really creepy is when she found out that my wife and I were announcing our engagement at Christmas, she went from being the world’s best spinster to not only having a boyfriend, but also being knocked up in the space of two weeks. What is even creepier is she found a man with the same last name as mine.
But I digress. My point in bringing her up is that she is a prime example of a person who has never actually thought about, planned or in any way managed her own choices. The emulation of my wife’s choices by her sister is pathetic ultimately because my sister in law wasn’t making these choices out of personal striving but rather to maintain parity on some level with her sister.
Now compare that to how my wife did things. She chose to leave home because she realized that the world view of her family and by extension her little town was insular at best. She took the huge risk to leave home and rely on herself. She chose to be a nurse in a very difficult arena, namely intensive trauma care. It is very different from being a simple floor nurse. It is also something that you must intentionally try to get the credentials for. My wife chose to buy a house because she wanted to have something to show for her efforts while she decided what she should do next in her career.
Of course she didn’t plan on me or Alex coming into her life. But ever since I have known her, the degree of thought and the depth of planning she takes towards all things in our lives is profound. When we discuss her family and her sister, it is often with regret. The regret is that they assume incorrectly that we plan for nothing and they resultantly say and do things that make our choices seem inferior.
Fact is at this point we let the results of our choices speak for themselves.
Obviously, and especially, in the last few months we have had to make many choices of great weight since the fire. And in those choices almost every one of them were ultimately decided by how it will effect our son. For us, the consideration of either my wife’s parents or my own are simply not an issue. It would take too long to adequately explain why they are of minimal importance. The fact remains however, that when we make a decision our own parents aren’t a concern.
Without giving you a list of things we decided to do and not do, I will instead offer you the guidelines we used. The first was whether our choice would enable our son to have more options than we had with our own lives. The second was would the choice give him stability to be able to independently choose his own path in life. The last was would the choice make our family stronger both now and in the future.
It really was that simple.
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