About last night

I watched the entire Heat-Celtics game, and what a game it was.  While one doesn’t want to take too much out of one game, I think we can glean this:

• The Miami Heat will win a lot of basketball games: Dwayne Wade is still healing his hamstring, their offense was “atrocious” in the first half (and that’s their coach’s word, not mine), yet they still turned a 15-point halftime deficit into a 3-point game with about minute to go – against the Eastern Conference Champions who actually added to their roster (more on that later).  Wade will get healthy; and things like the first quarter will be few and far between.  Looking ahead, I can think of only three teams (out of 29) who would consistently give Miami a game.  Boston happens to be one of them; the other two are Orlando and the Lakers.
• The Heat are vulnerable to size: Boston’s major addition was Shaquille O’Neal.  Now, Shaq is one of three NBA players who are older than I am, and he only played 18 minutes.  Yet he had nine points (and would have had 14 if he made his free throws) and seven rebounds.  Miami had no answer for him before resorting to tried-but-ture Hack-a-Shaq.  The Celtics revealed how to beat Miami – use the big man.  The Lakers have Kobe, but they also have Pau Gasol.  Orlando has Dwight Howard.  They could give the Heat fits.
• Boston looks very good – and will again in the playoffs, but odds are the regular season will mean as little to them this year as it did last year.  This game showed us they can get ready for the big games, but with their, um “experience,” they’ll need to soft-pedal the small ones.  Look for them to be the 4th seed in the playoffs, then starting a run that could get them back to the Finals

All in all, for the East, it should be the most interesting season since Jordan’s 2nd retirement.

Cross-posted to VV

The Fighting Ninth once more

I must confess, I didn’t think Morgan Griffith could beat Rick Boucher this year.  The Ninth Congressional District doesn’t change representation often (although Boucher has been in place for nearly three decades), and Boucher seemed to get his message out first (although I must confess I have not spent any time in the Ninth, so it was all appearance from far away).

Well, Survey USA says it’s on:

A dramatic reversal of fortune in Virginia’s 9th Congressional District, where Republican challenger Morgan Griffith appears to have awoken after 3 months of polling at 40% and today, 7 days until votes are counted, vaults into a tie with incumbent Democrat Rick Boucher, who had been sailing to a 16th term.

In a SurveyUSA polling conducted exclusively for WDBJ-TV in Roanoke, it’s Griffith 47%, Boucher 46%, within the survey’s theoretical margin of sampling error. Griffith’s lead may or may not be statistically significant; the contest should be reported as even.

SUSA says Griffith draws even because voters particularly keyed on this election are breaking almost 2 to 1 in his favor.

Here’s the kicker: about two weeks ago, SUSA had Boucher up 10 points in this race.  Naturally, a movement this big sends one to the crosstabs.  Well, every category’s changes are within the margin of error (meaning it could all be white noise), but three jump out:

• Age: using 50 as the dividing line, the new poll shifts 4% more for the under.  That helps Griffith because younger voters are backing him – although amng the 35-49 crowd the numbers went from Boucher +2 to Griffith +17
• Party ID: Amazingly, Griffith picked up 11 points on Boucher with a sample 3% less Republican than the 10/14 version (the Democrats were 1% higher than in 10/14)
• Abortion: Wow.  From 10/14 to current, the sample shifted 3% away from pro-lifers, yet Griffith still went from -10 to +1 overall

In other words, this is a genuine shift.  Griffith has gotten traction, and has victory in his sights.

For the first time in years, it’s the Fighting Ninth again.

Cross-posted to BD

One heckuva tea leaf

One of the signs that 2008 would not be a good year for the GOP was the slew of retired Republican office-holders endorsing Barack Obama (including, in one case, a sitting GOP Congressman bounced in a primary). It was as if the only people will to publicly back John McCain were Republicans who had to do it in order to keep their own careers going. It was a terrible optic.

Well, today, the Democrats awoke to an omen even worse: a Congressman from their own party running for re-election who announced he supported . . . John McCain in 2008 (Sun Herald via NRO - The Corner):

(Mississippi Democrat Gene) Taylor said he voted for Republican John McCain for president . . .

Uh oh.

Democrats running away from Nancy Pelosi is one thing – announcing you voted against your party nominee – when the nominee won 53% of the vote – is something else entirely.

Or, to put it another way . . . in 2008, Republicans abandoned their leaders once it was clear their careers were over; now we have a Democrat abandoning his own president to ensure his career will continue.  That points to a very bad 2010 for the Dems.

Cross-posted to VV

Revisiting TARP, two years later

I am surprised to find the buzz regarding the latest news on TARP is almost non-existent (except for some of my friends who have been curteous enough to wait for this post and express their views in the comments).  For those unaware, here it is (Bloomberg):

The U.S. government’s bailout of financial firms through the Troubled Asset Relief Program provided taxpayers with higher returns than yields paid on 30- year Treasury bonds — enough money to fund the Securities and Exchange Commission for the next two decades.

The government has earned $25.2 billion on its investment of $309 billion in banks and insurance companies, an 8.2 percent return over two years, according to data compiled by Bloomberg.

Now, because much of the opposition to TARP among the American people was driven by the anger over taxpayer bailouts, most TARP backers assume that all is well with the world simply because the government came out ahead.  I couldn’t disagree more.

For starters, we’re not actually sure of the entire TARP picture, as Todd Petzel told Bloomberg (same link): “But there are other costs as the government made it possible for the banks to pay back TARP. Those costs can turn out to be larger, and their legacy could last longer.”

More importantly, though, many of us who objected to TARP had more the simple populist anger on our minds.  These objections have not been salved by an additional $25 billion that the Democrats can waste before voters send them packing in 12 days.

To wit . . .

• It was unnecessary: Ostensibly, TARP was supposed to create a fund to buy all of the “toxic” mortgaged-based securities off the hands of ill banks. The “moral hazard” objection to this was obvious: if one allows investors and firms to avoid the consequences of risk, they’ll engage in more risky behavior that will cause even more problems down the road.  More specifically in this case, however, was the fact that the assets in question were artificially “toxic” under an accounting regulation known as “mark-to-market,” which forced firms to list the value of the assets at whatever the market would pay for them.  Thus, when the wave of foreclosures began, prices of these assets fell like stones – despite the fact that overwhelming majority of the mortgages backing them were not in default.  Thus, the long-term asset values were far higher than their prices, but the owners weren’t allowed to list their values as such.  The artificial red ink eliminated $500 billion in capital, which translates to $5 trillion in liquidity lost.  Mark-to-market, sadly, survived until April 2009.
• The dramatic government intervention in the economy: While the American economy was hardly a pure free market before the fall of 2008, TARP crossed into new territory, even if it had gone as designed.  Instead, it got even worse.  Despite its initial intentions, TARP also included language that gave the Treasury Secretary carte blanche do use the funds however he liked – a tremendouse expansion of government power.  Henry Paulsen (Bush’s Treasury Secretary at the time) promptly used his authority to announce the money wouldn’t go to buying off “toxic” assets, but to buy stock in banks instead.  As bad as that bait and switch was, Paulsen then dragged healthy banks into it – literally forcing them to take TARP money in a de facto eminent domain move that would have made New London blush.
• The damage done to the economy: When TARP was first discussed, the recession was about nine months old, but it was so mild that it hadn’t even been declared yet (the announcement would come after the election).  As voters coped with their anxiety, they looked to Washington and saw a political class wholly consumed by panic (or, to be more accurate, mass hysteria), a Treasury Secretary making it up as he went along, and banks that they thought were healthy taking TARP money – and thus giving off the impression that they were sick.  In short, the government took a serious credit crunch (albeit caused by an accounting rule) and turned it into a nationwide economic crisis in which all banks and financial institutions were smeared as weak and unable to survive.  Is it any surprise consumer and investor confidence sank?  That most of the job losses tied to this recession occurred in the months following?  Of course not.  Had the Administration and Congress acknowledge the true scope of the danger (deeper yet narrower than the perception given), the effect on the economy would not have been as damaging or as widespread.  Instead, events unfolded as they did (and the assets that supposedly caused all of this were left untouched).
• Finally, it stopped a desperately needed restructuring of the financial and auto markets: Dick Armey, an economist before and after he was a Congressman, noted this problem in his objections to TARP two years ago.  We tend to forget this now, but the banking sector was on its way to sorting itself out before TARP.  JP Morgan Chase bought Washington Mutual, and Wells Fargo actually managed to outbid Citibank for Wachovia.  The healthier banks were consolidating the sector and clearing out the weaker ones – until TARP forced them all to feign the same level of illness.  Obama basically did the same thing in the automobile sector.  I remain stunned that so many people believed the entire auto supply chain would go down if GM and Chrysler had gone to bankruptcy.  Had no one heard of Honda, Isuzu, Hyundai, Kia, or Mazda, to name a few?  What about upstart American companies like Tesla?  Or what about Ford, which refused TARP money and made itself profitable without it?  Instead, the moral hazard problem has extended from Wall Street to Detroit (one city that really does not need it).

In the face of these objections, the hey-it-made-money defense pales in comparison.

I’d be more willing to hear hey-we-didn’t-know-Paulsen/Obama-would-do-that defense. Some TARP supporters are trying to do that in re Obama and GM/Chrysler.  It doesn’t excuse it (after all, the bill explicitly granted Paulsen the authority to do whatever he wanted, it was a touted feature, not an accidental bug), but it would be better than showing me $25 billion (assuming it hasn’t been spent already).

Yet, sadly, many, many more have chosen to continue defending TARP, and whip up the panicked spirit of September 2008.  Never mind that none other than Richard Shelby – a former chairman of the Senate Banking Committee, thought this was bunk, and had a number of economists to back him up.

Or Marsha Blackburn, whose response is hardly the populist rage that so many TARP-backers believed was the unanimous view of opponents (NRO - emphasis added):

The responsible action is to pass the most effective legislation in as short a time frame as possible. The bill before us didn’t do that. It leveraged too many federal assets and too few Wall Street assets. It also ignored some market-oriented solutions that could be carried out immediately. Again, I’d look to options like mark-to-market reform, increases in FDIC insurance, etc.

I know I’m being repetitive, but waving $25 billion at us doesn’t make our objections go away.

Why the sky won’t necessarily fall

If you have a hankering for dystopic accounts of the future – and for reasons I cannot explain, I do – then Jim Bacon‘s Boomergeddon is the book for you.  More importanly, his contribution is not via literature or art, but rather a hard-headed analysis of where America is and where he thinks it’s going (basically, for a default).

At the risk of being simplistic, Bacon’s 311 pages can basically be distilled to this: “our debt and deficits are huge; no one has the guts to reduce them; so people of my generation (note: Bacon is a self-described Baby-Boomer) who expect to be helped by entitlement program are toast.”

He rather remorselessly presents the evidence for it.  If you want to know the true fiscal state of government in America, Boomergeddon is the best source, hands down.  I would also add that he tells a convincing and detailed story about what could happen over the next twenty years.

There’s only one problem: he’s convinced it will happen, and it is this hopelessness for the future that leads me to part company with him.

Bacon is convinced that no one will put our fiscal house in order.  He doesn’t think tax increases will fix the problem (at some point, that stone runs out of blood), and does not believe anyone has the political will to bring spending down.

I’m not so sure.

We tend to forget that the spend-spend-spend mentality of government is relatively new; for over two-thirds of its life, the American republic  and its electorate did not treat government spending as the life-blood of the American economy.  Keynesian economic thought was a reaction to the Great Depression, but it needed a political shift in the Western center-left from small government to big government in order to become politically dominant. It’s high point came in 1971, when Richard Nixon declared, “We are all Keynesians now” – effectively the intellectual surrender of the last political entity in the Western world that took issue with the theory.

For the Baby Boom generation, that effectively ended the economic discussion.

For the rest of us, well, it hasn’t been 1971 for a long time.  In less than a decade, Keynesian received a double blow from reality (stagflation, which isn’t supposed to exist in the Keynesian world) and a slew of academic challengers (monetarism, rational expectations theory, and neoclassicalism).  Even in the political world, “supply-side economics” (which, depending on the adherent, drew from all three and/or Keynesianism) challenged the orthodoxy.

Yet the political challenge to Keynesianism didn’t last long for two reasons: the increasing power of Boomers in American politics (still remembering Nixon’s line), and the fact that the greatest piece of evidence for Keynesianism (the American 1930s) was left largely unchallenged (although monetarism has made an effort to discuss the cause of the downturn).  Thus, Keynesianism in the political world held sway even as academically it was knocked off its perch and forced to redefine itself (as New Keynesianism).

Thus, any attempt to reduce spending ran into political Keynesianism (and usually did not do well).  Bacon himself refers multiple times to the Keynesian effect on the economy, and how just about any attempt to cut spending will be met with you’ll-cause/exacerbate-a-recession naysayers.

However, in 2010, that Keynesian political consensus is breaking down.  FDR’s New Deal is getting another look – and the old public-spending-saved-the-world account is taking a beating.  Several economists came out to oppose the Demcorats’ stimulus and the interpretations behind it.  Even when White House economists tried to defend the stimulus with Old Keynesian assumptions, New Keynesians andothers from leading institutions took aim and obliterated them.

I sincerely doubt that Bacon, as he was writing Boomergeddon considered world where the International Monetary Fund and the European Central Bank were telling policy makers that government spending would lead to weak economic growth, or where Harvard was home to leading economists dismissing the notion behind Keynesian stimulii.

Yet that’s the world in which we live today.  While nearly every other academic field has lunged leftward, economics has moved rightward over the last forty years.  This fact remained largely unknown to the rest of the world (including nearly everyone in politics) – until now.

Changes like this tend to happen without anyone noticing at first.  When Canada passed the Saudis as the biggest exporters of oil to the United States in 2004, hardly anyone caught on.  Even today, the politics of oil imports still lags behind the economics of it.  The European Coal and Steel Community made few waves in 1954, but has now become the behemoth known as the EU.  When the Communists took power in Russia in 1917, the New York Times was more upset about a potential Communist running for Mayor of New York.

In this case, we’re talking about the intellectual foundation for decades of resistance to austerity collapsing in a heap.

In fact, the consequences are already being felt.  Bacon express disgust at the fact the Paul Ryan’s Roadmap gets little support from the House Republican caucus.   What he doesn’t seem to notice is that Ryan himself is considered a shoo-in for re-election (in Les Aspin’s old seat, no less) despite calling for dramatic entitlement reform.  In Florida, Mark Rubio openly called for raising the Social Security eligibility age, and he not only chased a sitting governor out of a primary, but may also get over 50% in a three way race.

Neither would have been anything but laughable twenty or even ten years ago.

Now, I still consider Bacon’s book invaluable.  Boomergeddon is a warning every American should read, and heed.  I just happen to think more Americans will heed it than he thinks will.

Cross-posted to VV

So *that’s* why Uncle Kevin is a Democrat

To be fair, Kevin Quinn has been an attorney in San Diego, CA for more than a quarter of a century, and a Democrat for at least that long - long before the Republicans began a streak of five straight election wins for Mayor.

Anyhow, the city has a gaping budget hole.  Kevin Williamson (the Exchequer) details the gory details.

Mayor Jerry Sanders’ response?  Play the raise-taxes-or-I’m-firing-cops card (NBC – San Diego).

This is what local Republican leadership looks like to my uncle.  I don’t know why he became a Democrat, but I sure don’t blame him staying one.

Cross-posted to VV

Yikes! VFW to shut down its own PAC

Yet another sign of a Dempocalypse – albeit one from waaaaay out of the blue.

The Veterans of Foreign Wars is so upset at its PAC endorsing less-than-hawkish Democrats that its comander-in-chief (Richard Eubank) is “withdrawing all PAC appointments” and is moving to have the PAC dissolved at the next VFW convention (via NRO – The Corner).  Here’s the meat of Eubank’s statement:

It is now evident to most of the VFW leadership, both National and especially the departments, that the VFW has been subjected to extreme negative publicity throughout the nation, and the recent endorsement decisions have, in fact, harmed the VFW’s reputation and future ability to fulfill our mission.

I cannot let this erosion of public support for our great organization continue. The apparent lack of the committee to address these concerns will lead to a proposal by me, as Commander-in-Chief, to amend the by-laws at the 112th National Convention for the purpose of dissolving the PAC.

All the vulnerable local Democrats (Nye, Connally, Boucher, and Perriello) are waylaid by this.  Any “supported by veterans” mailers or ads they have in the pipeline might as well be (figuratively) pipe-bombs now.

VFW-PAC basically went into incumbent protection mode this year.  That the Democrats on the list garnered this much anger within the membership (especially in an election where military and foriegn policy issues were on the backburner) is a sure sign a GOP “wave” is building.

Cross-posted to BD

Say what, Krystal?

Krystal Ball, the Democrat trying and failing to convince voters in the 1st District to replace Congressman Rob Wittman, admitted to playing a little fast and loose with the truth about her finances.  Then she made up for it by getting Wittman’s record wrong.  All in a day’s work!

Will start with the finance problem, first noted at Virginia Virtucon.   She admits to the Virginia Gazette that she and her husband “weren’t totally straightforward,” i.e., she was hiding the truth.  According to Ms. Ball, the firm had to sue a client, which was bought out by K-12 Inc., and she settled for K-12 Inc. shares.  Even with this explanation, she triggered more questions with this:

That dispute resulted in a settlement in which Ball got K-12 shares that were listed on her most recent financial disclosure as worth between $1 million and $5 million.

“That’s what they were worth, but we settled for an amount that was less than $1 million,” she said. 

Huh?  Which is it, Krystal?  Under $1M or over $1M? 

Meanwhile, in her attempt to get the attention off her financial chicanery, she practically swallowed her own foot talking about Wittman:

He claims to be a moderate and an independent voice, but just does whatever Eric Cantor and John Boehner tell him to.

Are you kidding me, Krystal?

First off, Rob Wittman has always campaigned as a conservative.  It was one of the things that had me so upset at him during the pre-TARP phase of his Congressional career.

Secondly, and most importantly, on what was arguably the biggest and most important vote of his young career, while the leadership in both parties were engulfed in mass hysteria, and Messrs. Boehner and Cantor were telling him to support TARP (as were Ms. Ball’s heroes – Barack Obama, Nancy Pelosi, et al), Rob Wittman defied them and voted against it.  It’s easy to complain about TARP now, but Wittman showed unique courage in his willingness to keep a level head, recognize the deficincies of the bank bailout, and oppose it.

In short, Ms. Ball admitted she got her own finances wrong, and tried to make up for it by getting her opponent’s record wrong.

All the more reason Mr. Wittman should be re-elected

Cross-posted to Virginia Virtucon and The Real Krystal Ball

Multi-state anti-Democare suit catches up with Virginia’s

The lawsuit against Democare filed by twenty states and eagerly followed by all but one of the remaining thirty was allowed to go forward yesterday.

For those of us fortunate enough to call Virginia home, the decision was not breaking or urgent news. Attorney General Ken Cuccinelli had filed a similar suit on our behalf and got a similar green-light ruling two months ago.  That said, I don’t remember Judge Henry Hudson tipping his cards on the evenutal ruling the way Judge Roger Vinson did here.

Vinson took aim at the Obama Administrations three-card-monty on the language of the health mandate (Washington Post):

In his 65-page ruling, Vinson largely agreed with the 20 states and the National Federation of Independent Business, saying Congress was intentionally unclear when it created penalties in the legislation. The states have argued that Congress is overstepping its constitutional authority by penalizing people for not doing something – not buying health insurance.

The penalties for those who do not buy insurance are never referred to as taxes in the 2,700-page act, Vinson wrote. Attorneys for the Obama administration argued at a September hearing that the penalties should be considered a tax levied by Congress – as allowed by its constitutional power to regulate interstate commerce.

“One could reasonably infer that Congress proceeded as it did specifically because it did not want the penalty to be ‘scrutinized’ as a $4 billion annual tax increase,” Vinson wrote.

“It seems likely that the members of congress merely called it a penalty and did not describe it as revenue-generating to try and insulate themselves from the potential electoral ramifications of their votes.”

That may mean bad news for the mandate.  No wonder Cuccinelli himself chimed in on Vinson’s ruling (WaPo – as one would expect, he was quite happy).

Each case (and the one that went the other way in Michigan last week) is headed to the Supreme Court, meaning the entire ball of wax is likely dependent on the views of one person: the Reagan-appointed, recent Ninth Amendment devotee Anthony Kennedy.

I’d say Democare’s mandate is the underdog, but not by much.

Cross-posted to BD

Say What?!?!?!?!

Well, it’s October, which means some candidates suddenly get hit with events from their past that sound awful until one examines them in closer scrutiny.  One of the more disturbing has come from Colorado, although I don’t think the scrutiny helps the candidate – or his would-be constituents, for that matter.

There, Republican U.S. Senate nominee Ken Buck is taking flak for his decision in 2006 not to prosecute a particular rape case as District Attorney in Weld County.  The usual suspects are furious because Buck cited certain reasons not to pursue the case, summed up by the Greeley Tribune (which backed Buck’s decision), cited by NRO – Battle ’10:

 . . . we understand sometimes the facts of a case simply don’t warrant prosecution because there isn’t a likelihood of conviction. And we’re not in favor of spending taxpayer money just to go through hollow motions, dragging everyone through an emotional and costly trial with no hope of winning.

In this particular case, the woman, a University of Northern Colorado student, admitted she became intoxicated and called her former lover. She asked him to come from Colorado Springs to see her . . .

OK, so far, so muddled.  Sounds like another tragic he-said, she-said night, or, as Buck clumsily noted, “A jury could very well conclude that this is a case of buyer’s remorse.”  As Battle ’10 noted, Buck routed the case to a fellow DA (in Boulder County) who agreed with his decision not to pursue the matter, as did Greeley’s police chief and – apparently – the voters of Weld, none of whom even bothered to challenge Buck for re-election in 2008.

But then, going back to the Tribune editorial, I read this:

. . . and when he arrived, according to police reports, she and he agreed she said no several times during their sexual encounter.

And, frankly, this is where the state of Colorado lost me.

I will confess that I am not an attorney; I’m a numbers guy.  There is a comfort in numbers that does not exist in a courtroom hosting a trial.  Half the reason I’m cross-posting this to Virginia Virtucon is to see what the attorney(s) within the VV community have to say . . .

Still, the first thought that comes to my head – and stays there – is this: how can this case be considered unworthy of pursuit when “she said no” is undisputed?

Until someone answers that question to my satisfaction, I am glad – for a whole slew of reasons – that I neither live nor vote in Colorado.