Plan B?

“Government Motors,” doing business as General Motors (GM), recently concluded the biggest initial public stock offering (IPO) in United States history; it raised about $20 billion. The dog and pony show which promoted the offering was timed to coincide with the elevated level of public scrutiny following mid-term elections. President Obama commented on the big day. He saw a “pay off” after two years of making “tough decisions”. (It must be emotionally draining to condemn taxpayers to decades of penury with bailouts and privileges for the few, while hamstringing the economy with more regulations, taxes and other curtailments of liberty … Continue reading Plan B?

Things Could Go Better

A market bubble is commonly understood as a large asset segment overvalued by speculation. Speculators in related assets are primarily concerned with reselling to a “greater fool” at a higher price. The underlying assumption is that prices will continue to rise. An expanding bubble of air eventually deflates. Irrationally inflated asset prices must do something similar. As the asset supply becomes excessive, prices drop. Incentives change well before the situation can become a crisis. Price changes communicate market incentives. Misallocated capital must then be liquidated and invested elsewhere. Losses must be rebuilt by alternative employment, savings and investment. That is … Continue reading Things Could Go Better

Turbulent Waters Ahead

American voters will soon participate in a drill to rearrange the deck chairs on their titanic ship of State. Election Day is November 2, 2010. Many are caught up in the idea that a new crew with better ideas will help navigate through rough seas. However, few have recognized the looming economic iceberg of unintended consequences, the unavoidable cumulative result of a drift toward greater command and control by both captain and crew—those past and present. Fundamentally nothing changes in the corporatist managed economy of the United States, including the growing scope of government involvement in the daily affairs of … Continue reading Turbulent Waters Ahead

The Greek Experiment

According to New York Times reporting concurrent with the bailout of Greece, the President of the United States advised leaders of Germany and France relative to the European Union/International Monetary Fund (IMF) decision. The Times cited unnamed senior Administration officials who stated that President Obama’s “experience” in brokering big deals was brought to bear (i.e. through his involvement in various U.S. economic stimulus packages and corporate bailouts); Obama’s encouragement to “think big ideas” allegedly helped lead to the trillion dollar deal via a “special purpose vehicle” (essentially a form of Eurobond issue). The end result of the weekend negotiations was … Continue reading The Greek Experiment

The More Things…

From the Associated Press today: Tens of thousands of workers marched in cities from Hong Kong to Istanbul Saturday to mark international worker’s day, demanding more jobs, better work conditions and higher wages. A year ago today, I published a comment on “May Day” observations. Although “workers” in Greece and elsewhere may have their own spin on how to resolve the crisis of their country’s insolvency in the latest economic manifestation of the consequences of collectivism, nothing has fundamentally changed for the better in my view. “Better” would be a trend away from collectivism and toward individualism as a basic … Continue reading The More Things…

Random Stories Earn Consistent Comment

Tiger Woods The mind and body are inextricably linked. There is no soul-body dichotomy. Tiger will continue to perform as a superb golfer (as long as he doesn’t cheat). His conduct at the “19th hole” and beyond reveals much about his incomplete development as a human being. His primary moral obligation now is to maintain some practical level of relationship with his wife for the sake of the children they’ve brought into existence. Any “obligation” to golf fans is subordinate. Jesse James Clearly, an essential aspect of this man’s knowledge and psychology is the adornment of human bodies—his own and … Continue reading Random Stories Earn Consistent Comment

Time to Trade

I have written quite a few words in my efforts to put all of the nonsense about the government bail out of General Motors into perspective. For example, I pointed out the disingenuous claims by the American President that there would be no political intervention accompanying government ownership. Also, one of my articles most read on this site was the essay on the GM dithering over the sale of Adam Opel GmbH. It is a measure of the unique ability of art to highlight the essentials of a complex issue. Today, I encountered one such example signed by cartoon artist … Continue reading Time to Trade

Sleight of Hand

File this under the category of Red Herring:  “Obama: Excessive pay ‘does offend our values’”—Associated Press article on MSNBC.com, October 22, 2009 Before we parse this bit of fluff, let it be said that no one should have any sympathy for bailed-out organizations. In order to keep the “too-big-to-fail” enterprises running, the State intervened in the normal course of business and kept them alive. This is simply favouring some economic participants at the expense of the rest. It is wealth distribution and privilege bestowed by the all-powerful State. Government’s sticky fingerprints have been on the financial industry since at least … Continue reading Sleight of Hand

Dress Appropriately

On Climate “Since Al Gore released his feature-length cartoon, “An Inconvenient Truth,” in 2006, the Earth has cooled about 0.74 degree Fahrenheit, almost the same amount that the U.N.’s climate panel, the Intergovernmental Panel on Climate Change (IPCC) claims was gained in the entire 20th century.”–Investor’s Business Daily Editorial, ‘Nuts’ to Copenhagen, September 30, 2009 It should be noted that this relatively rapid cooling since 2006 occurred even as the economies of those countries signing on to the Kyoto Accord were severely impaired (e.g. Spain’s), and that man-made carbon emissions continued apace without any apparent negative impact on the environment … Continue reading Dress Appropriately

Only Politics Eludes Logic (OPEL)

Prior to filing for legal bankruptcy protection on June 1, 2009, General Motors transferred 65 percent ownership of its money-losing operation in Europe, Adam Opel GmbH, into a German Trust. The five parties to the Trust include one non-voting Chairman, with two members representing GM’s now 35 percent minority interest and the remaining two representing several German governments, including the national government headed by Chancellor Angela Merkel. This Trust is supported with bridge financing of approximately $2.2 billion from Germany’s national government to continue operations until a new buyer takes over the controlling interest. Plans endorsed by the GM Board … Continue reading Only Politics Eludes Logic (OPEL)