gm revisted and how does protectionism affect you?

Since December 2008, GMAC Financial Services, the financing arm of General Motors, has received approximately $12.5 billion in TARP money in an attempt to stabilize the company so that GM could fully recover.  At the time we were told that the money was necessary in order to save the automaker, and that they loans would be repaid once GM recovered.  Well looks like the "repayment" won't be coming anytime soon.  Yesterday the Treasury announced that it was giving GMAC an additional $3.5 billion in order to keep the company solvent.  After conducting a stress-test of the Company a few months ago, the Treasury required GMAC to raise more capital so that it would have enough capital on hand to cover any future losses, which are expected to continue into 2010.  However, GMAC was not able to find any private lenders to fill the void, so it was forced to turn to the federal government for yet another bailout.

Can anyone guess why GMAC could not find financing from the private sector?  Anyone?  It's not really that difficult a question.  Just look what happened to previous GMAC lenders.  They were the secured creditors who were left out in the cold when the Federal Government bailed out GM last year.  Rather than offering the creditors who secured their loans on GMAC's tangible assets a fair price based on the liquidation value of the company, the relative strength of their bargaining positions and contracts upon which the loans were based, Obama catered to the union special interests and made sure that lenders faced much stiffer losses (The union received approximately $10 billion in cash, $6.5 billion in dividend preferred stock and a 20% equity stake in the restructured company for about $20 billion in claims; compare this with $27 billion in claims by secured creditors who received 10-15% of restructured equity and no cash or preferred stock).

Why would anyone in their right mind lend money to GMAC after that?  If the company fails, which in my opinion is more likely than not, you will never get a fair deal for the return of your capital regardless of any contractual terms you negotiate.  This lack of private lending available to GMAC, as well as GM, is the inevitable consequence of the governmental interference in the contracts between lenders and GM.  If a lender cannot contractually guarantee a benefit for himself, then the contract has no value to him, as he now assumes all risk, and the contract will not be made.  Hence no private lending to companies that received federal bailouts.  I have no doubt that Geithner and Obama foresaw this outcome.  However, Obama has no problem nationalizing an industry and sees no problem with continued governmental control.  This was his ultimate goal.

None of this should be surprising.  Obama, although he espouses the virtues of private industry on camera to hide his socialist nature, has consistently funded government intervention and control over what should properly be a private venture.  Just look at Fannie Mae and Freddie Mac.  On Christmas Eve the government announced that it was removing the $400 billion cap on bailouts for the two GSEs.  That's right, they made this major policy announcement on Christmas Eve.  Why do yo think they would do this?  Of course they don't want people to know it.  And the vast majority of our retarded population will never have any idea.  News like this is is just words that get in the way of real news like the coverage of the Tiger Woods "scandal" and the death of Michael Jackson.  The announcement was made on a holiday and I guarantee that 99.9% of the population didn't know it happened.  But once again that's the way Obama roles.

Another example of the government intervening to protect a democratic political ally (once again the unions.  SUPRISE!) was the U.S. International Trade Commissions ruling that chinese steel imports "unfairly damaged" U.S. steel makers by receiving subsidies from the Chinese government.  The first question we should always ask in any antitrust or anticompetitive ruling is what is the goal of such a policy.  I belive that a smartly designed policy would be to ensure the protection of competition, not protection of competitors.  Our goal should be to ensure that access to a free and open market is not compromised, not that all competitors are protected from their own failures arising from rejection of their products in the marketplace.

This is the exact opposite of what occurred here.  U.S. steel makers are the United Steelworkers Union brought the case to the ITC under the dubious claim that the chinese "unfairly subsidized" their own domestic producers at the expense of U.S. producers.  First, what is the competition related problem with a government subsidy, which are often handed out in this country by the way?  How does this affect the ability of the market to function correctly?  It doesn't.  What is wrong with allowing the Chinese government to subsidize U.S. consumers of steel?  The subsidies make it cheaper to produced anything requiring steel at the expense of the Chinese taxpayer.  Sounds like a good deal to me.  There is nothing inherently wrong with that type of price competition.  If however, the Chinese jack up prices after eliminating such competition, that is an blatant predatory pricing violation of both the Sherman and Clayton Acts, and the chinese manufacturers would be subject to the stiff penalties outlined by that antitrust legislation.

However, the real reason for the I.T.C. ruling was to protect the domestic steel workers union at the expense of U.S. steel consumers (read EVERYONE).  They want to continue the status quo of impracticable benefits, unsustainable wages and absolutely no competition among workers.  I for one am sick and tired or it.  Why are the large majority of Americans expected to be productive or lose their job while teachers, government workers and other union members receive huge guarantees in pay and pensions while very little chance of ever being fired even if they are grossly negligent.  This double standard must change, and employees all across the U.S. should succeed based on merit, not political favor.

One final recommendation: to learn more about why protectionism is bad policy and why governmental intervention will almost never result in a positive outcome for the majority of the population please Free to Choose by Milton Friedman.  This rational market view of economics is straightforward, easy to understand and dispels many of the scare tactics and arguments put forward by the socialist apologists.  I still think it is the best book I have ever read (non-fiction).

damn eagles and iran

The Eagles certainly just gave me a hell of a scare. They led 20-7 at halftime, and were up 27-10 at one point in the third quarter, but thanks in large part to a Macho Harris fumble and poor play by Donavan McNabb in the second half, Denver was able to fight back and tie the game at 27 in the fourth quarter. Luckily, after the defense stepped up and made several key stops, Jeremy Maclin made one the best catches I have seen all season to put the Eagles in field goal range with about a minute left in the game. David Akers did his thing and the Eagles pulled out a 30-27 win.

A couple of notes from todays game in no particular order:

- Brent Celek is deserving of a Pro-Bowl bid. Through 15 games he now has 69 catches for 875 yards and eight touchdowns. In my opinion the only player more worthy in the NFC is Vernon Davis. Tony Gonzales has a few more catches but less yards and touchdowns. Jason Witten has several more catches but is comperable in yardage and has only ONE touchdown. He sucks (I hate him even more because I wasted a high draft pick him in my fantasy league. And he had ONE touchdown. Gay.) Davis and Celek should go.

- Props to Champ Bailey and Andre Goodman. They played extremely well despite giving up passing TDs to Desean Jackson and Jason Avant. Neither of those Denver DBs was covering either of the Eagles WRs when they scored. For the most part they shut down the Eagles wide receivers, tackled well and never allowed the big play over the top. Champ also had a nice pick and a couple of nice pass break ups. Great game by both of them.

- McNabb needs to improve his accuracy somehow if this team is going to make a long playoff run. He played horribly in the second half and missed several open receivers. I am so tired of seeing him clap and laugh after throwing the ball at a receivers feet. Andy Reid could of helped McNabb out though by calling a little more balanced game in the second half. There was great balance in the first half, but after Asante Samuels' interception in third third quarter Reid called no pass plays on the next two possessions, and guess what? Two three and outs. On the following two possessions he called only two runs, both on first down, leading to two more three and outs. When your quarterback is struggling you've got to have more balance than that.

- Having said that, as Larry David would say, I like this team's chances next week against the Cowboys and beyond in the playoffs. They might have won ugly, but they won nonetheless. They have a chance to finish 12-4 and if either the Bears or Giants can manage to beat the Vikings, they have a great shot at a first round bye. If that happens, I think they make the conference championship at least regardless of who they play in the divisional round.

One non-Eagles note. I just want to quickly comment about what is happening in Iran. Once again the protests are heating up and pro-democracy/freedom reformists are trying to rally the nation around the ideals of freedom and liberty. These are the core values that all Americans believe in, and we should not hide our support for anyone that espouses these rights. Unfortunately, that is exactly what Obama is doing. He is more concerned with catering to needs of a illegitimate Dictator (Ahmadinejad) so that he can "engage" Iran on other issues like nuclear proliferation. Well look where "engagement" has gotten us. Iran continues to march towards a nuclear weapon and they don't give two shits that Obama wants to negotiate. Iran isn't even pretending to care what Obama and the U.N. says, they are just continuing down the path of enrichment and defiance of international law. At this point, Obama should express support for the protesters and declare that the U.S. no longer accepts Ahmadinejad as the legitimate president of Iran. In the age of global communications, this type of statement would immediately be broadcast all across Iran, especially to the protest leaders who are well-educated and most of whom live in Tehran.

Iran is the most dangerous threat to global stability in the post cold war world. If the reformers succeed in ousting this dangerous regime, world peace would be a much more achievable goal. We as Americans, and the American president, should do as much as we can to support freedom and ensure that happens.

weapon x returns

As soon as the 2009 NFL schedule was released, this week's Denver game was the one that jumped out at me most. Well maybe not the most. Next week's week 17 match-up in Dallas may have been a little more noticeable especially because of the Week 17 game between the same two teams last year, although it occurred in Philadelphia. For those that don't remember that game, I will tell you about it because it was one of the best regular season games of all time. After getting some help from Oakland earlier in the day, the Eagles had a de facto playoff game against the Cowboys with the winner getting a wildcard spot and the loser going home. Since it was basically a playoff game, you can guess how Tony Homo and the rest of the Cowgirls played; they laid one of the biggest eggs of all time in NFC East play, getting smashed to the tune of 44-6. The Eagles forced five turnovers and at one point scored TDs on two consecutive Cowboys possessions. And believe me, I have full confidence that the Eagles will do it again this year. Don't think the Cowboys are for real just because the caught the Saints sleep walking through the remainder of the regular season (The Saints should have lost their past three games). The Eagles are the hottest team in football right now that is not named the San Diego Super Chargers or quarterbacked by Payton Manning.

But back to the Denver game. Obviously regardless of the playoff seeding and potential first round bye implications, this game matters because B Dawk is going to be wearing a different colored jersey than the usual Midnight Green this Sunday at the Link. Dawkins had been the heart and soul of this franchise for far and away the best overall span of football in its history. In all honesty Brian Dawkins may be the only Hall of Fame player that played for a significant amount of time for the Eagles during that time period. McNabb has a chance, but unless he wins the Super Bowl, its hard to make the case for him in my opinion. The only others that have a chance are probably too young to know for sure. T.O. will make it, but he was only an Eagle for a year and a half. Players like Sheldon Brown, Brian Westbrook, and Desean Jackson could all potentially be in Canton one day, but they would need to continue to produce at a All-Pro level for several more years. But Brian Dawkins brings much more to a team than just great play at the free safety position: his is an emotional leader that leads by example and simply wills the players around him to perform at a higher level. Just look at Denver this season. They are not that great on paper, but Dawk has the defense flying around the field, and they have the third best defense by total yardage in the league. Dawk is just one of those type of players, and an even better person.

But obviously this game is important for several reasons unrelated to the return of Brian Dawkins. A win coupled with a Cowboys loss to the Redskins (and don't count out the Redskins: they are coming off the most embarrassing game in the history of the NFC East that wasn't the Eagles-Cowboys 2008 Week 17 game cited above, and the Cowboys once again are think way too much of themselves after beating the Saints. This is a division rivalry - anything can happen) would clinch the division for the Eagles. Additionally, if Minnesota loses one of its remaining two games and the Eagles win out they would get the two seed in the NFC and a bye in the first round. Obviously that is hoping for a lot, but it is definitely possible. If the Giants take care of business this week against Carolina, they will face Minnesota in Week 17 with a playoff birth on the line. The Vikings could definitely lose that game. But first the Eagles need to take care of business against a Denver team with a lot on the line. The key to this game for me is getting pressure on Kyle Orton. I think Denver is going to be able to run the ball, but I think the Eagles should be able to score on Denver as well. The offensive key is balance. Brian Westbrook will be back this week, and I would love to see him on the field at the same time as Lesean McCoy. That could create match-up nightmares for the Broncos linebackers. If the Eagles are able to put points on the board they should be able to force Denver into more passing situations, taking away their strength running the football. If they can put some pressure on Orton at that point, I see him having at least two turnovers. I think that will happen, and my prediction is a big win for the Eagles, with the final score being Eagles 27, Denver 16.

MERRY CHRISTMAS!!!

bcs playoff

So I think absolutely everyone in America who is not a president or AD of BCS conference university is in agreement that college football needs a playoff system to determine the national champion. If this doesn't happen within the next 10 years, I am seriously going to start raising capital for my ultimate dream: a professional football league that allows participants to enter as soon as they are 18 years old. I don't care if they dropped out of high school, if they can make plays I'll sign them. "Fuck college football," I'd tell recruits. "You can get just as many girls and get paid while doing it in the BFL (Bro's Football League)." I wouldn't have any of those annoying player personal conduct rules either. If you're not in jail, or prevented from travelling out of state because of parole, then you can suit up. I feel like this is a can't fail. Who wouldn't want to watch these thugs ball and what recruit would choose psych class over getting paid thousands if not millions? Time to start raising money.

But if the BCS does decide to go with a playoff system, I'll probably hold off just because college football may become better than the NFL at that point. Here is my recommendation for just such a playoff. First, I would require 16 teams. The bids would be given as follows:

- 6 automatic qualifiers fro winning one of the BCS conferences

- Automatic bid to any undefeated team
- Automatic bid to any team in the top 12 of the BCS rankings

- The remaining bids (if any) would be chosen by a selection committee

- The seeding would also be determined by the selection committee

So this year, if I acted as the selection committee, the seeding would be as follows:

1) Alabama

2) Texas

3) TCU

4) Cincinnati

5) Florida

6) Boise State

7) Ohio State

8) Oregon

9) Georgia Tech

10) Iowa

11) Penn State

12) LSU

13) BYU

14) Virginia Tech

15) Miami

16) Pitt

Using the espn playoff simulator, the tournament would proceed as follows:

(click for a larger image).

Penn State was very respectable, making it to the final four, but congratulations to 2010 NCAA football champions, The GEORGIA TECH YELLOW JACKETS!

healthcare, copenhagen and the epa

Well now that I am done with finals, I am hoping to update this thing a little more often. A lot has happened since my last post, and obviously my prediction that Penn State would play in the Fiesta Bowl did not pan out, but more about that later. Additionally, the Eagles are playing great right now, and I am going to devote an entire post to playoff scenarios later this week. For now, I want to focus on the two big political issues right now: healthcare "reform" and climate change.

At 1 AM ET last night, the Senate voted 60-40 to end debate on a healthcare bill, setting up a vote to pass the bill on Christmas Eve. The bill itself has become extremely unpopular with the public (a recent CNN poll released today showed 56% of people say they oppose it while only 42% support it), but that won't stop the Democrats from forcing it through in the middle of night. The whole process has been laughable and completely at odds with President Obama's promise of a "new era of transparency" that he promised during his campaign. The 2000+ page bill was written by 10 hand picked democrats behind closed doors, and the bill wasn't released to the public, or in that case the other Senators who had to vote on it, until just a few hours before the vote for cloture was invoked.

In short, this bill sucks, and I think that even the Democrats realize it. The major goal of the legislation was to provide every American with health insurance and do it without breaking the bank. Guess what? Neither goal will be accomplished under the Senate bill. First, although the legislation includes a new mandate that requires individuals to buy health insurance or face a stiff fine, even the Congressional Budget Office estimates that over 25 million Americans will fail to be covered even after the bill. Although Democrats were able to include several provisions that limited the insurance companies from denying coverage based on preexisting conditions and the such, they obviously have to be disappointed they had to abandon the public option, which many saw as a stepping stone to a single payer system.

But regardless of all that, there is one reason I find this bill reprehensible: Obama and the Democrats are STRAIGHT UP LYING about how much this bill will cost both in the short and long term. They are claiming that this bill is fiscally responsible based on the estimates made by the Congressional Budget Office. According to the CBO, the bill will only "cost" $781 billion over the next decade and will actually reduce the deficit by $132 billion over that time period. Really? Really? Does anyone actually believe that this bill is going to save money? Can you say that with a straight face? It simply does not make sense. They are claiming the quality will increase and costs will be lower. That's right! Democrats have finally figured out what most people couldn't: how to defy the laws of economics and make a system even better while making it cheaper in the process! Do you know why the CBO thinks this bill is going to save money? Because the tax increases to pay for the bill are going to start immediately, but over 98% of the costs do not start to accrue until 2014. So basically the CBO estimate uses 10 years of tax increases and only 5 years of entitlement benefits and then claims that it is a true estimate of the cost of the bill. This is the same type of accounting that has given us a Social Security/Medicare system that is set to bankrupt the country. Currently those programs have a total unfunded liability of over $50 trillion. That's trillion with a t. So what's the best way to address this coming financial crisis? Expand the program to include millions more. The whole entitlement state is nothing more than a Berni Madoff ponzi scheme on steroids, and if the accounting used by the CBO were used by a private company, the officers and accounts would be in jail for fraud (literally they would be).

Unfortunately, this health care bill isn't even the most destructive bill being considered by the Congress. The end of the world that is global warming must be stopped, and if we do not act... well, most people really aren't talking about what actually will happen if global warming continues. We are told horror stories about melting glaciers and rising sea levels, but I am not sold that any of these things will cause costs that are higher than those that would be imposed by cap and trade legislation. First, none of these supposed problems are going to occur in the near future or quickly. It will be a slow process and no one can predict exactly what is going to happen. By the time we start seeing any of these problems, we will be much more advanced as a society. Even under the most grave of predictions, it is impossible for anyone to say with accuracy what its effects on the human population will be. That is because humans are an unbelievably adaptable creature. We are the only mammal that can be found everywhere from North of the Arctic circle to the tropics around the equator. We will be ok.

Let's say the doomsdayers like Al Gore are correct. If we do nothing the Earth will warm two degrees over the next century. So what would be the actual effect on the human population? First, we will have advanced tremendously as a society by the time 2100 roles along. Technology has increased at an exponential rate since the advent of capitalism in the mid-sixteenth century. One hundred years ago, Howard Taft assumed the presidency, Einar Dessau made the first short-wave radio broadcast, and the first flight across the English Channel was completed. Today, instead of relying on radio we have the internet, so every individual has access to unlimited information, and we have planes that can fly without human pilots. Just imagine what life will be like one hundred years from now. I have full confidence that humans will adapt to a warmer climate, especially one that occurs slowly over decades. And do you know what the catalyst for change will be? Not a command and control economic push as desired by Obama and the other socialists, but the price mechanism. As global warming begins to impose actual costs in our society, the prices of the goods and services that are adversely affected by the climate will rise, encouraging innovation and alternative investments. Things like rising sea levels will be addressed by technological innovation. Consider this fact: 27% of the area and over 60% of the population of the Netherlands is below sea level. Using crude dikes and polders, the dutch have been able to keep the sea from destroying their homeland for hundreds of years. Imagine the innovation that would ensue if billions people faced a threat from a rising sea level, creating a large market in protecting against flooding.

And what about the positive effects of global warming? If the Earth does warm that will mean that more Northern regions will experience a longer growing season, allowing for the areas to grow crops that could traditionally only be grown in warmer climates. Critics say that the rise in global temperatures will lead to an increase in petulance and disease. Well why don't we address these problems directly rather than some indirect and causally suspect basis like global warming. If malaria will increase in tropical regions, we should invest in more mosquito nets, safe indoor DDT sprays and more education. No one can argue that stopping global warming would help protect poor populations from increased occurrence of disease more than this direct aid would. Additionally, the global warming alarmists insist that natural disasters will increase in both frequency and intensity. Even if this is true, which no once can actually prove, they are simply speculating, I think we will soon have the technology to address such concerns. Both researchers in the U.S. and especially in China are currently pursuing technology to control the weather. It sounds like science fiction, but so did a device that allowed you to not only to speak to anyone else on the globe from practically anywhere but also allows you look up any fact with the push of a button, to an observer 100 years or even 25 years ago (For those unsure, that last poorly worded sentence was my attempt to describe the iphone). For a few ideas about weather manipulation and where the technology is headed, check out this wikipedia article on weather control. Again, if the problem from increased storms is nearly as large a problem as the alarmists expect, one would expect research in this area to skyrocket.

Lastly, I just want to comment quickly on the EPA's recent "endangerment finding" that carbon dioxide is a "dangerous pollutant" and can be regulated accordingly under the clean air act. In order to make such a finding, they had to show that carbon dioxide threatens the public health and welfare. They based this finding on the "scientific consensus" that global warming will hurt "air quality," increase air born, climate-sensitive diseases, and increase the frequency and severity of natural disasters. Regardless of the fact that the clean air act was designed in 1970 to regulate pollutants like Sulfur dioxide that cause direct harms to human health through inhalation and the like, the fact that they found that emissions of greenhouse gases caused not only global warming but also the harms associated with it is disturbing. Traditionally, causation is a legal concept that has two parts: cause-in-fact and proximate causation. In order for a prior event to be considered a cause, both of these tests must be satisfied. For something to be a cause-in-fact, the second event would not have occurred but for the occurrence of the first. For something to be a proximate cause, an act from which an injury results as a natural, direct, uninterrupted consequence and without which the injury would not have occurred. Regardless, I see no way that someone can say that emitting carbon dioxide will cause the adverse effects of global warming. There are so many other contributing factors that contribute to these events other than U.S. emissions (the only emissions the EPA is allowed to consider in their endangerment finding) that it is impossible to say that they will not occur anyway even if the U.S. stopped emitting carbon dioxide immediately. Complex weather patterns, international emissions, and shirts in solar weather patterns are all potential intermediary actors that affect the potential harm. In order to be considered a cause in the legal sense, the event must have a direct and foreseeable impact on a harm that will not occur independently if the event is removed. Although they are strong arguments that warming is being caused by increased carbon levels, that link is too tenuous to be a legal cause under the clean air act, and any government intervention must derive its authority from new legislation, not some bullshit and speculative argument that misapplies a law that was designed to regulate pollutants that actually do directly hurt individuals because of things like toxicity.