Why Treasury Auctions Should Matter To You

Yesterday, the US Treasury had to offer more interest than they were expecting to sell their 30-year bonds.

Now, I'm not a financial whiz, and I'll be happy to hear from anyone who is in the bond-trading business about the significance of this event. But a similar thing happened to Great Britain earlier this year, for the first time since 2002 they didn't sell the entire stock of government bonds that they intended.

Why this is important is that in the last few months of 2008 and early 2009 the spending that the Obama Administration intended to accomplish seemed reasonable if only for the fact that people around the world seemingly couldn't get enough of the Treasury bill. T-bills are offered at a given interest rate, and then they can be traded afterward. If the price of a $1,000 T-bill offering 10% interest goes up, then the yield (interest relative to the price of the bond) decreases, and vice-versa. If you pay $500 for a $1000 bond that pays 10%, then your effective yield is 20%, because you're getting $100 in interest for a cost of $500. Government bond prices generally don't swing this much, but you can get some corporate bonds (GM for instance) at well less than face value now, with an astronomical yield, in part because the people who bought GM bonds originally don't believe they'll get either their money back or even their interest.

If you paid $1200 for a $1000 bond with a rate of 10%, you're actually seeing negative yield, it costs you more to own the bond than you're receiving in interest. For a while in 2008, the credit and investment markets were in such a tizzy that the T-bill was showing a negative yield -- people didn't mind losing a little money if they knew they would get the bulk of their money back. The private equity market was in disarray, and the government equity market was the place to be.

If you're a statist looking to expand the power of government, this latest credit crisis is a self-licking ice cream cone. Private equity is discredited, so people have a great appetite for government debt they feel they can trust. With people lining up to buy your debt, your government spending can increase because they are giving you cash in return for promises, cash you can turn around and spend on what you see as places for the government to "invest". What's more, people are so frantic for government debt that the bidding process keeps the interest rates low, so the cost of incurring debt isn't nearly as great as if you tried to borrow huge amounts of money under normal circumstances. It's a perfect storm blowing in your favor.

But all parties come to an end, and funny enough for the statists, it's good economic news that is now the problem. The latest jobs report that came out this (Friday) morning showed that only 539,000 people lost their jobs last month, rather than the 600,000+ in the preceeding few months, and there are private-sector folks who track this kind of thing so that the lower first-time unemployment number was known. Now, I don't presume to speak to the minds of Treasury auction participants, but reporters seem to feel that the expectation of slight economic improvement led the bidders for 30-year T-bills to ask for more interest (bid less money) for the T-bills on offer yesterday. This is plausible. When the economy is improving, the T-bill is no longer the only lifeboat, and negative yields may lose less than the market in 2008, but if the market is better in 2009 then money managers will need to get better than negative yields themselves.

Other plausible reasons for the Treasury unexpectedly having to offer higher interest yields include the Chinese not buying as much as they used to, meaning more were available and demand was down. As well, investment banks looking at the huge amount of money that has been promised by the government and lent by the Federal Reserve may be asking themselves when the inflation is going to hit, and wanting a higher yield to compensate for the increased risk of inflation.

In any event, this is a sign that the days of the private market being happy to lend to the Federal Government at record-low rates of return and fund masssive government expenditures may be drawing to a close. The auction didn't fail the way the British auction did, the Treasury was still able to raise the requisite amount of money albeit at a slightly higher cost down the road to the taxpayer. But the increased cost of borrowing and the failure of the British bond sale earlier this year does beg the question, "What happens if the government finds it harder and harder to borrow money?" There is not an infinite appetite domestically and abroad for US public debt, so there is an upper bound to the amount of borrowing that can occur.

Being a sovreign nation with a fiat currency, the United States has as many dollars at is says that it has, and the Federal Reserve System is allowed to expand or contract the monetary supply (the total number of dollars) as financial demands require. If the government cannot sell its debt, it can simply ask the Federal Reserve to "print" more money.

As an aside, I wish the presses were running full-tilt cranking out sheets of $100 bills to fund this government expansion, but I doubt the money could be physically printed fast enough to fullfill the requirements of just the amount of money passed out to banks, car manufacturers and expanded government programs since this past October. A trillion dollars is ten BILLION $100 bills. At a gram per bill, that's ten million kilograms of currency, about 22 million pounds of nothing but $100 bills.

This dump truck, the Caterpillar 797B, can carry 380 tons and is used in mining operations.



It would take just under 29 of them to hold a trillion dollars worth of $100 bills. It would take roughly 100 of these trucks, filled with their maximum load of 380 tons of $100 bills, to haul away the federal budget this year -- but hey, only half of that is debt, right?

That trillion dollars can be created in a computer system by the declaration of the Federal Reserve. It most recently happened on March 18, 2009. The Federal Reserve bought $1 trillion in T-bills and mortgage-backed securities with this money, though no 380-ton dumptrucks were reported in the streets of Washington, DC. The computer at the Fed got another 1 followed by 12 zeroes, and shortly thereafter the accounts listing "T-bills held by Federal Reserve" jumped up, and so did the account balance of the Treasury.

If you're getting a mental image of a snake eating its own tail for the nutrient value, then you're pretty much right on as to what is happening. This is of course legal, I'm not decrying it as something evil or nefarious, but everything has consequences. And it's the consequences that are my chief concern when the Treasury has problems selling their T-bills, because the Federal Reserve can always buy them with currency they create not based on items of intrinsic value, like gold or food, or based even on paper currency, but by the declaration of the Federal Reserve. Thus, there are more dollars in the system, and as the amount of goods and services produced in the United States didn't change, by definition the value of goods and services per dollar will decrease. This is called inflation.

When the US Government can no longer exchange its debt obligations to fund government operations, it must turn to making more currency. It's possible the Federal Reserve will tell President Obama that the till is closed, that the risk of inflation is too high. They will do this in part by making it more expensive for everyone to borrow money, by raising interest rates. This not only affects the federal government, it also affects everyone whose ARM resets and leads to higher mortgage costs. It affects anyone buying a car, which is something the auto industry really doesn't need. It affects anyone trying to borrow money to build or expand a business, increasing the costs of economic growth and employing others.

At this point, we must hope that President Obama and the Congress are "moderates" they tell us they are, and will moderate their spending appetites, which to this point exceed that of any Congress or Presidency in US history. I hope Ben Bernanke has the stones to tell the President that they just can't borrow what they want to borrow from the Fed, and that if more T-bill auctions end up more expensive than originally planned that Tim Geithner will pull the President aside and tell him that there is no more appetite for our debt and some serious priority-shuffling is required.

Maybe this will come in the form of significantly increased taxes, but people resist paying taxes (all people, not just wealthy people) and will move to minimize their tax burden. It's more likely that some of the more ambitious parts of the Obama agenda, like health care reform, will have to be seriously scaled back or abandoned altogether, if this happens before things like health care reform and cap-and-trade energy taxes are locked into place.

But it is also likely that what will be described as "a little" inflation is declared to be worth the goal of a "more equitable society". Of course, the inflation won't be or stay "little", and the equality of outcome will never appear, thus the need for continued government pursuit of the will o' wisp, with the inevitable "little more" inflation every year.

And meanwhile, your savings will be ground away, the cost of everyday goods will continue to increase, and we will learn the joys of inflation that has so bedeviled Zimbabwe and Argentina and other nations whose leadership was wrong-headed and felt their ends justified their citizens' increasingly-humble means.

So keep an eye out for news of more T-bill sales going unexpectedly south. I expected this, just not so soon. This current event is minor, and may not happen again for months, but when a T-bill auction doesn't sell out, that will be time to see how much gold you have on hand, because your next set of groceries may be costing considerably more than the last.

How I Spent My First Billion

I was born wealthy. I had nothing to do with this bequest of good fortune, and I'm not feeling guilty about it as some would have me do. Much of the wealth I had I can only appreciate looking back over my life. I can say that it truly is the experiences that stand out more so than the material things, but I had those, too.

I had houses in Michigan, Ohio, North Carolina, Missouri, Arkansas, Pennsylvania, Iowa and several in Texas. I even spent some time living abroad, it's one of the things you can do when you have the means. I (like many wealthy people) had two families, but they get along exceptionally well. Spending liberally on both of them keeps things on an even keel. In my family, my parents know about spending -- they've each spent over TWO billion.

Rather than being idle with my wealth, I spent quite a bit of the first billion on education. Several schools in several places, sampling what I could learn. I even got a doctorate, and a career to keep me busy. Doing nothing with the wealth you've been given is just wrong, isn't it?

And I spent, boy did I spend. Looking back, it's hard to imagine that I spent on average around eighty-six thousand a day. I even spent my wealth when I was sleeping, but the sleep was worth it. It's funny, when I was younger the wealth seemed more valuable somehow, but now having spent so much I have the memories to show for that billion. In the process of burning through my first billion I found a wonderful, thoughtful, capable lady who really wanted to help me spend it well, and we have three really funny, intelligent children, all of whom have their own fortunes to spend or (so we hope).

I made a lot of good, genuine friends. It's hard for some people to know whether it's their wealth that brings friends to them, or they themselves, but either way I met and befriended hundreds of people while I was spending my fortune. I have friends from nearly everywhere I lived, much like families, when you spend on people they tend to remember it, and appreciate it. People say you can't buy friends, but those people just don't spend the right way.

The end of my first billion I didn't even recognize, to be honest. I was working my first real Big Boy job, living in a great little town, father of two and planning to have Lasik in a couple of months. Best I can figure on August 9th, 1999, at about 5:30 in the morning I spent the last of my first billion.

I turned 31.7 years old. And in my sleep, I started spending my second billion.

*****

The billion I had wasn't in dollars. I had spent a billion seconds of my life to achieve all those things. My two families were my brother, sister, mother and father, and then my own family with my wife. I lived in all those places mostly because I was a kid moving around with my parents. I "bought" friends the way we all do -- with our time, our greatest investment in others.

I found out that I had spent a billion seconds already when I recently read Everyday Survival by Laurence Gonzalez, an excellent meditation on life, people and energy disposition. It was about that time that we were talking about these huge budget deficits, when the phrase "billions" was casually discarded in favor of "trillions", and it struck me how little we understand and relate to large numbers like that. A billion seconds is three-quarters of my life to this point, almost. We consider people who've had three billion seconds of life to be quite old. When people start talking about a $787 billion stimulus bill, that's a little over $86,000 a day for roughly 200 lifetimes.

And when they talk about a trillion -- that's a whole order of magnitude (well, three orders of magnitude) more. A trillion seconds ago was 30,000 years ago. These numbers are staggeringly large, and it sort of makes my mouth go dry a bit to consider that those numbers are debt, money that is intended to be repaid. Statistically speaking, I've worked for 15 years, and spent four months per year working just to pay the taxes I've owed. Doing the math, that's:

60 months
240 weeks
1200 workdays
9600 working hours
34,560,000 seconds

In my next billion seconds I'll probably be working the whole time. Assuming no increase in income tax rates, that's going to mean the income taxes I'm paying will consume 6.9% of my life. That doesn't even count the repayment of debt, the debt this year alone is nearly half of the budget, meaning that if we all spent 13.8% of our lives doing nothing but working to pay taxes we'd break even...this year. This assumes no inflation and no increase in interest on existing or future debt, both of which are exceptionally unlikely.

This is why the debt bothers me: because my kids will be spending a little over a tenth of their adult lives working to pay income taxes just to keep pace with the debt, not to even begin eliminating it. Once you add in the anticipated shortfalls from Social Security and Medicare, they're trillons of more dollars in the hole.

They're kids, and I'm not going to explain this to them until they ask me. Right now, they have a wealth of time they need to spend developing themselves, their skills and abilities. Right now, I'm the adult with the wider view of the world and what's going on, and it's my responsibility to change this. It's the responsibility of all of us who have the skills to do basic math to let our representatives know how much we dislike this level of spending.

It's not just your dollars they're taking. It's your real wealth that's being spent.

Sippican Cottage: My Father Asks For Nothing

Sippican Cottage: My Father Asks For Nothing

Papa (Marci's grandfather Billy Wise) died in February 2003, I can gauge how long ago by how big my youngest daughter is. She was a tiny spark of happiness toddling around a gloomy living room back then. She didn't get a chance to know him, and it's her loss.

He was a supply Sergeant in the Army Air Force, based in England from 1942 on. His unit got there to set up everything so the B-17s based out of England could start the difficult process of sorting out what worked and what didn't in the aerial bombing of Hitler's Europe. He flew on a few missions, he called them "milk runs" across the channel to France, when they needed anyone who could hold a M2 .50 caliber machinegun in the side gunner position, but he would tell you he wasn't a combat soldier. He was a proud veteran of the Eighth Air Force, though. He had a story or three about going across to Normandy a few days after D-Day to set up Marsten matting to build an improvised airstrip. He wasn't a fan of war.

He came home to a wife who loved him for nearly sixty years (and still does today), a series of sales jobs at which he found middle-class success, and had two children: a daughter and a son, who is the father of my wife and the grandfather of my children.

I knew Papa for what seems like a very short time, it was only 12 years and some change. I intended to take him to an airshow and buy him and I a ride in a B-17, but by the time I had the resources I didn't have the time, and he passed away suddenly. It would have been a great thing, but I dithered, and I missed it. I miss him more.

He died the way he would have wanted to, I think: in the middle of a joke at a doughnut shop where he and his Greatest Generation compatriots met daily to solve the problems of the world. He probably would have wanted to make it to the punchline, but hey, leave your audience wanting more, right? He was a gem of a man.

His burial was at the National Cemetary in Grand Prairie. If you've never been to a military funeral you can't understand the bond that soldiers feel for one another. The attendants at his funeral showed the utmost respect for a fallen soldier, and his survivors. He fought, like so many others who proceeded him into that cemetery, because it was the right thing to do. My wife, my children, maybe even I were witness for him that day, because he made our lives as we know them possible. It was the least we could do.

This is a great piece about a son who got to take his father to see a B-24 like the one that was so formative in his young years. I'm glad for him that he did.

It's also a reminder to me to stop doing the urgent things, and start doing the important things.

The Governance Registry

This is an idea I have been kicking around for a while. It would make (at the least) an interesting experiment, and not a particularly expensive one.

The proposed Obama budget for 2010 I find to be an abomination, it's only redeeming value is that it makes the steaming loaf of the $410 billion Omnibus budget bill for spending for the rest of 2009 look responsible by comparison. I fundamentally disagree with spending that much money on things that I do not share the President's concern for, and what's more, I pay a HUGE pile of taxes and stand to pay much more when the tax cuts of the Bush years run out.

I remember the misguided "Nuclear Peace" movement of the 1980s, and the phrase, "Wouldn't it be nice if schools were fully funded and the Air Force had to have a bake sale to buy a bomber?" Undoubtedly this doggerel was born in some left-wing think tank, or maybe air-freighted straight over from the USSR itself, but it got me to thinking: would the school or the Air Force win in a budget contest? And for me, there was no doubt, I'd be buying a share in the bomber.

With wedding and baby showers the US has developed quite an infrastructure dedicated to making lists and letting others fulfill the wishes of the honorees, it seems to be a reasonable step to adopt the same thing for the US Government. My "Government Registry" works like this:

1. The Congress adopts a budget for the year, which is divided as much as possible into the smallest dollar-value increment for each program and then fed into an online database. The Congress has 'registered' for the things it would like in a given year, down to the nuts, bolts, tires and policy costs.

2. Congress can set whatever taxation levels it chooses to, brackets, flat taxes, whatever.

3. Taxpayers get a report from the government when their taxes are filed, listing their payroll taxes, their income taxes paid, and their taxpayer ID.

4. Taxpayers then log into a secure website, enter their taxpayer ID and "go shopping", dedicating their tax dollars to specific programs the Congress has asked for in the next fiscal year.

You have to pay your FICA taxes toward Social Security and Medicare, which are programs that you front-end pay to directly benefit you, so when it comes to "shopping" for the government people who don't pay income taxes don't get to play in terms of determining which national priorities get funded.

For the lazy, there can be choices like "Evenly Distribute" and "All Social Welfare" and "All Defense" to allocate their dollars quickly and by formula. For everyone else, they get to know for sure what their tax dollars paid for in the next fiscal year.

I would buy a JDAM kit, medical insurance for a military family or two, childhood immunizations, practice ammo for the military and maybe buy some number of yards of interstate highway repair, and some hours of Air Traffic Controller hours (might need those guys if I fly). I would know what my money went to, and that makes paying my taxes a little more palatable.

The thing about wedding registries is that you occasionally get more in one category than you wanted, and have to return things. It would be interesting to see HUD trying to hawk 120mm tank rounds to fulfill their Congressional mandate, but probably the easier way to handle it is to make a public "gift" of some portion of overages from different government departments to the ones who missed out. The implications for the importance of the different departments of government in the eyes of taxpayers could not be clearer than the DoD announcing that it was funding 70% of the Department of Agriculture's budget for the year.

The budget would look very, very different, I think, if the people who paid the taxes chose where the money would go.

The President and the Fat Tail

Well, I said in my last post that the next bailout would be sadder, and boy was I right.

Since my last missive of 12/19/08, our Congress has passed a "stimulus" bill of $787 billion dollars. The Democratic Congressional leaders have made the prudent observation that during times of fiscal crisis it is important to pay your debts, and so right out of the chute they first debts they paid were political ones -- a Christmas Tree like no other. The reasons and justifications for this manifold and ultimately silly (though frightfully expensive) exercise really don't bear repeating, though the worst argument I heard was to the effect that their party interests had been shafted since Reagan, so they were evening the scales a bit. For anyone who believes this I would challenge you to look up the expenditures by government department in 2000 (Clinton) and in 2008 (Bush). Non-defense spending increased dramatically, Bush's major failing as a President was his inability to stop his GOP Congress from spending money like, well, Democrats.

You'd think $787 Billion (yes, that's a B) would have been enough, but you're wrong. The next appropriation bill coming down the pike is an Omnibus (when you see that word, hold onto your wallet) bill to fund several departments whose appropriations for 2009 (until the end of the federal fiscal year on September 30) could not be agreed upon by Congress and President Bush. There is more pork in this bill than in the entirety of the State of Iowa, and it leverages UP the baselines that will be used by the Obama Administration to set budget levels in their budget proposal for government actions starting in 2010. This bill, already passed by the House, bumps up domestic spending by 6.7%, the Obama budget will only increase it more, despite his recent pledge to halve the deficit to "only" $500 billion -- in four years. Despite Obama brushing off McCain's anti-pork attacks and promising a bottom-up review of government to find waste and inefficiency, this stinker of a bill is apparently not going to be even remotely opposed. The Democratic House Leadership essentially wrote the stimulus bill, apparently getting your shot entitles you to...getting another shot. Hey, we're all entitled now.

We haven't even begun to talk about the goodies that are hidden in these two bills, two bills that nobody will ever read, except the people who wrote them to advance specific purposes. Those purposes will be revealed in time, but not in time for us peons to have any say in changing those purposes. Much of the welfare reform that was the best thing to come out of the Clinton years has allegedly become undone, the Tiahrt Amendment banning states from using gun purchase records for anything other than law enforcement reasons (the other reasons being frivolous lawsuits against gun manufacturers) may not survive reauthorization or may be repealed outright.

We have not been governed recently, we have been dictated to, with the pretense of democracy. I'm really not sure how else you describe people voting on a bill they can't possibly read, making laws out of text that a minority of the majority concocts in camera. Democratic process does not make a democracy, and we barely have the process, or have for the last few weeks. The idea of a star chamber that is somehow legitimized by having people vote to approve their decisions largely sight unseen is laughable, or at least, it should be in America.

The argument that is frequently advanced by the White House or Democratic leadership is that this is a critical period and we must act quickly. I beg to differ. We get fewer points for getting an answer out quickly than we do for getting the right answer, the difference I believe is substantial and we all will pay for the push for speed. The nonpartisan (at least by reputation) Congressional Budget Office had a rather dim view of the stimulus -- in separate statements they predicted that the recession would end by 2010 and that the stimulus as written had more long-term downside than short-term upside. This does not suggest to me that the stimulus is the right answer, and so the "crisis" will continue. I predict that this crisis will not be declared to have come to an end until the political goals of our current overlords are well and truly met. There will always be the spectre of economic backsliding into recession to goad people into supporting the latest attempt to patch our societal and social dikes with money borrowed from the Chinese. I believe I've said it before, that when you hear "government spending" you should interpret that as "borrow from the Chinese".

If you need any more proof that this isn't the same country it was ten or twenty years ago, then I can't help you. In some ways it's good that this isn't the same country as it was in the past. Electing a minority man with a funny name as President is not the first way our country shows it's getting beyond racism, I believe it rather shows that we're well down the path. But part of the problem we're facing today is that our leadership is proving itself wholly unsuited to the tasks before it. This will not be the same country in 2012 that it is now, and will change further by 2016.

Richard Fernandez at Belmont Club (a great blog, you should read it) makes this point, along with Fabius Maximus (another great blog, if a little more depressing). If it seems like the world is changing, they argue, it's because it really is, and more fundamentally than at any point in my 40 living years. Chaos is taking the reins and we are in for some momentous times.

I only wish the crowd in the White House and House & Senate leadership appeared to be ready for the times. In their defense, I don't know that anyone could be, but there is certainly no lack of confidence from those quarters. They have the plan that will make it all better, fix all our woes -- um, pardon the language but the hell you do. The financial turmoil is beyond the ken of Barack Obama and Timothy Geithner. Their performances have demonstrated this convincingly. Quite frankly, decades of economic assumptions are unravelling at breakneck speed, and if the former New York Federal Reserve governor doesn't know the easy answer, then there isn't one, and Mr. Obama needs to quit telling us that he Has A Plan. He has assumptions, and even those are probably wrong.

People want to make this out into a "Bush vs. Obama" question, but that's not the issue. It is a gross simplification to assume that doing the opposite of the Bush Administration policies are automatically the right answer, the world is far more complex than that. The Obama Administration has its own set of answers -- and these will be wrong, too. The reason is that circumstances have exceeded the ability of the government to control, and the solutions that the Obama Administration and Democratic majority in Congress are applying are political solutions to economic problems. It's hard to blame them, they are after all politicians and it's natural for them to field a political solution, it's the only tool in their toolbox.

We have left the realm of realtively stable economic times and moved into the world of the fat tails, a reference to the Bell Curve and a situation where low-likelihood and high-impact events happen more often than they "should", it's exactly this kind of non-linear behavior that triggered the implosion of the financial world. Everything that has been proposed so far is demonstrably linear -- reviving old programs, pouring money in and expecting commensurate results, investing years into the future when we do not really know what the future will bring. I think that the government's actions are rational, but they are being applied to an irrational, chaotic situation where many of our basic assumptions are changing or about to change. How successful is that likely to be? The rate of success lies in the ability to predict the question that you're trying to answer, if the economy is a game show the stimulus package is punching the button on Jeapordy and giving Alex Trebek your first ten answers without hearing the questions. That's not the kind of change I can believe in. The fact that Obama says the word "change" does not mean that he's ready for it on this scale, and the Back-To-The-Future stimulus bill only reinforces to me the folly of old school solutions for new and novel problems.

The conceit of the day is that our government's fiscal and monetary policy will shape our world during this time of change, and it is a only conceit, not a plan. Normally I wouldn't mind watching a liberal and borderline socialist go down in flames, but this particular liberal happens to be the President of my country and the bet he's making is with my (real) tax dollars and those of my kids. The well from which our government can draw resources is much shallower than the Obama Administration seems to believe it is, things will go south quickly when we can no longer sell debt to foreign countries. This is not a time to centralize power, whether economic or political power. It's a time to allow flexibility, to allow individuals to change their circumstances to match the changes that occur.

I'm pretty sure that the tax burdens implied by the huge price tags on the stimulus, the House appropriations bill, the huge 2010 budget to follow, TARP II and the nationalization of healthcare (not to mention the nationalization of banks) are not what is meant by giving the American people "flexibility". It's just the wrong road, and we're already passing through a period with a lot of quakes. I don't know that anyone else could do a better job, but there are plenty of people who could be more humble. People who could admit that fixing our economic problems is beyond the ability of the government, rather than proposing government spending that increases the size of the government.

I'll be honest. I'm reflecting more and more on each day on the things I enjoy about my life, because I'm pretty sure things are going to really, really change. I wonder when my grandparents realized that things were going to get bad and stay bad for a while back in the late 1920s and early 1930s. I see this time as a twilight. I don't know how long it will last, it may me months or even a few years, but the big drop on the rollercoaster feels like it's coming.

And I haven't even read Atlas Shrugged yet.

Bailouts, Corporealness, Faith and The Pet Sematery

I gotta tell you, I go off to Facebook for a few weeks and everything I predicted happens. It's as if the people who run this country don't even read my blog.

Okay, it didn't happen quite the way I predicted. The GOP Senators led by Bob Corker, who heretofore has been a relatively silent backbencher, managed to insist on enough common-sense provisions in the Senate auto company bailout plan that it ultimately failed. The sticking point was the UAW having to pick a day in 2009 by which their wages would be reduced to those comparable to the wages paid at Toyota, Honda and other "transplant" auto companies. They were also going to have to take some of their pension and health care trust fund money in stock, and while they definitely want to get paid, nobody's crazy enough to take GM common stock right about now. The date that the UAW is thinking about is January 20 -- when the new President and the new Congress take over and things start swinging their way in earnest.

Like I said, there's no way a Democratic Congress and a Democratic Presidency aren't going to lead-block for organized labor. While this is a great opportunity for a Sister Souljah moment, the Democratic party has never stood up to the unions since the Great Depression, and given that we're on the brink of at least a Little Depression I don't see them doing that now. Heck, with "Card Check", the deceptively-named Employee Free Choice Act, it's not inconceivable that if the UAW waits long enough and twists enough arms at the transplant auto companies ("transplant" is the new term for foreign manufacturers who have set up here -- kind of like a transplanted kidney that is working when the native ones don't), they won't be lowering their pay and benefits to match the non-union shops, they'll be introducing the GM-Ford-Chrysler contract at all the new UAW Locals at the transplant factories. Disparity averted! Problem solved!

So now the White House feels the need to act, and here's where we get into the etymology of "corporation". Now, it seems funny to see the word corporation all by itself, without its constant companion word, "evil". For some reason, a group of people who are organized, like say, a community organization, is good, while a group of people in a corporation are practically destined to do fell deeds. One of the great realizations of my college education was that the words corporation, corporeal, encorporate and corpse all share the same Latin root: corpus, or body. A corporation is a legal fiction: it is in essence a brain-dead human being, forever at the age of majority, and as the officers of this corpus the Board of Directors has what amounts to power of attorney. While this body is never seen and doesn't act on its own, this particular corpse is agreed to exist by legal fiat. The assets of stockholders are shielded by this fictional being, who exists enough to own things and accept responsibility and blame, but not enough to have motive force. A corporation is a fictional person, nothing more and nothing less. The actions of a corporation are the actions of people -- good, bad or indifferent. People who fail to grasp that a corporation is simply an organizational tool and not a moral judgment are nonserious people.

So what we have are three corporations -- three now-very-old fictional people who used to be vibrant and healthy, and were active an vigorous as little as a decade ago. Now, they're functionally in the financial ICU, with multiple organ system failure and at Death's door, knocking loudly. The most recent knock was from Chrysler, who announced earlier this week that they were a bit overstocked on cars and would be shutting down operations for four weeks over Christmas and New Year's. This announcement was apparently made as a means of banging Chrysler's spoon on its high chair, the wallet of last resort (the White House) was insufficiently prompt with a bailout offer, and the owners of Chrysler were getting nervous.

As an aside here, the 80% owners of Chrysler are not Mom & Pop stockholders, it's Cerberus Capital Management, one of the largest private equity firms in the United States. Have you heard about how much money Cerberus is going to put into Chrysler? Yeah, me neither. Why innovate or invest or even manage when you can spend a fraction of that money lobbying for rents (the economic term) in Washington? Cerberus can go hang, I want to know what they're willing to do before my tax money goes to bail out people who make more in interest each week than I do in a year. But I digress...

So Chrysler gives a hint that it's going to take a nap and might not wake up, and the Bush White House folds like a lawn chair. They're scooping the dregs out of the first round of TARP funds (that program that was supposed to buy troubled assets, but didn't, and invested in bank equity to improve liquidity, which didn't work either, but hey) and have announced $13 trillon or so in low-interest loans for Chrysler and GM, to tide them over until February. If the Congress doesn't pull the brake lever on Round Two of the TARP funds (another $350 billion, or as we like to call it, about half of the cost of the War in Iraq -- remember when $350 billion was a lot of money?) in early 2009, there's another four-bil in it for them.

There are a couple of things to like, and this is looking very much on the brightest possible side. One, this is a loan, not a giveaway, though this is in itself a major technicality -- loaning money to your crackhead buddy when you know he's going to blow it and is unlikely to pay you back amounts to a giveaway. Two, to get the money the unions have to lower their wage scale to match the transplant auto companies' by 12/31/2009, among other things. That's it. Otherwise, your money is being used to perpetuate the life of a couple of corporate beings by another few months. They say end-of-life care is the most expensive, and if you needed any proof, well, there it is.

You see, there is an afterlife for corporations, these fictions of life that do our bidding. It's called bankruptcy. All that you have and all that you owe are tallied, and a judge makes a determination about how you'll spend the rest of your existence. There is a holy book that describes this process, the United States Code. It even has Chapters, Chapter 11 is the favorite of many. But to get to the afterlife, you have to have faith -- and faith is what we're missing.

George W. doesn't want to be the President who lets a whole economic sector die on his watch. He only has a few weeks left, and he's trying desperately to avoid becoming George "Hoover" Walker Bush -- his faith is being challenged. He has publicly stated that his purpose is to avoid a "chaotic" bankruptcy, because of the disruption down the supply chain and the further crisis in consumer confidence that would create, so he puts some quarters in the respirator and the corpus stays alive for a few more weeks.

Which brings us to Pet Sematary, a now decades-old novel by Stephen King, the functional lesson of which is that "Sometimes, dead is better". In the story a doctor loses his son and cannot bear the loss, so he buries his son's body in an old and exceptionally haunted Indian burial ground. What comes back from the burial ground looks like his son, but is clearly his son no longer. Eventually, the son-thing kills his wife, and having already lost everything, the now-quite-insane doctor buries his wife in the Pet Sematary and waits for her terrible reanimation. The clear parallel here is that Congress is the Pet Sematary, a magical force that will reanimate these fiscal corpii, though they won't really be alive.

Japan went through this same kind of real-estate fueled boom-and-bust cycle, and one of the lingering aftereffects were "zombie corporations", companies that were perpetually dependent on government handouts to stay alive. They were a further fiction atop the fiction of a corporation, unable to perform even the basic function of a corporation they were nevertheless kept functioning on the government dole to avoid the specter of unemployment. One imagines the Nikkei stock index as a tour of the storage chamber in Robin Cook's Coma. The fear of unemployment and the specter of deflation kept the Japanese government printing money, lowering interest rates and desperately propping up the economy, but there was essentially no economic growth in Japan for more than a decade -- almost the length of our own Great Depression, though without the high unemployment.

I can see Bush shambling toward the Pet Sematary, cradling the corpses of GM and Chrysler -- not because he loves them in particular, but because he fears loss and blame. It's really unfortunate that this and a shoe-throwing incident are the two last acts he'll probably be remembered for at least for the first round of histories. I believe he has faith in the bankruptcy afterlife for GM and Chrylser, but he doesn't want to pull the plug. He's kicking the can, and it's sad to watch.

The next Congressional session will be sadder. But when it comes to the bailout, I'm agin' it.

Pull The Trigger

I've been hearing about how GM and Ford and Chrysler are on the ropes for months now. I even bought some GM at $6 a share a few weeks ago, the sold it at $6.50 because I read a rather convincing article that GM could very likely fail.

Well, it seems that that eventuality is pretty close to becoming a reality. The Big Three have convinced the Democratic leadership (Reid/Pelosi/Obama) that they need a bailout and now Obama is trying to convince Bush that they need the bailout even before the Obamas can move in with the new First Dog. Nevermind that the Big Three already have $25 billion in low-interest loans, a little tidbit passed in the days before the $700 billion TARP plan made that look like chump change. They need more.

Part of the reason they need more is that the UAW has systematically strangled General Motors and other automakers for decades. I should know, both of my grandfathers were UAW members and retired with UAW pensions, one from Fisher Body, the other from Chrysler. I'm far removed from Detroit now, but Detroit is one of my family's ancestral homes and my own father recently retired from GM. The UAW nearly killed GM a last year with a strike, as part of the settlement the long-term UAW pension and health insurance benefits were to be passed on to trusts, funded by General Motors and run by the UAW. Sounds like a good plan -- GM gets to pay $36 billion to pay for 70% of its massive $51 billion in unfunded retirement benefits.

Well, here we are in 2008, just over a year later and the Big Three's lobbyists are walking the halls of Congress and prophesying doom if they don't get paid. Hope and Change are in the air. GM hopes it will have enough cash to make it to the end of the year, much less until the change comes in late January of 2009. Nancy Pelosi and others are trying to figure out how much to pull out of the national wallet to prop up these automobile manufacturers, in part because the UAW's trust fund is not yet fully paid up.

An ironic note is that when President-Elect Obama is able to issue executive orders, one of the ones he's likely to issue is a variance from EPA standards allowing the California Air Resources Board (CARB) to regulate CO2, and raise fuel efficiency standards for cars sold in California. CARB has already indicated they want to raise standards above what Congress just mandated last year -- efficiency standards the automakers have yet to meet. If President Obama allows California, where 40% of US car sales occur, to set the bar for the rest of the country, within 5 years the car companies will be right back to Congress for yet another handout. If he doesn't, the MoveOn.org and hardcore environmentalist folks will be experiencing the buyer's regret that I expect them to encounter at some point in the first 100 days.

Pelosi, Reid and Obama are very interested in getting help to GM, not so much because they are ardent capitalists but because union households delivered Michigan, Ohio and Pennsylvania, among other states, and unions are a major constituent of the Democratic alliance created back during the last great economic challenge -- the Great Depression. The Wagner Act is a legacy of those days, the adversarial position of union vs. management was enshrined by legislation during the 1930s. The UAW delivered for the DNC in ways they really have not for GM, now they want their government to work for them, and be sure their retirement plans are fully funded.

I predict that GM will be bailed out by the government, at least once, if for no other reason than to preserve union benefits. In fact, literally for no other reason than to preserve union benefits. GM as a company will not be helped by this cash infusion, they'll likely get enough of your money and mine to complete their pension mandates, and then the Congress will find themselves much more interested in the workings of a free and fair market.

My modest proposal to Rick Waggoner is to tell the government to stuff it, save the money he's spending on lobbyists, and declare bankruptcy now.

No other course of action will allow GM even the chance to get the UAW claw off the company's throat. The Democratic Congress will not pay for GM's survival directly, it's mainly the UAW they want to see benefit. Only bankruptcy will allow General Motors to sever its relationship with the UAW and move forward like the other half of the US car industry. GM going bankrupt will not be the end of domestic manufacture of cars -- automobiles are still needed, and GM has the plants and fixtures to make them. But GM cannot do so and make money with its current cost structure, so to save the company the cost structure has to go.

You see, there are two automobile industries in the United States. One is northern, unionized, domestically-owned, and dying. The other is southern, non-union, foreign-owned and thriving. GM cannot continue to compete with Japanese companies who do not have to tote around the UAW. Taking Congress' money will weld GM even tighter to the UAW, and will likely be the end of a domestic industry.

So, Rick, buddy -- we both know you're on the precipice. Take a big step over the edge, before you get pushed. Maybe you can fly without all the deadweight, it's certainly possible. You'll never know until you try.

And Ford and Chrysler -- do you really want to be the last union shop in the auto industry?

Pull. The. Trigger.

Whither Palin?

Well, the results are out and while the polls generally overestimated the level of Obama's support, they didn't over-overestimate it to the point of missing a hidden McCain victory. I believe Scott Rassmussen's group came the closest on the quadriennial dart throw, predicting a 6.5% advantage in people identifying themselves with Democrats over Republicans. And there's your difference, more or less. The PUMAs are apparently much rarer animals than they chose to let on.

Congratulations to President-Elect Obama. Now all you have to do is deliver on everything you've promised, and quite frankly you have as much chance to do so as your average department store Santa does to get everything under the trees of the kids they meet each year. It does not escape my notice that Barack Obama is the first man of African extraction to become the President. This is a big deal, but whether it changes much of anything with regard to race relations I don't really know. If GOP people opposing his agriculture plan, for instance, get the Race Card^TM deployed against them, little will have been accomplished.

Giving Her The Finger...Or At Least Pointing It

The recriminations are now beginning to boil out of the McCain camp, with a number of fingers pointed at Sarah Palin. Here's just a sample, according to Carl Cameron of Fox News Channel these kinds of things will be coming out for days.



Hey, why take blame when you can pass it on to others? The McCain campaign, unable to craft an economic message until an unlicensed plumber talked to Barack Obama in front of a rope line, figures it must all the Caribou Barbie's fault. For the record I tend to doubt she thought 'Africa' was one country.

The good thing for Sarah is that she has her day job, and can go back to Alaska where her popularity is only slightly dimmed (from 80%) and the Personnel Board has cleared her of any wrongdoing. She might have to fight the legislature over the Branchflower report, but chances are pretty good that they won't go after her. For one thing, it will look petty. For another, she's no threat to Obama and got her ears boxed on the national stage in a way that the Alaska Legislature couldn't dream of pulling off.

The shame of all this nasty talk is that it's just the standard pettiness that comes from losing an election, and in this case it's likely a bunch of insiders sticking knives into Palin and hoping for jobs in the next election cycle -- which starts a whole 100 weeks from now or so. Less, if you can wangle a staff job with a PAC. The maneuvering for 2012 at this point is pretty unseemly. David Frum, no Palin fan, blames Nicole Wallace, a former Bush staffer who worked for the McCain campaign. The kinds of things that are coming out are petty and catty, like she answered the door to her suite in a bathrobe. You mean, she didn't let the staffers stand in the hall? Goodness, how inappropriate...or something? Sounds like the kind of thing someone used to taking care of her own business would do, that's the mark of a humble person, not an arrogant one.

It's a shame the McCain campaign people weren't as effective at real politics as they seem to be at office politics. Could have made a difference.

Senator Palin?

Ted Stevens, Alaska's senior Senator (and newest felon!) might win his re-election bid after being convicted of perjury for failing to report $250,000 in home improvements an oil services company performed for him. If elected, he will most likely face censure and expulsion from the Senate, if not jail time, so he will not be serving. Alaska law requires a short-interval election within 90 days, so someone will be replacing him and will run against (most likely) Mark Begich.

Sarah could run, but it would be a bad idea. First, it looks like naked political ambition. She was elected governor, she should serve out her term. Second, if she wants to run as a Senator, Lisa Murkowski is up for reelection in 2010. I have nothing personal against Lisa Murkowski, but with the name there's probably a body or two buried somewhere and if she has ethical issues Sarah has the opportunity to run. Waiting is better. If she gets to appoint someone, I imagine she will appoint Sean Parnell, the Lt. Governor who she supported in the primary against Don Young.

Finally, being a Senator probably wouldn't add much to her resume. It would destroy her "Washington Outsider" credentials, which are probably going to be really useful because the Reid/Pelosi/Obama group have challenges before them their ideological bent does not prepare them for (war, recession, crushing debt) and their chances of screwing something up badly are very high. She will benefit from staying out of the blast radius of the debacle as much as Barack Obama did from being a state Senator during the 2002 Authorization for Use of Military Force vote before the Iraq War.

R-E-S-P-E-C-T

For someone who was such a punching bag for Saturday Night Live, the real Sarah Palin seemed to really make an impact on at least three people: Lorne Michaels, Tina Fey and Alec Baldwin. None of these folks would you expect to be political allies, and none of them are. But they have an interesting perspective, politics has been described as "Hollywood for ugly people", there is a certain similarity in what they do. Performers in Hollywood know they are at the apex of a very high and steep pyramid where only the best get where they are, and then with more than a little luck. When the guy that launched the careers of Bill Murray, John Belushi, Eddie Murphy, Mike Myers and Chris Farley, among many others says:

What do you think Palin gained from her appearance?
I think Palin will continue to be underestimated for a while. I watched the way she connected with people, and she's powerful. Her politics aren't my politics. But you can see that she's a very powerful, very disciplined, incredibly gracious woman. This was her first time out and she's had a huge impact. People connect to her.

She's a ratings magnet, too — do you think she can land a development deal if this VP thing doesn't work out?
She could pretty much do better than development. I think she could have her own show, yeah.

Lest you miss it, "I think she could have her own show" is a bit of a compliment. Maybe it's a way to get her out of politics and into something where Lorne feels she could do less damage, but either way it's a compliment.

Even Alec "I'm going to move to France" Baldwin is fairly circumspect in his criticism of her during his appearance on Letterman:


Same for Tina Fey on Conan O'Brien.


Obviously, it's easier to be nasty when you're being anonymous and not-for-attribution to Carl Cameron behind the campaign bus, and harder to do it when you're on-camera with Conan or Dave. Nevertheless, there is some acknowledgment from people pretty close to the top of their game in working in front of cameras that Sarah Palin has...something.

What she does have, and more importantly can communicate very well, is a general happiness about her life as an American. Of all the gifts that Reagan had, this was his most potent. Nothing draws people like happiness and love, and Sarah Palin is at her best when she communicates these things. If she can add an uncrackable knowledge base to that, she'll be a fierce competitor in the next election cycle. Contrary to popular belief and MSM assumption, conservatives really are happy. It's kind of our little secret, but when someone like Sarah Palin can get onstage in front of 40 million people and be conservative and happy at the same time, well that snaps the needle off the approval meter for conservatives. If being an Angry Conservative was enough, Pat Buchanan would have been GOP nominee for life.

Then again, after this turn as the punching bag, she might decide to just raise her kids, stay in Alaska and remember that couple of months when she was the first female GOP nominee for Vice-President. It would be our loss, I believe, but I think she's earned some peace and quiet.

Kiss Me, I Voted

Yup. On the way to work, at Pine Tree High School. There were three people ahead of me in line, and it took about three minutes of waiting.

The "books" were gone this year, it's all on laptops and little printed-out stickers to sign. We've had E-Slate voting machines for the last few elections, they're pretty simple to use and it took a whopping sixty seconds or so to page through the options and make my choices. I didn't get a sticker, though. I wanted a sticker.

If you've already voted, congratulations. If you haven't voted, get out and vote for John McCain. There's always the possibility that your neighbor's useless kid will set down the bong long enough to find a polling place this year, you need to be there to cancel him out if he does.

No matter who wins, this is going to be a really, really big election. If Barack Obama wins, there will likely be a leftward tilt to the American government not seen since the Great Society days of LBJ, not to mention that America will officially be no longer racist.

The biggest game-changer of all will be if John McCain wins, though. It will be huge because a monstrous swath of the media and political elites will have been shown to be spectacularly and phenominally wrong. A sizable portion of those people will later be found to have been complicit in one of the biggest Psy-Ops attempts in American political history, the inevitability of Barack Obama. They will have missed a huge groundswell of opinion, and completely misread the political situation in the United States. You won't be able to sell anything with a poll for years in this country. It's happened before, in 1994. It may very well happen again.

If you're interested in what I'm saying, there are a couple of fairly long 'think' pieces I would invite you to read. The first one I read was from the oddly-named Zombietime and is called The Left's Big Blunder. Read that one and then go to Sean Malmstrom's site and read his entry called Toast.

Go ahead, I'll wait. I have to go to Starbucks and get my free coffee.

Now that you're back, those are a couple of well-reasoned arguments to keep your chin up, aren't they lil' GOP voter? Did you respond to a poll phone call this year? Me neither. Would you respond to a poll phone call? Yeah, me neither. I believe that McCain voters are horribly under-polled this year, and the majority of the polls show such wild swings and divergence from each other than they're useless. No two "scientific" polls using similar sample size and methodology should show a 15-point difference. The fudging always favors the Democrat.

Do not believe the exit polls, either. The media have too much riding on a Barack Obama win to not call the election as soon as possible and try to create a self-fullfilling prophecy. Exit polls are as subject to bias as anything else, the major bias factor is that Obama voters are more likely to tell you they voted for Obama, and McCain voters have to get back to work.

What if the media are wrong? If you've read the Zombietime and Malmstrom articles you're aware of the media either being swept up in or, in the case of MSNBC, pushing the meme of Obama's inevitability -- the poll-weighting, the Palin-hating (how much do you wish Obama could trade Biden for Palin at this point?). If they're wrong, after all that -- how will you believe them about anything in the future? They will have completely missed the largest political story in modern history because the Democrat/New Party candidate sent a thrill down their leg.

Their objectivity is shot whether Obama wins or loses in my opinion but an Obama loss, even a close one, would be devastating to the credibility of the media. They have obviously picked Obama. They have been less than honest in their role as servants of the public knowledge, and yet believe or at least proclaim their neutrality.

Bull. You get this one wrong legacy media and you're dead to me. You're not looking good even if you get it right. When the Los Angeles Times is sitting on a relevant piece of video like the Khalidi tape, they're cheating. When the San Francisco Chronicle fails to report Barack Obama's punitive carbon tax plans and intent to bankrupt the coal industry in the pursuit of the elimination of a trace gas, only quietly making the audio available online for 10 months, it's a problem.

When the media won't report on how completely insane Joe Biden is, that's a problem. When a guy like me on his couch with a laptop can call BS during the VP debate and then with a few more hours of research find that Joe Biden's version of reality is his and his alone, that's a problem. When the media is denied access to Biden and has more access to Palin without the public really knowing this fact, that's a problem. Right now it's a problem for the consumers of news. If the media gets the election badly wrong, it will rapidly become their problem.

And so, my Survival Guide For Election Night

1. Don't believe a single exit poll unless they show Obama with less-than-expected support. McCain voters are much less likely to answer, and the PUMAs will flat-out lie.

2. If you live west of the Eastern Time Zone, MAKE SURE YOU VOTE. Do not listen to a thing the media says. It's over when the votes are counted, not when the media "calls" a state for one candidate or the other. Pennsylvania is a good example -- the media may call the state because of the outcomes in urban counties but not wait for the rural voters. PA is very, very important, as you'll deduce from the Zombietime and Malmstrom articles.

3. We should know quickly if Obama wins, there are some must-gets for McCain on the East Coast and if he loses FL, VA, PA and OH then it's really over. Go to bed, and start digging your bunker tomorrow morning.

4. If McCain wins PA and FL and VA, it won't be over until the last Obama lawyer throws in the towel, but winning those three goes a long way to winning overall. It will still take MO and OH and NV to go Red this year, but if McCain can flip PA it will be huge.

Best of luck to us all, I've been praying for the country and for McCain and Palin for weeks now.

I might do a liveblog of the election returns, but maybe not. I think I have one more Palin piece in me before the election but I have miles to go on the PACS before I can do that.

A Feature, Not A Bug

Too many reports to ignore that maybe Barack Obama's vaunted fundraising operation is steeped in fraud. Specifically, the allegation is that the donate-by-credit card option on the Obama website is intentionally disabled to allow fraudulent donations.

If you've bought anything online you've probably dealt with the AVS, or Address Verification Service, which is a check to be sure that your name matches the card number and your address and zip code match the account information as well. Many vendors also insist on the three-digit CVV code on the back to confirm you have the real card in your hand when you donate.

The Obama website has none of this, which is part of the reason that the Obama Campaign has accepted donations from such well-known figures of history and fiction as Good Will & Doodad Pro, Adolf Hitler, OJ Simpson, Nodda Realperson, John Galt, Henry Reardon (those last two for the Ayn Rand fans in the audience) and the best "asdf". In some cases these fictional donors have given tens of thousands of dollars in small increments.

The reason for small increments is that donations of less than $200 do not have to be reported to the Federal Election Commission with the same stringency as larger donations. You do not need to record a name, address and occupation of the donor. If you wanted to send millions of dollars to a candidate, the easiest way to do it would be to do so in $200 increments. You could pay someone $10 an hour, enter a payment a minute, and funnel $12,000 an hour into a campaign, limited only by the ability of your keyboardist to invent new names. Quite frankly, you could just automate the process with a large enough database of names and fictional addresses and do it 24/7/365. The personal limit to any individual campaign is $2300 in the primaries and $2300 in the general election.

The disabling of the fraud-protection system got me thinking, though. There are three ways this could work out for the Obama Campaign.

One, it allows foreign donors to contribute, and it's not as if the man is unpopular overseas. Nice that they have an opinion but taking their money is a federal crime, I believe. The fact that so many Obama donations during the primaries were odd-denomination donations (dollars and cents) makes one suspicious that the donated amounts were in Euros or other currency helpfully converted to dollars by the magic of Visa.

Two, it allows people to use lists of valid credit-card numbers to "donate" to Obama in a fraudulent fashion -- which has happened.

Three, if the Obama campaign was working in conjunction with a fraudulent front company to do its credit card processing, fraud becomes a feature and not a bug.

Usually, if your credit card is misused by someone else your bank will reimburse you for the loss, and attempt to ding the merchant for the difference. If there was an intermediary organization that could a) do the credit card billing for Obama and b) had access to foreign cash (or just cash in general over and above what could be legally donated), the front company could reimburse "fraudulent" charges to people whose cards were used wrongly...and never attempt to get the money back from the Obama Campaign.

Let's say Ima Republican shows up with a $2300 charge on her credit card to "Obama Campaign Services". She reports it as a fraudulent charge, and Obama Campaign Services refunds her the money. Well, if OCS is a front bank with its own source of money, then it doesn't have to go after the Obama Campaign itself to make good. It just accepts the loss and moves on. The Obama Campaign is never asked by Obama Campaign Services, its credit-card processor, to repay the money. Assuming OCS has sacks of cash available, the more fraud the better it is for the Obama Campaign, as long as it doesn't get caught too often. OCS is there to take the hits, pushing otherwise-illegal money to the Obama campaign no matter if it's fraudulent or not.

Sounds a little paranoid, I know. But when I hear about Democratic lawmakers circling my 401k like sharks, paranoia becomes a reasonable way to do business. I know next-to-nothing about credit card processing, this is entirely conjecture on my part. But the fraudulent activity is not conjecture. it's something to be concerned about, especially when it would be very easy to make your website fraud-resistant the way the Hillary Clinton and John McCain websites are.

But Sarah Palin has new clothes, so I guess all of this doesn't matter.

UPDATE: Apparently Chase Paymentech is the company that does the CC processing, and they are a reputable firm. Other people have pointed out that the Obama campaign may batch-process a days' worth of credit card payments and automatically drop obviously fraudulent or illegal contributions -- except "Good Will" has made actual donations.

All I can say is that when you're running for President and trying to raise money through credit cards it's occasionally good to have "The Senator from MBNA" for your wingman. Is Joe Biden worth it? If you're in good with the CC companies he's worth (literally) millions.


Barack+Obama 2008 Fraud

On Deterrence and Perception

I know something about deterrence, both sides of it actually. Now that I am 6'5" and slightly over 250lbs, I represent one defintion of deterrence. My first CHL instructor, a former Green Beret and UN Peacekeeper in the Sinai, told me flat out, "Nobody is ever going to mess with you Darren, not even drunk. You're just too big." I find this to be true. I haven't had anyone in my adult life make anything approaching an aggresive physical move toward me. I know one side of deterrence in this way: I intimidate, without trying.

The other side of deterrence I know from my childhood. I was tall, but not particularly wide. I grew fast and was skinny, and I stood out among my peers. I had some kind of inborn block against beating the crap out of people who deserved it. I have thought a lot about this, and for me I believe it came down to a fear of losing control, of abandoning myself to fury and really trying to hurt someone else. I have subsequently gotten over this concern (it's amazing what having a wife and children will do), but growing up and being the new kid as often as I was, I had people getting aggressive with me all the time.

Now, you may wonder, why does this trip down memory lane have much relevance this political season? Well, Joe Biden made the discussion of deterrence and lack thereof relevant with some comments he made in Seattle, as reported by ABC News:

"Mark my words," the Democratic vice presidential nominee warned at the second of his two Seattle fundraisers Sunday. "It will not be six months before the world tests Barack Obama like they did John Kennedy. The world is looking. We're about to elect a brilliant 47-year-old senator president of the United States of America. Remember I said it standing here if you don't remember anything else I said. Watch, we're gonna have an international crisis, a generated crisis, to test the mettle of this guy."

Amazingly, Joe Biden and I agree on something, though strangely enough when I proposed this a week ago to some committed Obamatons, they said I was absolutely insane. I said that the courage of John McCain was beyond question, but that when Obama talked tough he was unconvincing which meant that he was going to be challenged more than McCain would.

While some of you intuitively "get" this, there are no doubt some readers who will say, "No, now, the practice of international diplomacy is sophisticated! You can get degrees in it, it doesn't come down to something as silly as schoolyard bully calculations!" I agree with that to a certain point. Democracies are often complex, messy and shot through with divergent groups with divergent ends they wish to see met. Even as august a figure as the President of the United States may only be speaking for some portion of the population, and if the President gets ahead of the populace they may jerk his or her chain back into line.

Not so with totalitarian governments. Totalitarian states are built around the personalities of their leaders and inevitably end up taking on the personality of those who run the Cult of Personality. Positions that are complex and may arise from a confluence of different interests in a democracy become much simpler when you're a dictator. If you don't like cheese, you can outlaw cheese and the dairy lobby can't say boo. If there is a warship off the coast of your nation, you can personally weigh the benefits and risks to harassing it or leaving it be. Totalitarian states are the ones most likely to reflect the characteristics of their leaders and to act in a schoolyard fashion.

Should Obama become President, it's not the democracies who are likely to give him trouble. He could run for EU President in 2009 and win that, too, most likely. It is the totalitarian governments (Venezuela, Iran, Russia and to a lesser extent North Korea and China) that will be the most likely state actors to contrive a conflict with Obama, to measure the man and see what can be gotten away with in the next four years. And lest we forget, there are totalitarian non-state actors like Al Qaeda who will be only too happy to see George W. Bush disappear over the horizon, if for no other reason than he would respond to attack without hesitation, and would pursue an attack rather than making a show of aggression like Clinton. They, too, might choose a confrontation with Obama to see if their campaign has produced a more malleable US President.

What's interesting is that Senator Biden didn't stop at saying that we WILL get into a conflict in the first six months of Obama's term (if he's elected). That would be too easy for Joe, he continued, somewhat ominously:

"I can give you at least four or five scenarios from where it might originate," Biden said to Emerald City supporters, mentioning the Middle East and Russia as possibilities. "And he's gonna need help. And the kind of help he's gonna need is, he's gonna need you - not financially to help him - we're gonna need you to use your influence, your influence within the community, to stand with him. Because it's not gonna be apparent initially, it's not gonna be apparent that we're right."

Curiouser and curiouser. I added the emphasis, and that's the interesting part. The guarantee that our nation will be plunged into crisis is garden-variety and patented Joe Biden Stupid (TM), but the idea that the influence of left-wing idealogues who come to an Obama-Biden fundraiser will be needed to counteract what appears to be boneheaded moves by then-President Obama is interesting.

Does this imply that the nominally docile Obama will display a level of aggression in response to a threat that would be off-putting to the granola-crunchers that paid for his campaign? Or will the lefties be drafted to explain why doing nothing in the face of crisis (which seems to me to be more likely) is the "right" thing to do? Either is likely, but in any event Biden is basically saying that they won't get the first one right, at least in the eyes of the public, and they'll need political cover from Obama supporters after the election. Biden implies that there will either be an overreaction or an underreaction, but not that they'll handle the situation in what is clearly the right way.

Makes you wonder about Obama's judgment in choosing this clown as his running mate. Sarah Palin is regarded by many on the left as a stuffed skirt with no intelligence and a drag on the GOP ticket they're thankful for, but so far she's
energized the GOP base (check)
given the highest-rated acceptance speech in VP history (check)
given SNL the highest ratings in 14 years (check)
draws crowds that equal or exceed Obama's (check)

What has Joe Biden done? Besides prove himself unable to count to four?



Joe Biden will be 66 years old a couple of weeks after the election. Ask yourself this: If Joe Biden becomes demented and starts confabulating (making up things to cover the gaps in his memory), how long will it be before anyone notices?

I think Joe Biden would have to agree that the wisest choice would be to avoid the test, avoid the need for political cover from leftists, and just elect John McCain.

Update: When you get schooled by Sarah Palin, whom you disdain, what does that make you? Seriously, watch the video. It's worth a smile.

Music to CPR By

Saw this at the WSJ Health Blog and had to mention it.

Turns out that most people who do CPR don't compress the chest fast enough to help. The recommended rate is 100 beats per minute, but it seems too fast and wears you out.

The answer seems to be providiing appropriate theme music, which, ironically is Stayin' Alive by the Bee Gees.



At 103 beats per minute, if you can keep up with the Bee Gees you can do CPR at the proper rate. Kind of turns saving lives into Guitar Hero, but when 15 medical students were allowed to listen to music (namely, this song) they could do 109 BPM, and five weeks later, even without the music they were still at 113 BPM. All of this will be presented for the edification of us all at ACEP, the American College of Emergency Physicians meeting October 27-30 in Chicago, or as it is known for those three days, "The Best Town In Which To Have A Public Cardiac Arrest."

Two Debates and one Plumber

Well, I didn't post anything about the second debate between John McCain & Barack Obama because it was so dull I was afraid I would lose the meager readership I have simply by mentioning it. Nothing happened, literally. People asked questions that the candidates didn't answer, and many talking points were repeated. About the only thing I can say is that I'm glad there weren't 9 more "Town Hall" formats scheduled, and Tom Brokaw has strangely become much more compelling in text than in real life.

Bob Schieffer moderated debate #3, which is the first one that John McCain really showed up for. He was animated and engaged, a little too wordy at some points (stepping on his own points on occasion), but much better than in previous debates. He took it to Obama on the over-the-top accusations of John Lewis, and the best line of the night was "I'm not George W. Bush. If you wanted to run against him you should have run four years ago."

As an aside, while I liked McCain getting on Obama about the falsehoods and distortions, McCain lacks the carpe jugulum (Latin - seize the neck) attitude that his running mate displays pretty well. He made his attacks but did not press them. He landed blows but refused to try to sit on Obama's rhetorical chest and continue pounding until Obama could not reply. It's just not in him, I guess. I have heard it is a generational thing, but either way McCain keeps letting things like Obama's "cut taxes for 95% of taxpayers" line float past unmolested.

The star of the third debate, who wasn't even present, was undoubtedly Joe the Plumber, better known as Joe Wurzelbacher, a Ohioan who Barack Obama had the misfortune to stumble upon and engage in conversation while being videotaped.

Joe the Plumber asked Obama if he was really going to raise taxes on him, Joe was considering purchasing the small plumbing business where he works but was worried that the increased taxes would make it unprofitable to work beyond the 10-12 hours a day he already put in.

Obama, foolishly, was honest. As quoted at Fox News:

"It's not that I want to punish your success. I just want to make sure that everybody who is behind you, that they've got a chance for success too," Obama responded. "My attitude is that if the economy's good for folks from the bottom up, it's gonna be good for everybody ... I think when you spread the wealth around, it's good for everybody."

Oops. In one comment, Barack Obama may have undone four months of careful tacking to the center on economic issues. We may have a problem or even a series of problems in the economy right now, but when one of the people that could be President starts speaking in language dripping with socialist overtones I believe Americans will start to listen a little more critically.

Sensing an unforced error, John McCain mentioned "Joe the Plumber" nine times in the third debate, with Obama forced to mention him twice. The election has a poster child, Ladies and Gentlemen.


Now what makes this infuriating to me is that immediately the left side of the blogging community and the media set to "vetting" Joe the Plumber as if he did anything other than ask a question of Barack Obama.

Within 48 hours we now know that Joe Wurzelbach's actual name is Samuel J. Wurzelbach, he is twice-divorced and does not have a plumber's license, though he does work for a plumber. His home address has been published, his tax lein (filed in 2007) publicized and his local plumber's union notified, lest he actually work as a plumber somewhere near where he lives. He has cameras all over him, and he doesn't have to worry about any of his secrets being revealed. If you can find it online, it's going to be revealed about him.

The real question I have is why Joe the Plumber is getting the third degree? And why is the Obama campaign so completely silent on the public strip-and-cavity search that its allies are performing to a "civilian", a voter? He's just a guy, or he was before he committed the unpardonable act of making Barack Obama flub a question in front of a camera.

I see this as tremendously not-helpful for Barack Obama, because it doesn't bode well for free speech or even criticism should he become President. Apparently the rule is that if you question Barack Obama or his policies, then you make yourself the subject of inquiry. The question to be answered is not, "What is Barack Obama's reply?" but rather, "What makes you think you have standing to ask The One a question?"

At this point, would you want Barack Obama to come up to you and say, "Hi, do you have any questions I can answer?" In essence, he would be asking you if you think it's worth your privacy in case he gets stumped. Joe didn't even set himself up to be a rival of Barack Obama, Barack came to his house and because Joe didn't kiss the ring and move along, he gets both barrels from the press and the left wing.

The vitriol directed toward Joe the Plumber is pretty similar to that directed toward Sarah Palin, in that neither of them were considered to have sufficient stature to question Barack Obama's policies or conclusions. There was a collective, "Who the hell are YOU?" response, as if Joe or Sarah sat down at the cool kids' table in junior high school unbidden. What I find so interesting is that it is the alleged egalitarians and Friends of The Common Man, the leftists, who are the most incensed when an unelite person skewers one of the anointed.

Well, I have a tiny little soapbox, but when the press comes calling I will stand up and say, "I am Joe the Plumber." Somebody has to stop this kind of thing. We need to get in the habit of making our questions and criticisms known, so that maybe an potential Obama government will worry about trying to stifle dissent.

Polls are tightening. If you're of a GOP or conservative bent, keep your powder dry and be sure you vote. This is far from over.

My VP Debate Wrap-Up

After some consideration, this is my conclusion about the debate.

Joe Biden clearly and convincingly defeated George W. Bush in this debate, President Bush being absent. He also forcefully stated that as VP under Obama, in the face of economic crisis he would not pursue the tax policies of his opponent, John McCain, then went on to list the things he would not be in favor of cutting despite the fact that the bailout bill added another trillion or so to the national debt. He would "slow down" foreign aid commitments, which he later described as vital to winning in Afghanistan. As Bill Hobbs points out, this is "slowing down" a doubling of US foreign aid amounting to $25 billion a year -- against an annual deficit of hundreds of billions.

Palin dodged some questions, the wisest dodge was on the issue of the Unitary Executive and the role of the VP, which is an inside-baseball topic of interest primarily to Con Law professors and something she likely knows virtually nothing about. Joe Biden put on his Con Law professor hat and proceeded to quote the wrong part of the Constitution regarding the role of the VP as Executive Branch. "Everyone should know that," he said. I question whether "everyone should know" something that's patently wrong. Article I, Section 3 refers to the office of Vice-President, it is the part of the Constitution dealing with legislative structure and function. Article II has to do with the Executive.

Joe Biden was fully in command of the facts he made up out of whole cloth during the debate. He showed a far greater range of familiarity with his own fabrications than his opponent. In this regard, he was clearly the winner, as shown by focus group polling from Katie's Restaurant in Wilmington, DE, which has been closed since 1990. He showed boldness by contradicting the Obama website on sitting down President-to-President with Achmedinejad without preconditions. He also showed boldness by contradicting himself on the issue of coal plants. Speaking untruth to power has never had a bolder advocate. In my opinion, Joe Biden is never more convincing and genuine than when seamlessly weaving made-up facts into his statements, and I believe that is an important qualification when choosing a Democratic Vice-Presidential candidate.

But really, I think Palin came out ahead. She lied less, for one, and she's authentic in a way Joe hasn't been for a couple of decades. Considering that this is her first national debate and his third run for the Presidency (this time as VP), he didn't blow her out and she was able to score on him in her vicious-yet-nice way, which is a true political gift. She did not defend McCain as well as I would have liked, a more experienced politician might have seen more opportunities and I can't help but believe that she still could have done better. Nevertheless, she did exceptionally well. Like I said in the liveblog, they need to come up with another word for "maverick", my personal feeling is that the word has attracted as many people as it's going to attract. Drop it, or use it once and then use a synonym.

It didn't change much for the race, but it changed a lot for Sarah Palin. You can bet she'll subscribe to Foreign Affairs and, if she loses, spend the next four years getting the experience and knowledge to run on her own. She's a bit uneducated from a national and world affairs standpoint, which is what you expect from a remote state governor. Ask Biden about the status of salmon fisheries and he'll make something up, but she's probably right on top of that one. Get Biden to talk about anything other than John McCain's votes on alternative energy and he'll tell you a heartwarming story about Bill's Oil & Coal in Wilmington that never existed, or modify a Frank McCourt story about how his family had to make one piece of coal last all winter because President Willkie was such a bad Republican president back in the 1940s. Energy is Palin's issue, and she wasn't asked a single question about it.

She's a superb communicator, and couple that with more experience and she'll be deadly. She is probably about as physically attractive as a woman seeking political power can be without being off-putting to other women, what she lacks is a few more years in the governor's chair and easy familiarity with issues compelling to reporters and media folks. She needs to tone down the homespun a notch, but she's got the right instincts and she'll be a player for years.

She might even be Bobby Jindal.

Sarah+Palin Joe+Biden debate

Near-Liveblogging The Debate

Through the miracle of TiVo and a new HDTV aerial (new today) I can see every one of Joe Biden's hairplugs. Amazing. Anyway, I'm about 20 minutes behind, so refresh to see my take as it goes along.

Joe is muted and low-key

Sarah blew the answer about the financial issue. She blamed the 'Predatory lenders' without mentioning the effects of the CRA, without mentioning the actions of Freddie & Fannie.

She is bright and assertive but a little hyperkinetic. So far she's able to bring details without having to look like she's straining.

Joe is hammering deregulation, she's not responding and sticking on the tax issue. Needs to stop using the term 'heat up' the economy.

Next question: why is raising taxes not class warfare?

Joe "It's called fairness". Hmm. 30% of income tax filers don't pay any taxes. "Simple fairness" IS class warfare. $300 billion to corporate America.

Sarah "redistribution of wealth" good reframe. And she hits the small business issue. Needs to meniton S Corporations. Backwards way of growing the economy. Nice. Looked like she was going to duck the question on health care. Handled it well. "Unless you're pleased with the way the federal government has run much of anything..." Tap that anger, girl. She also snuck in the word 'Universal' -- that's a Frank Luntz word.

Joe is making a lot of hay out of the tax credit for healthcare. Spouts a lot of numbers but I doubt his specifics. I will have to look this up. $12K per insured, that's a lot of money. Maybe more than the entire private health insurance market.

Ifill reasks the "what promises will you not be able to keep?"

Joe Biden promises to slow down foreign aid, and not to keep John McCain's campaign promises regarding taxes. Will keep alternative energy, education, health care. Eliminate wasteful spending, mentions $100 billion tax dodge for offshore tax havens.

Doesn't tell one thing to one group & one to another. Energy bill 2005 -- "That's what gave those oil companies those big tax breaks" Biden used the $4 billion for XOM line twice, she turned it around and sank it in his eye socket. No, there's no promises we won't keep.

Biden responds that Barack Obama voted for it because it had alternative energy things, tried to strip it out. He calls her severance tax a "windfall profits tax", which it's not. If that is not proof of what I say then I don't know what is. Well, if you lie about it, then does it count as proof.

She's hammering the corruption and greed of Wall Street issue. John McCain to thank for failing to get his bill passed. "A toxic mess on Main Street that is affecting Wall Street." As Willy Wonka would say, "Strike that, reverse it."

Ifill asks about the bankruptcy bill -- it's complicated, Biden says. We should be allowing bankruptcy courts to adjust the principal you owe as well as your interest rate. That sounds fishy. Used to be that when you lost your stuff when you declared bankruptcy. The whole penalties thing?

8:29pm

Brief answer from Palin to deflect the bankruptcy issue and then back to energy. She's doing remarkably well so far, few flubs. She's kind of lecturing here, but hammering the ANWR issue. Energy independence is the key to this nation's future. Needs to stop using "heckuva".

Q: What is true and what is false regarding climate change? I don't want to argue about the causes of climate change, want to figure out how we can do that. All of the above plan. As we rely more and more on other countries.

Biden: It is man-made, it is clearly man-made. The cause is man-made. Gives the 3% of reserves/25% of consumption line, which minimizes our true reserves and ignores unproven offshore reserves as well as natural gas and the trillion barrels of oil shale we have. John McCain voted 20 times against alternative energy. Obama-biden wants to develop energy that needs subsidies to be competitive and try to sell that to the rest of the world. No-go in China or India, Joe. Coal is King there and will be for sure in China

Palin does support capping carbon emissions. Joe supports clean coal technology for 25 years, despite his rope-line comment. Maybe he's all for it if the go government doesn't have to pay for it.

Joe Biden supports gay marriage. First gaffe. Saran-does not support gay marriage. Now neither Joe Biden & Barack Obama do not support gay marriage. So much for the people who think Barack Obama is a closet gay marriage supporter.

Iraq: Palin sounds like she knows this. Compliments Biden on standing up to Obama regarding a political vote.

Biden: needs an exit strategy, needs a time table. Palin says we'll go when we're ready, when the Iraqis can govern themselves. She points out that Biden says he would have been proud to be VP candidate for McCain. skewers him effortlessly.

Biden says Pak nukes could hit Israel. Wrong, I believe. Between nuclear Iran and unstable Pakistan he chooses unstable Pakistan. Sarah says both are important but talks about how a nuclear Iran is dangerous. Gets into the "no preconditions" line. Talks about her meeting with Kissinger. Biden bald-faced lies about what Obama said at a Democratic debate HE WAS AT. Misrepresents what McCain said as well.

Palin is clear and articulate on need for a two-state solution. Sounds entirely reasonable. Biden is now running against George W. Bush. He is four years too late for that. Biden: haven't heard how the policy is different from Bush's.

8:55 When do we use nuclear weapons? Palin answers a line about not allowing nuclear proliferation. Makes point about using surge principle In Afghanistan. Biden says CG in Afghanistan says (today) that surge would not work. Mentions Obama-Lugar as if it's important - an update to a 1991 law makes a big difference how? Makes a statement about spending in 3 weeks in Iraq the same as in 7 years in Afghanistan. Ignores difference in geography, technology, etc.

Biden makes an impassioned speech about Darfur. Palin agrees, a little too smarmy, but then mentions divesting Alaska's investments in Sudan. Didn't know that.

9:05 pm: When do we go into another country? Biden if we can win, makes a statement about countries and when we can invade. Palin needles him again about his voting record and statements, she's hammered this enough that she had better have a couple of Aces in terms of backup documentation.

So what if your President dies? Neither one will change anything.

What a Vice-President does? Palin: working with the Senate, she would lead in areas of Energy, Senate, special-needs children. Biden: Senate, advising President, He will tell president if he disagrees. Ifill asks about Cheney's assertion regarding the split nature of VP as Executive vs. Legislative. Palin ducks the question, wisely. Biden gives a long answer that is probably too much inside baseball.

Conventional Wisdom: Palin is inexperienced, Biden undisciplined. Palin makes a good speech. Biden says he's changed things, tears up when talking about his kids. Pain responds, needs to stop using the term 'Maverick'. It's getting annoying. Find another way to say it. Biden: "Maverick he is not."

Final question: What policy position have you changed? Biden: position re: judicial confirmation. Palm; wasn't able to zero-balance budgets, no compromises on principle.

Now the real final question: How do you stop the partisanship as VP? Biden: Don't question others' motives. Palin: get the job done, don't worry about credit.

Final statements: Palin: I like Reagan. McCain fought for you. Biden: it's time for America to stand up together.

Especially people making $250K or more. It's easier to get at their wallets that way.

Debate over. Palin survived, not broken or dispirited. Biden only gaffed once, wasn't nasty. Both did a good job. Hard to pick a winner, Pain maybe wins by not losing, but not by much.