King Obama Replaces the Duke of GM

Keeping with the general theme of politics that he learned at knees of King Richard Daley, King Barack Obama is replacing the Duke of General Motors (with whom the King is unhappy) with a new Duke to be announced later.

Government Forces Out Wagoner at GM

The Obama administration used the threat of withholding more bailout money to force out General Motors Corp. Chief Executive Rick Wagoner and administer harsh medicine to Chrysler LLC, marking one of the most dramatic government interventions in private industry since the economic crisis began last year.

The administration’s auto team announced the departure of Mr. Wagoner on Sunday. In a summary of its findings, the task force added that it doesn’t believe Chrysler is viable as a stand-alone company, and suggested that the best chance for success for both GM and Chrysler “may well require utilizing the bankruptcy code in a quick and surgical way.”

I don’t give a damn about Rich Wagoner. He is clearly an incompetent manager who ought to have been booted by any board actually interested in running GM. He also deserves getting tossed for being stupid and venal enough to take government money, when he ought to have declared bankruptcy and resigned like a man.

I also appreciate the President using his power to oust the guy because it gives us a glimpse of the world Barack wants to create – a corporate/government superstate. The “audacity” is instructive.

For more examples of what we are about to witness at the Federal Level now that a “King” is in town, read my older post on Feudalism.

Yet another good article on the “Financial Crisis”

If there is one theme I try to repeat often, it is that amateurs with common sense often out perform professionals with expertise – at least in the real world (Sports & Game metaphors don’t apply because of the very limited universe of rules inside a “game”)

The financial crisis that we are in the midst of is another example of proof of the above concept. As I’ve posted 100s of times, my former radio audience in Waukegan (moderately educated middle class) had this crisis pegged in early 2006.

The big brains hired by Wall Street firms didn’t. The article below explains why. It is long, but you will be that much smarter for reading it. It will introduce you to the concept of VaR Models, and how reliance on them was part and parcel of a crash that everyone with an ounce of common sense saw coming.


Risk Mismanagement

On the contrary: this was back when the major investment firms were still assuring investors that all was well, these little speed bumps notwithstanding — assurances based, in part, on their fantastically complex mathematical models for measuring the risk in their various portfolios.

There are many such models, but by far the most widely used is called VaR — Value at Risk. Built around statistical ideas and probability theories that have been around for centuries, VaR was developed and popularized in the early 1990s by a handful of scientists and mathematicians — “quants,” they’re called in the business — who went to work for JPMorgan. VaR’s great appeal, and its great selling point to people who do not happen to be quants, is that it expresses risk as a single number, a dollar figure, no less.

It’s not every day that an options trader becomes famous by writing a book, but that’s what Taleb did, first with “Fooled by Randomness,” which was published in 2001 and became an immediate cult classic on Wall Street, and more recently with “The Black Swan: The Impact of the Highly Improbable,” which came out in 2007 and landed on a number of best-seller lists. He also went from being primarily an options trader to what he always really wanted to be: a public intellectual. When I made the mistake of asking him one day whether he was an adjunct professor, he quickly corrected me. “I’m the Distinguished Professor of Risk Engineering at N.Y.U.,” he responded. “It’s the highest title they give in that department.” Humility is not among his virtues. On his Web site he has a link that reads, “Quotes from ‘The Black Swan’ that the imbeciles did not want to hear.”

ONE THING THAT surprised me, as I made the rounds of risk experts, was that if you listened closely, their views weren’t really that far from Taleb’s diagnosis of VaR. They agreed with him that VaR didn’t measure the risk of a black swan. And they were critical in other ways as well. Yes, the old way of measuring capital requirements needed updating, but it was crazy to base it on a firm’s internal VaR, partly because that VaR was not set by regulators and partly because it obviously didn’t gauge the kind of extreme events that destroy capital and create a liquidity crisis — precisely the moment when you need cash on hand.

Indeed, Ethan Berman, the chief executive of RiskMetrics (and no relation to Gregg Berman), told me that one of VaR’s flaws, which only became obvious in this crisis, is that it didn’t measure liquidity risk — and of course a liquidity crisis is exactly what we’re in the middle of right now. One reason nobody seems to know how to deal with this kind of crisis is because nobody envisioned it.

Nonsense. All kinds of people did. Again, your trust in experts (Economists, MBAs, Lawyers, dingy teachers with worthless ‘certificates’, etc.) will hurt you. Badly.

WHAT HAPPENS IF YOUR 15 MINUTES ARE UP BUT YOU STILL HAVE FOUR YEARS TO SERVE?

The credit for the headline above belongs to my favorite blogger, Brothers Judd. Once in a while I enjoy the headline or post so much I just copy it and give him the credit.

While I don’t agree with Orrin on everything, he consistently digs up most of the best articles on the web. The headline above connects to this NYT article, which points out just how “light” Obama is on policy, leadership, and frankly judgment.

In summary, there appear to be only two constants in our ever-changing world. One is that Barack Obama is going to be on television every day forever. No venue is too strange. Soon, he’ll be on “Dancing With the Stars” (“And now, doing the Health Care, Energy and Education tango …”) or delivering the weather report. (“Here we see a wave of systemic change, moving across the nation …”)

The only thing that really scares me about Obama is that retains just enough luck and popularity that he actually succeeds in his goal – which is to transform America into some horrible hybrid of Chavez’ Venezuela and the dying and sclerotic European Union.

UGH!

Another “Obushma” moment

Try as he might to pretend that his problems all stem from Bush’s terms, Obama is still relying on Bush’s policies in both Iraq and Afghanistan.

Obama Afghanistan Plan Breaks Old Ground

Did George Bush leave one of his old speeches in the Resolute Desk? As President Obama unveiled his Afghanistan-Pakistan policy Friday, it was hard to miss the echoes of his predecessor’s “surge” strategy in Iraq. Indeed, says James Dobbins, the State Department veteran who served as President Bush’s first envoy to Afghanistan, Obama’s plan is “largely an extension of where the Bush Administration, in its last years, was heading,with some refinements and additions.”

Like Bush, Obama plans to send more U.S. troops to fight the insurgency in Afghanistan. In fact, when you add them up — the additional brigade Bush announced in January, the 17,000 combat troops Obama announced a couple of weeks ago and the 4,000 trainers added Friday — you get almost exactly the same number of extra troops sent into Iraq for the “surge.” (See pictures of Afghanistan’s mean streets)

The parallels don’t end there. Bush’s “surge” strategy was twinned with an effort to capitalize on disputes between al-Qaeda and its Iraqi allies; eventually, the majority of Sunni insurgents were induced, with promises of money or political power, to stop attacking U.S. forces and turn their guns on the jihadists. Obama, likewise, hopes to drive a wedge between what he describes as “uncompromising” Taliban and al-Qaeda leaders on the one hand, and less implacable insurgents who may be more inclined, for the right price, to make a deal with Western forces or the Afghan government.

60 Days and it’s official…Worst. President. Ever.

The faster we hobble this guy, the better for every American. If he does something right (like a carbon tax or gas tax swap before a corrupt “crap and trade” scheme), I’ll be the first to give him credit, but I don’t see much of that happening.

BREITBART: Dreaming of President Petraeus and an American surge

Signs of our collective weakness emerged after 9/11 when only part of the American population took seriously that we were at war with an evil and motivated enemy determined to destroy our way of life. Since then, al Qaeda has refused to quit despite debilitating losses.

Clearly, our national will is wilting away.

Following the tragic lead of Europe, too many Americans no longer want to engage our external threats head-on. And on the domestic front, we are confronting the economic crisis of our lifetime with the same full-steam-ahead spending-spree mind-set that got us into the mess to begin with.

We say: Let’s create more government dependency, reward the incompetent and print more money.

That’s doubling down on stupidity.

When the going gets tough, the weak go on Leno.

I can’t get out of my head that the leader of the free world gave the British prime minister 25 films on DVD that don’t even work in U.K. machines.

I can’t wrap my head around the fact that the commander in chief tried (for a minute anyway) to require injured warriors to pay to have private insurers take care of their treatment.

I can’t believe the president would allow the likes of Nancy Pelosi and Harry Reid to dictate the terms of his budget – and Barney Frank and Christopher Dodd, the symbols of government kowtowing to Wall Street – to be spokesmen for his financial bailout.

And did President Obama really produce a YouTube video to appease President Mahmoud Ahmadinejad and the mullahs of Iran?

Yes, he did.

These aren’t beginner’s mistakes. These are his core incompetencies.

The only question at hand is whether these are truly incompetencies. Sure, the DVD set was a silly, but minor oversight. The overtures that bolstered Ahmadinejad are horribly damaging to the nation. When you look at Obama’s crypto-Marxist history, you have to ask whether debauching the currency, making America weaker internationally, and destroying our work ethic while simultaneously making the auto and banking industries another “patronage farm” are truly mistakes…

…or the long term goals of some one who wishes to make America something different than what it is.

Yours Truly in DeKalb Illinois…

…promoting the idea of getting new people into politics.

I was in DeKalb doing what I could to help Lynn Fazekas get elected mayor of DeKalb.

“Old blood” can’t (and/or won’t) enact new ideas. That is why Illinois is such a mess, locally and statewide.

Barack O-bore-ma

As I’ve stated, Obama is an awful leader, but a good campaigner. That is why all he does is campaign. I make no predictions, but I think this will grow old. It is hard to create a “cult of personality” around yourself when you don’t have one.

Democrat anger at Obama overkill

WHEN the White House announced last week that President Barack Obama will be returning to the nation’s television screens on Tuesday for a prime-time press conference that will postpone the latest episode of American Idol – the talent show watched by 25m viewers – fans of the programme were quick to respond.

“Stop, please stop, Mr O, we can’t take much more,” one angry viewer wrote on an Idol-related website. “Not again!” complained another. “It’s the same speech he’s been giving for the past year.”

There were dark mutterings that by commandeering evening programming only a few days after he appeared on Jay Leno’s popular late-night chat show, Obama was “just like Fidel Castro [of Cuba] and Hugo Chavez [of Venezuela] – always on camera, always giving speeches and lecturing”.

The barbed response to the prospect of yet another mass-media dose of Obama’s economic prescriptions underlined the dangers the president is facing as he struggles to sell his recovery efforts to a country seething with anger and anxiety over the costs, effectiveness and potential abuse of the government’s trillion-dollar bailout programme.

White House aides remain outwardly confident that Obama’s telegenic appeal will reassure Americans who were appalled by last week’s Wall Street bonus fiasco and who are becoming increasingly skeptical about the president’s so-called “Big Bang” approach to reviving a shattered economy.

Barack Obama is 100% responsible for the so-called “bonus fiasco,” along with skanks Dodd and Franks. Like the bribes they took from Fannie and Freddie, they just got caught once again doing the bidding of the craven financial interests that paid for their election.

Also note the comparison to Fidel Castro and Hugo Chavez. A mere 60 days into the Presidency, and he’s already outed himself.

Right Question, Missed Prescription

John Tamny, an economist who writes and edits for the excellent “Real Clear Markets” extension of “Real Clear Politics,” has an editorial in the Investors Business Daily.

It is an excellent piece about the process by which capitalism just might sow the seeds of its own destruction.

Is Socialism Overtaking Capitalism In The Way Schumpeter Foresaw?

In his 1942 book, “Capitalism, Socialism and Democracy,” Joseph Schumpeter asked the essential question: “Can capitalism survive?”

His unsettling answer was, “No. I do not think it can.”

Schumpeter’s words were in no way meant to denigrate capitalism. Instead, he felt “its very success undermines the social institutions which protect it.” History in many ways proved his views prophetic.

That’s the point in a nutshell. That phenomenon is one of the reasons I’ve developed some fun memes of my own on that topic – the favorite being my view that “getting rich makes you stupid.”

[For evidence, note that those making over $200,000/year voted 52/46 Obama, and the stinking rich probably by even higher margins. For better evidence, look at the suburbanites who pay obscene property taxes while stupidly thinking it is benefiting their children. But I digress...]

The point of my little meme is that once you get rich enough, you generally could care less what the “little people” pay in taxes. You don’t care if your referendum vote taxes your elderly neighbor out of the home they lived in for decades. Most importantly, your wealth and access to paid talent allows you to escape the hard work necessary to actually understand the world around you.

All of that culminates in rich soccer moms driving around in $35,000 SUVs, leaving their kiddies’ McDonald’s trash in the strip mall parking lot (for one of the “little people” to pick up), all while preening about with their faux moral superiority – as evidenced by their Obama bumper stickers.

In short, the new, young, rich may look hot, but they have become morally flabby. So has a good chunk of America. Moral flabbiness eventually leads to intellectual flabbiness as well, but in our specialized society, our resumes will protect us from the vagaries of the “market” for a very long time. If you are good at your specialized corner of the world, your income can protect you from the truth that you just might be a complete idiot about everything else in the world (i.e. believe the mainstream media).

For large, cultural manifestations of this trend, one need only look to Madoff, the entire meltdown, and the fact that most of America feels it deserves a cut of some “bailout,” when in fact, most of America needs a good spanking and year working as a dishwasher or busboy, or tradesman (if they are lucky).

Which brings me back to Tamny’s article. He goes on to blame “regulation,” which is, of course, somewhat accurate.

The irony of a government that fostered our financial destruction overseeing its resuscitation has seemingly never troubled Bernanke, so now the very regulations that failed so impressively when it came to rooting out previous financial mistakes will be expanded.

What’s rarely asked is how the very people who achieve stature through something called “pay grades” could ever successfully regulate those who make millions by gaming those same regulations and regulators.

Once this is considered, it has to be remembered that a bigger regulatory state simply ensures that there will be more big failures, and more Bernie Madoffs to contend with.

Regulations, rather than a deterrent when it comes to nefarious activity, actually encourage it for the existence of rules that sharper minds in the private sector will always work around. Regulations merely tell those eager to cheat or take excessive risks what they’ll have to comply with while cheating and taking excessive risks.

Here is an example of the Libertarian clearly overstating his case re: regulation, while ignoring the far more important aspect of regulation that EVERY libertarian and socialist wishes would just go away. Better “self-regulation.” Better “self regulators” are better people. It’s called character.

As for government regulation, I think the meltdown would not have occurred if we had “better” (not more) government regulation. Dodd and Frank took bribes to keep regulators off of Fannie and Freddie’s back. Further, the market for purchasing loans was “monopolized” by Fannie and Freddie through government protection and subsidy.

Next, the government protected Moody’s and S&P from competition. Had these companies had to compete with better rating agencies, the river of CDOs and synthetic CDOs would never have been rated “investment grade.”

But it is the MORAL HAZARD of rich “libertarian” and liberal organizations that bought protection and rules changes (vast lowering of capital requirements) that threw fuel on the meltdown fire.

Here is the upshot of all of this. We as Americans have lost our ability to “self-regulate,” and it is our institutions that are driving the destruction of that ability. Whether we crave weight loss in a pill or lipo-suction, crave a house we can’t afford, or want to pretend that we deserve to have our homes appreciate at 20%/yr forever, once we bump into reality, our reaction is to wail that we need a bail out. Our once robust corporate sector is even more craven.

Tamny’s article is fine as far as it goes, but it doesn’t go far enough. If you want to preserve your freedom, whining about big, bad government regulation isn’t going to help you, or America. The same smart people alluded to in Tamny’s article are (as he even admits in the bold text above), morally compromised. If you regulate them, they will co-opt the regulators (witness the AIG loopholes and the Democratic Congress and President who FORCED THEM ON YOU!).

On the other hand, If you don’t regulate them, they will cheat you blind.

If it is true that capitalism’s “very success undermines the social institutions which protect it.” , then there is only one way out. Our society requires a principled, reasoned, and decent conservativism that is premised upon man’s fallen nature, and the necessary and never-ending struggle to overcome it personally – not collectively (which socialism’s failures prove is not possible, BTW).

John Adams wrote that “We have no government armed with power capable of contending with human passions unbridled by morality and religion. Avarice, ambition, revenge or gallantry would break the strongest cords of our Constitution as a whale goes through a net. Our Constitution is designed only for a moral and religious people. It is wholly inadequate for any other.

As you contemplate Bernie Madoff, the Madoff Economy, and the fact that our media, our cultural institutions (save churches), and our government are all working to undermine our moral fiber, take the time to contemplate this…

“You can’t cheat an honest man.”

I’m getting to the point where I don’t really care about “economic recovery,” particularly if it is built on simply restarting the cycle of cheating ourselves. I’d like to see a little bit of a moral recovery. I’d like to see America (and her institutions) being led by honest men and women again. And no, Mrs. Soccer Mom, Barack Obama, his army of rules-waived lobbyists and politicos, and his legions of sycophantic media whores, certainly do not qualify.

Anti-Trade Idiocy

Smootbama-Hawley anyone?!

Mexico Bites Back

Free Trade: Congressional Democrats have a bad habit of viewing treaty obligations as favors, forgetting that trade is a two-way street. Now that they’ve broken NAFTA, the Mexicans are about to educate them.

Responding to Congress’ scrapping of a North American Free Trade Agreement obligation to let Mexican trucks enter the U.S., Mexico’s government retaliated with $2.4 billion in tariffs on 89 U.S. goods that had gone to Mexico duty-free since 1994.

The Mexicans made no bones about why they were doing it: If the U.S. won’t honor the treaty it signed in 1993, then they won’t either.

Retaliation isn’t something to cheer, but who didn’t see it coming?

The U.S. had promised to let Mexican trucks on the road by 2000, and still only had a pilot program as of 2003. When the U.S. Omnibus bill got rid of even that program, under which Mexican trucks passed all inspections and even outperformed U.S. trucks on safety, the result was a treaty not worth the paper it was printed on.

With retaliation, the Mexicans were saying that if the U.S. intended to pick and choose what parts of the treaty it would follow, then they’d do the same. It’s a terrible bargain, because this is becoming a trade war with sides about to lose out.

I don’t get a lot of comments on this blog. Maybe it’s hard to comment. Maybe I’m so smart no one wants to argue. Maybe no one reads this blog (though my stats are pretty good).

Regardless, I’ll offer the same insult/challenge to anyone interested. Please attempt to make a case against “free trade.” Some one? Anyone? I know it’s not easy exposing your ignorance, but please try. There are a lot of sheep who agree with you.

Framing the Issue – Obama’s Tyranny Agenda

When you strip away all the faux intellectualism and the idiocy of so-called “reality-based” nomenclature, the left’s view of foreign policy is to starve democracy and make deals with tyrants.

Obama’s Tyranny Agenda

The Obama Administration has struttingly declared its fealty to realism, the only foreign policy school of thought so insecure that it seeks validation in its name. Over the past decade, realists have come to define themselves in opposition to “overly idealistic” neoconservatives, but that sells a proud tradition short. Historically, realists have provided a valuable service to the foreign policy community by relying on steely-eyed analysis and a focus on the national interest to cut to the quick of even the most vexing national security issues. But the diluted progeny of those realists past have polluted the legacy of their forebears. Steely-eyed analysis has given way to clammy-handed diplomacy. And the national interest has been supplanted by the least offensive consensus.

Thus, the Obama realists will have none of this dunderheaded democracy talk. Sophisticated nations, after all, thrive by starving the universal hunger for liberty and gorging the bloated enemies of freedom. At least, that’s the only intelligible way to understand President Obama’s foreign policy.

How else does one explain a presidential offer to barter away the missile defense of Eastern Europe’s young democracies in exchange for Russian efforts to slow Iran’s development of nuclear weapons? Were Obama’s offer tied to any tangible outcomes it could perhaps be justified on the coldest of realist grounds: between your security and ours, ours comes first. But a promise to talk, even if fulfilled, doesn’t disarm warheads. Like the equally insipid “land for peace” gestures in the Holy Land, all it does is guarantee that one side gives up a tangible asset today in exchange for a dubious promise tomorrow.

The usually branding conscious Obama Administration has yet to give a label to their foreign policy. Given where its priorities seem to lie, let’s settle on the “Tyranny Agenda” for now.