Thursday, July 29, 2010

It is not about taxes or fairness, it is about control

I am beginning to think that the Left doesn’t much care who has money in this country or how much of it, especially given how many liberals are stinking rich. Certainly there are plenty of super wealthy liberal donors who could pay more of their “fair share”. The hypocrisy of ultra-liberal Hollywood types living in palatial mansions and paying tax attorneys to hide their wealth urging that successful Americans who make more than the average are somehow gaming the system is completely lost on them.

What seems more in character is that liberals don’t care who has money as long as it is filtered through the government first. In other words, I don’t think the issue is income or wealth equity. It is all about who decides where the money goes. In a true free market, the market decides. Those who work the hardest, have the most marketable skills, have the right idea at the right time, are the ones who benefit the most financially. In a controlled economy, the direction we are heading, it is the central government that makes those decisions. Wealth is redistributed based on a myriad of criteria: perceived past abuses, a social status that is in vogue, whether you live in the right congressional district.

In other words, I don’t think Nancy Pelosi and company care a lick about the poor or whether some people have substantially more money than someone else. All they care about is deciding where every penny goes. Fairness? Bah. There is only one word that matters in D.C. and that word is control.

Friday, July 16, 2010

Like picking a one legged blind kid for your kickball team

The three stooges (Barney Frank, Nancy Pelosi, Christopher Dodd) celebrating another Pyrrhic victory

The Congress is on the verge of enacting a sweeping financial services “reform” bill and it is going to be a problem. Anytime you see these three jokers yukking it up, you better grab your pocketbook especially when you are dealing with Barney Frank who has never held a real job in the private sector as far as I can tell and whos only experience in complex financial transactions involved a homosexual prostitute that lived in his home and worked as an "aide". Clearly what we are seeing is once again proof that Democrats are badly misreading the mood of the electorate. Statements like this one are indicative of why Democrats are heading for an ugly election cycle in the fall:

Democrats say the bill will cut the odds of another crisis and better handle one when it arrives. They also contend it will restore confidence in U.S. financial markets, protect consumers and spur growth. White House officials said it will put an end to taxpayer-funded bailouts of banks, addressing the scars of the financial crisis of 2008.

We are supposed to believe that increasing the power of the Federal government over banking is supposed to make Americans more confident. I have worked for some of the biggest financial firms in the world and there are plenty of chuckleheads working for them but also some supremely smart and capable people who make tons of money by being talented. I also deal with government bureaucrats in the financial services business on a regular basis and have to deal with the laws and regulations they make up. If I have to trust one more than the other, the private financial services sector wins every time. Exhibit A are the government backed mortgages that created an artificial market for less than ideal loans. If I make a loan and keep it on my books and it goes bad, I have to eat the loss. That reality tempers my underwriting behavior. If on the other hand I can make a loan and then sell it to the government with no repercussions if it goes sour? That also impacts my underwriting, making it more likely that I will write riskier loans to people with substandard credit, with excessive debt or with a loan to value that is at 100%.

Here is what the government and most Americans don’t understand:

Business is all about risk and reward

Every business engages in risk every day. Hiring more people is a risk. Rolling out a new product is a risk. Extending credit to a customer is a risk. Buying a newer version of Microsoft Office is a risk. Every business owner needs to weigh the potential reward against the potential risk in every transaction. That risk/reward equation is how business functions. Take too much risk and eventually it will bite you. Take too little and someone else will pass you up. Businesses are phoenix-like in that businesses die and new businesses spring up. That cycle of renewal keeps the economy chugging along. That is until Uncle Same gets in the mix.

The government by nature governs. That is what it is supposed to do. Make laws and enforce them within narrow constraints spelled out in the Constitution. When the government starts to tinker around in the private sector, it messes everything up because a) the government has no motive to be efficient and profitable so it operates under entirely different assumptions than the private sector and b) it changes the risk/reward ratio and either causes behavior that normally wouldn’t be prudent or it quashes behavior that normally would be prudent.

I like what Senator Shelby said:

The bill "is a 2,300-page legislative monster…that expands the scope and the powers of ineffective bureaucracies," said Sen. Richard Shelby (R., Ala.).

We are giving additional power, resources, money, staff, etc. to the least efficient and effective possible entity, the monstrous Federal government. What is worse, it sounds like the bill is going to make it possible for government bureaucrats to create the actual regulations that will govern financial services and that is where the real danger lies. At this point, no one really knows what this bill is going to do and no one will for several years but once these regulations get in place, it will be nigh impossible to untangle them. The cost of these regulations will, surprise!, be passed on to consumers. Don’t think for a second that this monstrous bill is going to do anything but make it harder and more expensive to do business. Rather than reigning in “too big to fail”, we are seeing a contraction in banking and the big banks are getting bigger and more profitable. J.P. Morgan Chase announced profits of almost $5 billion yesterday. Be sure that as these regulation get written, banking lobbyists are going to be all over the regulators making sure they are protected. The CEO of Chase, Jamie Dimon, is a sharp guy, perhaps one of the brightest guys in corporate America, and you can be sure that Chase and other big banks are going to weather this quite nicely. The small community bank in your town? Maybe not.

There are clearly dangers in the free market but the market has mechanisms to deal with companies that take too many risks. Rather than being bailed out, they go out of business via bankruptcy, closure or being acquired. In propping them up with bailouts we rewarded risky behavior that should have resulted in failure at enormous taxpayer expense and perpetuated the dependent behavior of poorly run companies who run to the Federal trough when they get in trouble. This bill is bad news, if for no other reason than it tries to do something far beyond the scope of the Federal government to understand or handle.

Giving even more power to the Federal government which has already proven unable and unwilling to regulate financial services is like picking a one legged blind kid for your kickball team. The problem is that when this team loses, we all have to pay.

Monday, July 12, 2010

This is exactly what Detroit doesn’t need

Ah Jesse. Always showing up where he is neither wanted nor needed to show he still has clout.

UAW president, the Rev. Jackson to launch jobs and peace campaign today

United Auto Workers President Bob King and civic rights leader the Rev. Jesse Jackson Sr. intend to launch a new campaign that will call for more American jobs, beef up federal enforcement of the workplace and industry, and end the wars in Afghanistan and Iraq.

So explain this to me. How exactly is someone, i.e. “The Reverend” Jesse Jackson, who has to the best of my knowledge never held a job or ran a business and whose entire career is based on race baiting, profiteering on tragedy, opportunism and extortion of corporate America, going to lead a push to create jobs? By walking around Detroit and making a speech one afternoon?

When you combine the forces of Jesse Jackson, a race-baiting opportunist, with Bob King, a radical who sees his job as not only to squeeze as much money out of UAW employers as possible and then crying about it when they have to cut back but also to bring about global “progressivism”, you have a tsunami of the exact sort of thinking and activism that has Michigan in the toilet to begin with. Michigan is still riddled with an entitlement mentality fostered by decades of union leadership in this state coupled with executives too weak to stand against the unions and too eager to capitulate.

Bob King and Jesse Jackson haven’t the faintest clue how jobs are created or perhaps worse they do know but don’t care because all they care about is stirring the pot to justify their existence. Until Detroit collectively tells men like this to take their snake oil wagon someplace else, that city will continue to languish. Detroit doesn’t need “social justice”, i.e. leftist wealth redistribution policies. It doesn’t need more unionizing. It doesn’t need more racial polarization. Detroit needs an attitude adjustment and a business friendly atmosphere that will encourage private sector investment which will in turn lead to jobs. If I am a business owner even considering moving to Detroit, seeing demagogues like these two marching the streets would be more than enough for me to take my business and my jobs elsewhere.

Detroit’s last mayor is in prison, the recent president of the school board is an illiterate pervert, the schools are a disaster, everyone who can flee to the suburbs is fleeing and graft and corruption are the name of the game in virtually every corner of city government. It is high time Detroiters tell Jesse Jackson to take his tired act somewhere else. Detroit has enough problems as is without Jesse parachuting in to cause trouble and foment racial disharmony.

Wednesday, July 7, 2010

Draconian? Really?

Only in the mainstream media can this sort of paragraph, found in this morning’s USA Today editorial, be considered reasonable:

Don't get us wrong: The Arizona law — which requires local police, in the course of a lawful stop, to question the legal status of anyone they reasonably suspect of being in this country illegally — is draconian and, as the lawsuit argues, potentially an unconstitutional infringement on federal powers.

Draconian? I would assume that somewhere in USA Today’s offices they have a dictionary (maybe not). Here is the definition of draconian.

1 : of, relating to, or characteristic of Draco or the severe code of laws held to have been framed by him
2 : cruel; also : severe

Given that Draco, the individual from ancient Greece referenced in the first definition, was infamous for severe laws that often put people to death for minor infractions, I assume that is not what USA Today meant. So I guess that they mean that Arizona’s law is severe and cruel. Really?

So asking people during the course of a traffic stop, for example, for proof that they are a citizen is “draconian”? I wonder if anyone on the editorial board of USA Today took a second to ask “Is this law even unreasonable, much less draconian?”. I am assuming not. When the media insists on using over the top rhetoric like draconian to describe a pretty mild law, it cheapens the word and makes a mockery of actual draconian laws that exist around the world. When people describe Abraham Lincoln as a tyrant or George W. Bush as a fascist, it exposes their inability to formulate a coherent argument which results in using overheated rhetoric in place of reason.

Let’s look at the way a traffic stop might go in Arizona. A police officer in Arizona pulls someone over for a traffic violation. They first thing they ask for is…drivers license and registration. If you produce these legally required documents, documents I always have with me, I am issued a ticket and go on my way. I am clearly a citizen of this country because I have a government issued ID. On the other hand, someone who refuses or is unable to produce such an ID (which is required for all sorts of stuff and rightly so) does and should raise suspicion. Keep in mind of course that being in the United States illegally is…..illegal. That is why they are called “illegal immigrants”. Since the Federal government has essentially abdicated its responsibility to control our borders, Arizona has taken matters into its own hands and done so in a way that is little different from states having their own drivers license laws.

Thankfully the Federal government is about to spend untold millions to engage in some political grandstanding that has no chance to succeed in overturning Arizona’s law. Perhaps we could try to secure the border, impose severe penalties on employers who hire illegal workers. That might make some actual sense so it probably won’t happen.