?

"I realize that passing this budget won't be easy," Obama said. "Because it represents real and dramatic change, it also represents a threat to the status quo in Washington."
...

"The system we have now might work for the powerful and well-connected interests that have run Washington for far too long, but I don't. I work for the American people," Obama said.

"I didn't come here to do the same thing we've been doing or to take small steps forward, I came to provide the sweeping change that this country demanded when it went to the polls in November."

Part of me thinks he has no clue what he is talking about. This side of me is the side of me that is giving him the benefit of the doubt.

Images

As the economy gets worse, and our government moves further and further from the principles of the Founders, this picture will become more relevant. It probably isn’t fair, but in the age of images, they can be your enemy too.

Late Winter

The pine limb is a casualty of an ice storm. I will burn it in the spring. The ornament at the top of the stairway has absorbed solar energy and melted the snow that was touching it.

I had put out crackers for the squirrels yesterday, which were not eaten at the time. The crackers are now gone.

Adventures With Bill

I woke up this morning, alone. I hope I haven’t pissed her off too bad. She had cut out a coupon for a free sausage biscuit with the purchase of a large beverage at Tim Horton’s for me. It is on the table and I decide to use it.

I get to Tim Horton’s and can’t find the coupon that I had intended to use. So I buy a medium cup of coffee, and no food. But the idea of a morning sandwich is stuck in my head, and I know McDonald’s has a two Sausage McMuffins with Egg for $3 deal.

To the local McDonald’s. My mother used to sneak raw eggs into my morning milk-shakes, which I was informed of later, and there must be some neurological after effect that makes me like ‘folded’ eggs and not the standard eggs on the McDonalds McMuffin. So I ask for folded eggs on my two McMuffins. The man says that there are no substitutions on the two for three dollars deal.

I say, ‘thank you anyways’, and drive six mile to the next McDonalds, where they sell me two McMuffins for three dollars with folded eggs. These were very heavy and I wish that had only eaten the one sandwich at Tim Horton’s.

My Paper, by Peter Orszag

Hello Mr. Congressman, I have come up with this paper. I am not allowed to give opinions on legislation, so read nothing into my estimate that the federal government can likely take over Fannie Mae’s and Freddie Mac’s financial obligations at no cost to the taxpayer. So here we go:

On July 14, 2008, the Administration released a proposal that would temporarily authorize the Department of the Treasury to purchase obligations and securities of the government-sponsored enterprises (GSEs) that deal with housing finance—the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac), and the Federal Home Loan Banks.

The Congressional Budget Office (CBO) estimates that there is a significant chance—probably better than 50 percent—that the proposed new Treasury authority would not be used before it expired at the end of December 2009. If the proposal is enacted, private markets might be sufficiently reassured to provide the GSEs with adequate capital to continue operations without any infusion of funds from the Treasury; during that time, it is possible that expectations about the duration and depth of the housing market downturn may brighten. Under that scenario, the temporary authority would not be used and thus would involve no budgetary cost.

So, you see Mr. Congressman, a betting man says that having the taxpayer take over Freddie-Fannie’s financial obligations will have…… NO COST!

In CBO’s view, however, that scenario is far from the only possible result. Indeed, many analysts and traders believe that there is a significant likelihood that conditions in the housing and financial markets could deteriorate more than already reflected on the GSEs’ balance sheets, and such continuing problems would increase the probability that this new authority would have to be used. Taking into account the probability of various possible outcomes, CBO estimates that the expected value of the federal budgetary cost from enacting this proposal would be $25 billion over fiscal years 2009 and 2010.

$25 billion over two years isn’t that much, Mr. Congressman. Have a heart, people are losing their houses. OK, now here are my weasel-words:

CBO’s estimate reflects the current budgetary treatment and existing scorekeeping conventions for federal credit assistance and equity purchases and does not necessarily measure the underlying change in the federal government’s financial condition as a result of this legislation. On the one hand, the acquisition of financial assets like equities is recorded as an outlay in the budget even though such purchases may not change the government’s underlying financial condition. On the other hand, even if enacting this legislation would not result in outlays over the near term, it might effectively strengthen the linkages between the GSEs and the federal government and thereby increase the government’s underlying exposure to the risks associated with the GSEs’ activities.

The results of CBO’s analysis and its methodology are described in the attachment. In keeping with the agency’s mandate to provide impartial analysis, this report makes no recommendations.

I hope that you find the analysis useful. If you have any questions about it, please contact me at (202) 226-2700.

Sincerely,
Peter R. Orszag

p.s., just in case this thing costs $400 billion in the first six weeks of 2009, instead of the unlikely case of ‘up to $25 billion in two years’, don’t blame me, or even ask questions. Just promote me. Thanks- Pete
...

Peter Orszag was nominated by President Obama and unanimously confirmed by the Senate to Head the Office of Management and Budget on the 22nd of January.

Nothing Good Can Come From This

This one makes you wonder:

The Carroll National Guard unit will train on urban military missions by holding a four-day exercise at Arcadia.

The purpose of the April 2-5 drill will be to gather intelligence, then search for and apprehend a suspected weapons dealer, according to Sgt. Mike Kots, readiness NCO for Alpha Company.
…

Correct me if I am wrong, but there are lots and lots of fully legal weapons dealers. They operate in the open, last time I checked.

"One of the techniques we use in today's political environment is cordon and knock," Kots explained. "We ask for the head of the household, get permission to search, then have them open doors and cupboards. The homeowner maintains control. We peer over their shoulder, and the soldier uses the homeowner's body language and position to protect him."
…

I don't personally like the idea of armed soldiers coming into my home, and peering over my shoulder as I am directed to empty my belongings. This kind of seems like an 'unreasonable search', in the absense of a court order.

The unit will use a Blackhawk helicopter for overhead command and control, and to simulate medevacs.

The drill will culminate in the apprehension of the suspected arms dealer.

Giving this exercise the benefit of the doubt, the lessons learned will do this military unit absolutely no good in Dar al-Islam. Hopefully this is just a really bad Public Affairs Officer.

t/p: RivrDog

Economics Post

As I am in a shitty mood, it is time for an economics post.

This is well-written paper about world economics. American politicians, and the electorate, are abusing the greatness that has been handed to them by previous generations. They are able to do this because people believe that ten dollars today will be worth ten dollars in six months, or at worst eight or nine dollars in six months. So Tim keeps printin' it and Barry keeps writin' checks.

This makes other nations angry with us, because we get to print money and create value without doing work as things currently stand, and they have to watch their dollar reserves shrink in value. So it is natural that other world political systems will move towards barter and alternative currencies. This is why Putin was pushing for an energy-based currency at Davos, which makes sense, as the paper explains.

It is clear to me that Putin sees President Obama and Geithner as children, or perhaps puppets of the New World Order types. Putin still hates the West for what we did to him in Afghanistan, and will take down our dollar without mercy, if given a chance. And I think he’ll get it.

So I am personally ready to offer up all of America’s lawyers and bankers as a tribute to Vladmir Putin.

Problems in the Caribbean?

Guadeloupe, a French Possession, has problems. Six policemen have been injured on the small island in clashes with the population over food prices. A union boss has been shot dead. The airport is now shut down.

The mayor of Pointe-a-Pitre said gunfire rang out all night. "No one can go out onto the streets," Jacques Bangou told Europe 1 radio. "For the past 48 hours, the streets have been in the hands of groups of young people, completely out of control."

The friendly French muslim population back in Europe always seems to be looking for something to complain about. Sarkozy has recently released 2.65 billion Euros for new social programs in the mainland in an effort to prevent unrest from spreading to France.


Update: Problem policed as of yesterday. Four units of French Gendarmes have been flown in from Europe, and 33 protestors have been arrested.

Update #2: There were also bribes. Workers now get an additional $10/day from the French government, probably doubling their wages. Guadeloupe has an interesting history.

I Am Not a Coward

I agree that we should have an honest discussion on race. I have the perspective of a man who has worked in both the US and a country in Central America. In Central America, human biodiversity is openly acknowledged, and people seem to get along together much better than they do in the US.

In the US, the current political premise seems to be that Jefferson meant that all men were created biologically equal. This is not what Jefferson meant. Jefferson was talking about positions of royalty. In his other writings, Jefferson was very clear about human biodiversity.

In my opinion, equal amounts of evolutionary energy has been invested in all of us. But this energy was applied in different environments, leading to different biological outcomes. In my opinion, NFL kickers are from Europe because kicking requires reflection, a trait associated with civil society. NFL wide receivers are from Africa because running and catching are traits associated with hunting and gathering.

The environment in the US is currently one of organizations and machines. This gives and advantage those whose ancestors evolved in Europe and Asia. The New York GDP numbers seem to be representative of the numbers across the nation. Black GDP per capita income is $31,364, while whites earn $48,186.

This is not due to ‘hate’, it is due to biology, in my opinion. I also suspect that the reason Eric Holder is so obsessed with race, is that he has a self-awareness issue about his own mixed-race heritage.

Israel

I believe that, on balance, the Jewish presence is a strong net positive for America. The media over-representation bothers me, and I think may become an issue if the fairness doctrine push is made during bad economic times. But the contributions of Hyman Rickover, Albert Einstein, and dozens of American Jews I have worked alongside have been very positive for the country.

I have a theory on some in Israel, and the ACLU-types. Most Gentile Europeans’ ancestors made their living in an agricultural setting. These Europeans’ bodies contain the lactase necessary to process dairy energy. Their livelihoods were tied directly to the land they stood upon, and evolved to have an innate sense to protect their ‘homeland’.

Lactose intolerance is far more prevalent in Jews. This, I suspect, is due to a more urban existence of their ancestors. These people’s livelihoods were dependent upon banking and other professional skills, which were transferrable. So there is less of an innate sense to defend a piece of property.

I suspect this is why Tzipi Livni is willing to surrender additional Israeli territory. This woman is delusional and does not understand the texts of Islam. The Bible says that two thirds of the Jews of Jerusalem will be killed, and then the last third will rise up and defeat all of Israel’s enemies. It also talks about female leadership. This could be a self-fulfilling prophecy, in the case that it is not divine.

The Mugabe School of Economics

There is the Austrian School of Economics, which advocates limited government involvement in the economy. And there is the Keynesian School of Economics, which advocates taxing the population, so that the central government can guide the economy. Personally, I subscribe to the Austrian School.

I have to congratulate the new Administration on developing a whole new method, the Mugabe School of Economics. In this school of economics, you establish a fiat currency, and then print lots of it. You are then able to buy lots and lots of stuff and favors.

Smart guy, this Geithner. Him and his boss.

I get the feeling that the power structure intends a smooth transition from the Mugabe School of Economics to whatever they have envisioned to come next.

Eye On Mexico

Although I cannot find the data on the Internet, 40% of Mexico’s public funding was reportedly provided by oil exports in 2007. Cantrell is the world’s second largest oil field, after Saudi Arabia’s Ghawar deposits. Cantrell peaked at 2,100,000 MBD in 2003. In July, 2007 the oil output was 1,526,000 BPD. In July, 2008 the oil output was 973,668 BPD. In December, 2008, Cantrell put out 811,000 BPD.

Mexico seems to survive on oil, drugs, tourism, and cheap exported labor. The drug industry seems to be doing well, and other than that, the other three pillars of the Mexican economy seem to be in trouble.

Here is the best information I can find, from Bloomberg, who seems to be out of touch with reality. Mexico banished Gringos from their oil business, and Bloomberg believes that allowing Gringos to help will magically make more oil.

The end result of this will likely be a sudden flood of humanity across the border as anarchy sets in. The question will be the reaction north of the border.

A Job Interview

I started out as a little fish in a big pond, and then I was a big fish in a little pond, and now find myself as a minnow in the Pacific Ocean on a new project of mine. And I will continue to flap my little minnow tail, and push forward on what I believe to be a very worthy cause.

There are positive aspects about being your own boss, but there are negative aspects as well. One of these is that you do not get a regular paycheck. Another is that, if you do not regularly interact with grown-ups, and live in the presence of children’s television, there is a statistically significant chance that you will go crazy. This blog is Exhibit A.

So this morning I went to a job interview for what could be a nice year-long contract job. Fancy hotel. I am there early and note that the only people in this fancy hotel, other than the employees, are the two ladies who will be interviewing me, and they are eating breakfast in the fancy restaurant. This appears to be a DBE staffing company, as the job involves a large federal project. I enjoyed the interview in any case.

Then more people came through the hotel. It was a school group. The hotel manager told the school group that he hired a particular employee because he was always smiling. This is the opposite of my experience. I do not trust men who are always smiling.

Set PPI = $1.47

5 lb Part Skim Mozzarella: $8.67 (a)
102 oz tomatoes: $2.43 (b)
25 lb flour: $9.78 (c)
720 Slice of Pepperoni: $7.76 (d)

Enter the PPI equation:

PPI = $0.01 + (a)/10 + ((b)/24)(2) + (c)/50 + (d)/40; or

PPI = $0.01 + $0.87 + $0.20 + $0.20 + $0.19

Which gives us a 13FEB09 PPI of $1.47. This is an additional 3% drop in 10 days, indicating pizza deflation is real. We are now down 7% in a little over two weeks. We will collect one more data point, and then begin to graph our findings.

I predict that the PPI will continue to drop, for approximately one year, as cash-strapped consumers eat less cheese and more grains. And then the prices for all components of the pizza will begin to rise with inflation.

If I Can, Make It There, I’ll Make It, Anywhere

Half Sigma and Roissy write very good blogs from Manhattan and Washington DC. My first job was in Washington DC and I was very excited about it. I met my two roommates from Ohio at our apartment to be, and we decided to drive around to see our new city.

We all hopped in the used Ford Ranger and were off. Then the tank was almost empty and we needed to get gas, but we could tell we were in a bad area. We were getting worried, and finally saw a policeman at a gas station, and decided this was the place to gas up.

The policeman was standing over a corpse with fluids coming out of its head.

I kind of made the decision there that I was fine with the rural lifestyle. Half Sigma and Roissy write in their links above that they too are thinking about moving. I believe that this will be a trend among taxable urban individuals.

Sell: Urban real estate. Buy: Farmland.

A Solution for Student Loan Defaults

The answer to high rates of student loan defaults is to cure lactose intolerance. One can easily correlate lactose intolerance with inability to pay back student loans.

Think of the alienation that lactose intolerant students feel when, after drinking their carton of milk at lunch, their lactase-starved bodies convert lactose into flatulence, instead of afternoon energy.



Brick Oven declares itself the world’s authority on the study of lactose intolerance as it relates to poor performance in school, and later the workplace. As a center of excellence in this field, we offer our services to the Obama Administration. We would like one of those 95% government guaranteed Small Business Administration loans. One million dollars should do it.

As Brick Oven is a lactose-tolerant organization, the odds of payback are excellent.

Tractors and Bankers Gone Wild

The way I see it, the Great Depression was caused by the introduction of the tractor in the 1910s and 20s. A tractor, fueled by stored solar power in the form of gasoline, gave the simple farmer the power of two hundred horses.

The unleashing of this kind of power, all across North America, caused productivity to jump. These productivity jumps, everybody assumed, would, of course continue for ever and ever. So the projections were made, and financial instruments were leveraged, and the productivity leveled off, and the system crashed.

Then Nixon took us off of the gold standard to fund overseas adventures, and intended not to abuse the fiat currency. And time went by and the power shifted. Then we were increasing the money supply by $300 billion every year to fund social experiments gone bad.

Then came the IOUs and government guarantees, because, you know, the government is good for it.

So, the way I see it, the ‘Great Depression’ was a correction based on a bad farming assumption. What we are facing now is a correction based on greed, gross conceptual errors concerning human nature, and the impending failure of worldwide currencies. So this round will likely be uncivil. These are dangerous games.

Set PPI = $1.52

5 lb Part Skim Mozzarella: $9.18 (a)
102 oz tomatoes: $2.43 (b)
25 lb flour: $9.78 (c)
720 Slice of Pepperoni: $7.76 (d)

Enter the PPI equation:

PPI = $0.01 + (a)/10 + ((b)/24)(2) + (c)/50 + (d)/40; or

PPI = $0.01 + $0.92 + $0.20 + $0.20 + $0.19

Which gives us a 07FEB09 PPI of $1.52. This is a 5% drop in 10 days, due to a 6% drop in the price of cheese. There are three theories as to the reason for the drop in the price of cheese:

1) Lower fuel prices are working their way through the dairy industry;
2) Consumers are hurting and putting less cheese on their mac, reducing cheese demand and price;
3) Intervention by the most merciful President Obama.

Electric Railroad

In a different forum, I have argued that a real economic stimulus package would be to electrify the nation’s railroads. I believe that this is a good plan because:

1. It would reduce the nation’s consumption of liquid fuel, which is a finite resource.

2. A blanket design and permitting program could make this ‘shovel ready’ in approximately two days.

3. This would put workers immediately to work throughout the Country.

4. Global warming is BS, in my opinion, but if you are a believer, electric railroads would reduce greenhouse emissions, if/when nuclear generation capacity is expanded.

5. Right-of-way issues, that would take years or decades to resolve on standard land transmission lines, have already been solved along railroad lines.

6. The design would be standardized, and work could begin immediately, in all fifty states. This is the best use of ‘stimulus’ money, in my opinion.

7. The Northeast corridor is already electrified, and works fine, last time I checked.

8. The American locomotive fleet could simply be outfitted to replace the diesel generator with an electrical connection.

9. Once the railroads are electrified, overall thermal efficiency would rise from the low twenties to the high thirties.

I, Bill, hereby offer my design services to the federal government. My price is $12 million. The design will be correct.

President Obama Is In Trouble

The stimulus legislation is not President Obama’s. It was developed by Pelosi and Reid. This stimulus legislation sucks. But President Obama, like a green 2nd Lieutenant, charged ahead as its champion, making it his own. And the Legislature pulled the rug out from under his feet, remaining silent.

And on the Eastern front, Maureen Dowd, the woman who was instructed to not mention ears, has turned against the President. Maureen Dowd’s observations sound eerily like mine . President Obama is 47 years old. Has he not learned that you do not tell women like Maureen Dowd what to do? You simply stay away from them.

President Obama is in over his head. This will end poorly.

Mexico

Glenn Beck is hitting his stride. I can relate with Glenn Beck. He talked about Mexico on the radio show today, and I didn’t really listen too closely. This post introduces my thoughts on the subject he brought up.

I’ve been to Mexico four times; once with a church group at an orphanage, twice as a cheesy tourist on a cruise ship, and once when I was stationed for a week at Camp Pendleton, making the run to Tijuana, where I saw my first bottle show (Why is this beer so expensive? Oh, I see.). I opted not to see the donkey show.

In a more recent experience, a friend of a friend got into an argument with a group of Mexican ‘youth’ about music styles, and they shot him. He is OK but the bullet is still lodged in his back. A former engineer, who I know of, was walking on mine tailings in Honduras, and was shot dead. I have a Honduran friend who warned me against going to Honduras.

Mexico is in trouble. Paul Chefurka has an excellent analysis of the oil side of the equation. Mexico has passed Peak Oil, tourism is drying up because of the security concerns, and the Western Union money transfers are drying up also.

Mexico will likely collapse. If it does, a flood of refugees will head north. This flood of refugees will encounter an American population that is suffering from severe economic problems, and is already weary from their failing hospitals, and state governments, and pension plans, that were not failing before 1986. This will test my First Theory of Multiculturalism, which goes as follows:

Diversity + Proximity – Resources = Problem

If there is a problem, the Commander in Chief, by the time it happens, will likely be a bitter man. This would be a volatile situation. I will credit Glenn Beck here and then adopt this term without further attribution: Global Katrina.

p.s. Testing: For some reason I am not able to link to Paul's web-site. The link does not work on my computer, perhaps it will work on yours. I hope I am not being blocked based on political differences because I respect Paul's work. You can cut and paste the address below the automatic link if the automatic link doesn't work for you.

excellent analysis

http://www.paulchefurka.ca/Mexico%20and%20the%20Problematique.html

Massachusetts Institute of Technology

I am a technical guy and have come up with a design which I think is pretty good. I’m in the fund-raising mode and the banker-guy recommended that I partner with a good school. So today I decided to contact MIT.

Google: [MIT Engineering Department]. The Google search result page introduces us to MIT:

The Massachusetts Institute of Technology (MIT) Women’s Initiative Program seeks to increase the number of women enrolled in engineering majors by educating ...

Sigh.

So I call MIT, and some lady picks up the phone. She will put me in touch with the appropriate department, click, wait, robogreeter. Robogreeter gives me options and then says to stay on the line to speak to a representative. Who isn’t there.

More calls. And I get a person, who refers me to a Professor, and gives me a phone number. I call this person, who answers with some unintelligible greeting. I introduce myself as a private sector engineer. The man seems to be somewhat condescending. He tells me that he does not actually work at MIT anymore. And refers me to some non-Ivy-League schools who are actually doing research on energy independence.

I called an engineering program at one of these schools, and an intelligent person picked up the phone.

Comments

There are not many commenters at Brick Oven, as we are an ‘elite’ community, is I think how Spinal Tap put it. But it is fun when someone comments on my thoughts and I’ve been meaning to figure out why I have to approve comments when they are made. I’ve finally figured it out and comments should now show up immediately, in theory.

Thanks to those who have shared their thoughts, hopefully removing this filter makes this a less stuffy format.

A Trip to School

The President has not been told ‘no’ many times in his life, and the trip to school was a defense mechanism. The President fielded questions from seven year olds. This is somewhat understandable because today was a pretty bad day for him.

But it has been only two weeks. It took the President’s friend Deval two months. The Presidency is a very, very tough job. It is much harder to be the President than it is to be a Governor. Governors can hide.

The first lady’s statement: "We got out! They let us out!", was telling, but wrong. “They” don’t go away. And they are not seven years old.

There are excerpts in case the link goes down:

The governor ‘‘will work a flexible schedule for the next few weeks in order to spend more time with her and his family,’’ according to a statement.

Aides to Patrick declined to say whether Diane Patrick had been hospitalized, or had suffered from depression or exhaustion in the past.

‘‘The family asks for the prayers and understanding of the public,’’ the statement read. ‘‘We also ask respect for the family’s privacy at this difficult time.’’

A partner at the Boston law firm Ropes & Gray, Diane Patrick, 55, said when her husband was elected last November that she intended to be more prominent publicly than previous gubernatorial spouses. But she acknowledged she was unsure how to balance the new demands with her legal career.

t/p: DevalPatrickWatch.com

A Trip to Circuit City

Comment left at the Becker-Posner-Blog. This happened to me today as I was trying to figure out my new computer.
…

One.

I went to Circuit City today. When I walked in the door, the people had a look in their eyes that I had not seen in a long time. There was a very large man at the cash register with two terrified children. His wife was twelve feet away, begging him to calm down. There was a slightly smaller, but nonetheless physically strong Circuit City manager, walking past me, away from the cash register.

The large man with the terrified children bellowed ‘If you are going to wear a Patriots jersey, wear it like a man.’ Then the manager directed an employee to call the police if the gentleman at the cash register said anything else. An Oriental employee from behind another counter straightened and yelled at the very large man, telling him that all of the Circuit City employees were losing their jobs too.

I sensed danger and could feel the after effects of high levels of adrenalin as I drove home. It aches.

Two.

The value of labor on the world-wide market is $3/day.

Three.

In the 1930s, the United States was the world’s largest EXPORTER. And, because of this, a trade war probably hurt the United States’ export-based economy. England was an importer, and during the entirety of the Great Depression, I believe that their economy only shrunk 5%. Today, the United States is the world’s largest IMPORTER. I doubt that foreign countries will stop buying our food, but if they did, it would lower prices at the supermarket.

Four.

I, for one, would not object if my government chose to drop out of, or deeply renegotiate international trade agreements. I say return tariffs to historical levels of 30-40% to protect domestic industries.

Deborah Solomon

Deborah Solomon (NY Times): Europeans have historically defined themselves through inherited traits and titles, but isn't America a country where we are supposed to define ourselves through acts of will?

Charles Murray: I wonder if there is a single, solitary, real-live public-school teacher who agrees with the proposition that it's all a matter of will. To me, the fact that ability varies — and varies in ways that are impossible to change — is a fact that we learn in first grade.

Deborah Solomon: I believe that given the opportunity, most people could do most anything.

Charles Murray: You're out of touch with reality in that regard.

Per Wikipedia, Deborah Solomon was ‘born at yale’, and then educated at Cornell. Her master’s degree is from Columbia University. She majored in Journalism.