Good simple explanation of the A.I.G. money pit

“A.I.G., Where Taxpayers’ Dollars Go to Die” by Gretchen Morgenson is a good three-page explanation of how taxpayer dollars are disappearing in the A.I.G. bailout. Due to secrecy, she could not follow the money all the way through to the ultimate destination (it might be mostly foreign banks, which would probably truly upset American taxpayers), but the article shows us where at least $50 billion has already gone and where another $100 billion or so is likely to go (hint: none will go into factories that hire American workers; none will go into infrastructure that will make it easier to do business in America; my ideas for economic recovery seem to be receding ever further into the distance).

Full post, including comments

Will turning the U.S. into Europe save our economy?

Let’s look at what the U.S. government has been proposing to do in response to the collapse of 2008…

  • extend unemployment benefits and other payments to people who don’t work
  • expand government spending as a percentage of GDP
  • increase taxes, starting with folks who have higher incomes
  • offer universal government-paid health care
  • make it easier for workers to unionize

Will this work? Let’s consider the Western European countries. They all have lavish unemployment benefits, high government spending, higher taxes on high earners, taxpayer-funded universal health care, and powerful trade unions. They long ago achieved everything that our current president and Congress are trying to achieve. How are the Europeans doing? The S&P 500 is down 48.76% from a year ago; the FTSE Eurofirst 300 is down 49.11% (source). Our unemployment rate is 8.1%; France and its overseas departments have an unemployment rate of 8.2% (source). France is supposedly the healthiest of the European economies.

Full post, including comments

How business guys see our new planned economy

I was talking to one of my pilot friends yesterday. He was the CEO of a public company for 20 years and now serves on the Boards of several big firms. I asked him whether he thought there was any prospect of an economic recovery. “I think we’re more likely to see a Politburo down in Washington and all of those guys wearing fur hats.”

Full post, including comments

Stock market down 4.25 percent; not a front-page story

This evening’s New York Times was worrisome. An inset box showed that the S&P 500 had fallen 4.25 percent for the day, wiping out roughly a year of investment returns. A few months ago this would have been the top story. Today, however, it did not even make the front page. There were no articles talking about the collapse of the stock market unless you clicked into the “business” section. Investors in the U.S. economy being destroyed isn’t news anymore.

Full post, including comments

Thank God the government spent $2 trillion

I thought it would be nice to take a moment to thank God and our government for spending nearly $2 trillion of our tax dollars on TARP, auto industry rescue, and stimulus. Imagine if our politicians had not acted decisively. We might have seen the following:

Whew!

[One could, of course, argue that without the expansion of Big Government, the stock market would have fallen 98 percent and one guy in Saudi Arabia plus the Chinese government could have scooped up 100 percent ownership of America’s 5000 publicly traded companies, but that doesn’t seem entirely plausible as most of these companies are still profitable.]

Full post, including comments

Stimulus bill is creating jobs

A friend works at a wind energy company. I asked him if he was getting his share of the money from our new planned economy. His response: “We are stimulated! There is some good stuff in there for renewable. We may need to open a DC office just to chase the $$.”

As long as we think that we can grow GDP by having an ever-larger proportion of our best citizens working as full-time lobbyists, it would seem that the stimulus bill is working as advertised.

Full post, including comments

Can we dig ourselves out of this hole by taxing the rich?

Barack Obama proposes to dig the Federal government out of its deficit hole with higher taxes on the 2 percent of Americans with the highest income. Today’s Wall Street Journal carries an analysis of what would happen if the government could confiscate 100 percent of those folks’ earnings. The depressing conclusion is that it wouldn’t be enough money.

Full post, including comments

Harvard Business School summarized

Just finished read Ahead of the Curve: Two Years at Harvard Business School. Philip Delves Broughton was a British journalist who dragged his wife and young child away from Paris in hopes of changing his career. He was successful in spending $175,000 and graduating with the Class of 2006, but the HBS degree does not make him irresistible to consulting firms and investment banks. Broughton achieves an excellent balance between summarizing the material taught and the social experience. Highly recommended to anyone considering business school (a potential $174,983 savings by reading the book instead of attending) or anyone wondering why our economy is where it is.

Full post, including comments