Miscellany: 2/07/11

Quote of the Day

If truth is beauty, how come no one has their hair done in the library?

Lily Tomlin

Excerpt of the Day:

Vedran Vuk: "Some Thoughts on the 2008 Crash"

I have said the exact same thing in my own posts:

The Left often blamed the crisis on “the policies of the last eight years.” This always makes me think, “Well, what policies specifically?”...The “last eight years of policy” quote shows how ignorant the Democrats really are about business cycles. It’s essentially like saying “Some stuff from the past eight years caused this, but we’re really not sure what the actual problem is.”

What policies? Is the emperor wearing clothes? How many times have the mainstream media let Obama and other Dems' preposterous, nebulous talking point go unchallenged? Did Bush do something to keep the accountants from doing their job? State bank regulators? Credit bureaus? The Fed? Did Bush propose or sign follow-up deregulation legislation? No, our vacuous Chief Executive is simply dismissive ("last 8 years of policy"), as if we should readily accept his scapegoating as "self-evident truths" instead of intellectual laziness.

Vuk points out that illusory, artificially low interest rates were the province of Greenspan/Bernanke, not Bush. (Obviously, Presidents aren't going to look gift horses, like low interest rates, in the mouth.) The GOP did not encourage the growth of the government-sponsored duopoly (Fannie Mae/Freddie Mac), implicitly putting taxpayers on the hook, and it wasn't responsible for the CRA, encouraging home loans to more risky applicants; Bush didn't pass 1999 financial deregulation (re: derivatives and swaps).

Does that mean the Bush Administration is beyond criticism? No. It was passive, not proactive. Perhaps it's easy to do Monday morning quarterbacking. We should have been more skeptical of wealth being created from money versus real growth in products and services.We were clearly in the late stages of the real estate cycle, speculation in the market was rampant, the quality of loans was deteriorating, and government policies were counterproductive, transferring risk from the private to public sector. Bush did make a half-hearted effort at reforming the GSE's (after the accounting issues), but he didn't do enough to mitigate public risks or streamline and/or reform morally hazardous regulations.

But I think the Dems protest too much: for one thing, one or both chambers of Congress were controlled by Democrats for 4 of Bush's 8 years in office and hence had the opportunity to investigate relevant agencies, entities and the Fed. The fact that the Dems assume that the American people will overlook the indisputable fact they shared power with Bush is audacious.

Bing West: Obama's Mubarak Overreach: Thumbs UP!

This short article does an excellent job analyzing Obama's diplomatic blunder in prematurely throwing Mubarak under the bus after the Egyptian President had just announced that he would not run for reelection. I had mentioned similar and other points (e.g., the protesters would view it as too little, too late); West also mentions recent history of Democratic Presidents bungling coups: Kennedy in South Vietnam and Carter in Iran. However, it's West's pithy critique of Obama's "what were you thinking" moment that drew my attention:

Obama’s peremptory command of dismissal to a ruler who has been America’s staunch ally for 30 years was a geostrategic blunder on three levels. First, it signaled American arrogance; the White House presumed to tell another country’s leader what to do. Second, it guaranteed that Mubarak and his government, for however long they endure, will be less cooperative with us. Third, it unsettled our non-democratic allies throughout the Middle East. Since Israel is the only established democracy in that region, Obama’s command has unsettled the leadership in Morocco, Jordan, Qatar, Kuwait, and Saudi Arabia.

Biggs & Richwine, "Yes, They're [Federal Employees] Overpaid": Thumbs UP!

This note gets a bit into the weeds, discussing some of studies and certain methodological distinctions. I've written a number of segments on this topic in past posts. But there are a couple of points in this article which I would like to highlight. First, there was a discussion of the structure of compensation. The basic idea is, all things being equal, risk-weighted compensation in the public sector is less than in the private sector, we should see the government finding it hard to staff positions and government workers jumping ship to join the private sector. Clearly that's not true in general. We also have the circumstance where the federal government in the 1980's transitioned from a defined-benefit retirement plan (an old-fashioned pension) to a defined-contribution retirement plan (e.g., 401K/403B). Defined-contribution plans limit organizations' exposure to soaring baby-boomer retirement costs. So if we buy the idea that federal pay is artificially low because the real compensation is in retirement and you lower the contribution of the government, then we should have seen retention rates worsen (but, in fact, they went up).

Second, there was an interesting little study where new hires (e.g., postal workers) were asked to report prior compensation--and the private sector compensation was roughly 25% lower. It's intuitively obvious why the application rates are so high and turnover is lower, relative to the private sector.

I personally know 5 people (if not more) whom joined civil service--and almost all of them waited some period of time before they were finally accepted. Three of them have not earned college degrees (and at least one of those has migrated to a more white-collar/managerial role). I don't have a problem with people taking advantage of the employment opportunities available to them; it's the American way and demonstrates initiative. On the other hand, as a taxpayer, I have no doubt, except at some very high levels, generous compensation is pushing on a string, and in many (if not most) cases, you would have a strong supply of applicants even at compensation rates 20% lower.

Congratulations to the New Nation of South Sudan!

The referendum was overwhelmingly in favor of independence; the principal issue now is negotiation of revenue split from the oil reserves, primarily in the south. This is subsequent to a 2005 peace agreement following a civil war that claimed two million casualties. (Note: the disputed region of Darfur is in the west of Sudan). President Obama indicated that the US will recognize the new nation by July; the US government is looking at removing Sudan from its blacklist of terrorist-supporting states. Southern Sudan is desperately poor, with many people living on under $1/day.

Small Brazilian Boy Personally Greets Pope Benedict XVI

Jesus said, "Let the little children come to me, and do not hinder them, for the kingdom of heaven belongs to such as these." (Matthew 19:14)

Very charming! Viva il Papa!

Done Too Soon: A Canadian Life Well-Lived

Maddie Babineau: Beliefnet's Most Inspirational Person of 2010

Political Humor

A few originals:

• New Egyptian finance minister Samir Radman insists that the 15% pay raise promised to Egyptian government workers is not "bribery". He is correct; bribery is what the workers have to pay in order to enter government buildings...
• Some anti-Mubarak protesters were heard shouting "Down with America" after the US backed off from immediate transition.of the Egyptian government. It seems like there are birthers among the protesters, demanding Mubarak's birth certificate and claiming as an alleged American, Mubarak never had a right to be elected Egyptian president in the first place....

Musical Interlude: My Favorite Groups

The Bee Gees, "The Edge of the Universe". In the aftermath of Peter Frampton's monster live LP, the Bee Gees released their own, and this was their single off the album, a classic taste of their signature fusion of melodic hook and brilliant harmony.

Miscellany: 2/06/11

Quote of the Day
The greatest thrill known to man isn't flying--it's landing.
Author unknown

Congratulations, NFL Champion Green Bay Packers!

This was one of the best Super Bowl games I've ever seen as the Packers won 31-25. The Packers dominated the first half, but the Steelers battled back (as Packer receivers dropped several passes) and then got clutch two-point conversion in the fourth quarter to close within a field goal. But the Packers clicked on a clutch final drive and score, and the defense shut out Pittsburgh the rest of the way.

I did root for the Packers, although I am a fan of a divisional rival which didn't make the playoffs. I remember being friends with this boy, an avid Packers fan (after the Lombardi era), whom lost his father in the Vietnam War. I rooted for my friend's happiness. (By the way, no, I never attended a Packers game during the 3 years I was on the UWM  faculty.)

President Ronald Reagan's Centennial Birthday Celebration



It's one of the things that liberals or progressives never understand, and we saw it briefly reprise during the recent mid-term campaign cycle, when newly nominated Senate candidate Rand Paul almost sabotaged his own candidacy by revisiting the Civil Rights Act of 1964.

The question is--when do we use government authority to compel people to be virtuous? We often do things that are arbitrary; for example, school kids often want to be in the popular clique;  many single women apply a minimum height requirement or may be attracted to men of power or means; men often choose women based on looks. What about various associations with selective criteria--say, gender, religion, race, etc? Progressives constantly add to an ever-expanding list of legally enforced rights for victim groups discriminated against: race, ethnicity, gender, sexual orientation, size, age, etc. We had Prohibition; we have zoning restrictions; etc.

One of the things I never knew about Ronald Reagan was the fact that during his salad days in Dixon, IL, he took exception to the fact that a local inn refused to admit blacks, and he would bring them to his folks' home where his mother not only put them up but served them breakfast in the morning. After his eventual conversion from an FDR liberal Democrat to a conservative Republican in 1962, Reagan had some principled reservations to certain civil rights policies, e.g., if a home-seller decided to discriminate by arbitrary restrictions on potential buyers (e.g., race). In the mind of most free market/classical (economics) liberals like Reagan and myself, arbitrary restrictions are counter-productive (and people have a right to be stupid and leave money on the table); they limit the number of competitors and a robust bidding process. If a grocery or hotel discriminates against people of color, it provides a natural incentive for competitors with more enlightened, inclusive policies. Ronald Reagan would eventually make pragmatic concessions to specific policies, given his principled support in favor of individual rights.

I did not support Ronald Reagan during the two Presidential elections. Like Ronald Reagan, I had my salad days as a liberal Democrat with some eclectic exceptions (I have always been pro-life, pro-defense,  and a fiscal budget hawk), but as I began work on my MBA in the early 80's, I became more principled in support of free market principles and pro-growth policies (to the point one of my non-partisan professors commented that I came across as overly strident in one of my papers). I was not happy with what I considered to be a betrayal of fiscal conservative principles under President Reagan and cast a protest vote. As any faithful reader of my blog knows, I finally broke with the Democrats over their dishonorable sabotage of Robert Bork's nomination to the Supreme Court.

Of course, President Reagan was a consequential President. His low-tax message has been transformative; he was an unapologetic promoter of the free market and traditional American values. His cheerful, optimistic conservativism connected with the American people, and 30 years after his election to the Presidency, almost every prospective GOP candidate for next year's Presidential election will duly pay homage to his memory today.

Is there a true successor to President Reagan among potential contenders  in the GOP today? No--not from my perspective. Today a Presidential candidate who would agree to raise payroll taxes to shore up social security or Medicare or pass immigration reform would soon find himself  declared a "RINO" by media conservatives. Reagan had to compromise, having dealt with one or both chambers controlled by Democrats; some of the long-cherished goals to shrink government (e.g., abolish the new Department of Education) were never accomplished.

And these reports of Barack Obama reading books about Ronald Reagan, perhaps seeing himself as a Democratic version of Reagan? Give me a break! They both have been great communicators, but there are marked differences in style and approach. Consider the incessant  Bush bashing by Obama and others and  contrast with this observation from Airoldi:

As an example consider the word Carter: our prior idea about Reagan's style suggested that Reagan would seldom talk about his opponent, Carter, his line of attack being more subtle. He would mostly address the government or capitol hill people and similar figures instead...

Steven Hayward wrote the following, also discussing to what extent Reagan made use of ghostwriters during his prolific post-gubernatorial period:

In 1975, Reagan began a twice-weekly newspaper column and a five-day-a-week syndicated radio commentary that was carried on more than 300 stations, reaching an estimated 20 to 30 million listeners...Over five years, Reagan broadcast 1,027 commentaries; the Andersons and Skinner discovered Reagan's handwritten drafts of 682 of them. It is likely that Reagan wrote even more than this...He cast a wide net for information, and went far beyond generalities to discuss the inner workings of obscure government programs and regulations...Stitched together, these serial commentaries offer a complete teaching on issues such as inflation, tax policy, welfare reform, the environment, and foreign policy. The remarkable range and depth of Reagan's writings suggests that he was arguably the best-prepared person to enter the White House in modern times. This was not a person who needed to consult polls and policy wonks to decide what was important or what he should think.

We don't see in Reagan, for instance, Obama's Johnny-come-lately response to skyrocketing oil prices or jawboning AIG executive bonuses, his newfound respect for the Second Amendment AFTER the Heller v DC and McDonald v Chicago decisions, the long-delayed decision on the Afghanistan surge, subcontracting his agenda to Congressional leaders, or the inept handling of the BP oil spill and the Egyptian crisis. Certainly Reagan's "evil empire" speech and provocative challenge to Gorbachev "to tear down [the Berlin wall]" were inconsistent with Obama's diplomatic style of interpersonal dynamics.

If anything, I consider myself a lot like him, in the sense we both evolved from a liberal Democrat perspective and became conservatives, are consumed by intellectual curiosity and prolific, have good senses of humor, and are principled but pragmatic. But before anyone gets the wrong idea, I'm not claiming to be a second Ronald Reagan; I'm satisfied with being Ronald Guillemette. Other than some core beliefs, the only thing we have in common is our given name. I have faced adversity in my careers (anyone who really is good at what he does will face adversity; only the inconsequential individuals are ignored--which leads to the paradox of Sarah Palin. For some reason, she has gotten into progressives' heads. I think this has more to do with the fact that John McCain's choice of her as VP totally swerved the media and progressives.) I've mentioned the only thing I've been elected to was head of altar boys as a teen and I needed my younger brother's support to get that.

After Goldwater's blowout loss to LBJ in 1964, it seemed as though conservatives were finished as a political force. Who could have known that a congenial former actor would invert the landslide just 16 years later and establish the dominant political paradigm for the next 3 decades? Happy birthday, Mr. President.

Christina Aguilera Screws Up 
the National Anthem at the Super Bowl

Check out the fourth line...



Some Follow-Up Notes on the Egypt Crisis

I have been rather disgusted by the Obama Administration's amateurish handling of this crisis. I have no doubt that President Obama will try to argue that his response for an immediate transition (after the Mubarak announcement that he will not be a candidate for the September election) didn't necessarily mean the imminent resignation of Mubarak, but his response was viewed exactly as I predicted, as Hillary Clinton subsequently tried to correct the notion that the US is interfering with Egyptian internal affairs. Frank Wisner,  former US ambassador to Egypt, an envoy on Obama's behalf, although making plain he wasn't speaking for the Obama Administration, underscored the criticality of Mubarak for upcoming transition activities. In the meanwhile, Mubarak has continued to transition his way out of office, noting his son will not be running for President either, and subsequently dropping his membership in the ruling party.Clinton now suggests that Mubarak might be needed to transition things to the September elections, noting under the Egyptian constitution Suleiman would not assume the presidency on Mubarak's resignation, and a new Presidential election would be necessary in a few weeks, leaving little time for political parties and a political campaign.

Although I have previously expressed my support for letting Mubarak fill out the remainder of his term, this does not mean that I support the authoritarian nature of his rule or his record (beyond his honoring the peace treaty with Israel and his support during the War on Terror). In fact, I'm rather dismayed by the fact that at least 8 members of Hamas somehow managed to "escape" during the crisis and return to Gaza. There is no doubt in my mind Mubarak was sending a message to the protesters--and to the international community--how important he is, over the coming weeks, in keeping Egypt from descending into chaos.

Political Humor

"Secretary of state Hillary Clinton said regarding the crises in Egypt that the Obama administration is not advocating or working toward any specific outcome. Same policy they had during the economic crises. Just kind of go along and see what happens." –Jay Leno

[President Obama was about to dig into his foule and taamiya (beans and felafel) for breakfast when an aide pointed out that it was Hosni Mubarak's favorite dish. To avoid sending the wrong signals to protesters, Obama decided to skip breakfast, explaining that he needed to lose an extra pound.]

An original:

• Fans attending today's Super Bowl will get screened similar to what is done in airports. No word on whether NFL referees will be around to flag illegal use of hands by the screeners.
• What disturbs Julian Assange more--the fact that the Swedish sex file on his alleged rapes was leaked online or WikiLeaks didn't release it first?

Musical Interlude: My Favorite Groups

Bee Gees, "World". One of my all-time favorites to sing. Glorious arrangement and harmony; soaring chorus. (Pop artists today don't have a clue as to how to write tunes like this one.) The second is a reprise medley performance (including my favorite Bee Gees' oldie, "Run to Me") by the post-disco Bee Gees.

Miscellany: 2/05/11

Quote of the Day

I think the purpose of life is to be useful, to be responsible, to be honorable, to be compassionate. It is, after all, to matter: to count, to stand for something, to have made some difference that you lived at all.
Leo C. Rosten

An Interesting Twist on the President's State of the Union Address:
A Retrospective Commentary

Doug Hornig of CaseyResearch.com (archives of the Daily Dispatch are here) basically suggests that President Obama co-opted the GOP reform agenda by preempting GOP talking points, putting himself of getting credit for whatever reforms are enacted:

Consider the back story: here’s a guy whose policies have just been repudiated big time. The opposition is flying high, sharpening its knives...Obama went on the attack, and he did it so stealthily and with such a velvet glove that the GOP may not yet know what hit them…What wasn’t expected is that in one short hour this paragon of liberalism suddenly, unexpectedly, got reborn as a conservative. Just have a look at this laundry list of the things he's belatedly discovered he’s all for: repealing the bad parts of the health care bill; removing unnecessary regulation from business; cutting corporate taxes; simplifying the general tax code while closing loopholes; eliminating superfluous government agencies; tort reform; and even, yes, tinkering with Social Security, the formerly untouchable third rail of Democratic politics...Does this sound familiar? It should: Obama just stole nearly the entire Republican playbook...he's gonna preempt them and take credit for it all himself. In fact, now if the GOP doesn't get what it wants, he can blame that on them, too.

I don't think so, but nice try, Doug. This is Obama as usual; we've been there, done that: he pays lip service, willing to give a token concession--of his own choosing, not negotiated. Remember the Obama whom first rejected offshore oil production off the coasts, but then (after oil surged past $140/barrel) was more receptive to the idea? Of course, it took him more than a year to open up some acreage: but not north of New Jersey, not at all off the West Coast, several areas in Alaska were off-limits, and in the Gulf you have to drill several dozens of miles off the coast. And then when the BP spill occurred, despite of thousands of prior offshore wells without a similar incident, Obama used the incident to rationalize a sweeping moratorium that didn't even have the concurrence of his own advisors.

The 111th Congress, heavily Democratic, could have done any or all of these things; where was Obama then? Tax simplification or regulatory reform from the guy whom signed two-thousand page bills on health care and financial regulations? If he was so keen on the impact of regulation on small business, where were the impact analyses in the first place over the 1099 paperwork? Why were the Democrats unaware of the fact that hundreds of businesses and unions would apply for exemptions, that the law would endanger current private-sector retirement benefit financing? And Obama specifically addressed tort reform BEFORE the House voted for the corrupt Senate bill, but tort reform was not part of the final package.

When you listen to Obama give a speech, you better have a lawyer around whom will read the small print: is it just a coincidence that the case he made of loopholes involved incentives for domestic oil and gas companies? Has he sworn off tax loopholes and/or subsidies "investments" for green energy? He's really talking about raising costs for fossil fuel development and production companies, which  in the long run really get passed onto the consumer and don't do a constructive thing about making us less dependent on foreign suppliers of carbon-based energy.  And keep in mind while he constantly demagogues against "special interests" and lobbyists, he was meeting with executives from the pharmaceutical and medical device industries, AARP and physician groups, not to mention his heavy-handed involvement with banks and auto company bailouts. He's willing to talk about social security, but making young adults today more self-reliant and less dependent on the government for retirement planning is off the table...  This is simply the same old, same old Obama whom picks winners and losers, whom doesn't understand the meaning of the term 'shared sacrifice'.

What did the American people get for the two years of Democratic control of the federal government? Well, last year, one of every 7 persons was on food stamps, bankruptcies and foreclosures were setting records, and home prices continued to trend down. What was Obama doing to provide domestic companies more of an incentive to invest domestically? Did he make corporate tax rates more globally competitive? Did he relieve them of costly, ineffectual regulatory burden?

I think all the moderates and independents know Obama by now, and they realize, even with GOP-controlled House, the GOP doesn't control the Senate, and there are more than enough Democrats in the House or Senate to sustain a Presidential veto or filibuster any bill in the Senate.

I haven't said much about the GOP response(s) to the State of the Union Address. As for Michele Bachmann: the transcript seemed to be little more than a rehash of the rhetoric leading up to the mid-term elections. Yes, we know about the "tax-, spend-and-regulate" Democrats whom seemed to be oblivious to how the impact of their agenda on the job creator class. But cap-and-trade had no chance in the Senate, even with a super-majority, a balanced budget bill would require Republicans to tax or cut some $1.5T with 9% unemployment. I would have taken a different approach--I would have pointed out that one of the biggest line items in the budget is servicing the debt, and this will get worse if and when the Fed has to raise rates to control inflation. I will point out the social security and Medicare are two of the most rapidly growing expenditures with an aging population, and if we don't make the hard choices now, we will leave nothing to our children but unsustainable bills  in a tough global economy.  I would have pointed out that not only did the Democrats fail to proactively address entitlement reform in the last Congress, but they put existing programs in danger by taking unlikely cost savings in Medicare and using it to fund another unsustainable entitlement.

Michele Bachmann just comes across as overly strident and shrill. This plays very poorly against Obama's smoother style and intentional ambiguity; she would have been better served to have sounded less as the direct bad cop and more empathetic to the plight of the poor and unemployed, pointing out that the Democrats' scope creep into the middle class is not only unsustainable but puts the programs themselves at risk. What Obama is doing is not leadership: it's punting the tough decisions to an administration after his.

Paul Ryan came across as a policy wonk; this, too, lost most of the audience. I think a more effective response would have been a mirror response of Obama: I would have explained how Republican initiatives are providing great economic and retirement security and a more efficient safety net. I would have directly seized on the President's metaphor of a Sputnik moment, suggesting that progressive policies are endangering American innovation with undue burdens on entrepreneurs and businesses  (including the uncompetitive, expensive, regulation-happy, lawsuit-prone culture), even more than in China, a Communist nation; I might have congratulated the President (better late than never) for coming around to GOP policies promoting simpler, fairer tax reform, streamlining government agencies, and reforming local school monopolies. I would have pointed out that Medicare and social security comprise a large plurality of federal outflows, and the President's address lacked any specificity on how to shore up those entitlements.

I myself have been quite critical of President Obama at times, but he does a very good job of anticipating and playing off an admittedly all-too-predictable opposition and has learned to use a calm, positive personality and a pseudo-centrist perspective to marginalize his opponents. What Bachmann and Palin haven't yet realized is that one must be able to target independents and moderates, not just the base. A successful GOP Presidential candidate next year must be able to present a positive agenda, project a Reaganesque optimism and use Obama's own tactics against him.

Salmon: Going Beyond Omega-3's

This is the second topic over the past week which should really be a topic in my nutrition blog. As you may recall, Obama used the specific example of salmon being handled by agencies based on the type of water they are in. This is used to illustrate what whistleblower.org refers to as regulatory chaos. They note that different agencies handle items on a typical dinner plate: meat vs. fish vs. produce; inspection frequency and applicable fees vary by type. The organization wants to consolidate food oversight in a centralized, accountable agency, with consistent inspection policies and independence of inspection and its funding.

I have for some time advocated streamlined government processes; this, of course, is not the first time that the complexity of redundant, superfluous agencies has come under question: for example, 9/11 revealed certain discontinuities, e.g., between the FBI and CIA, and even the incident of the underwear bomber reflected lack of integration between the State Department and DHS.

Political Humor. Just a periodic reminder you can find copies of recent late night jokes on websites like Giglish, about.com, and newsmax.com.

"The Dietary Guidelines for Americans for 2010 just came out. The government says if people want to lose weight they need to eat less. And to think people say the government is useless." - Alex Kaseberg

[Unfortunately, the only ones who read the guidelines were the anorexics.]

"President Mubarak came out of the presidential palace today and saw his shadow; six more weeks of rock throwing." – Jay Leno

[However, Mubarak's shadow refused to take advantage of the large crowds in Tahrir Square in order to request their votes in this September's Presidential election.]

Musical Interlude: My Favorite Groups. I am starting a new series based on some of my favorite artists. The first group I'm selecting is the Bee Gees. I try not to duplicate songs, and I've previously featured favorites like "Fanny", "How Deep is Your Love", "Run to Me", "How Can You Mend a Broken Heart", "Lonely Days" and "Tragedy". My first selection is a song I referenced, but did not embed, in a prior post.

Bee Gees, "First of May"

Miscellany: 2/04/11

Quote of the Day 

Tis the business of little minds to shrink, but he whose heart is firm, and whose conscience approves his conduct, will pursue his principles unto death.
Thomas Paine

Jobs, Hype, and the Equilibrium Rate

Remember how much Congresswoman Debbie Wasserman-Schultz has gone around for months crowing about how Obama gained more jobs last year than Bush over 8 years of his administration (with 4 of those years having the Democrats in charge of the Senate and/or the House)? Revisions have a way of coming around to bite you; Bush gained just over 1 million (keep in mind Bush went through a tough first 2 years inheriting the recession following the Internet bubble burst, not to mention 9/11 and the corporate scandals, and of course, the recession started in December 2007). Of the 8 million jobs lost during the recession, roughly 4.6M occurred on Bush's watch. The new numbers show 950,000 added last year, considerably shy of one million.

Now, of course, expect the Democrats to trumpet going to a 9% unemployment rate, the biggest 2-month drop ever in the rate. But before you celebrate that, you need to know the number of new jobs only amounted to 36,000 new jobs; depending on the source, the rule of thumb is that 110,000 to 150,000 a month is needed to sustain an equilibrium in the labor force, e.g., new high school/college graduates entering the job market. (The lower Fed counts, even as low as 100,000, reflects the effect of earlier retirement.) Obama is still roughly 3M jobs in the hole during his tenure--never mind recover the 4.6M since the recession started. So what is the difference, with 14M unemployed? Basically a larger number of discouraged workers left the labor force (i.e., are no longer actively looking for work) and hence are no longer counted in the official statistics.

A Note on the Endangered Palin Accomplishment List

Sarah Palin's signature achievement is that she managed to do something other predecessors had tried but failed to do--land an agreement for a natural gas pipeline from Alaska to the lower 48. But a funny thing happened to soaring natural gas prices and domestic shortages: natural gas "fracking", especially on subterranean shale, has better than doubled the US proven resources, a 100-year supply, allowing the US to overtake Russia as the world's leading producer; an increasing supply of natural gas on the domestic market has led prices to plunge, making it more difficult for Alaska and its pipeline partner (TransCanada) to find enough customers to make the pipeline project economically feasible. The Alaska legislature is already looking to possibly cap up to a $500M obligation on front-end costs for the projects.

Egyptian Vice President Omar Suleiman Target of Assassination?

Shortly after Suleiman was appointed to his new position, there was an attack this past Monday on his motorcade, killing two of his bodyguards. This is an ominous warning of what could be in store for an interim administration if Mubarak is forced into resigning ahead of the end of his term in September. Was it terrorists or even a cell within the military? There's not enough information available yet to comment. But let us remember, from our own history, what happened with the departure of military officers from the South, promised by Rutherford Hayes in the aftermath of a controversial Presidential election: a number of white Southerners attempted to intimidate poor blacks and whites from voting. In case the reader doesn't remember, recall when Iraq civilians voted, there had been explicit threats by terrorists to attack voters going to the polls. One should keep that fact in mind even if support for the Muslim Brotherhood has been modest to date.

Political Humor

It was so cold in Washington, D.C., that they needed jumper cables to get Dick Cheney started. - Jay Leno

[It was so cold in Washington, D.C., that the Democrats had to burn even more money than usual just to stay warm.]

The Chinese say the year is 4709, and we say the year is 2011. I’m just going to guess that they probably got the math right on that. - Conan O'Brien

[The Chinese later explained they use the year they estimate the US will finally pay off its debt to them...]

Yes, I realize we're just a month past New Year's, but I recently came across JibJab's year-end review and it's reasonably fresh...




Musical Interlude: One-Hit Wonders/Instrumentals

Herb Alpert & the Tijuana Brass, "Spanish Flea"

Miscellany: 2/03/11

Quote of the Day 

I believe that all government is evil, 
and that trying to improve it is largely a waste of time.
HL Mencken

Obama: Be Careful Of What You Wish For

I'm fascinated with current Fox News coverage of the Egypt coverage, which is heavily slanted in favor of the anti-Mubarak standpoint and sympathetic to those demanding the immediate resignation and/or exile of Mubarak.  I have also heard Fox News contributors from conservative journals National Review and the Weekly Standard  (on Hannity and Special Report, respectively) derisively dismissing the idea of Mubarak serving out the rest of his term. There are a number of related threads: downplaying the relevance of the Muslim Brotherhood; attempts to link violence to paid pro-Mubarak sources; the predominantly secular nature of the protesters, anecdotal violence or perceived suppression of the foreign press, etc. One of the recurring talking points is how former Secretary of State Condoleezza Rice's jawboning the Egyptian leadership over political reform years ago and contrasting that with the Obama Administration's low-profile approach. Where's the reporting of the fact that protest leaders are refusing to negotiate with the new vice president until if and when Mubarak has resigned in the short run?

To be sure, there are a few commentators, not exactly Mubarak supporters, expressing concern about the Muslim Brotherhood, a decidedly left-wing political agenda (e.g., so-called social justice), and the intrinsic high risk associated with early elections. But, and I'm astonished at how few journalists and commentators have reported on this, doesn't anyone remember how a slavish devotion to democratic principles resulted in the election of an Hamas government in the Gaza Strip and almost immediately a shower of rockets into Israel? And, in reference to the talking point about the alleged secular foundation of the protesters, the protests were triggered by Friday morning prayers?

I'm concerned about Obama's fair-weather-friend policy, almost immediately after Mubarak's announcing he would not stand for reelection, pressing for an immediate transition; it was an unconscionable treatment of a 3-decade ally which has provided a measure of stability in a volatile region of the world and an invaluable friend during the War on Terror. The press has reported that the Obama Administration is threatening to use military aid as a stick to interfere in Egyptian internal affairs (i.e., its preference in the nature of the transition).

What the Obama Administration is doing is not only inept and unproductive in the long run (e.g., unnecessarily pressuring the military: are there other places in the world looking to counter American leadership? Of course...), but by backing the Egyptian government into a corner, it is actually making the current situation more dangerous.

Consider the following  underreported post excerpt by ABC This Week's Christiane Amanpour:

In Tahrir Square, protesters had been telling us two things. Some were saying that President Hosni Mubarak's announcement Tuesday night, in which he announced that he would not seek reelection, was not enough and that he has to go now. Others told us that although they have protested against him, they want him to leave in an orderly fashion, with dignity.A majority, it seemed, were concerned that if he left quickly, the economy and institutions could collapse, resulting in an explosion of crime and violence. If Mubarak leaves precipitously, there could be real chaos. Mubarak's party had been sending a message on state TV regarding moves to restore law and order. The army, in a new statement on television, had urged the protesters to go home, "for the love of Egypt."

Amanpour then goes on to explain that the sentiment changed as pro-government supporters clashed with the protesters. In a subsequent exclusive interview, Mubarak echoes, in effect, the sentiments of the crowd above about anarchy if he left immediately. [For one thing, most Americans assume that the new VP would succeed Mubarak--not by the Egyptian constitution. So when the Obama Administration is pushing for the VP to succeed Mubarak, it is either incompetent in not knowing Egyptian law and culture, or it is meddling in internal Egyptian matters.]

Mubarak is a proud man, and I think any leader wants to leave with his dignity intact and wants a legacy to his leadership. Leaving with the nation gripped in chaos is not what any leader wants to leave office. What most people are discounting is the fact that the Egyptian military has been a source of leaders like Sadat and Mubarak. I think the military pressed Mubarak to announce he would not seek reelection (and subsequently that his son would not run for President).  For the most part, the military enjoys popular support with the Egyptian people.

What happens now? I can only speculate. It may well be decided tomorrow with the "Day of Departure" protests. The military may decide it's not willing to risk ongoing chaos and  its own public support to keep Mubarak in office another 8 months, find some constitutional way to make VP Suleiman the interim leader and possibly impose some version of martial law until the September elections.

The Rule of Law vs. Obama

US District Judge Martin Feldman yesterday held the Obama Administration in contempt for essentially reconstituting its drilling moratorium after the judge had ruled the moratorium unauthorized by federal law, a violation of the balance of powers.

Social Security and Number Crunching

Most project managers understand the impact of design errors: the longer it takes to detect a design error (e.g., implementation stage), the more expensive to resolve. A similar phenomenon exists with program estimates. It's impossible, of course, to know when the reserve will disappear because we would need to be able to forecast something like economic growth decades in advance. Some argue that even modest differences in GDP (say, from expected 3% to 2.8%) would push the day of reckoning even earlier than 2037.

Nostalgic Moment

Yes, I realize that we just celebrated Christmas over a month ago. (What brought this to mind is I got a recent email promoting a retrospective of Red Skelton, one of our beloved clown/comedians.) This utterly charming skit was on a cherished family Christmas album; to people whom don't remember the referenced Cold War (before the dissolution of the USSR), the skit is dated and obscure, but it could easily be reworked to reference, say, a materialistic, self-absorbed culture.



Political Humor

A few originals:

• Punxsutawney Phil just predicted an early end to winter. And Joe Biden told unemployed people to just "hang in there"...
  
• There was a record snowfall in Chicago this week. But that pales in comparison to the snow job the Democrats in Washington are doing in defending last year's health care plan and insisting chronically underfunded entitlements are in good shape.

Musical Interlude: One-Hit Wonders/Instrumentals

Thelma Houston, "Don't Leave This Way"

Miscellany: 2/02/11

Quote of the Day

I am extraordinarily patient, provided I get my own way in the end.
Margaret Thatcher

US Senate Rejects ObamaCare Repeal  51 Democrats to 47 Republicans

I had predicted in an earlier post that a repeal vote would fail:

I don't see any of the Democrats admitting their original votes were wrong. If they did, it would still be a reelection issue (I can just saw the attack ads now: Ben Nelson flip-flopped on healthcare.)

This may seem like an obvious insight: after all, the Democrats had decried the original House repeal bill as a gimmick, given the fact that President Obama would veto a repeal of his crown jewel legislation. But, in fact, repeal is probably the single greatest thing we could do in terms of long-term national debt containment, not to mention contributing to the unsustainable healthcare cost bubble. Using Medicare reform cost savings to bankroll other patients simply redirects attention away from the large unfunded liabilities of Medicare reserves themselves.

Here's the point: despite something like 800 exemptions being granted to McDonald's, unions, and other organizations, despite polls almost universally showing public support in favor of repeal, despite healthcare playing a major role in the mid-term elections, despite two federal judges already ruling at least part of the healthcare bill UNCONSTITUTIONAL, the Senate Democrats are digging in, only adopting a separate amendment lifting the business-despised $600-plus reporting mandate, as Obama himself has hinted on several occasions, including the recent State of the Union. The voters in 2012 now can judge their senators and President late next year.

Obama: Irresponsible on the Egypt Crisis

I'm really at a loss to explain Obama's heavy-handed attempt to pressure Egyptian President Mubarak, after Mubarak's national address explaining he would not run for reelection this September, to transition sooner rather than later. It was grossly incompetent.

I started an alternative critique of Obama's performance on the status of Egypt in yesterday's post:

Let me point out that a year and a half after Obama's worldwide address to Muslims, the Middle East has exploded in instability as a sort of contagion which has resulted just today in Jordan's King Abdullah II dismissing the prime minister and his cabinet. Just over the last few weeks: Lebanon, Tunisia, Egypt, Jordan, even Syria. (And don't forget the risks of the crown jewel of the region: Saudi Arabia). Since Obama or Clinton were obviously caught flatfooted, why was that the case? How effective is our intelligence, and how proactive has been this President's foreign policy? Over 2 years in office and how has he transformed the region beyond high-sounding rhetoric? Talk is cheap...

First, if the attempt was to appease his left-wing flank or the malcontent Egyptian protesters, that ship has already sailed. The protesters felt that the Obama Administration was two-faced, trying to play both sides. A Johnny-come-lately, throw-Mubarak-under-the-bus act after the protest, without Obama's explicit, unconditional support, yielded a critical concession from Mubarak not to seek reelection, comes across as opportunistic and self-serving and is viewed with contempt by the true believers.

Second, it's not clear what the payoff is for hastening Mubarak's departure. (The only reason I can think the protesters are pushing for Mubarak's immediate departure is because they fear that once the heat is off of him, he will somehow renege on his promise to leave office. The fact of the matter is that Hosni Mubarak will turn 83 May 4, and he had already delivered on a long-deferred promise to name a Vice President; in addition, there are already talks between the Vice President and opposition groups on reform measures) But hastening elections only helps highly organized groups, like the Muslim Brotherhood, normally achieving only 20% or so of the electoral vote, which is virulently against the existing Egypt-Israel peace treaty, and the small Christian minority is already being persecuted by Islamic militants. More importantly, it fails to acknowledge that there are pro-Mubarak forces, both within the military and in the general society as today's nasty battles between pro- and anti-Mubarak forces. Have we forgotten the lessons of  post-invasion Iraq? Many Iraqis preferred life under Saddam Hussein and feared change; they felt excluded from the future of Iraq.

In addition, Barack Obama's amateurish handling of the situation has undermined a bond of trust with our allies.

My Favorite Governor, NJ's Chris Christie:
Reality Check With Cop Complaining About Compensation



Political Humor

Chicago is expecting something like 20 inches of snow. In fact, today Rahm Emanuel said he's glad he doesn't really live there. - Jay Leno

[Well, Rahm did attempt to hire unemployed people to clear the snow away from his campaign headquarters, but they declined, saying they could make more in unemployment compensation than he was willing to pay them.]
.
Likely GOP Presidential Candidate Mitt Romney on David Letterman




Musical Interlude: One-Hit Wonders/Instrumentals

Love Theme from The Godfather

Miscellany: 2/01/11

Quote of the Day

A great pilot can sail even when his canvas is torn.
Seneca

You Read It Here First

In my January 19 post, I had this to say about Harry Reid's vow that the House repeal would never reach a Senate floor vote:

But let me point out that McConnell seems confident a vote will occur, and McConnell is not one to make idle threats. I do know that the House Republicans will have a lot to say about any legislation that gets to the President (including budgets and funding for ObamaCare), the large Senate minority has the ability to block almost any legislation Reid wants to pass and to offer amendments

In today's news, Minority Leader McConnell announced that he will offer an ObamaCare repeal amendment to an FAA reauthorization bill.

In Sunday's post I wrote:

I would look for a face-saving way for President Mubarak to announce his intent not to run for reelection, not now, but at some unspecified time of his choosing, prior to the next scheduled Presidential election.

Yesterday I said the following:

[The fact that the new Vice President Omar Suleiman is negotiating reforms with opposition parties] is a strong indication that Mubarak is de facto transitioning out of power; the only question is when, not if, he leaves the Presidency.

Today President Mubarak announced his decision not to run for reelection. I thought his speech under the circumstances was very classy, although a little defensive and self-serving at times. A number of protesters, of course, are not satisfied: they smell blood and feel that the momentum is on their side. They want him out now. I honestly think it is in the best interests of the country that Mubarak stay for a period of transition; it has nothing to do with not appreciating the pain that a large, poor population are dealing with in dealing with soaring food prices or the restlessness and sense of powerless in circumstances beyond their control felt by many, if not most Egyptians. Keep in mind Mubarak has just named his first VP and reshuffled his Cabinet; we are talking about changes to the Egyptian constitution and electoral reforms. Mubarak has strong connections with the US and Israel, and concerns about Islamist influence in an emerging government would put at risk relationships within the region and with Western democracies. It would be prudent to project some stability to the outside world and a smooth transition of power. Keep in mind that the American system provides 2.5 months between the Presidential election and inauguration.

Will President Mubarak actually stay in office until the new elections? Well, I remember last week I said I thought Mubarak might be able survive this challenge, but it was very clear from over the weekend that the Egyptian armed forces were not prepared to handle the crowds the way the Iranian theocracy brutally cracked down on the Green Revolution. At this point, I'm not sure that Mubarak will remain for the remainder of his term, despite my argument above. I suspect that the military or other allies might be willing to throw Mubarak under the bus if necessary.

What's curious is for many of the Fox News contributors and/or anchors (e.g., Charles Krauthammer and Bill O'Reilly), Mubarak can't leave fast enough. The populist Bill O'Reilly basically thinks Mubarak's decision not to run again (which was to them as obvious as my announcing I will not seek the GOP Presidential nomination next year) is the result of American pressure, and O'Reilly said that Obama should order Mubarak to leave right now. Yeah, Bill, portraying the Egyptian President as little more than an American puppet is a way of winning friends and influencing people in the Middle East.

There will be enough time to do a post-audit later, but let me point out that a year and a half after Obama's worldwide address to Muslims, the Middle East has exploded in instability as a sort of contagion which has resulted just today in Jordan's King Abdullah II dismissing the prime minister and his cabinet. Just over the last few weeks: Lebanon, Tunisia, Egypt, Jordan, even Syria. (And don't forget the risks of the crown jewel of the region: Saudi Arabia). Since Obama or Clinton were obviously caught flatfooted, why was that the case? How effective is our intelligence, and how proactive has been this President's foreign policy? Over 2 years in office and how has he transformed the region beyond high-sounding rhetoric? Talk is cheap... With oil now topping $100/barrel (at least North Sea oil). How does your anti-oil exploration stand sound now? Surging oil prices will sap consumer disposable income and could trigger another recession... Obama may end up hearing "drill, baby, drill" all over again.

Miscellaneous Notable Excerpts

• Health Care

Investor blogger Gary Shilling looks at healthcare costs:

Two major features of the current system almost guarantee explosive growth. First, most Americans don’t pay directly for their health care, which is financed by employer-sponsored insurance or the government through Medicare and Medicaid. That plus the fact that it’s “my life” that’s involved means that, except for deductibles and co-pays, there’s no restraint on usage. Many participate in what we call “recreational medicine”—take a day off from work at full pay to visit a physician, at employer expense, because of a minor ailment. Second, in paying for service plans, medical providers have many incentives to perform extra procedures because more office visits enhance their incomes. Defensive medicine with more procedures is also encouraged to avoid litigation over mistakes.

And, Mr. Shilling, what do you make of the smoke-and-mirrors accounting behind the Democratic Party Health Care Law?

But history suggests that the government is underestimating the growth in health care outlays. In 1967, the year after Medicare commenced, the House Ways and Means Committee forecast its cost at $12 billion in 1990. It turned out to be $110 billion—nine times as much.

• Oil Supply

Let's look at graphs of American oil supply (imports and domestic production):

• Public Pension Crisis

I've given past comparisons of federal and private-sector workers. Here's an example of the Michigan state versus private-sector workers (quoting financial newsletter writer Porter Stansberry):

Michigan Governor Rick Snyder published a 20-page report today explaining his state's budget problems in layman's terms. Michigan faces a $1.5 billion deficit for 2011. Total government debt is more than $70 billion and unfunded costs for pension and retiree health care adds another $55 billion.

What does Governor Snyder blame for Michigan's fiscal crisis? It's not that the rich aren't paying enough in taxes... It's public sector wages and benefits. Snyder's report shows the average state employee's wages increased 19% over the past decade while private sector wages fell 13%. Meanwhile, its workforce is aging, debt is increasing, and spending regularly exceeds income.

• Social Security

Finally, I picked up this excerpt from a recent dividend.com email:

As a country, we are getting older. In 2010, around 16% of the population is 62 or older -- and most are eligible for Social Security. By 2020, though, 20% of the population will be 62, and that number will swell to 30% in 2030! Where is the money going to come from to pay for the retirement benefits of so many additional seniors?

People's faith in the Social Secutiy system is rapidly dwindling. 60% of non-retired U.S. adults do not believe the Social Security system will ever pay them a single benefit when they do retire. Meanwhile, 56% of current retirees believe their Social Security benefits will be cut.

Political Humor

"A Washington Post columnist is proposing February be a Sarah Palin-free month. You know a better month? November 2012." –Jay Leno

[Sarah Palin rejects the suggestion that she give away her sage advice for free; after all, she has to make a living. Her appearance fees are rumored to be around $75K; she has a multi-year contract with Fox News; look for an upcoming DVD release of TLC's "Sarah Palin's Alaska!", with previously unseen footage; her two books are at fine booksellers everywhere, and, of course, the soon-to-be-scheduled Pay-Per-View where she'll announce her 2012 plans. She wants to thank all the little people whom made it possible for her to achieve the American dream: John McCain...]

An original:

• Egyptian protesters are not happy with the US; no doubt they've been holding a grudge since the 1980's when a group of unveiled female singers stereotyped the way that they walk...

Musical Interlude: One-Hit Wonders/Instrumentals

Gloria Gaynor, "I Will Survive"