Novel Idea from the European Right: Budget Sanity

Anne Applebaum goes to Europe and sees it tilting to the right. For economic reasons:

For the record, Ferguson is, at least by origin, a British Tory. For the record, there aren't any U.S. Republican polemicists making the same arguments in quite as public a way. With a few exceptions, the American center-right's loudest and most articulate voices have been focused almost exclusively on national security for the better part of the last decade. Lip service was paid to "small government" and "reduced spending" while successive Republican Congresses, hand in hand with a Republican White House, enlarged government and spent like crazy. How can they now criticize Obama's possibly lethal budget deficits when their own were so vast, so recently?

None of this is to say that any of Europe's conservatives would necessarily go down well in the United States. (Picture Silvio Berlusconi, paparazzi and alleged teenage mistresses in tow, campaigning in Mississippi.) It's also true that they don't necessarily have much in common: Allegedly, German Chancellor Angela Merkel and French President Nicolas Sarkozy can hardly stand to be in the same room at the same time. But if nothing else, the success of the European center-right during the current crisis proves that there is something to their political formula. They are fiscally conservative. They are, if not socially liberal, then at least socially centrist. They haven't been swayed by the fashion for big spending. They are trying to keep some semblance of budget sanity. And, at least at the moment, they win elections.

It's not rocket science is it?

Sass Palin: Economic Genius

Sass Palin made the top story on Drudge Report today. In it she gives her opinions on the economy.

HANNITY: You know but it goes back - It does go back a little to the campaign. I mean, ‘spread the wealth, patriotic duty…’

PALIN: Kind of a ‘we told ya so’.

HANNITY: Well, is that how you feel?

PALIN: That’s how I feel! I feel like… and I think that more and more constituents are going to open their eyes now and open their ears to hear what is really going on and realize ok… Maybe we didn’t have a good way of expressing that, or articulating that message of ‘here is what America could potentially become if we grow government to such a degree that we cannot pay for it and we have to borrow money from other countries, some countries that don’t necessarily like America.

Well, what was Sass saying back in the campaign? Listen to her field the question from Katie Couric about bailouts. And GOP diehards say it's a smear to call her stupid:



UPDATE: Palin lays groundwork for 2012 presidential bid

At one event in Auburn, New York, over the weekend, Palin was greeted by the crowd with a revised version of her campaign-trail mantra of "Drill, baby, drill". As she arrived on the podium, the 20,000-strong audience erupted in a chant of "Run, Sarah, run."

What a joke.

The Inevitable California Bailout

Peter Schiff makes the case that California should be refused a bailout:

California, like many states, expended its bureaucracy as the nation’s bubble economy inflated. When condos flipped like hamburgers and homeowners flush with equity spent like lottery winners, extra tax revenue flooded into Sacramento. However, instead of saving the money for a rainy day or paying off prior debts, the state government simply ballooned its spending. Now that the bubble has burst, and revenues are severely depleted, it is time for California to reconsider its excesses.

Governor Schwarzenegger’s claim that a federal guarantee is not a bailout is ludicrous. No one in the private sector will lend California any money because the state can’t pay it back. Just like AIG and GM, it needs federal help to stay solvent. And although the Federal balance sheet is in far worse shape than California’s, there is one crucial difference: Washington has a printing press, and Sacramento does not. With the ability to pay off debts with newly created funds, a federal default is not a concern.

However, if Obama comes to the rescue, none of the needed cuts will be made. Instead, California will continue to operate its bloated bureaucracy and will be in constant need of more bailouts. In other words, if Schwarzenegger gets his bailout, look for him to utter his famous line – “I’ll be back.”

But hey, Arnie can be proud of his "green initiatives." What a joke.

You know he'll get the money. I'm finding it very grating to follow the news these days.

Hat Tip: Pat

UPDATE: Not a bad quip from Conan O'Brien about his new show debut

After all those months of breathless network preparation, the program began with a semi-monologue in which O'Brien poked fun at himself. He said he's doing a show on the last-place network and has moved to a bankrupt state to do a show that was sponsored by General Motors.

50 Billion Smackeroos Buys You...

60% of a bankrupt car company.

The fallen icon of American industrial might will rely on $30 billion of additional financial assistance from the Treasury Department as it reorganizes. That's on top of about $20 billion in taxpayer money GM already has received in the form of low-interest loans.

GM will follow a similar course taken by Chrysler LLC, which filed for Chapter 11 protection in April and hopes to emerge from its government-sponsored bankruptcy this week.

The plan is for the federal government to take a 60 percent ownership stake in the new GM. The Canadian government would take a 12.5 percent stake, with the United Auto Workers getting a 17.5 percent stake and unsecured bondholders receiving 10 percent. Existing GM shareholders are expected to be wiped out.

This is absolutely stunning madness. The leadership of the USA (and Canada) do not know what they are doing.

Could America Lose its Triple A Credit Rating?

This Financial Times report is a cold bucket of water in the face about the future of the USA. If it doesn't get its spending in order, it risks becoming a banana republic. America’s triple A rating is at risk

That warning from Moody’s focused on the exploding healthcare and Social Security costs that threaten to engulf the federal government in debt over coming decades. The facts show we’re in even worse shape now, and there are signs that confidence in America’s ability to control its finances is eroding.

Prices have risen on credit default insurance on US government bonds, meaning it costs investors more to protect their investment in Treasury bonds against default than before the crisis hit. It even, briefly, cost more to buy protection on US government debt than on debt issued by McDonald’s. Another warning sign has come from across the Pacific, where the Chinese premier and the head of the People’s Bank of China have expressed concern about America’s longer-term credit worthiness and the value of the dollar.

(...)

For too long, the US has delayed making the tough but necessary choices needed to reverse its deteriorating financial condition. One could even argue that our government does not deserve a triple A credit rating based on our current financial condition, structural fiscal imbalances and political stalemate. The credit rating agencies have been wildly wrong before, not least with mortgage-backed securities.

How can one justify bestowing a triple A rating on an entity with an accumulated negative net worth of more than $11,000bn (€8,000bn, £7,000bn) and additional off-balance sheet obligations of $45,000bn? An entity that is set to run a $1,800bn-plus deficit for the current year and trillion dollar-plus deficits for years to come?

There is a potential catastrophe in the making. I don't think the US has the potential wealth creation to tackle its debts.

I feel like when a few years after the start of the Iraq War and things were still unsettled and getting worse. My thought was: Could some politician step and make a speech to reassure me things will get better, or what the plan was? We never got one. We're still there. With this financial crisis, I would like the president to explain how and when they plan to pay off these debts? Can they pay it off?

Green Policy Fantasy

Czech President Vaclav Klaus once again proves that he is the voice of reason amoung western statesmen. Here is his op-ed: Green policies = economic decline

So I am amazed to see people going along with the currently fashionable political argument that policies like cap-and-trade, government mandates, and subsidies for renewable energy can actually benefit an economy. It is claimed that government, working together with business, will create "a new energy economy," that the businesses involved will profit, and that everyone will be better off.

This is a fantasy. Cap-and-trade can only work by raising energy prices. Consumers who are forced to pay higher prices for energy will have less money to spend on other things. While the individual companies that provide the higher-priced "green" energy might do well, the net economic effect will be negative.

Exactly. I would have a lot more respect for environmentalists who will come out and say: "It will hurt growth, but that is the price we have to pay." Fair enough. Then we can decide if we want to make that trade off. But please don't say it will create more growth and make the economy better. If it did, then nobody would oppose it. Lying to advance your argument will not work and is ruinous to your credibility.

Hat tip: Pat

A Failure to be Happy About

The Yankees are finding out that charging $2500 for seats to a baseball game isn't a huge seller.

Twelve days after opening their new stadium, the Yankees on Tuesday bowed to the sour economy and the specter of empty seats by slashing in half some of their top-end, $2,500-a-game prices.

(...)

But back then, still two weeks before the home opener, [Hank] Steinbrenner could not have anticipated the empty swaths of blue seats that were supposed to be filled with people willing to pay $500, $600, $850, $1,250 or $2,500 a game for a premium seat.

Steinbrenner announced the new ticket policy in a statement issued Tuesday afternoon. Neither he nor Levine was available to comment on the new policy. Nor was Lonn Trost, the team’s chief operating officer and the Yankee executive most identified with the initial ticket strategy.

$2500 to see a single baseball game. I don't know if this would have worked, even if the economy didn't go bust.

Nation Building Ideal Almost Lost

Pulling out of Afghanistan is gaining support on the right. Here's Diana West in at the ultra-neo-conservative Townhall: Let Afghanistan Go

I decided to ask someone with real military experience how we could fend off jihad without further digging ourselves into Central Asia. I called up retired Maj. Gen. Paul Vallely, one of the few top military leaders who talks on the record, to ask for his strategy recommendation for Afghanistan.

"Basically, let it go," he said.

Let Afghanistan go -- music to my ears, particularly given the source is no Hate-America-First professor or Moveon-dot-org-nik, but a lifelong patriotic conservative warrior. "There's nothing to win there," he explained, engaging in an all-too-exotic display of common sense. "What do you get for it? What's the return? Well, the return's all negative for the United States."

Obama is making a huge mistake by continuing this war. I thought he was supposed to bring "change"?

PJ O'Rourke: The Ditch Carp of Democracy

Enjoyable as always, PJ has a column in an Aussie newspaper. (here)

When charming leftists stick their nose into things they don't understand they become ratchet-jawed purveyors of monkey-doodle and baked wind. They are piddlers upon merit, beggars at the door of accomplishment, thieves of livelihood, envy coddling tax lice applauding themselves for giving away other people's money. They are the lap dogs of the poly sci-class, returning to the vomit of collectivism. They are pig herders tending that sow-who-eats-her-young, the welfare state. They are muck-dwelling bottom-feeders growing fat on the worries and disappointments of the electorate. They are the ditch carp of democracy.

Easterbrook on the AIG Fiasco

It's not often you get the clearest financial writing from a football column, but Greg Easterbrook segues into the AIG fiasco in Tuesday Morning Quarterback today. (The link is for the entire column, scroll down to the sub headline: Regrettably, TMQ was Right About Something to find the entire AIG commentary.)

On the big outrage, of the $172 billion taxpayer-funded giveaway, we now know much of it used to cover credit-default swap debts AIG refused to honor. Large amounts went to foreign banks, such as Deutsche Bank and Societe Generale of France. AIG simply handed over payment in full, without negotiating. When AIG was days from insolvency, it should have said to Deutsche Bank and others, "If we go bankrupt, you will stand in line with all the other creditors at the bankruptcy court and be lucky to get 10 cents on the dollar. Would you accept 50 cents on the dollar to settle instead?" Negotiating with creditors to avert bankruptcy is a standard business tactic; General Motors and Chrysler have been doing this for the past few months. As the Wall Street Journal recently reported, a year ago Merrill Lynch was owed credit-default swap payments by an insurer called XL Capital, and after negotiations, Merrill accepted 13 cents on the dollar.

But instead of negotiating a reduction of debt, AIG simply immediately handed over full value. After all, the money was coming from taxpayers' pockets, and when has anyone cared how much taxpayer money is wasted? Goldman Sachs was the largest single recipient of AIG's paid-in-full taxpayer-funded gift, receiving $13 billion. Merry Christmas! And now we learn that [CEO Edward] Liddy owns at least $3 million worth of Goldman Sachs stock -- whose price was shored up by the paid-in-full taxpayer gift. AIG's tax-funded gift to Goldman Sachs couldn't possibly have had anything to do with Liddy's stock, could it? The worst sin is that the Washington muckety-mucks running the tax-money giveaway team did not require AIG to negotiate down its counter-party obligations. Bernanke and Henry Paulson, who approved AIG's actions last fall, deserve to be run out of town on a rail for their irresponsibility in management of public funds. Meanwhile, can anyone imagine that if a French or Germany insurer owed money to an American bank, that the French or German governments would ever pay one single centime or pfennig, let alone cover the entire debt immediately?

Tony Clement Talks Tough With CAW

I love hearing this: Ottawa willing to let GM, Chrysler collapse

When asked whether he would be willing to let Chrysler Canada Inc. or General Motors of Canada Ltd. go bankrupt if the unions do not agree to cut costs, Mr. Clement replied: “We have to examine every possibility.”

“I don't think it is in the interest of the Canadian public to have continued funding to a company if there is no deal with their union and if there is no outside investor, or no outside partner in the case of Fiat,” he said. “Those were our conditions.... So if you're asking me whether I'm willing to funnel Canadian government money, taxpayer money, when we do not have an acceptable plan on a go-forward basis, I cannot do that. I don't think it would be responsible.”

CAW president Ken Lewenza has called Fiat's proposal to cut labour costs at Chrysler Canada by $19 an hour an “unreasonable” demand and has said it is “not going to happen,” arguing the CAW is competitive with unionized environments in the United States.

CAW are so shameless. They refuse to negotiate down. Having a cut wage, is better than having no wage. It makes me hope these fat cats go bust and collapse. Ye shall reap, what ye sow. I think the Tories are reading public opinion on this one properly.

Time to Bug Out: The Growing Case For Isolationism

It's looking like there is a good argument to pull out of the Middle East all together. In the next little while, I want to make the case for it in writing. I'm going to start by taking six quotes, from articles that I have posted about on the Daily Salt Shaker in the last week or so, to get a flavor of some of the difficulties:

Pakistan, perhaps of the most concern, has some 12,000 madrasas, many of which are Saudi-funded. Wahhabism provides not only the breeding ground on which Islamist terrorism flourishes, but it also threatens to overshadow other, more moderate traditions within Islam.
-Foreign Policy

The victory, such as it is, will be short-lived. I'm increasingly convinced that Afghanistan's problem lies deeper than a recalcitrant Taliban or a gutless central government. It's a problem so profound that for the first time I have to ask: Should our troops just get out?
- Irshad Manji

...it is "terrifying" for her to wander the malls in Dubai because Filipino maids or nannies always sneak away from the family they are with and beg her for help. "They say – 'Please, I am being held prisoner, they don't let me call home, they make me work every waking hour seven days a week.'
- The Independent

By going to Ankara on his knees, he gave his seal of approval to a pungently anti-American Islamist government bent on overturning Mustapha Kemal's legacy of the separation of mosque and state.
-Ralph Peters

The Obama administration will ask Congress for another $83.4 billion to fund the wars in Iraq and Afghanistan through the end of September, Democratic congressional sources said Thursday.
-CNN

Canadian officials contacted the Afghan government Tuesday to express concern about controversial new legislation that would reportedly allow men to rape their wives.
-CTV

Iggy Not Reading the Liberal Playbook

Whoops, Michael Ignatieff thinks we ought to raise taxes:

Federal taxes will have to rise to pay off Canada's burgeoning deficit, but not at the expense of economic recovery, Liberal Leader Michael Ignatieff said Tuesday.

The Conservative Party quickly jumped on Mr. Ignatieff's comments, highlighting them at the top of their website.

“We will have to raise taxes,” but not at the expense of hurting the recovery from this recession, Mr. Ignatieff, on a four-day tour of Southwestern Ontario, told a meeting of the Cambridge Chamber of Commerce.

“An honest politician” cannot exclude a tax hike as an option, Mr. Ignatieff said in response to a question from Cambridge, Ont., business leader John Bell, who wanted to known when the federal debt will be paid back.

The Liberal playbook says you promise to lower taxes, then wait until after you are elected to raise them. Silly boy.

The back peddling started pretty quickly though:

Michael O'Shaughnessy, Mr. Ignatieff's press secretary, said later that the party has “no plan and no desire to raise taxes” in a recession.

Hat tip: Pat

Sunday Reading: Mark Steyn

Mark Steyn writes a brilliant column in the Orange County Register. (Read the whole thing)

Let it be said that in recent years in America, the United Kingdom and certain other countries the "financial sector" grew too big. In The Atlantic, Simon Johnson points out that, from 1973-85, it was responsible for about 16 percent of U.S. corporate profits. By this decade, it was up to 41 percent. That's higher than healthy, but it wouldn't have got anywhere near that high if government didn't annex so much of your wealth – through everything from income tax to small-business regulation – that it's become increasingly difficult to improve your lot by working hard, making stuff, selling it. Instead, in order to fund a more comfortable retirement and much else, large numbers of people became "investors" – albeit not as the term is traditionally understood: Instead, you work for some company, and it puts some money on your behalf in some sort of account that somebody on the 12th floor pools together with all the others and gives to somebody else in New York to disperse among various corporations hither and yon. You've no idea what you're "investing" in, but it keeps going up, so why do you care? That's not like a 19th century chappie saying he's starting a rubber plantation in Malaya and, since the faster shipping routes out of Singapore, it may be worth your while owning 25 percent of it. Or a guy in 1929 barking "Buy this!" and "Sell that!" at his broker every morning. Instead, an exaggerated return on mediocre assets became accepted as a permanent feature of life.

Globe and Mail Columnist Waxes Nostalgic about Communism

My goodness, how does Rick Salutin still have a column at the Mop and Pail? Disgruntled at the economic times, he marvels at the communist glories that have passed us by:

Another model existed during the last global depression, in the 1930s. The Soviet Union was socialist and the bloom wasn't yet off that rose. Visitors from the West often returned with accounts of how well it worked. That shook up enough powerful people to help make the New Deal possible. In Canada in those years, the leader of Canada's Communist Party, Tim Buck, could draw a bigger crowd anywhere than prime minister Mackenzie King.

During later crises, when the Soviet system had ossified and its stench was unavoidable, there were other models: huge China, little Cuba, all the ex-colonies in Africa and Asia with versions of socialism. They weren't just in the heads of Western protesters and dreamers; they were on a map. You could go and see (or project) the dream fulfilled.

Never mind the millions of innocent people slaughtered by these tyrannies. The confiscation of property, the totalitarianism, the squashing of free speech. The utter failure of their economies. They provided a good example, and helped shake up the Canadian political establishment back in the good old days? Is that what he's saying?

How is this kook employed by a major newspaper?

New Yankee Stadium a Symbol of the Professional Sports Bubble

New Yankee Stadium opened up to the public yesterday, and like the gilded theatres of the 1920's, it seems ugly, and distasteful when the boom is over. The New York Post took a critical tour: In tough times a monument to greed.

But this is about more than wrong place, wrong time. The Yankees' sense of entitlement and unrestrained excess is timeless. They will tell you they built this stadium for the everyman, stressing what they consider still affordable pricing and amenities. But this stadium, in actuality, was built for a moneyed class that in many respects does not even exist in this city any longer.

Those $2,625-per-game Legends tickets behind home plate are selling slowly, and that certainly is because there is a whole class of banking/Wall Street/real estate mogul who would have scooped them up but has gone the way of flannel uniforms. But also because those seats not long ago would have screamed status, and now speak only to greed. The working world will not look onto those sitting there with envy. They will wish that those seats came with a dunk tank, not waiter service.

....However, the new Stadium didn't make me think of the place just across the street. It made me think about Vegas or Disney World, since it made me think of a fake place designed to manipulate my emotions and get into my wallet.

Perhaps one good thing to come out of this economy will be bursting the pro sports bubble. I don't care how good of a player A-Rod is, he doesn't deserve $25 million a year to play baseball. Nobody should have to pay over a thousand dollars to bring their kids to a ballgame. It's ridiculous.

Even here in Vancouver, the blue collar and mid level office workers, who care about the Canucks more than anybody else, can't afford to go to the games. Want to take the wife and two kids to a hockey game? It's $55 a pop for upper nosebleeds, behind the goal line. The lower bowl is all corporate types. I've sat down there with corporate tickets, and there's very few true fans. Even with freebies, I ended up spending big money on $8 beers, $10 on pizza.

Hopefully prices and salaries will become more realistic.

A Trillion to the IMF? Who the Hell Are the IMF? Did Anybody Vote for This?

A trillion dollars has been allocated by the G20 countries to the IMF. (Trillion is definitely the new billion.) Can somebody tell me what it means?

The G20 nations will inject $1 trillion into the world economy in an effort to curb the global financial crisis, British Prime Minister Gordon Brown announced Thursday as the group's summit concluded.

(...)

The package includes $500 billion for the IMF, plus $250 billion special drawing rights from the reserve currency for member countries of the IMF and $250 billion to boost trade, Brown said.

Canadian officials have said that Canada will be providing an additional $10 billion US for emergency IMF assistance and is putting $200 million into the trade fund.

Brown said the summit represented a "day the world came together to fight back against the recession."

"Today the largest countries in the world have agreed to a global plan for recovery and reform," he said. "I think the new world order is emerging and with it the foundations of a new and progressive era of international co-operation."

We've been beaten into the ground with bailouts and stimulus, that it is hard to grasp what this means. Billions and trillions are being advocated at a dizzying pace lately, with no accountability. Now this. Who is the IMF? (OK, I have minimal knowledge.) Why is Canada sending $10 billion there? Can we have an appropriations committee? No? Well, I give up then.

It makes me feel like how I felt with hedge funds and derivatives. You're trusting that these experts know what they're doing. Turns out they didn't know what they were doing. The IMF is some giant monolith and I have no faith that they know what they're doing. At least national pork projects are overseen by Canadians, and used in Canada. Adding another layer with an international group seems beyond ridiculous.

Hat tip: Pat

For Economic Matters Listen to France

My fingers were bleeding as I typed that headline. The world is definitely upside down when the French are making more economic sense than the British and Americans.

Ms. Lagarde has said France may do more on the spending front if necessary, but that nations should wait to see the effect of current stimulus measures before taking any further action....

Now we're going to get better cuisine tips from the Brits and superior fashion advice from the Americans.

CBC Supporters Don't Want to Pledge Their Own Money

There is a petition going around the "Save the CBC."

The CBC is asking for temporary loans amounting to just $6 per Canadian, or less than 2 pennies a day for each of us. We can make this happen, so let's pull out all the stops to deliver a massive petition to Parliament and Save the CBC!

Petition to Prime Minister Stephen Harper: The CBC and Radio Canada are a national treasure, and play a vital role in our culture. We urgently call on you to grant the CBC's request for a bridge loan to cover its budget shortfall this year, and commit your government to supporting our public broadcasters.

Why don't they have a pledge drive like PBS and pony up some of their own dough while they're at it? I like how they mention that the money is only $6 per Canadian, but nowhere do they ask these loyal CBC fans to pay themselves. If it means enough to people, they will pay.

Brooks' Pie in the Sky Scenario in Afghanistan

David Brooks is visiting Afghanistan and thinks the war is salvageable and important for America to win:

Every element of my skepticism was reinforced during a six-day tour of the country. Yet the people who work here make an overwhelming case that Afghanistan can become a functional, terror-fighting society and that it is worth sending our sons and daughters into danger to achieve this.

(...)

After the trauma in Iraq, it would have been easy for the U.S. to withdraw into exhaustion and realism. Instead, President Obama is doubling down on the very principles that some dismiss as neocon fantasy: the idea that this nation has the capacity to use military and civilian power to promote democracy, nurture civil society and rebuild failed states.

Foreign policy experts can promote one doctrine or another, but this energetic and ambitious response — amid economic crisis and war weariness — says something profound about America’s DNA.

David: slap, slap, slap! Wake up, it's not 2001 anymore! We had this thinking then, unfortunately, eight years later we are still there with no end in sight. Take a look in the papers, the USA is broke and simply can't afford this anymore. How many people would like to have the trillion plus dollars spent on those wars back? Who wants to spend a trillion more continuing this folly? They don't have a trillion more dollars to spend.