Monthly Archives: February 2009

It will get a lot worse

Before it gets better. At least that is the opinion of two economists – one from the German Deutsche Bank reported on NPR’s Morning Edition this morning:

“Ultimately, the taxpayer will be on the hook one way or another, either through greatly diminished job prospects and/or significantly higher taxes down the line,” the document says.

In other words, the paper says, if the government tries to save taxpayers money, many people will lose their jobs and the whole economy will suffer.

The research note offers a solution any banker would love: The government should “estimate the highest price it can pay for the various toxic assets on financial institution balance sheets,” then pay that price to buy them.

Note that doesn’t say what they’re worth or what the going market price is, it says the highest price it can pay. The alternative is very, very high unemployment – like in the 20% range. Since “it” is the government, that’s us that will be on the hook, via taxes and debt. According to Simon Johnson, an economist at MIT’s Sloan School of Management:

“It’s saying, ‘Guys, either you’ll have 20 percent unemployment or national debt will go up to these dangerous levels, unless you buy toxic assets — not for what they’re worth, not for what the market price is, as much as you can pay.’ ”

Johnson says his “first reaction was: ‘It’s a spoof.’ My second reaction was: ‘Oh my God.’ “

Again from NPR:

Johnson thinks that if the U.S. is going to spend taxpayer money anyway, it’s ridiculous to use it to save the same bankers who caused the current crisis. He likes a different approach: where the government directly takes over banks and then sells them to new owners. Maybe for a profit, maybe for a loss.

David Beim, a former banker who is now a professor at the Columbia Business School, has something to say for people who want to pin this whole thing on the banks.

He has a chart illustrating how much debt American citizens owe, how much we all owe — with our mortgages and credit cards — compared with the economy as a whole. For most of American history, that consumer debt level represented less than 50 percent of the total U.S. economy, as measured by gross domestic product.

And then …

“From 2000 to 2008, it’s almost a hockey stick. It just goes dramatically upward,” Beim says. “It hits 100 percent of GDP. That is to say, currently, consumers owe $13 trillion when GDP is $13 trillion. That is a ton.”

This has happened before. The chart shows two peaks when consumer debt levels equaled the GDP: One occurred in 2007, the other in 1929.

Right now, I have a job. I hope that continues.

Oops

It seems that you may not be able to leave home with it, after all. It’s not your life and it’s not your card any more. In a move to pull back from letting people have the card that DeNiro and lots of others carry, card-issuer American Express is recalling cards (video) it thinks it shouldn’t have issued to people who don’t have perfect credit and offering them $300 bucks if they turn their card in.

If you get an email from the IRS asking for personal information, recall that they already have it (unless you’re not paying taxes at all, in which case, stop reading this and go get a lawyer, stupid) on all those tax returns you’ve sent them over the years. The IRS email is almost certainly a phishing scam.

And, in the No shit, Sherlock! category, Ben Bernanke thinks we’re suffering in a significant contraction. Ya think?

Oh, and A.I.G. wants to borrow another $60 billion or so. I don’t think they know yet how much they really need. Remind me again why “too big to fail” is something that wasn’t killed at birth.

Thinking out of the box

It’s good that some of the administration are at least starting to think outside of the box (and why did someone ever build that box anyway? It’s got to be really big to contain all the people in there, but I digress.) but I’d like Ray LaHood to do a little more thinking, thanks.

Ray has talked to the media about taxing cars not based on a gas tax but based on a miles driven tax. I have multiple concerns about this idea. (Fortunately, so does Barack, so the whole discussion is academic, but still…) 

First, the gub’mint isn’t going to stick a GPS unit on my car to track how many miles I drive, period. That’s none of their business even if (as sadly happens to be the case) I never go anywhere controversial or interesting. I don’t trust them to just keep track of the miles.

Second, although I am sure I can be trusted to tell the government the truth about how many miles I’ve driven on my tax returns (he says, as he blushes), there are probably others who won’t be as honest as I am.

Third, I have spent years and years driving cars that get in excess of 30 MPG because I care and now my taxes are going to be the same as some asshole driving a Hummer? I don’t think so. Not. ever. going. to. happen.

Fourth, since my car was built before any such devil devices were created, how do they think I’m going to latch onto one of them gadgets? Are they going to buy me a new car to replace every one we’ve got? I doubt it, although that would probably do more to help the economy than anything. So if I decide to only buy old cars from now on, do I get out of this tax? Tax avoidance is not illegal.

Of course, I see some thinking going on because if car companies start slipping electric cars onto the roads, the taxes taken in from gas taxes will decline sharply. And there’s never enough money in governmental coffers to keep the roads fixed. After all, our roads are pretty good, but the section of I-65N south of Briley can still jar your teeth.

Well, Ain’t We Speshul?

By Gum, I luvs me some innertubes. Acordin’ to my ifriend over at the Teevee stashun, we’uns r livin in the land of possum cracklins and geetar twangin. An’ sumhow them reporter fellers over to Los Angesleeze kain’t unnerstan how come we gots the lectric Nissan deal.

Weel now, Mr. Dan Neil, it’s simple enough even for you to figger out if’n you had brainz. Yore roads are clogged up worse’n granny’s colon with too many of them autymobiles. Battry autymobiles gotta be abul to git somewheres so ya kin plug em in and even wif all them roads y’all got over yonder, ya kain’t git nowheres anywho. Don’t ya unnerstan nuthin?

Say What?

Update: The Seattle Public Utility company was caught billing customers for having fire hydrants available across the city and the courts ruled they owe their customers a $22 million refund because that ought to be a city-provided service. So how would you think they’re repaying the refund? Yep. They’re adding a surcharge to everyone’s bill.

A Refresher Course

I’ve mentioned this already this week, but I’m going to point it out again. Vanity Fair has an article on the previous presidency. I know, it’s over now, but this is different. It’s told chronologically by people who were part of the administration and who were there when decisions were made. It’s the story of a descent into war and financial despair told by those who witnessed it. It is a profoundly disturbing portrait of the office and the times.

It is worth reading.

Richard Clarke (chief White House counter-terrorism advisor)
On September 4 [edit: one week prior to the 9/11 attack), we had a principals meeting. The most telling thing for me about the attitude of these people was on the decision that had been pending for a long time to resume Predator [remote-controlled drone] flights over Afghanistan, and to now do what we couldn’t have done in the Clinton administration because the technology wasn’t ready: put a weapon on the Predator and use it as not only a hunter but a killer. 

We had seen bin Laden when we had it in the Clinton administration, as just a hunter. We had seen him. So we thought, Man, if we could get this with a hunter-killer, we could see him again and kill him. So finally we have a principals meeting and the C.I.A. says it’s not our job to fly the Predator armed. And D.O.D. says it’s not our job to fly an unarmed aircraft.

I just couldn’t believe it. This is the chairman of the Joint Chiefs and the director of C.I.A. sitting there, both passing the football because neither one of them wanted to go kill bin Laden.

Bill Graham, Canada’s foreign minister and later defense minister
We were there in Washington for a G-8 meeting, and Colin suddenly phoned us all up and said, We’re going to the White House this morning. Now, this is curious, because normally the heads of government don’t give a damn about foreign ministers. We all popped in a bus and went over and were cordially received by Colin and President Bush. The president sat down to explain that, you know, this terrible news had come out about Abu Ghraib and how disgusting it was. The thrust of his presentation was that this was a terrible aberration; it was un-American conduct. This was not American.

Joschka Fischer was one of the people that said, Mr. President, if the atmosphere at the top is such that it encourages or allows people to believe that they can behave this way, this is going to be a consequence. The president’s reaction was: This is un-American. Americans don’t do this. People will realize Americans don’t do this.

The problem for the United States, and indeed for the free world, is that because of this—Guantánamo, and the “torture memos” from the White House, which we were unaware of at that time—people around the world don’t believe that anymore. They say, No, Americans are capable of doing such things and have done them, all the while hypocritically criticizing the human-rights records of others.

Alberto Mora, navy general counsel
I will tell you this: I will tell you that General Anthony Taguba, who investigated Abu Ghraib, feels now that the proximate cause of Abu Ghraib were the O.L.C. memoranda that authorized abusive treatment. And I will also tell you that there are general-rank officers who’ve had senior responsibility within the Joint Staff or counterterrorism operations who believe that the number-one and number-two leading causes of U.S. combat deaths in Iraq have been, number one, Abu Ghraib, number two, Guantánamo, because of the effectiveness of these symbols in helping recruit jihadists into the field and combat against American soldiers.

Ari Fleischer, Bush’s first White House press secretary
[The housing bubble] was not on my radar screen. Now, after everything broke with Fannie and Freddie, I guess the White House released some document that, if I remember it, said the president 17 times cited Fannie and Freddie problems going back to the initial budget that we submitted in 2001. So the wonks were onto it, but in the post-9/11 world and then the Iraq-war world, all the visible focus, all the news, was on other issues. I think it just got drowned out and it didn’t get met with any sense of urgency from people in both parties.

Just so you know

It’s a set of threes. There are three rules you need to know about drain pipe. First, drain pipes need to slope downwards. Sloping up doesn’t do anything useful. Sloping downward does. In fact, some pipe needs to slope downward only slightly (like no more than 1/4 inch down for each foot of distance). This is common in plumbing pipe to make sure that solids, like cell phones and jewelry, are able to keep up with the liquids, like flat beer. Second, drains need to go somewhere eventually. Plumbing drains go to a septic tank or a sewer. Foundation drains go to a creek or a gully or somewhere. (For the benefit of the person who built my house, it is generally considered bad to run a drain up to a concrete block wall and just stop it there. Putting another drain outside the wall kinda near where the one under the front porch ends isn’t all that useful. I hate you very much, thanks.)

The third thing is that there are three different versions of that big black, ribbed drainage pipe you see in home centers. One kind is solid, with no holes in it. At our last house, I used this as a separate drain system for the downspouts. This pipe channels water out and away from the house – it’s strictly for moving water away. The second type has holes in it, but only on one side of the pipe. The holes are big enough that you can stick your little finger in there. This type of pipe is used to collect water and move it away. It’s typically used at the base of a foundation with the holes facing up. Correction: It seems that the holes are located at 5 and 7 o’clock and are designed to face down so that groundwater seeping up will go into the pipes. Oops. Proof here (pdf). That allows rain water that soaks into the ground as far as the drain pipe to find its way into the pipe and be drained away. Although it’s somewhat new in its application, this type of pipe is now covered with a tube sock kind of thing that helps keep dirt and gravel out of the pipe. Prior to the advent of this tube sock gadget, these pipes were covered with drainage-sized rock, usually from 2″ to 4″ in size, then covered by dirt. That PDF link tells you everything you ever wanted to know about drains. Seriously, everything.

The third and final type of big plastic pipe has little slits cut in it, spaced all around the pipe. This type of pipe is used when you have the water far enough away from the house that you think it’s OK to drain it into the ground since it can’t possibly go back uphill and get into the house. Some water seeps pout of the pipe into the ground, some keeps moving downhill towards the end. It’s generally considered unsuitable for use along a concrete block wall, especially if you plan on ending the pipe at an interior concrete block wall. It seems I have to explain this.