WiseUp! Don’t be manipulated…

17 January 2009

It’s finally over for print this year

Filed under: Blogroll — davodavo @ 8:24 am

1998 was the year that sealed the fate of print media.  That was the year of the Microsoft and Netscape browser wars, proving that the Internet would be the way the world would access documents.  That was the year that @home deployed the first broadband internet into homes.  That was the year that Yahoo cut deals letting them give away the news for free.  That was the year that Google — the crucible where real-world copyright would be forged — was founded.  That was the year that the lobbyists got the Digital Millennium Copyright Act passed, showing all the vision of King Knute.

Newspapers and magazines only vaguely realized the extent of the cancer.  Despite print media’s best efforts, the financial black hole of the internet had been started, and it kept expanding, engulfing content and instantly squashing its price down to zero.  Its event horizon kept expanding, with Craigslist and Adwords swallowing bread-and-butter advertising.  And then came blogs and Wikis that provided instant pundits and “good enough” information for the audience, all for free.

For 10 years, newspapers kept up the good fight, commercial zombies that could not admit that they were, quite literally, yesterday’s news.  They pulled every financial trick in the book, selling themselves off to conglomerates, doing leveraged buyouts, cutting news staffs — but it was only staving off the inevitable .  And 2009 is the end of the line for many big newspapers:  the Christian Science Monitor, Seattle Post-Intelligencer, Chicago Tribune, LA Times, the Minneapolis Herald are all bankrupt or stopped publishing a daily edition.  Gannet and Scripps are in similarly deep yoghurt.  The Washington Post and New York Times are doing relatively better, with “only” 10% reductions in revenues this year.  But they each could run out of money by June.  The weekly news magazines aren’t that far behind.

Part of the problem was the press’ fixation with the medium — paper — rather than their economic core — reporting and reliable information.  When they created web sites, they felt like newspapers.  Working with all the speed of Kodak in the face of digital photography, it took easily 8 years for the newspaper web sites to become worthwhile destinations.  Only recently have the newspaper sites had more visitors than newspaper circulation.  Trapped in the Innovator’s Dilemma, newspapers did “the right thing” for the quarterly demands of stockholders all the way along, but their actions ensured extinction.

Meanwhile, over in radio land, another dieing media property was successfully reinventing itself.  Talk radio and all-news stations became consistent market share leaders, with enviable profits.  One single talk radio guy makes $75 M a year.  And trust me, he doesn’t use expensive fact-checkers.  Who’d have thought AM radio would be the primary news source for 20% of the country.  And wouldn’t you know it, the newspapers all owned FM stations that delivered music, not news.

Now with broadband in 70% of US homes (and probably 90% of homes within reach of newspaper delivery), paper gives way to LCD screens.  We read the news headlines on the mobile phone, read the story on our laptop, listen on the iPod or just the car radio.  Paper is too slow, too expensive, too polluting.  There’s no point in mourning its passing.

Instead, find and pay for news sources on the web.  A couple of bucks a month.  It’s worth it for quality information.

WiseUP!  Just because newspapers and magazines fold up shop this year doesn’t mean that the press is dead.  Reporters and editors just have to move to a new home, after the economic cyclone hits.


26 October 2008

The Wily Investor

Filed under: 2008 Election — davodavo @ 5:26 pm

Investors know that they have only two things to invest:  their time, and their money.

So the smart investor focuses not on when to get in, but when — and under what conditions — to get out.  And so wily investors pay close attention when a CFO resigns his post.  They know that when a CFO is saying that his personal time is better invested elsewhere, it’s time for investors to leave, too.  Stocks often take big hits when a CFO leaves.

So you’d think that the CFO of the largest corporation in the world — the US government — resigns, people would take notice. Particularly if that CFO is a staunchly free-market guy who thinks that government should be  run like a business.  CFO leaves, bad times ahead…right?

Nobody got it this time.

Of course, the guy in question was 80 and deserved a retirement.  But Alan Greenspan knew it was time to hit the road before the going got really rough.  And this week, he earned his place in cinematic history, because he’s proved himself an even better actor than Claude Rains.

"Those of us who looked to the self-interest of lending institutions to protect shareholders equity, myself included, are in a state of shocked disbelief."-- Congressional testimony this week

"I'm shocked, shocked to learn that there's gambling going on in this establishment." -- Casablanca, 1942











There can be no doubt that the CDO/CDS bubble (and that’s where the real bubble was) happened on Greenspan’s watch.  From his testimony this week, he knew the bubble was growing explosively, uncontrollably a year before he resigned.

There can also be no doubt that Greenspan’s policies had a lot to do with it, and that he was being a neo-classical ideologue.  He studied at the foot of Milton Freidman, he was personal friends with Ayn Rand.  You don’t get better conservative bona fides than that.

But the wily investors got out of this mess long before you and I heard about it.  According to interviews from Planet Money’s “A big pile of money” broadcast, the smart guys on Wall Street started to pull back from CDOs, CDSs, and the sub-primes they were spawning, in the fall of 2006.  They kept their secret for a year, looking for greater fools to sell to.

Now that the whole thing fell apart, they’ve found the greatest fool of all — governments around the world — to keep the financial system from collapsing.  This IS the right thing to do:  the credit markets and the ATMs have to work for the economy to function.  But there must be a reckoning, given the $30 B in bonuses that Wall Street executives gave themselves last year.

WiseUP!  This isn’t a case of a few greedy people: it was an entire system of markets all doing “what they were supposed to” — without any controls.  When it all blew up, the wily investors were already gone.  Now it’s time for us (we’re all investors now) to put in new restrictions for a market that can never police itself.

19 October 2008

The Speech You’ll Never Hear

Filed under: 2008 Election — davodavo @ 7:19 am

The root of the word Conservatism is “conserve” — to maintain and enhance the original ideas that are America.  But if you look at what the Republicans have done in the name of conservatism, you have to wonder if they’re living up to the name.

Have they conserved on spending?

Despite all the noise about fiscal responsibility, modern Republicans have made deficit spending an art form.  Over 70% of the national debt for the entire history of the country has been incurred during the 16 years of the Reagan and G. W. Bush administrations.  This happened not just because of tax cuts, but because of amazing spending programs that benefited corporations (such as the prescription drug bill and the Wall Street bailouts).

Have they protected the middle class?

American middle class incomes have gone steadily down since 2000. Their share of the tax burden has gone up, even though they got “tax relief.”  Lax controls have let corporations raid middle-class pensions (to the tune of billions).  Government retraining funds (for those who lost not just their jobs, but their entire job category) have been reduced.

Ask yourself that famous question:  “Are you better off than you were 4 years ago?  8 years ago?

Have they conserved the value of the dollar?

Look no further than the value of the dollar vs the Euro, or even the Canadian dollar.  In the last 8 years, the value of the dollar has sunk over 40%. Thanks to the rot of our industrial base, we import too much.  Our deficit spending has undermined the dollar’s trading value.  Our savings rate is non-existent because all the tax incentives have gone towards equity investment (too much of which flows overseas).

Have they conserved our international stature?

The United States of America has been the beacon of freedom, fair play, human rights, and internationalism without bullying or colonialism.  Even our enemies admired our principles — we’d earned the label “leaders of western democracy”.  When we made a mistake, we quickly corrected it.

Due to Bush doctrines of torture, extraordinary extradition, bullying on issues large and irrelevant, and pre-emptive war, we have lost our moral leadership.  It is impossible to argue that our stature now is as good as it was 8 years ago.  It will take us decades to restore our international reputation.

Have they conserved American competitiveness?

There is no way to deny that we undergoing de-industrialization. The only area of the manufacturing economy where we are truly world class is military hardware. It’s also the only area of the economy that has a government-sponsored industrial policy.

The rest of our industrial base is left to nearly limitless international competition.  Free trade is good, but not when you have policies that guarantee the domestic companies lose.  Not when you don’t have serious investment incentives for plant and people.  Not when you oppose pollution taxes that would make international “dirty” products more expensive than clean ones.  Not when you oppose consumer safety inspections that would keep out poisonous Chinese dog food, candy, and toys.

Have they conserved our environment?

Forget about global warming — let’s look at things that are undeniable.

What’s happened to clean air, clean water, wildlife preservation, wilderness, and the EPA itself? There isn’t an area of the environment where the last 8 years hasn’t meant deliberate and noticeable degradation.  The conservatives have advocated strip-mining of coal, lowering air-quality standards, and drilling for oil in wildlife preserves.   They’ve decreased the EPA and department of interior staff.  They haven’t advocated trade agreements and standards that would help limit pollution from China and India.  They haven’t incented clean technologies in America, so the next generation will all come from overseas.

Have they conserved religious tolerance?

Religious tolerance is one of the reasons we have a United States of America.  But religious tolerance must include the freedom from religion, not just the freedom of religion.

If you listen to the rhetoric and the noise of talk radio — completly dominated by conservatives — you hear nothing but Christianity.  The Musliim faith is demonized.  The Jewish faith is ignored.  Agnostics and atheists are ridiculed.  The Ten Commandments are to be enshrined in the Capitol and courthouses across the country.

For the first time, the Federal government has invested billions of dollars in “faith-based organizations”  — Christian denominations only, please.  Does that sound like tolerance to you?

Have the Republicans conserved our liberty?

Over the last 8 years, we’ve seen important parts of the Bill of Rights shredded in the name of security.  Millions of Americans’ phone conversations have been listened to without a court order, and billions of emails have been read.  Over 500,000 people are on the terrorist watch-list.  Constitutional protections against habeas corpus, right to speedy trial, search and seizure of evidence, and due process have been compromised or waived.  Eminent domain has been expanded.  The right to privacy has been degraded by government policy, and the right to a free press has been degraded by unfettered mergers that result in all news outlets being owned by five corporations.

Have they conserved the meaning of our Constitution?

Under the theory of the unitary executive, the Constitution’s balance of powers has been weakened.  When Congress passes a law, the President now makes a “signing statement” that indicates what parts he’s going to ignore.  When the President doesn’t like an existing law, he simply deosn’t fund the agency that enforces it, or neuters the funding by “forgetting” to appoint the agency leader.  He goes to war without declaring war.  Congress is now the weakest branch of government.

When it comes to the Judiciary, the Executive branch has weakened or neutered judicial oversight.  This has been completely obvious (although secret) in the case of the FISA court, but has been documented in other areas as well.

The only part of the Constitution that has been improved under modern conservative administrations is the second Amendment and the right to bear arms.

So just what have they conserved? It seems that they have done a world-class job at conserving and amplifying:

  • Property rights
  • The rights, powers, and freedoms of the corporation
  • The power of law enforcement and the military
  • The ease of getting guns
  • The rights of the unborn
  • Low taxation for the rich

Is that what you want to conserve?

WiseUP!  Labels like “conservative” or “liberal” are just emotional branding, they don’t mean very much.  Think about what you’re supporting — and it’s consequences — don’t blindly support what “your brand” is promoting.

13 October 2008

Had Enough?

Filed under: 2008 Election — davodavo @ 6:57 am

Over the weekend, the world’s finance ministers decided to inject essentially infinite liquidity into the banking system.  The market seems to like it…this morning…

Let’s hope it works.  If you’ve checked your 401(k) and other investments recently, things look pretty sour.  I don’t know about you, but even my professional investment guy’s portfolio is down 35% for the year.  I tend to get real real cranky about portfolios that lose $10K in a month.

Don’t you think it’s time we shot the idea of the “self-correcting market” in the head?  This idea works fine in micro-economics, where supply meets demand.  But self-correction is ridiculous in the macro-economics of politics and the stock market, where fear meets greed.

The Republicans scream the neo-classical idea that markets are smarter than government, but recent events show how the self-correcting market is a childish illusion.  Markets feed on excesses, not rational self correction.

The way you make money in the stock market is to get to an investment before the “bulls” get there and drive the price to the sky.  Or you sell a put on a different investment, before the “bears” drive the price through the floor.  The way you really make money on the stock market is to identify and ride price swings and excesses that are irrational.  Sure, over a decade markets self-correct…but it’s hard to make money on rational correction.

Over the last 8 years, the miracle of the unregulated “financial innovation” brought us collateralized debt obligations and credit-default swaps (CDOs and CDS, to the tune of $62 trillion) that the market bought up.  The investment banks that made markets in these securities were miracles of leveraged profitability, and practically every Wall Street analyst said, “buy more of those profitable investment banks!”

The market didn’t correct, even though many smart people like Warren Buffett were saying, “this stuff is poison.”  The information was out there…but many powerful people in the government (and of course the investment banks) were saying, “it’ll be just fine.”  Read last week’s New York Times for a great article about the work Greenspan and Cox and Paulson and Graham did to make sure CDOs and CDSs were totally unregulated.  These guys, Republicans all, were the big boosters of the most expensive “greater fool” investment the world has ever seen.

The final irony is seeing the governments of the world — and you, the taxpayer — now  rescuing these unregulated financial geniuses.  Now that this self correcting market has imploded, don’t forget who’s idea it was.

WiseUP!  Markets are efficient, they are good, and they bring us most of the wonders of modern life.  But they need to be monitored, sometimes policed, and every few decades…rescued.  By government. That is competent.

5 October 2008

Republican prescription: drill, baby, drill

Filed under: 2008 Election — davodavo @ 9:33 pm

Our economy has two big long-run problems, staring us right in the face.

We have become addicted to two devils:  cheap credit and cheap energy.  It’s not going to be easy to get over either of these addictions, but gradually we’re going to have to do just that.

So it’s been painful to watch the Republican leadership suggest that all we need to do for energy is drill for oil and  remove the federal gas tax. These cheap fixes aren’t great ideas, they’re really childish.  Because the last thing you want to give an addict is easier or cheaper access to their drug of choice.

I’m no tree hugger here: I don’t particularly care about pristine wildlife in Alaska or the view off the coast of California.  In fact, I think oil derricks look kind of cool off the coast of Santa Barbara.  My argument isn’t based on scenery.  It’s based on cold hard economics. Follow me for a bit.

At some point, we’re going to drill in all these places and suck every drop of that oil out of the ground.  No problem.  But as a business decision, when do you want to do that?

When you can get the most money for that asset, and when the technology is the most advanced (to keep costs down and safety up).  When do you think this occurs, now?  Nah.  That oil that’s in the ground is going to be worth more in 20 years than it is now.  It’ll be worth more in 30 years than in 20.   So the economically best time to suck out that oil is probably around 2040 (any further down the pike, and something else will have replaced oil and its value probably goes down).

Think of this strategically:  when do we want to run out of domestic oil — by 2020, or 2050?  Isn’t our hand stronger if we have the proven reserves, while, say Venezuela and Nigeria are all drilled out?

So, rationally speaking, the best outcome is for us to plan, and to wait.

But industry won’t do that on its own.  Unbridled business wants to get to all that oil and pump it out now, to make this quarter’s earnings reports sound better.  Business doesn’t care about our national interests.  They don’t care about lowering the price we pay at the pump.  They just want to get to more oil, because that’s what they know.  Even more sinister, the oil business is trying to get us to hose ourselves.  Bear with me.

Something like 70% of the world’s oil is now nationalized, controlled directly by governments.  Venezuela, Saudi, Russia, Kuwait, Libya, Iran have all told the oil companies to take a hike.  So the oil industry looks to Uncle Sam and says, “boy, I sure would like to get my hands on some of your oil.”  The oil industry has our government practically working for it, with various politicians begging the public to let the drilling begin as soon as possible.

The biggest irony of the Republican calls for drilling is that it won’t make any difference to today’s price, or even the price 3 years from now.  Even if we decided to drill tomorrow, no oil would hit the market for years.  And when the oil started flowing, it would immediately hit the world market, where world demand sets the price.  That oil wouldn’t come exclusively to our pumps, any more than Alaskan oil did.

WiseUP! You can’t drill your way out of high energy prices, and drilling now is a bad business decision for you, the citizen.  The path forward is to in invest in future technologies that allow us to increase energy output without increasing oil consumption. We don’t need to reduce our dependency on foreign oil, we need to reduce our dependence on oil. “The stone age didn’t end because we ran out of stones” — it’s time to get out of the 19th century for our energy techonology.  Massive solar arrays.  Modernizing the power grid.  Natural gas terminals and storage facilities.  Redesigned nuclear plants.  A new automobile fleet.  All of these things mean improving our infrastructure and result in serious job creation.

28 September 2008

Republicans want to run government like a business

Filed under: 2008 Election — davodavo @ 4:57 pm

In election year speeches you’ll hear Republicans say that government should be run like a business.  That sounds good — I mean everyone knows how awful the government is, right?

And I’ll give them credit:  they do try to run government like a business.  Which makes for really bad government.

Just this week, Treasury Secretary Paulson came up with an efficient 4-page plan for the $700 B bank bailout.  Everything was to be done in secret, with no oversight by congress, and no right for review or legal action in the courts.  This is just what you’d do if you were still running things at Goldman Sachs, a private partnership on Wall Street.  Only one problem:  this is government, and he’s saying “trust me” with $700 B of our money.  This guy was part of the team that created this financial disaster in the first place — trust me?  I don’t think so.

Paulson, like many Republicans, makes the mistake of confusing business and government.*

Business has competitors.  Government does not.  If a business does something stupid or horrible, it is driven out of business by market forces.  If a government does something stupid or horrible, there’s not much to protect you and me.  They’re the ultimate monopoly, with the force of all law behind them.

Business thrives on secrets.  Government does not.  A business with no secrets has no advantage, and is soon out of business.  If a government has too many secrets, it can’t be in touch with the populace and will make increasingly perverse decisions.  Of course government must have some secrets (military action and intelligence depend on them), but most of the time secretive governments have something bad to hide.  Too many secrets leads to too much power, and democracy loses.

Businesses gain advantage by acting more quickly and unilaterally.  Government does not (except for war).  In most governmental activities, it’s important to be inclusive and gradual, to make sure that some new law or policy doesn’t hurt people.  Government is a blunt instrument, it can never be clever or “surgical” the way a nimble business can.

Businesses excel by making something that everyone covets.  Governments excel by doing a great job at the stuff that nobody wants to do.  Libraries, roads, public education, sewers, commodity postal service, coast guard, land management — infrastructure like this does not make for sexy business opportunities.  Nobody really covets government services, but everybody needs them.

Peter Drucker, the dean of American management consultants, once wrote: “Businesses shouldn’t fix problems, they should pursue opportunities.”  If you look at what government is tasked with, all they do is fix stuff that’s broken — anything that’s really visionary will die in the political process.

American business only has the accountability to its stockholders:  if you can make it look like you made money, nobody can touch you.  American government was designed with continuous public accountability and checks and balances to prevent tyrany.

Businesses exist to maximize profit.  Governments exist to maximize social welfare.

So all the things that businesses are good at really don’t apply to the jobs that government has to do.

If you look for governments that are run like a business — with a CEO at the top and an unbroken chain of command that responds to commercial stimuli — you find dictatorships.  Nazi Germany.  Banana republics.  Maybe even China.  Really efficient at some things, but not so hot for the citizen.

Wise Up!   Unilateralism and centralization of power are the hallmarks of a strong executive in business.  They are also the hallmarks of a dictator in government.  Don’t fall for the idea that government can be run like a business — these are just nice words that lead to really bad outcomes.


*For what it’s worth, I’ve got an MBA and was a VP at two publicly traded companies.  I know a little about business.  I also worked for 7 years as a consultant to the government, and I took every government class that was offered at my university, so I know a little bit about government.  I’ve spent more money on the US government (taxes) than on any other single item in my life, including my house.  So I’d like it to be more efficient.  But that’s not what government does.

21 September 2008

When Republicans say “deregulate,” grab your wallet quick

Filed under: 2008 Election — davodavo @ 2:00 pm

I have to start today’s post with a serious “great work!” to the folks in Washington.  The action they’ve taken last week to stabilize the financial markets — and work on the real problems in the financial system — deserve some serious praise.  This isn’t the end of the financial crisis by any means, but the White House and others have clearly made serious inroads. We’re all better for it.

You have to wonder what the real story is behind this.  Perhaps a late night call from Saudi Arabia or China saying, “you want us to dump all our bonds tomorrow?” had something to do with the speed and magnitude of the change. Treasury Secretary Paulson, SEC Secretary Cox, and Fed Chairman Bernanke have pivoted on this issue so fast, they’ve got to be suffering whiplash.  It’s great to hear McCain simultaneously calling for stronger banking regulation but fewer regulations — as a marketer, it just makes makes my heart flutter and my eyes tear up at such double-barreled bullshit.

All of a sudden, regulations are being brought to bear.  This is a huge turnabout, as Republicans have traditionally been ardent proponents of laissez faire capitalism and aggressive deregulation.  Particularly with Cox and Greenspan, who essentially told their regulatory agencies to do less.  The market knows best, corrects itself, and — through the automatic punishment of bankruptcy — weeds out bad behavior.  So over the last dozen years or so, legal safeguards, firewalls, and regulations of the banking and investment industry were swept away.  In 2000, Congressional Republicans made hedge funds almost completely free of inspection, let alone oversight or regulation.

Some companies made a ton of dough with this — a few hedge-fund managers compensated in the billions — and leverage was driven to the hilt.  In  a classic case of what economists call a “race to the bottom,” safeguards were removed or ignored.  Oh yeah, and common sense was thrown out the window.   If you weren’t playing the game by the new rules (where there were no rules of credit-worthiness), your firm would lose out.  Check out PlanetMoney’s terrific podcast about how the sub-prime mess really happened.

So what did those deregulated companies do?  Privatize huge profits.  And now what do WE get to do?  Nationalize the losses.  To the tune of $1.5 trillion so far (that’s $1,500,000,000,000).  This all goes to the national debt, which we’re going to have to pay back someday….could be sooner than you think, given the country’s overall creditworthiness.

Deregulation has been sooooooooooo good for us.

Remember the Savings and Loan crisis of the early 90’s?  Pretty much a direct result of the S&L deregulation of the early 80’s.  Taxpayers paid $150 Bil so that bankers could have a field day “innovating” and “competing.”  In other words, speculating.  Remember Keating?  He was big buds with McCain.

Remember when the Republicans deregulated the California electric power system?  Within months, PG&E and SoCal Edison sold off all their generating plants to others, because for the first time in 80 years they didn’t have to do what regulators said anymore.  These power companies would be soooooooooo much more profitable if they didn’t have to actually generate power!  Grrrrreat for stockholders!  Cool for bondholders!  And power would be cheaper because they could just buy it in a competitive marketplace (you know, the one that never hurts any customers!).  And it became soooooooooooo much fun for Enron and Dynergy to manipulate prices, arbitrarily turning off power plants to underscore the point that they could make more money by hurting businesses and people than by delivering power. There are some great recordings of Enron traders joking about increasing the cost of power by 10 times.  Deregulation was their corrupt meal-ticket.

The final irony:  companies without regulation hurt themselves, as well as each other.  In the end Enron blew up and Dynergy was financially crippled.

There’s a striking parallel with what happened to the Wall Street geniuses when they were freed from their shackles, given regulatory holidays and supplied with cheap credit.  If the government hadn’t intervened this week, every big independent investment bank would have been put out of business (3 out of 5 were already gone).  The retail banks like WaMu, Wachovia, Downey Savings, and hundreds of others would have come under further attack.  To paraphrase a bunch of articles in the Wall Street Journal and the London Financial Times, the financial system would have totally melted down.

All this in the name of deregulation.  To quote MarketWatch, “a free market is anything but free when taxpayers are left holding the bag.”

WiseUP!  Regulations are put in for a reason. In many situations markets do not self-correct.  As we’ve just witnessed, unbridled markets even exaggerate dangerous situations.  Regulations can be bad, but sometimes deregulation can be even worse.  Don’t swallow the “get the government out of the way of business” garbage…unless you’d like to pull out another trillion dollars from your wallet.

14 September 2008

Where Republicanism Works: In the Past

Filed under: 2008 Election — davodavo @ 11:08 am

The Republican party is going out of its way to talk about Small Town Values and using good old fashioned common sense to run the country, and by extension the world.  Hooray for the red, white, and blue!

There’s only one problem:  the policies and politics they promote don’t work in the world that you and I live in.  They’re out of touch with the reality of today’s America.

For example, they’ve gone out of their way to make sure that Wall Street isn’t regulated, because the wondrous (invisible!) hand of the market does a way better job of managing the banking industry than stupid old incompetent government is.  Their Treasury and Fed and SEC have declared open season on weak banks, letting them fail because of all the risky decisions that the banking executives made.  Sounds OK until you realize that the banks that handled 80% of the mortgages in the US are now gone. Kaput.  Ka-blooey.  Now owned either by the US government (that is to say, the taxpayer) or foreigners.  All because the Republicans abdicated their responsibility to regulate, to truly govern.  In the words of Jim Kramer, the CNBC “Mad Money” guy, the government has now declared arson to be legal, and every hedge fund in the world knows it.  Say goodbye to Lehman Brothers, Merill Lynch, and probably WaMu.  (Six days after I wrote this post, the SEC put a temporary ban on the short-selling I was referring to here.  Nice to see the scope of my influence ;-))

The problem is, the Republicans are using all the economic creativity of Hoover, in an era when billions of dollars move markets in milliseconds.  Ever since Ron Reagan said, “government isn’t the solution, it’s the problem,” Republican administrations have been going out of their way to make sure that the government is incompetent by cutting budgets that actually matter and purging talent from the EPA to the FBI to the FTC to the State Department to the CIA to the Department of Justice.  The complex, ugly world we live in requires government that is competent — and not just for anti-terrorism.

In another example of Republican virtue, they’re putting up Sarah Palin as the Carol Merrill for 2008’s Presidential Let’s Make a Deal.  She’s a small town good ol’ boy from Alaska.  A state where Republicanism really works.  And I’ll give it to them, it does work there.  Why?  Because it’s not part of the America that you and I live in.  No immigration or race problems.  Budgetary surplusses year after year.  No manufacturing job losses.  No homelessness problems.  Very low taxation.  How does it all work?  Let’s take a closer look:

  • No immigration problems because Alaska doesn’t have a major port or a border with poverty.  No foreigners means lower cost schools because everyone speaks English.  No worries about equal opportunity or reverse racism because everybody’s white.  Like in Iowa in the 1950s.  Cool.  But you and I don’t live in a country like that.
  • Budgetary surplus because (1) the state doesn’t provide that much in the way of services, and (2) WE in the lower 48 pay all their taxes for them, in the form of gasoline purchases.  How many other states in the US have so much money they pay their citizens to live there?  Zero.   You and I live in states with chronic budgetary problems.  Ironically, part of our state deficits goes to pay for Alaska’s surplus (the state of California buys $M of oil products every month).
  • No manufacturing job losses because (tada!) there is essentially no manufacturing in Alaska.  They’re way ahead of the rest of us on this one.  They don’t have any farming either, so they don’t need any tariffs of pesky state agencies.  They don’t have to worry about balance of payments problems with China either because of the Miracle Cure-All:  oil.  So, Alaskans don’t feel any of the pain of economic swings that you and I do in the lower 48.
  • No homelessness problems because you die if you’re homeless there.  Now there’s Good Old Fashioined Republican values!  Nobody destitute moves from Santa Monica to Anchorage, it’s the other way around.  Republican nirvana:  export the homeless to warmer states.  Gee, this is sounding easier and easier to govern.  Hell, I could be governor of a state with less population than San Francisco.
  • Very low taxation.  This goes double for Sarah’s home town of Wasilla.  They had zero property tax, and they funded the whole city out of a 2% sales tax.  This is again Republican nirvana, because there’s no tax on wealth (god forbid!) AND because most of that 2% sales tax is paid for by people who DON’T live in the town.  How did they make this miracle happen?  They designed the sales tax to hit all the stuff that’s sold in the town’s Big-Box stores (WalMart, BestBuy, Costco, etc.), where the purchases are mainly by out-of-towners.  So the classic Republican solution — straight out of Homer Simpson — have your taxes paid for by Somebody Else!

To be brutally honest, the Dems don’t have the most realistic policies either.  And the contest to see which candidate has the *least* relevant experience is taking on So You Think You Can Dance proportions.

But Wise UP!  Don’t fall for the simple, lilly-white solutions offered by the Republicans — they just don’t cut it for today’s problems and the messy world we really live in.

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