Category: Government

Unambiguously Good News

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For the first time since the 3rd quarter of 2008, State tax receipts rose in the 1st quarter of 2010.

The obvious bit of good news here is that increasing tax revenues means that there is more hiring (income tax) and buying (sales tax), but there is another significant effect.

49 states, all of them but Vermont, are required by their constitution to run balanced budgets, and what this has meant is that the state governments have had to act like 49 little Hoovers, cutting budgets and staffing in the midst of the worst downturn since the great depression.

The turnaround in tax revenue means that the spending cuts can stop, which removes a drag to those state’s economies created by budgetary retrenchment as well.

Deep Thought

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Perhaps the British royal family is not as overpaid as I thought:

You would have to pay me a lot of money to make me wear those hats, and I occasionally frequent the company of Orthodox Jewish women at services, and their bad taste in hats is legion, though clearly nothing compared to this.

Link.

Building an Infrastructure for Tyranny in the UK

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One of the peculiarities of Great Britain is that they have no constitution, so they can change what should be inalienable rights with a law.

A few years back, for example, they removed the right to remain silent in a criminal investigation, and so juries can now explicitly use non-testimony against the defendant.

Well, as part of the coalition deal the Tories and the Lib-Dems, they intend to
set a fixed 5 year term for the parliament.

The current state of parliamentary terms is a maximum of 5 years, but new elections can be called before then, and have to be called before then if there is a failure of a confidence vote.

Well, Conservative David Cameron, Liberal-Democrat Nick Clegg have decided to go with a fixed term of 5 years, requiring at least a 55% vote of Parliament to dissolve the institution.

It appears that this was done because Clegg is concerned about getting cut loose as soon as it is convenient for Cameron.

While this is understandable it is a major change in the way British governance works.

In the US, with the exception of the (thankfully rare) impeachment, terms are fixed, and state actors are controlled by checks and balances from competing branches of government.

This is not the case in a parliamentary system. The Prime minister has much greater powers, particularly in the UK, where there is no formal constitution.

What prevents excesses in government by the ruling party is the threat of government turnover at any time: the no-confidence vote can put the shoe on the other foot in very short order.

If you remove that, you remove many of the constraints on the behavior of the executive.

Clegg is being penny wise, and pound foolish.

Morons

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After all that has gone on with the Euro over the past year, and the fact that the Baltic Republic is suffering through a brutal recession, which its government has made worse by implementing an austerity program, Estonia has announced that it will adopt the Euro next year.

While I understand the issue here, national pride basically, anyone who joins the Euro now, when the state of the currency, and its central bank are currently in flux, is dangerously reckless.

OK, This IS a Sign of the Apocalypse

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The yield on 2 year Greek government bonds jumped 300 basis points (3%) to 13.522% over the past day.

To place this in perspective:

Greece’s two-year borrowing costs are now higher than those of Argentina, at 8.8 per cent, and Venezuela, at 11 per cent, two countries that have been shunned by many international investors because of the mismanagement of their economies.

This is not a collapse of Europe. What this appears to be is a classic bank run.

This doesn’t make it a potentially life threatening disaster for the George Bailey’s of this world.*

*I’m using It’s a Wonderful Life for illustrative purposes only. I never liked the film, and pretty much no one until it fell out of copyright, and TV stations around the US started using it as cheap filler.

Credit Where Credit is Due

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General Stanley McChrystal is now saying that Dick Cheney’s model for the army,* with contractors galore, simply does not work:

The U.S. commander in Afghanistan said April 16 that the military is wasting money by employing too many private contractors to do jobs better done by soldiers or local Afghans.

“We have created in ourselves a dependency on contractors that is greater than it ought to be,” General Stanley McChrystal told an audience of French officers and military experts at France’s defense university in Paris.
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“I think we’ve gone too far. I think that the use of contractors was done with good intentions so that we could limit the number of military. I think in some cases we thought it would save money. I think it doesn’t save money.”

This is the right thing to say, but it’s a tough thing to say, since lucrative consulting gigs follow general officers who play the game, and now McChrystal will have to work for a living after retiring.

Of course, it’s going to take years to rebuild the capabilities that Bush I, Clinton, and Bush II privatized and moved out of the Pentagon.

*In one of his worst miscalculations in a lifetime of abject failure, Cheney did this as Secretary of Defense under Bush I, where he decided to privatize everything in sight that was not a “primary military function.”

Obama’s Former Auto Czar Being Investigated for Pension Kickback Scheme

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So, Andrew Cuomo has made it official, and former Obama “Car Czar” Steven Rattner is under investigation for kickback schemes involving the New York State pension system:

In case you were living under a rock, this is why he left so quickly from his position managing the bailouts of GM and Chrysler:

New York Attorney General Andrew Cuomo confirmed his office is investigating former Obama administration auto industry advisor Steven Rattner, in a growing probe into illegal kickbacks involving the state pension fund.

Rattner, who helped craft the federal rescues of General Motors and Chrysler, left the Obama administration abruptly last year. This morning, the private equity firm he co-founded, Quadrangle Partners, agreed to pay $7 million to settle allegations it made illegal payments to a New York state official and a political consultant in exchange for millions of dollars in pension investments.

But the settlement specifically excludes Rattner, who Cuomo says is no longer with the firm and remains under investigation. What’s more, Quadrangle issued a scathing statement against its co-founder.

“We wholly disavow the conduct engaged in by Steve Rattner,” the statmement says. “That conduct was inappropriate, wrong and unethical.”

This is a guy who operated a corporate “chop shop,” and we are surprised to discover that he is a dirt bag.

This “experience” thing, which justified, Rattner, Geithner, Summers, etc. is highly overrated.

Ethics first, allegiance to the American public second, and only then consider experience.

Earlier post.

I want smaller government and my Social Security

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Teabaggers in a nutshell.

It’s not that government is too big, it’s that you are giving money to n*****s:

“That’s a conundrum, isn’t it?” asked Jodine White, 62, of Rocklin, Calif. “I don’t know what to say. Maybe I don’t want smaller government. I guess I want smaller government and my Social Security.” She added, “I didn’t look at it from the perspective of losing things I need. I think I’ve changed my mind.”

Their problem is that a black man is President.

Good Writing

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Matt Taibbi, once again, this time on how the banks used complex products to rape Jefferson County, Alabama when they wanted to issue debt to upgrade their sewer system:

What happened here in Jefferson County would turn out to be the perfect metaphor for the peculiar alchemy of modern oligarchical capitalism: A mob of corrupt local officials and morally absent financiers got together to build a giant device that converted human sh%$ into billions of dollars of profit for Wall Street — and misery for people like Lisa Pack. [a county employee laid off when the debt exploded]

………

And once the giant sh%$ machine was built and the note on all that fancy construction started to come due, Wall Street came back to the local politicians and doubled down on the scam. They showed up in droves to help the poor, broke citizens of Jefferson County cut their toilet finance charges using a blizzard of incomprehensible swaps and refinance schemes — schemes that only served to postpone the repayment date a year or two while sinking the county deeper into debt. In the end, every time Jefferson County so much as breathed near one of the banks, it got charged millions in fees. There was so much money to be made bilking these dizzy Southerners that banks like JP Morgan spent millions paying middlemen who bribed — yes, that’s right, bribed, criminally bribed — the county commissioners and their buddies just to keep their business. Hell, the money was so good, JP Morgan at one point even paid Goldman Sachs $3 million just to back the f%$# off, so they could have the rubes of Jefferson County to fleece all for themselves.

(%$# mine, emphasis original)

I believe that I have described him as this generation’s Hunter S. Thompson, but I was wrong.

He is this generation’s Upton Sinclair, though there is certainly a lot of Thompson in his prose.

It’s a fairly long read, and the twists and turns of the deal, where Morgan Stanley paid a middleman to bribe people, and now will be getting off Scott free, and I really can’t do justice with a summary, so just read the whole thing, and at the end, you will agree with him when he says, “This isn’t capitalism. It’s nomadic thievery.”

I wish that I could write like him.

Nate Silver Can be Annoying,* But

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He knows his math, as shown by his take-down of the study by Veronique de Rugy of George Mason University and the National Review† claiming to show that stimulus went disproportionately to Democratic districts.

You see, much of the aid under the stimulus package was direct aid to the states, which, of course, was sent to state capitals, like Sacramento, and Albany, and then disbursed from there to the rest of the state.

It turns out that state capitals, with their generally urban character, and having a large, and usually significantly unionized workforce, tend to be more liberal than the state as a whole, but what is more significant, is that the money that goes to these state capitals does not generally end up there; it is allocated by the governors or legislatures all over the states:

That de Rugy has testified before Congress on the basis of her evidence, and never paused to consider why the top five congressional districts on her list overlap with Sacramento, Albany, Austin, Tallahassee and Harrisburg, is mind-boggling. The presence of a state capital is the overwhelmingly dominant factor it predicting the dispensation of stimulus funds. This could have been discerned in literally five minutes if she had bothered to look at the apparent outliers in her dataset and considered whether they had anything in common — a practice that should be among the first things that any researcher does when evaluating any dataset.

Once you read his analysis, it’s pretty simple to see the flaw, but it is one that is hard to spot in the first place.

Basically, if you make any sorts of block grants to the states, they go to the capitals, and are then disbursed all around the states, so if you only go 1 or 2 levels down, you make it look like the stimulus program is a Democratic pork project.

The reality is far different.

*I tend to find his political analysis largely directed at either cock-punching DFH’s,‡ or mindlessly contrarian, kind like a mini-Michael Kinsley.
†2 strikes against her credibility there to start.
‡Dirty F%$#ing Hippies.

I Said that This Would Happen

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I said that there would be blowback when GM decided not to sell Opel and suck up all the state aid itself, and it appears taht I was right

We are now seeing that the taskforce reviewing GM’s plans with Opel is saying that, they are inadequate, and aid should not be awarded:

General Motors’ restructuring plan for Opel/Vauxhall has been dealt a potentially serious setback on Wednesday after a German government taskforce said it had doubts about the scheme.

The US carmaker presented the turnaround plan for its lossmaking European operations last week and formally applied to Berlin for €1.5bn ($2bn) in loans or guarantees – the biggest portion of the €3.3bn it says it needs to finance its plan.

However, the federal task force advising Berlin on GM’s plans has deemed the proposals “unqualified for government loan guarantees”, three officials in German states with GM plants told the Financial Times on Wednesday.

(emphasis mine)

Part of the reason for this, though it is not explicitly spoken, is the belief that GM will strip mine Opel to support its US operations.

There has been a tepid denial from the board about this report, but I’m inclined to believe that they want guarantees that the money is not going to Detroit.

Yeah, Change We Can Believe In

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So, here’s another one that Barack Obama and His Clueless Minions™ are allowing to slip through their fingers.

This time, it’s student loan reform, which would have taken the private loan companies out of the game, saved the tax payer money, saved the students money, and eliminated a lot of fraud and waste:

Four months ago, it appeared all but certain that the White House and Democrats in Congress would succeed in overhauling the student loan business and ending government subsidies to private lenders.

President Obama called the idea a “no-brainer” last fall, predicting it would take billions of dollars from the profits of private lenders and give it directly to students, and many colleges were already moving to get loans directly from the federal government in anticipation of the next move by Congress.

But an aggressive lobbying campaign by the nation’s biggest student lenders has now put one of the White House’s signature plans in peril, with lenders using sit-downs with lawmakers, town-hall-style meetings and petition drives to plead their case and stay in business.

Yes, we have reports that the administration has, “recognized the threat and was beginning to push back in an effort to get the plan approved,” as evidenced by the recent criticism of the lobbying and the progress of the bill by Education Secretary Arne Duncan, but it is indeed weak tea.

It appears that they dropped the ball on this because they were working on healthcare reform, which might be marginally excusable, only, of course, the administration pretty much screwed the pooch on that one too, handing it off to Congress and allow ratf^%$s like Nelson and Lieberman to screw that up.

Seriously, the problem here is that the FIRE (Finance, Insurance, Real Estate) sector has captured our government to an astonishing degree, and eventually the parasitic rent taking that they extract from society needs to be reined in.

Big Surprise, Old Dominion Governor Rolls Back Protections for Gay Workers

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Yes, now that Bob McDonnell is now Virginia governor, he repealed the protections instituted by his predecessor for gay and lesbian state workers:

McDonnell (R) on Feb. 5 signed an executive order that prohibits discrimination “on the basis of race, sex, color, national origin, religion, age, political affiliation, or against otherwise qualified persons with disabilities,” as well as veterans.

It rescinds the order that Gov. Tim Kaine signed Jan. 14, 2006 as one of his first actions. After promising a “fair and inclusive” administration in his inaugural address, Kaine (D) added veterans to the non-discrimination policy – and sexual orientation.

It’s because they need someone to hate, or they would have nothing to campaign on.

Obama to Give Multibillion Dollar Subsidy to Nuke Plants

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It’s $8 billion in loan guarantees, but if you run the numbers, and assume a 4% interest rate savings as a result of the loan guarantees over a 10 year period, the new reactors are due to come on line in 2017, but they will be late, because they are always late, then you get about a $3.85 billion [(1.0410-1) x $8 billion] subsidy for the Southern Company to build two new reactors at their Vogtle plant.

Actually, the payback time is likely closer to 30 years, which means that the US government is actually paying Southern to build the plant, but depending on how you count it, it’s a f%$# load of money.

How About Paying Them More?

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Yawn, another day, another report saying that the dearth of US citizens interested in majoring in technical fields is a national security threat:

Sure, we’re all plugged in and online 24/7. But fewer American kids are growing up to be bona fide computer geeks. And that poses a serious security risk for the country, according to the Defense Department.

The Pentagon’s far-out research arm Darpa is soliciting proposals for initiatives that would attract teens to careers in science, technology, engineering and math (STEM), with an emphasis on computing. According to the Computer Research Association, computer science enrollment dropped 43 percent between 2003 and 2006.

Umm ………… Hello?!?!?!?

You are asking how to encourage people who have the proficiencies to go into a technical field to do that, as opposed to, for example, becoming a banker or a stock broker.

But, of course, like the Cylons, they have a plan:

The agency doesn’t offer specifics on what kinds of activities might boost computing’s appeal to teens, but they want programs to include career days, mentoring, lab tours and counseling.

Like that will work: Ignore the poor pay and benefits, and the fact that your barista at Starbucks® used to be in IT, but after he got laid off the last time, he couldn’t find another job, because he only knows C++, not C#, because being a computer programmer or an engineer is just so f%$#ing cool.

By definition, people who have the wherewithal to go into science, technology, engineering and math (STEM) are people who can count.

If you want them to take a technical major, you have to promise better pay and benefits.

Duh …………

More Ass Covering by the Fed

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It’s clear that Bernanke does not want the rock turned over to see what slimy things live underneath, and so we have some more measures taken by the Federal Reserve to try to mute calls for an audit, and perhaps a re-evaluation of the role and powers of the institution.

They have implemented more consumer friendly credit card rules (also here and here), and now Bernanke is saying that the central bank would welcome an audit of their dealings with AIG by the GAO.

In the latter quote, the pertinent quote is this:

The invitation does not represent any procedural changes, as GAO could have reviewed the issue without such an invitation. But the does letter highlight the Fed’s sensitivity to mounting criticism to the events leading up to the bailout.

So, if the Federal Reserve has no choice, then they will write a nice letter saying, “Okily dokily, neighbor.”

I expect that if the GAO conducts an audit, it will take crowbars and explosives to actually extract any meaningful information though.