Protest Government Spending

I'm not sure how readable this flyer is going to be, but there is going to be a protest against the money laundering going on in our government these days. It will be on April 15th, 10:30 to 1:30 in front of the capitol building in Carson City. All are welcome to join. You can find more info here.

Ignoring the Customer

It's hard to believe now, but I used to enjoy reading Kathleen Parker's opinion pieces in National Review. I stopped when she turned on Sarah Palin for not being sufficiently sophisticated for the Washington champagne circuit. I stopped reading a lot of people then. Now I've come to find out that she has a thing against bloggers.

There’s something frankly creepy about the explosion we now call the blogosphere — the big-bang “electroniverse” where recently wired squatters set up new camps each day...Each time I wander into blogdom, I’m reminded of the savage children stranded on an island in William Golding’s Lord of the Flies. Without adult supervision, they organize themselves into rival tribes, learn to hunt and kill, and eventually become murderous barbarians in the absence of a civilizing structure.

Let me guess. The "civilizing structure" would be Kathleen. Apparently she is unaware that running naked through the forest is not only serious business, it's loads of fun. She should try it sometime. It might loosen her up a little. She continues:

Drive-by pundits, to spin off of Rush Limbaugh’s “drive-by media,” are non-journalists who have been demonizing the media for the past 20 years or so and who blame the current news crisis on bias.

There is surely room for media criticism, and a few bad actors in recent years have badly frayed public trust. And, yes, some newspapers are more liberal than their readership and do a lousy job of concealing it.

Where do I start with this? There was a time, not so long ago, when one who worked for a newspaper was called a reporter. A journalist is something different. Journalism, so I'm told, allows for perceptions and feelings. And guess what Kathleen; your feelings are of no more consequence than those of any blogger picked at random. As for "a few bad actors"; how about a whole troupe? The players in Washington may seem Shakespearean to you, but from this distance it looks like yet another high school performance of "Harvey". And who needs to pay for liberal opinion? It's in the ether. I would pay to escape it, but not to read it. She continues:

But the greater truth is that newspaper reporters, editors, and institutions are responsible for the boots-on-the-ground grub work that produces the news stories and performs the government watchdog role so crucial to a democratic republic.

Yes, about that crucial "watchdog role", where were you when the current mess was developing? How about the mess before this one? As I recall, wasn't that you in the comfy chair licking your ass? It's time you put that "boots-on-the-ground grub work" ethic to practical use and sniff out a new business model.

If the Gazette Journal folded tomorrow, Anjeanette Damon would still have a job. Why? Because she is in demand from people like me. And when it comes to Ms. Damon, there are a lot of people like me. We would search her out, find her new venue, and continue as before. As for the Washington troupe, just look for the room with the comfy chairs.

God, I love blogging.

Catching Up with Dilbert

As noted earlier, the new time zone is still wreaking havoc on my schedule. Looking through some old Dilbert blog posts, I found this:

One could argue that previous economic bubbles were driven by sex, directly or indirectly. Guys bought cars to attract girls. The VCR business thrived because of porn. So did the Internet. If you want to predict the next economic boom, figure out who is inventing technology that 19-year old boys will crave in order to increase their chances for sex. Any ideas?

Here's mine:

Japanese Robot Babes! When one of these shows up at the high school prom, we'll know 2 things. 1) The next boom cycle is here and, 2) the end of the human species is not far behind. They never nag, don't get jealous when you flirt with other robot babes, and they take instructions. The perfect 10.

Finance Magic

In an article about the Obama Administration's problems in staffing the Treasury Department, Stephan Green, the Vodkapundit points out an interesting phenomenon:

According to a recent Reuters story, Blackstone Group CEO Stephen Schwarzman estimates that “Between 40 and 45 percent of the world’s wealth has been destroyed in little less than a year and a half.” Think about that. There was no 9/11 in New York, no nuclear bomb going off in London or Beijing, no fleets of bombers destroying factories — there has not been any physical destruction of capital whatsoever. Yet in the last 18 months, nearly half the wealth in the world has vanished into thin air.

Well, as every mother has said, at least once in her life, "Things don't just disappear, it has to be somewhere". So, where did nearly half the world’s wealth go? The answer depends on your view of reality. If the wealth was real, then it ended up in somebody’s pocket. If wealth is only a promise for future work, then it is not real. It can appear and disappear as easily as any other promise.

We are all familiar with optical illusions. Magicians make their living with them. Is there such a thing as a financial illusion?

You've worked and saved, and you're ready to buy a house. The work you have done is real. The money that was exchanged for your work is real; it is equal to the work you have done. So you plunk down 20%, and the bank covers the other 80%. Except, the bank doesn't have the 80%, they only have 2% on deposit with the Federal Reserve. The remaining 78% of the value of your house doesn't exist, not yet. But in the eyes of the banker, he has a note; a tradable commodity. He uses that commodity as a down payment on a bigger promise, and that commodity on an even bigger promise still.

All it takes to end the illusion is one broken promise; one call for a show of real wealth within a group of people who have none. When the illusion is over, what have we lost? You still have your house, your work, and you're keeping your promise. The banker still has houses and no real wealth. He's right back where he started.

I've heard we have lost our trust. Well, no kidding. Who would trust a magician?

A Few Useful Links

Is it my imagination, or did the switch to Daylight Savings Time wipe out a few bloggers (including me) this week. The early morning hours are prime blogging time for me, so I haven’t accomplished much this week. But, I did promise a few examples of the presentations at the Interactive Summit.

Thanks to a comment from Ryan Jerz in my last post, there is an excellent Twitter feed that has links to many of the presenters. Here are a few highlights.

Mike Henderson’s summary of his talk on podcasts is here. Even if you’re not thinking about podcasting, you can see it’s pretty thorough.

Mike McDowell’s Media 101 is in slide show format. I don’t know if it will make sense to someone who wasn’t there, but it’s a lot better than the notes I took. Trust me on that one. I’ve started using google reader as a result. It’s working out really well. It saves a lot of time and is much less aggravating than going back and forth from the blogroll. What I’d really like to do now involves an aggregator. It would be something like Nevada Blogs, only it would be the blogs I choose. So far, everything I’ve seen to do this involves HML, so I’m still looking.

Marcel Levy’s summary is in PDF format. Marcel doubles as a stand-up comic. Who would have guessed that building charts could be so much fun? There are some hard to find web addresses in here. I know they’re hard to find because I’ve looked for them, so this will be very helpful.

There’s plenty more on the search twitter link. I have months worth of projects just from these three. I'm off to visit mom this weekend, so I still won't get much done, but maybe I'll adjust to the new time zone.

Notes on the Summit

I attended the Nevada Interactive Media Summit held at the Reynolds School of Journalism on Saturday. Is it possible to suffer information overload, and still not have heard enough? The conference was designed in three groups of workshops per hour, over five hours, so I didn’t get to hear everything I wanted. Still, by day’s end, I had to go home and give my poor little brain a rest.

There were a few themes that nearly everyone was talking about. One of these was strategy. Most of the presenters were marketing people, as were a majority of the audience, but what is the goal of blogging? Every so often I come across a blogger asking: ”Why do I do this?” It’s a bit like asking a weekend artist why he paints landscapes. There are a thousand reasons, and no reason in particular. The more I do this though, the more obvious it becomes that there are abundant opportunities for the taking. The field is wide open, and setting some long-term goals would probably be a good idea.

Another constant throughout the day was the importance of mobility; that means gadgetry. Most of the talk was about programs and applications, but sitting here at my desktop is already considered somewhat quaint and old-fashioned. I put a lot of effort into keeping my life simple. This blog naturally reflects that. I’m not a gadget guy. Still, the place could use a little variety. I now have a much better idea of how to accomplish that without getting tied up in USB cables. I can liven it up a little while maintaining a minimalist approach.

One thing everyone could agree on was the need to filter out all the chatter and concentrate on only the things that apply to them. No doubt, there is somebody filtering out this blog post right now. There are some time saving techniques on how to do that, and there will likely be better ones coming along in the near future.

As hokey as it sounds, the best thing about these types of conferences are the people. The knowledge, ideas, and experiences, the friendliness, the focus, it’s a great way to spend a day. It’s always good to be reminded that behind every post, tweet, and camera shot is a human being trying to communicate. The fears of virtual isolation are much overdone, as the virtual has merged with the physical. Many of the presenters said they would post summaries on-line, so I’ll have an update with links up soon. Also, as I complete some new projects, I’ll be posting about how it went. For those that missed it, you’ll see it was worth the price of admission.

End the Fed

Thanks to Vox Day for pointing this out. It's too good not to pass along.

The Federal Reserve’s low interest rate policy is a big mistake; it is not a panacea.

Artificially low interest rates are achieved by inflating the money supply. Low interest rates penalize the thrifty and those who save are cheated. It promotes consumption and borrowing over savings and investing. Manipulating interest rates is an immoral act. It’s economically destructive.

The policy of artificially low interest rates caused our problems and therefore cannot be the solution. The market rate of interest is crucial information for the smooth operation of the economy. A central bank setting interest rates is price fixing and is a form of central economic planning. Price fixing is a tool of socialists and destroys production. Central bankers, politicians, and bureaucrats can’t know what the proper rate should be. They lack the knowledge and are deceived by their own aggrandizement.

Manipulating the money supply and interest rates rejects all the principles of the free market. Ironically free markets and sound money generates low rates, but unlike the artificially low rates orchestrated by the Fed, the information conveyed is beneficial to investors and savers. The Congress, by conceding this authority, conveys extraordinary economic power to the elite few. This is a power that has been abused throughout history. Only the Federal Reserve can inflate the currency, creating new money and credit out of thin air, in secrecy, without oversight or supervision. Inflation facilitates deficits, needless wars and excessive welfare spending.

Debasing a currency is counterfeiting. It steals value from every dollar earned or saved. It robs the people and makes them poorer. It is the enemy of the working man. Inflation is the most vicious and regressive of all forms of taxation. It transfers wealth from the middle-class to the privileged rich. The economic chaos that results from a policy of central bank inflation inevitably leads to political instability and violence. It’s an ancient tool of all authoritarians. Inflating is never a benefit to freedom loving people. It destroys prosperity and feeds the fires of war. It is responsible for recessions and depressions. It’s deceptive, addictive and causes delusions of grandeur with regards to wealth and knowledge. Wealth cannot be achieved by creating money by fiat. It instead destroys wealth and it rewards the special interests.

Depending on monetary fraud for national prosperity or a reversal of our downward spiral is riskier than depending on the lottery.

Inflation has been used to pay for all wars and empires. And they all end badly. Inflationism and corporatism engenders protectionism and trade wars. It prompts scapegoating: blaming foreigners, illegal immigrants, ethnic minorities, and too often freedom itself for the predictable events and suffering that result. Besides, the whole process is unconstitutional. There is no legal authority to operate such a monetary system. So let’s stop it. Let’s restore a policy of prosperity, peace, and liberty.

The time has come. Let’s End the Fed.

Congressman Ron Paul's speech to Congress 2/25/09

Housing and Recessions

I ran across a article at Calculated Risk that has 20 good charts; so many that I had trouble picking just one. This chart shows the relationship between housing construction and recessions, and brings up 2 important points.


The first point is that housing spikes and recessions are not necessarily related. There are several smaller spikes in home construction outside the recession areas.

The second point is when recessions contain housing spikes, one sure fire way to end a recession is to stop building so many unsellable houses.

I recently started following Guy Johnson on Twitter. He blogs at Reno Realty. The last post there discusses a house in the "bungalow district" on the "wrong side" of Wells Avenue. It's selling for $89,000. Out of curiosity, I drove over. It's definitely a fixer-upper. It has aluminum siding on the street side and, well, something else on the other 3/4's. Several large tree stumps decorate what used to be a backyard lawn. Still, I came away with a vague feeling of optimism. It was a real house, on a real foundation, and I could afford it if I wanted it. That's assuming I could find a banker foolish enough to loan me tens of thousands of dollars.

With our government insisting on creating jobs and stemming unemployment, it means we will still be building more unsellable houses and prices will continue to fall. And, thanks to our government, there are plenty of foolish bankers still in business. Who knows, in another 6 months, I might be able to afford a decent house in a decent neighborhood.

So keep the bailouts coming Mr. President; keep that monopoly money flowing and the bubble expanding. I'm almost there. Too bad for everyone else though.

Problems at CPAC

Republicans are the pro-business party. Why then are we so lousy at public relations?A case in point from Patrick Poole at Pajamas Media:

...those of us inhabiting the official bloggers row, sponsored this year by Pajamas Media, are clearly considered the red-headed stepchildren by CPAC’s organizers. The best evidence for this was that bloggers row was situated at the back corner of the exhibit hall (which doubles as the first floor of the hotel’s parking garage). The organizers could not have positioned us any farther from the events here at CPAC without setting us up outside the building. In contrast to political left, where bloggers and new media have propelled Democrats to stunning victory and are courted by their politicians at the annual Daily Kos convention, the conservative establishment still has no idea what to do with new media.

OK, here's a pop quiz for all you Republican "leaders". If you take your date out to dinner, and the waiter gives you a table that is closest to the kitchen, with banging pots and pans competing with angry shouts from the cooks, do you tip him 0%, 5%, or 10%? If, on the other hand, the waiter seats you and your date next to the window, where she can overlook the gardens as the evening sky turns from pale blue pink to Rosy red, do you tip him 25%, 50%, or leave an endowment to his kids?

Needless to say, Mr. Poole was not overly gracious in his comments on the rest of the conference. He went on to point out that most of the speakers were the same retreads that caused our collapse. Looking at the straw poll, I can't say I have a lot of hope for 2012 yet.

Mitt Romney...20% (Are Mormons ready for a Mormon President?)

Bobby Jindle..14% (Makes Bob Dole speeches seem thrilling by comparison.)

Ron Paul......13% (Will he ever get 15% anywhere?)

Sarah Palin...13% (The thrill is gone, maybe.)

Newt Gingrich.10% (Who?...What?...Really?)

Mike Huckabee.07% (Not many Baptists at CPAC this year.)

Mark Sanford..04% (Did we ever decide the Confederate flag issue?)

Rudy Giuliani.03% (Aw Rudy, we'll always have New York.)

Charlie Crist.01% (Apparently candidates were allowed to vote for themselves.)

The good news is we have 4 years to work on it.

The Soak the Rich Myth

I once worked for a very wealthy man. He was the kind of guy who would make the interns, who were already working for free, take the company car over to his house to clean his swimming pool. He was the kind of guy who once had an employee load a bale of hay into the back of his brand new pick-up truck, drove around town showing off his new truck, only to have the employee unload the truck upon his return. He had no other use for the hay bale. He was the kind of guy who, after downgrading the employee retirement plan, bought a prize steer for $25,000 and invited his friends over for a bar-b-cue. As grandma might have said, he was a piece of work.

He bought a new Cadillac every year. He owned at least three homes that I knew of; his house on the hill in the swankiest neighborhood, a well appointed "cabin" in the mountains, and a home in Hawaii. Every December he would leave for Hawaii and not return until the spring thaw in March, while those of us who were gainfully employed kept his income stream going through the sub-zero Colorado winters. Needless to say, there was a little grumbling among the employees from time to time.

One of the nice things about working the night shift is that if you hustle through the first seven hours, you can put your feet up for the eighth. On a January night, a few of us were sitting, listening to the wind howl, watching the snow "fall" from left to right, wondering if our cars were going to start, when we began grumbling. After a while, one guy who had been sitting quietly looking out the window, said to no-one in particular, "Ya' know, if I had his money, I'd be in Hawaii right now too." Good point.

What brought this memory back this morning was an article in Pajamas Media by Jennifer Rubin, about the latest tax plan.

A taxpayer in the 35% bracket gives a gift to United Way of $10,000. Under the current rules he can reduce his tax bill by $3500. Under the Obama plan he can only reduce his tax bill by $2800. In the Obama scheme, then, that United Way contribution now costs the taxpayer $700 more. The obvious result: give less to United Way so the higher tax bill can be paid. To be blunt, the government is discouraging charitable giving. It is hard to think of any worse tax policy or any one more harmful to the needy.

If there is one thing that I can say with absolute certainty, it's that we all want more than we have. Everybody has dreams. If I only had $1,000 I'd get this; $5,000 I'd get that; $50,000, and I'd definitely buy one of those. Well, what if you did? What if you lived a lifestyle that allowed for Christmas in Hawaii, springtime in the Rockies, and five figure checks to a variety of charities? Where would you cut? Would you tell the wife she’ll have to do her Christmas shopping in sub-zero weather, or shave a little off the donations? You could take those $10,000 checks down to $9,000 and still make it to Hawaii. $9,000 is still a lot of money. You could tell yourself that you're still being generous, and you'd be right. Just a little bit less here and there, and you won’t have to tell your friends that instead of prized-steer ribs, this year you’ll be serving mutton. Be honest with yourself. Which would you choose? Really?

Real Trust Requires Real Capitalists

Plowing through the hyperbole that the financial sections have become, one can sometimes find a little perspective. Rob Kirby writing in Financial Sense looks back on the road we have traveled:

Banks in the 19th century were owned by real capitalists and the equity capital of banks was about 60–80% of their balance sheets: bankers were lending or investing their own money, so they were responsible and did not accept excessive risks.

The 19th century also had what were called "wildcat" banks. These were often owned and operated by thieves and counterfeiters. They were located throughout the country, but were especially prevalent in the territories. They were characterized by the fact that they only had enough money to convince the locals that they had more. Today, we call that "a low reserve ratio".

Following a succession of bank panics, the central banking system was created in 1913 and called the Federal Reserve. And here is where it gets really interesting. The reserve ratio was set at 3%-12% depending on the size of the bank. What only a year before had been considered dishonest at best and criminal at worst, was now institutionalized as the norm. Shortly after this, the honest banker disappeared. The gold standard became a political football, before being phased out. With no cultural pressures, and no system of measurement, the wildcats could run free.

The required reserve ratio at the Fed is currently 10% on transaction deposits (checking and savings), and zero on everything else. Homes, cars, credit cards, entire businesses, have all been financed with nothing. And what of those savings accounts? Of course, there are plenty of exemptions and waiver rules included for favored political donors. Mr. Kirby continues:

...an accurate and logical accounting of where we are would amount to a confessional by the powers-that-be, punishable by law.

I don't see that anything is punishable by law. Inaccuracy and illogical accounting is the law. The lack of trust we see today is only the widespread realization that the money center banks are insolvent. They have been for a very long time. The banks are broke and everybody knows it. If the banks had been built on real wealth, regaining trust would be quick and easy. As it stands, what's to trust?

Leeches On the Back of Society

A universal constant in the world of the rich and powerful is that they will always do what is in their own self-interest. It's how they became rich and powerful to begin with. I have no problem with that, but anytime one of them says something that ordinarily would not be in their own self interest, I have to wonder; What's the game?

The Drudge Report carried a story from Reuters about "renowned investor" George Soros, saying:

the world financial system has effectively disintegrated, adding that there is yet no prospect of a near-term resolution to the crisis.

Really? It's more likely that Soros Fund Management Inc. has effectively disintegrated and there's no near-term resolution to George Soros' crisis. But, it gets even better:

...the turbulence is actually more severe than during the Great Depression, comparing the current situation to the demise of the Soviet Union.

Let's take a deep breath and calm down for a minute. Hedge funds have been taking an even worse beating than the New York banks. Hedge funds borrowed from the banks to buy the toxic assets that are causing all the problems. The banks are in trouble, not just because they too own some toxic assets, but because the hedge funds can't pay off the loans for theirs.

Soros Fund Management, located in the Cayman Islands (where else?), is a group of hedge funds. The largest of these funds, Quantum Fund, plays the currency markets. Mr. Soros and his ilk take the money of the rich and move it from country to country, going long on strong currencies and short on weak currencies. If you can talk enough rich people into letting you manage their money, you can do what Mr. Soros did.

In 1992 he bet the whole wad on shorting the English pound. The attack on the pound was so overwhelming that it became a self fulfilling prophesy. It broke the Bank of England and caused a devaluation in the pound. Mr. Soros and his wealthy clients walked away with billions, while the English working class saw the price of everything go up. Later in the decade, he nearly destroyed several Asian currencies. The farmers, the fishermen, the shopkeepers, all paid the price for the fame and fortune of Mr. Soros.

So what's the game today? I'll take a wild shot in the dark and say that Soros Fund Management needs a big government intervention; not only to help their currency positions, but in applying the Treasury Dept.'s magic eraser to all those toxic assets sitting in the Cayman Island offices.

But not to worry, Mr. Soros and his wealthy clients are philanthropists. They help all sorts of working class people with all sorts of problems. In other words, they destroy the working class, so they can help them. This is how the rich get richer, the poor get poorer, and the powerful solidify their grip. This kind of game is beyond mere hypocrisy, it's beyond even simple BS. It's dangerous.

Deconstructing the Lost Decade

There has been much talk of Japan's "Lost Decade" recently. In the IBD this morning, Robert Samualson lays out a few pertinent facts.

First and foremost is that, historically, government stimulus has a mixed record. Sometimes it works and sometimes it doesn't, and nobody knows why. Each situation is different enough that there is no conventional wisdom that applies to all.

Today, on one side of the argument, President Obama warns of a Japanese style stagnation; on the other, conservatives argue that the Japanese government instituted eight stimulus packages, none of which accomplished anything. They are both right and wrong at the same time. The Japanese experience has little to do with what we are going through now for the simple reason that we are not Japanese.

Japan has what Richard Katz, editor of the Oriental Economist, terms a "dual economy." On the one hand, export industries (autos, steel, electronics) are highly efficient. They face intense global competition. On the other, many domestic industries (food processing, construction, retailing) are inefficient and sheltered from local competition by regulations or custom.

Since the early '80s, U.S. economic growth has depended on a steady rise in consumer spending supported by more debt and increasing asset prices (stocks, homes). Just as the mid-'80s signaled the end of Japan's export-led growth, our slump signals the end of upbeat consumption-led growth.

The problem in both cases is, once the formula has played itself out, where to find new areas of growth. Our government has been driving out manufacturing, or inviting them to leave, for decades. Americans really don't make much anymore. Now that consumers are staying home, we don't buy much anymore either. If we don't make anything or buy anything, then what are we doing?

This problem is bigger than any stimulus can solve. If we bring back the factories, we'll bring back the jobs, and bring back the growth. Anything less is wasted effort.

When Subs Collide

The Sun newspaper is reporting that a British nuclear submarine collided with a French nuclear submarine somewhere in the north Atlantic. There doesn't appear to have been a breach of the hull in either vessel and no loss of life.

My dad served as a sonar man on a submarine in the north Atlantic during WWII. When I was a kid, I would ask him if he ever saw any action. Did he ever sink any Germans? He would calmly reply, "Heavens no, being 300 feet underwater with 100 drunken sailors was dangerous enough."

I wonder if the British Navy still serves rum rations?

Economic Fascism?

I'd been thinking about this subject for a while now, and this morning Michael Ledeen had an article on it. Is what's going on in Washington socialistic, fascistic, or just plain bad policy?

It has always been easy to tell the difference between capitalism and communism. They are divided by property rights and the means of production; capitalists have them and individual communists don't. But economically speaking, there are no clear lines of demarcation between capitalism and socialism, or capitalism and fascism. These three "isms" all allow some degree of property rights and some degree of government intervention, but are largely social constructs with no clear economic distinctions.

Hitler's Germany is a good example of the lack of distinctions, as the NAZIs never gave much thought to economics. There was no NAZI economic policy that I've ever found. They tended to do whatever worked best in supporting the military machine and left it at that. Mussolini's Italy is a little better, but even there they were heavily militaristic with no clear economic philosophy. Industry was directed to the betterment of the state, whether nationalized or left in private hands.

Wikipedia may not be the best source, but I did find this:

Historian Gaetano Salvemini argued in 1936 that fascism makes taxpayers responsible to private enterprise, because "the State pays for the blunders of private enterprise... Profit is private and individual. Loss is public and social."[26]

Sound familiar? I don't know what we are heading towards, but whatever it is, it makes unbridled capitalism look pretty good by comparison.

New Improved Zombies

There is a new phrase being coined regarding a perceived impending disaster that is our economy. It is the "Zombie Bank". I vaguely remember this term being used during the Japanese banking crisis in the 1990's. It's origin may be older, but I'm beginning to see it used in the US financial pages more often now. It's loosely defined as a bank that the market (us) sees as obviously insolvent, that the government central planners (them) refuse to allow to go naturally. Andy Kessler, writing in The Wall Street Journal gives an example:

Despite over a trillion in assets, Citigroup is worth a meager $18 billion, Bank of America only $28 billion. The market has already figured out that the banks and their accountants haven't fessed up to bad loans and that their shareholders are toast.

Citigroup, having had a $25 billion infusion from Old Uncle Larry, is set for round two with Tim Geitner. Like a young Dr. Frankensteen, Geitner is sure to have a pocket full of treats, as he leads the Citigroup Zombie through "Puttin' on the Ritz". I know I'm mixing metaphors here, but the question of the day is this; How well can the Citigroup Zombie sing and dance? Simply eating the flesh of the living just isn't going to be good enough anymore. We need zombie banks that can carry a tune; and if not dance the Tango, at least a saltzy Texas Two-Step to please the crowd.

And to think, the only price of admission is a fistful of toxic assets. Be sure to keep them in your pocket, you may need to show them later. They'll also make a nice souvenir for your memory book. So, sit back and enjoy the new improved zombie banks doing the high step down the avenue while singing, "We're All Keynesian's Now!", and prepare for the zany hijinks of the hit comedy of the season; "Honey, I Shrunk the Capitalists".

It's going to be quite a show. If not a Golden Age of Zombie Bank entertainment, certainly a Copper/Zinc Age.

The Individual Power Station

Scott Adams, the Dilbert cartoonist, has identified a basic modern problem, and the beginnings of how to solve it.

One of the frustrations people have with the current economic downturn is feeling they are helpless to do anything about it. We are told by the media that only the government is big enough to fix our problems.

Remember after 9/11 how President Bush told us to just go about our business? It was as if to say, "Move along folks, nothing to see here, just move along." Why doesn't the government ask anything of us? Isn't it strange that they don't?

It wasn't so long ago that President Kennedy said, "Ask not what your country can do for you. Ask what you can do for your country." 300 million individuals working towards a common goal could accomplish anything. But, nobody's asking us. Apparently, at some point between Kennedy and Obama, we stopped offering. So, leave it to a cartoonist to have the best idea yet.

Suppose President Obama ordered the power companies to make one change in policy. Not only would they credit the bills of customers who have solar panels on the roof when they generate more power than they use, as is the current situation, but they would actually pay customers cash for any energy created beyond the limit of their own monthly bill. That would make any home with a Southern exposure a potential generator of electricity. The President could ask citizens to invest in solar panels, as an act of patriotism, knowing the payoff would take years, but the collective benefit to the country would be great. It would stimulate the economy, create jobs, and drive down the cost of solar panels. And your neighbors could see your new solar panels and know you were doing your part.

Imagine tens of millions of clean energy companies run by private individuals. Each one energy independent, with at least the beginnings of a multiple income stream, and the costs to the poor being only in the distribution. Think of the effect on Nevada property values.

If the people in Washington DC would look at the governed as something other than a potential threat to their power, they might think of something like this. As things stand now, we are left with presidential decree's, legislative pissing contests, and the idle musings of cartoonists.

The Comedian's Craft

A confluence of events yesterday led me to Barnes & Noble bookstore to spend my Christmas gift card. One of the books I bought was "Born Standing Up" by Steve Martin. It's a very readable book about his early years and has quite a few surprises.

The biggest surprise is the story itself. When Steve Martin burst on the scene in the mid-seventies, we all thought he was a new comic. In fact, what we were witnessing was a performance artist at the end of the road. Weaving music, magic, salesmanship, and just plain entertainment, all the while taking classes in philosophy, psychology and art at Long Beach and UCLA, Mr. Martin developed his craft for the better part of two decades. This is the story of a guy who was willing to lay it all on the line for two dollars a show in near empty rooms.

Another thing I really liked about this book is there's not much name dropping. The names are largely unfamiliar; Magicians at Disneyland, theater actors at Knott's Berry Farm, and nightclub managers in San Francisco. Occasionally, he meets someone I'd heard of before, but not often. It was a tough life. It's the kind of life only the most dedicated romantic could stay with.

Mr. Martin also includes some pretty personal stuff about his family. This is not a tell all, but as he explains it"...a complicated childhood can lead to a life in the arts. I tell you this story of my father and me to let you know I am qualified to be a comedian." For all the silliness of his stage act, Steve Martin is a serious, logical thinker. This heartfelt telling of his own story shows a complicated man struggling to create something new, and once created, walking away from it to create something else.

Broken Windows and the Unseen

I happened across an interesting chart earlier this week. With all the back-and-forth about the next Great Depression one is tempted to look at the years 1930 to 1940. What is really instructive are the years 1941, '42, and '43. We might conclude from this chart that WW II was a wonderful time.



And, why not? Employment was at an all time high; anyone who wanted a job could get one. Real wages rose as a large part of the labor force was directed into unproductive endeavors, never to return. Exports were, well, booming. (Pun intended). There are some who say that war is good for an economy; and the bigger the war the better. These people, needless to say, are idiots. Economics, like everything else, is ultimately about people. Numbers are only a reflection of the lives people are living, and sometimes that reflection can be a poor one.

Another trail I followed led to Frédéric Bastiat and his Broken Window Theory. Briefly, it is the story of a shoemaker's son who one day breaks a window at the shop. All the neighbors agree that fixing a broken window has many benefits, one of which is that it provides a job for the glazier. Left unseen, is the productive use the money paid to the glazier might have gone to. Bastiat goes on to argue that any ruler can immediately double employment simply by cutting off the right hand of everyone in the kingdom. (I need to find out more about this guy).

Today, there is general agreement that the Bush bank bailout was an unproductive use of our national wealth. The folks in Washington seem determined to try something similar in other areas. All manner of numbers are being tossed around to "prove this, and "prove" that. No doubt, there are some bridges that need fixing, and reducing the long term energy costs of government buildings seems reasonable enough. Still, those of us who continue to "stand athwart history yelling stop" can only look on in sadness. Our leaders have been foolish. There are precious few left to count the unseen costs of fixing our country's broken windows. Who will ask, "What future improvement will be left undone because we used our money recklessly today?"

Chinese Automakers Outsell US

For the first time in history, the automakers in China have outsold their US counterparts. January auto sales fell to 9.8 million, compared to China’s estimated selling rate of 10.7 million. With our rising unemployment, one has to wonder when China will start shipping jobs over here to take advantage of our cheap labor.

Emily Kolinski Morris , Ford’s senior economist is quoted as saying, “There are some faint signals emerging that we may be nearing the bottom.”

I doubt it. The Obama Administration seems determined to repeat the mistakes of Herbert Hoover by raising taxes and dishing out money we don’t have to the states for infrastructure. The good news is, that Hoover increased federal spending by 30% in 1930, while President Obama is only planning a 25% increase in 2009. I suppose we can call that progress.