a couple of points

First of all, sorry to all my avid readers (if there are any) for the long break. I thought I would be able to write more often, but I am now working full time again, and I forgot how tiring that can be. I will try to do a couple of posts by the end of the weekend though. No promises.

I'm not sure if anyone besides me reads Matt Mosley's NFC East Blog on espn, but he recently asked his readers the following question: if you were starting a NFL franchise and were charged with winning a super bowl within three years, and you were allowed to draft 10 players from the NFC East, who would they be? I am not going to elaborate on why I would make these picks, but here they are in reverse order.

10. Brandon Jacobs, RB-NYG
9. Shawn Andrews, G-Phi
8. Brian Westbrook, RB-Phi
7. Jason Witten, TE-Dal
6. Asante Samuel, CB-Phi
5. Justin Tuck, DE-NYG
4. Jason Peters, T-Phi
3. Donovan McNabb, QB-Phi
2. Albert Haynesworth, DT-Was
1. Demarcus Ware, DE-Dal (He would be a DE for me)

Honorable mention to Santana Moss, Trent Cole, Marion Barber and Chris Cooley.

Apparently a bunch of people are making a big fuss because Supreme Court nominee Sonia Sotomayor apparently is a member of a club called Belizian Grove, which only accepts women as members. These people are claiming that if a male nominee were a member of an all-male club that did not allow women, then he would not be confirmed and labeled a sexist. What a bunch of cry babies. Although they are probably right that a male would have it held against him, they should stand up for their principles and say that this kind of thing doesn't matter. If they don't want that kind of thing used against a male nominee, don't complain now. What type of club you are in during your free time is nobody's business but your own. If Sotomayor wants to hang out in her girly club and talk about girly things, who gives two shits. So nobody should get pissed when I am nominated for the Supreme Court while I am a member of Augusta National.

President Obama is now trying to revive the "pay-as-you-go" rules for Congressional spending. In theory, this means that Congress cannot authorize new spending until it either finds a way to fund it through higher taxes or eliminating spending elsewhere. President Obama showing fiscal discipline? This is the biggest joke I have ever seen. It is so outrageous that he would propose this after all that he has spent in just 5 months, I cannot even comprehend how anyone would buy this shit. Does anyone really believe Obama has any, and I mean any, limits to how much he would be willing to spend? Sure, stupid people do. After a $787 billion stimulus bill that isn't stimulating anything other than the pockets of Washington special interests, hundreds of billions in bailouts for financial institutions through TARP, another hundred million of so for GM and Chrysler, and about $500 billion around the corner for socialized healthcare, sure I totally believe that Obama will now all of the sudden start being fiscally responsible. Not to mention that under the proposed pay-as-you-go rules, discretionary spending (which accounts for approximately 40% of the federal budget) and current entitlements are not included. So pet projects and programs like social security, medicare and medicaid would not have the rules apply to them. So basically all it would do would make it extremely hard to pass future tax cuts and limit increases in defense spending. Fuck that.

Inflation is on the horizon, and maybe even closer than the horizon. Unprecedented federal deficit spending, which has increased more this year (including adjustments for inflation, not just in terms of real money) than ever before in U.S. peacetime history. The fed has increased the monetary base at an extraordinary rate in an attempt to combat the recession. In fact, M1 (currency in circulation plus travelers checks plus demand deposits in banks) has increased more this year than at any time in the past 50 years. And its not even close. With a budget deficit that is 15% of GDP, and the total liabilities of our entitlement society after universal healthcare approaching an astronomical $100 trillion, there is no other answer. If the fed wants to keep tremendously high levels of inflation from occurring, the only thing they can do is to sell some of the trillions of dollars in U.S. treasuries it owns. However, does anyone think that is likely that the fed will do so, which would raise interest rates, especially since Obama will have to sell upwards of $2 trillion in newly issued treasuries over the next year or so to finance his enormous budget? Doubtful. In fact, the fed will probably end up buying some of treasuries that the Obama administration is issuing. At least this inflation will have the positive effect of making my school debt worth a lot less. But it is going to be tremendously harmful to the economy in general. My suggestion is to buy gold, silver, oil, wheat and other commodities. If you don't, then I told you so.

The Supreme Court decided not to hear Chrysler's bondholders appeal of Chrysler's bankruptcy. Although I knew that would happen, I think I have developed a good legal argument for why the should have taken the case. 11 U.S.C. 1126(c) states that

A class of claims has accepted a plan if such plan has been accepted by creditors, other than any entity designated under subsection (e) of this section, that hold at least two-thirds in amount and more than one-half in number of the allowed claims of such class held by creditors, other than any entity designated under subsection (e) of this section, that have accepted or rejected such plan.

In the case of Chrysler, the banks who were receiving TARP money and were also secured creditors (BoA, Citi, J.P. Morgan, etc.) held enough debt to easily meet these requirements. However, subsection (e) states that

On request of a party in interest, and after notice and a hearing, the court may designate any entity whose acceptance or rejection of such plan was not in good faith, or was not solicited or procured in good faith or in accordance with the provisions of this title.

Although "good faith" is not defined in the statute the case law has developed so that it seems to mean "whether those parties in interest with respect to whom a motion for disqualification is made, had some ulterior reason for their action which looked to some special advantage to be gained thereby." American Mutual Life Insurance Company v. City of Avon Park, 311 U.S. 138, 85 L. Ed. 91, 61 S. Ct. 157 (1940). Furthermore, at least one court as found bad faith where "a purchaser of claims in voting the assigned claims is pursuing an interest in addition to its interest as a creditor." In re Allegheny Int'l, Inc., 118 B.R. 282, 289 (Bankr. W.D. Pa. 1990). Even more on point, although "selfless disinterest" is not required where the creditor "was not acting to protect or maximize its rights as a creditor but, rather, was acting to preserve financial advantages it would receive if the Plan was confirmed," bad faith could be found. In re Holly Knoll Partnership, 167 B.R. 381, 389 (Bankr. E.D. Pa. 1994). Although the facts in the cited case were different than the conflict of interest experienced by the TARP banks, this is a novel issue and the law must be applied in a new way. The banks accepted the plan not because they were maximizing their interest as creditors, but because they wanted to continue to receive federal TARP funds (and the feds received a 20% share of Chrysler, so it amounts to a party receiving equity in the restructuring paying more proportionally to some bondholders outside of any bankruptcy agreement than to others who have equal shares and rights, so that the plan will be approved). There is no way that agreement is made in good faith. The problem is that it would be very hard to prove. But what do I know.

The Phillies just won their second extra innings game in a row against the mets, this time 6-3, giving them a series win in New York and a four game lead in the division. Raul Ibanez hit a game winning 3-run home run. Man I am pumped. Great come from behind win. GO WORLD CHAMPION PHILS!

one more year of school

I have finally finished my finals, so I am no officially done with my second year of law school.  Unlike many law students, I am in no hurry to get out of law school because attending school in Austin, Texas is pretty much the best thing ever.  But anyway, I should have plenty of time to blog over the Summer, so hopefully I keep this updated with a bunch of new posts.

First, my roommate Randy pointed out this Peter King article from his weekly Monday Morning Quarterback column.  The article does a good job of breaking down why the Eagles had one of the best drafts in the league in 2009 and is an interesting glimpse at how the Eagles front office approaches the draft.  Obviously I loved the Eagles draft this year: we got better at every offensive skill position, were able to get players with great value for the position they were taken, and added a couple of picks next year.  I am really pumped for the Eagles this season.  I think they have to be the favorites to not only win the NFC East, but the NFC as well.  

On a similar Philly sports note, the Raul Ibanez signing has worked out better than I could have ever imagined.  Nobody is happier about this than my Dad, since now he can constantly remind me how much better Ibanez is playing than former Phillies left-fielder Pat Burrell.  But I must say that Ibanez has been outstanding.  He hit his 14th homer of the year tonight and is hitting over 0.350.  I complained initially after the signing, mostly because of what we had to pay him, how old he was, and we lost our only slugging right-handed bat just to add another lefty.  But the results speak for themselves.  If Ibanez keeps up this pace, he would be the NL MVP.  If the Phils' starting pitchers ever get it together, they are gonna be a tough team to beat.

Game 1 of the Eastern Conference finals just ended in a 107-106 upset win for Orlando.  Very good game.  In the final minutes both teams hit big shots, but the other kept answering.  When LeBron got a huge and one with 25 seconds left to put Cleveland up by two, I thought it was over for sure.  But Rashard Lewis hit a huge three with a hand in his face to give Orlando the eventual win.  I think this is gonna be a tough series for the Cavs, who haven't been challenged at all yet in the playoffs, but I think they still are going to win in six.  Obviously I love LeBron, but I think Moe Williams is the key for the Cavs.  If he can create for himself, that will really open things up for LeBron, and when he isn't forced to do everything himself, he is pretty much unstoppable.  

Lastly, I want to post a letter my dad sent into a bunch of newspapers after the Chrysler bankruptcy agreement was released.  I think he is absolutely right, and the moral of the story is that whenever the government becomes so deeply entrenched in private business, it will be able to unfairly flex its muscles in negotiations and get exactly what it wants.  In this case, they used the TARP bailouts as leverage against several of Chrysler's secured creditors, forcing them to accept the government offer.  Unfortunately, the banks receiving the bailouts may have been Chrysler's largest creditors, but not their only secured creditors.  The smaller bondholders were forced to accept whatever the large banks acquiesced to because the large banks held a large enough amount of the debt to force the smaller creditors to take a raw deal.  The smaller bondholders were ready to force the issue in bankruptcy court, but the big banks decided it was in their best interest to to take a loss in this transaction so that they could continue to receive billions more in bailouts over the coming months.  It is a perfect example of government intervention favoring certain companies over others.  And people wonder why so much is spent on lobbying and special interests seem to run Washington.  When the federal government routinely gets involved in private enterprise, of course the companies are going to lobby both elected officials and government bureaucrats.  They have a huge incentive.  Anyway, below is the text of my Dad's letter.

While the average taxpayer goes about their business the federal government is in the process of nationalizing the automobile industry. As part of their proposed reorganization plan, both Chrysler (which entered bankruptcy court on May 1, 2009) and General Motors have proposed a federal government/auto workers union partnership to “save” these two companies. As part of this plan, the taxpayer is expected to be the piggy bank that finances this partnership.

This is the second major industry (the banking industry was the first) the feds are in the process of nationalizing. The health care and energy industries are next in the sights of our Washington politicians.

If the Obama admistration has its way, the big winners in this arrangement will be the united auto workers. The UAW and their pension fund will own 55% of Chrysler while the bondholders (who are secured creditors in bankruptcy court) were offered less then 10% position. It is obvious that the Obama administration is partnering with the UAW to run the auto industry. The bond holders (lenders who have lent Chrysler billions of dollars) are being asked to take a bath for the benefit of the UAW.

For two centuries the free market economic system in the United States has been the economic engine that was the envy of the world. The free market economic system has allowed a relatively obscure collection of 13 colonies to develop into the most powerful and wealthy economy ever seen in this world. There have been ups and downs in the economy over the centuries but when left alone, capitalism has an amazing self correcting mechanism to deal with its excesses. Limited government, sound money, free markets allowed free people to prosper in a way that had not been seen in this world.

Markets were free and hard work was rewarded throughout American history. Since the new deal was enacted in the 1930’s the federal government has injected itself more and more in the free market economy. More and more taxes and regulations were enacted to draw valuable assets from the private sector into the hands of the government. Along the way, government spending increased to the point taxes were not enough to cover expenses. Massive borrowing, deficit spending and an unsustainable national debt resulted.

Up to now, capitalism has been able to survive excessive taxation and regulation and still return a portion of its wealth to the tax man to finance our welfare society. The banking and auto industry bailouts are the beginning of a movement to nationalize our major wealth producing industries. The government has proven that everything it touches it cannot manage properly and will typically require unlimited subsidies to survive. With the banking, auto, health care and energy industries under government control in the future, these wealth creating industries face a bleak future. And as we move further toward European style socialism, our freedom and our individual and national wealth will gradually erode. The standard of living for the average person will continue to decline as our national wealth erodes.

Once we as a society nationalize and regulate the major wealth producing industries, the wealth will be eliminated from the national equation and we will have effectively “destroyed the goose that laid the golden eggs”. This will have negative long lasting effects on our economic and political freedom (they go hand-in-hand). This will also affect our individual and national wealth and equally important our national security. Our national wealth allows us to have a military that has been the envy of the world and one that is rarely challenged.

What does all this have to do with the Chrysler bailout you say? We as a society have reached an inflection point. We have begun a journey toward socialism. Do we allow our economy to move from a capitalist system to a socialist system? Do we allow the unions along with the government to force out private investors with little or no compensation? Do we remove risk taking and reward from the business equation? Do we eliminate individual responsibility from society and replace it with collectivism? Do we say that society is responsible for the individual and not the individual responsible for themselves? All these broad questions are being answered in the context of the Chrysler bailout.

The Chrysler bailout if executed as proposed by the Obama administration will continue the pattern of opportunistic takeovers by the Obama administration. In a few years we will have our banking, automobile, health care and energy industries owned and/or operated by the US government. Is this the change you wanted? Is this what you were hoping for? Do we want our children some day to ask how did we allow this to happen?