Weekend Debt Drama Open Comments

Now that the Senate is going to be debating legislation to raise the debt limit, the risk of a government shutdown is lower, but not zero.

The econobabe, Megan McArdle, speculated a bit on exactly what a government shutdown might entail. It’s pretty thought-provoking. We all have things in mind that should be cut; unfortunately, my list is not the same as most other people’s. In fact, there will be many whose list of things to cut is the same as my list of things to keep.

Cutting is easy in the abstract, but less so in the specific.

We currently borrow about 40% of the budget. That corresponds to the non-green segments in the diagram above. What would be the impact of that?

  • You just cut the IRS and all the accountants at Treasury, which means that the actual revenue you have to spend is $0.
  • The nation’s nuclear arsenal is no longer being watched or maintained
  • The doors of federal prisons have been thrown open, because none of the guards will work without being paid, and the vendors will not deliver food, medical supplies, electricity,etc.
  • The border control stations are entirely unmanned, so anyone who can buy a plane ticket, or stroll across the Mexican border, is entering the country.  All the illegal immigrants currently in detention are released, since we don’t have the money to put them on a plane, and we cannot actually simply leave them in a cell without electricity, sanitation, or food to see what happens.
  • All of our troops stationed abroad quickly run out of electricity or fuel.  Many of them are sitting in a desert with billions worth of equipment, and no way to get themselves or their equipment back to the US.
  • Our embassies are no longer operating, which will make things difficult for foreign travellers
  • No federal emergency assistance, or help fighting things like wildfires or floods. Sorry, tornado people!  Sorry, wildfire victims!  Try to live in the northeast next time!
  • Housing projects shut down, and Section 8 vouchers are not paid. Families hit the streets.
  • The money your local school district was expecting at the October 1 commencement of the 2012 fiscal year does not materialize, making it unclear who’s going to be teaching your kids without a special property tax assessment.
  • The market for guaranteed student loans plunges into chaos. Hope your kid wasn’t going to college this year!
  • The mortgage market evaporates. Hope you didn’t need to buy or sell a house!
  • The FDIC and the PBGC suddenly don’t have a government backstop for their funds, which has all sorts of interesting implications for your bank account.
  • The TSA shuts down. Yay! But don’t worry about terrorist attacks, you TSA-lovers, because air traffic control shut down too.  Hope you don’t have a vacation planned in August, much less any work travel.
  • Unemployment money is no longer going to the states, which means that pretty soon, it won’t be going to the unemployed people.

Some are pretty easy, others less so. Many are things the Federal government shouldn’t be doing in the first place. Cutting them out of the Federal budget suddenly with no preparation would result in chaos. Heck, cutting them out of the Federal budget over time would likely result in chaos, just a little less so.

Friday Pyrrhic Open Comments

The debt ceiling vote in the House has been postponed because too many Republicans said they would not vote for it for one reason or another. Very few Democrats would have voted for it, so Boehner & Co. decided to hold off to try for more support.

Whatever the result of that vote, the legislation remains very likely to be either voted down or simply shelved in the Senate. This is in addition to a threatened Presidential veto.

At this point, things are looking pretty bleak. Boehner and Obama were pretty close to a deal last week, but that got scuttled due to disagreements over new taxes, either immediately as a result of the legislation, or triggered at some later point.

I don’t know what the current sticking point(s) is(are). One is the size of the increase in debt authorization. Obama and Reid are demanding a big one to avoid having the issue reappear during the runup to next year’s elections. Boehner wants a smaller one to both force the discussion to return during the election cycle and to ensure that any cuts in the legislation actually happen.

Megan McArdle makes a point that I have not seen elsewhere. Bondholders are not that concerned about the internal machinations of how the debt ceiling is established or what different stakeholders are willing to do in return for the agreement of others. They are concerned with getting paid what is due them.

Wall Street sees the current fiscal impasse as prima facie evidence that our political system is broken and that we will continue to lurch back and forth between extremes until we develop a concensus that will work long-term.

Our AAA is not at risk because our current fiscal path is unsustainable, but because ratings agencies know what many GOP freshman and party activistsm [on both sides – wb] apparently do not: that doing the unpopular things required to get the budget in balance is going to require both parties to hold hands and jump together. Otherwise, whoever forces through their unpopular plan (huge tax increases/massive spending cuts) is going to get trounced at the next elections by an opposition party promising to undo whatever it is the party in charge has just done.

My reading of what the ratings agencies have said is that if the GOP somehow manages to force the Democrats to do everything their way, this will not secure our AAA; it will guarantee that we lose it, because it will show that we are currently unable to make the ugly bipartisan compromises that long-term budget balance requires, and raises the risk that sometime in the not-very-distant future, the other party will retaliate by threatening default.

In a related column she makes another very good point that most have overlooked. A few nuts are talking about invoking a clause in the 14th Amendment that could be interpreted, given a tortured enough reading, that the debt ceiling is unconstitutional. It may or may not, in fact, be. What matters is that there will be very few, if any, buyers.

I heard an analyst made a point about proposed 14th Amendment bypass of the debt limit, which was so obvious that I couldn’t believe I hadn’t thought of it: to wit, even if the Treasury simply went ahead and issued more debt, who was going to buy these instruments of dubious legality? And at what price? Yet all the DC people I’d seen writing about the “14th Amendment Solution” had focused on the legality of the move, or the political fallout; no one had thought about, like, finding customers for the debt.

Washington almost never really thinks about the customers for our debt. They’re useful bogeymen who can be deployed against policies you don’t like. You see liberals claiming that bondholders will be horrified if we cut Social Security benefits (they won’t, though they might be horrified if this becomes necessary because we don’t lift the debt ceiling–but that worry will be a fear that Congress is crazy, not a fear that this means we’re defaulting on our “obligations” to seniors)

Washington’s grandiose plans about raising the debt limit and using it to finance future expenditures will work – until it doesn’t. At some point, nobody knows when, a Treasury auction will fail; that is there will not be enough buyers for a new issue of bonds. One or both of two things will happen at that point: the auction will end and the bonds will be offered again at a later date, with a similar risk of failure; or the bonds will be sold, but at a deeper discount (equivalent to a higher yield), raising the cost of borrowing.

Tying all this up, we arrive at the point purists on both sides loathe – the need for compromise to one degree or another. This is not a compromise of principles; it is a compromise of tactics and means to achieve the desired goals. We see people all over the internet, including this very blog, who demand that their side not give in one iota and that such a move would be tantamount to abandoning any shred of honor.

This is hogwash. Given the makeup of the Federal government, there are precious few options for either party to move their agendas forward. Both sides are holding firm, almost to the point of intransigence. At some point, some give and take must occur in order to avoid very dire consequences.

I know this is heresy to some of you. So be it. As Keith Hennessey points out:

“Fight harder” and “Communicate your message better” are cheers rather than strategies. Cut, Cap, and Balance is a good policy, it is not a strategy. If you disagree with what Speaker Boehner is doing, present another strategic option, which is more than just a policy or a cheer.

Currently, what we hear most from Republicans is “Just say no” and “Don’t give an inch”.

The problem in this case is the implementation. The “just say no” strategy is predicated on the assumption that, if no agreement is reached, the policy and political consequences of passing the President’s August 2nd deadline will place greater relative pressure on Democrats than on Republicans, and that this pressure difference will be so great that it causes the President and Senate Democrats to accede to policies they had previously rejected.

If anyone thinks this is the case, they are very likely deluding themselves.

I think the “just say no until they cave” strategy cannot provide so much greater relative pressure on the President and Senate Democrats that they would suddenly accept a bill they hate. In addition, the strategy poses significant downside policy risk as well as political risk for Republicans. Nobody really knows what August would look like in the scenario in which Congress fails to act, and tiny-probability-really-bad outcomes become moderate-probability-really-bad outcomes. I would be willing to weigh that cost against the strategic benefit of getting a huge policy victory, but only if there were a strategy I thought could work. Without it, you are just taking unnecessary and dangerous risks with no benefit.

Put another way, this is rapidly approaching the point where a Republican victory may just be a pyrrhic one.

Thursday Bulwer-Lytton Open Comments

“Cheryl’s mind turned like the vanes of a wind-powered turbine, chopping her sparrow-like thoughts into bloody pieces that fell onto a growing pile of forgotten memories. ”

Somewhat grisly, but the above quote is the winner of the 2011 Bulwer-Lytton fiction contest, given to this year’s best example of bad writing.

The winner of the 2011 Bulwer-Lytton Fiction Contest is Sue Fondrie, an associate professor of Curriculum and Instruction at the University of Wisconsin Oshkosh who works groan-inducing wordplay into her teaching and administrative duties whenever possible. Out of school, she introduces two members of the next generation to the mysteries of Star Trek, Star Wars, and–of course–the art of the bad pun.

Prof. Fondrie is the 29th grand prize winner of the contest that that began at San Jose State University in 1982. The contest challenges entrants to compose bad opening sentences to imaginary novels takes its name from the Victorian novelist Edward George Bulwer-Lytton, who began his “Paul Clifford” with “It was a dark and stormy night.”

At 26 words, Prof. Fondrie’s submission is the shortest grand prize winner in Contest history, proving that bad writing need not be prolix, or even very wordy.

The runner-up is:

As I stood among the ransacked ruin that had been my home, surveying the aftermath of the senseless horrors and atrocities that had been perpetrated on my family and everything I hold dear, I swore to myself that no matter where I had to go, no matter what I had to do or endure, I would find the man who did this . . . and when I did, when I did, oh, there would be words.

There are sever category winners for things like adventure, crime, historical fiction, romance. One of my faves is purple prose:

As his small boat scudded before a brisk breeze under a sapphire sky dappled with cerulean clouds with indigo bases, through cobalt seas that deepened to navy nearer the boat and faded to azure at the horizon, Ian was at a loss as to why he felt blue.

You have to read them all.

Wednesday Automotive Safety Open Comments

I came across this video last night. It shows two things:
1. The biggest, heaviest car doesn’t always win.
2. Automotive safety has come a long, long, long way in the past 50 years.

The dummy in the Bel-Air bonks his head firmly into the ceiling and eats a steering wheel sammich. The dummy in the Malibu prolly walked away with slight achiness.

Tuesday Open Comments

Okay, I see that again I am left to open the door. Don’t have time to put together a proper column (perhaps this can be rectified later).

I missed the speeches last night. Had something more important to do.

I checked the couch, and it’s kitty barf free. Come on in and make yourselves at home. I hafta put the ol’ nose to the grindstone.

Monday “It is Everywhere” Open Comments

This is so true! The author of this article laughs at the “counter cultural” eco whack jobs who think they are “sticking it to the man” by eschewing the eeeevil capitalist corporations who provide our food, and who put on airs of socialist elitism by buying their food from a local food coop:

if we are driven to act, even based upon some imaginary construct, we are still acting in accordance with market principles. It’s an example of the Misesian idea that all human action is an effort to relieve some discomfort about the way things are.

As much wailing and gnashing of teeth that goes on in the dugouts of the left, they are still batting .050 when coming up to bat. Yeah, I’m not happy with the push toward socialism and the teetering tower of madness that our economy has become, thanks to the asinine tax and spend policies of the Democrat party. In spite of all that, there are still basic facts to be faced: eventually, our behavior is ruled by capitalist ideals. It has to, because other economic models fail.

The consumer receives better-tasting produce at a lower price than can be had elsewhere. Additionally, for those who care about such things, they are purchasing more than just vegetables: they are purchasing the air of superiority and ecofriendly street cred that comes from shunning the corporate grocery store and sharing in something that they believe to be one step away from a hippie commune. That reality doesn’t support such a conclusion is immaterial; if we are driven to act, even based upon some imaginary construct, we are still acting in accordance with market principles. It’s an example of the Misesian idea that all human action is an effort to relieve some discomfort about the way things are.

Rather than striking a blow at the evils of the free market, CSA members exemplify voluntary exchange in its purest form. I and the farmer “beat the market” in this transaction, largely because of the direct nature of the buying and selling. I walk away from the exchange having purchased produce at a lower price by accepting a little bit of risk, while the farmer, having cut out the wholesaler, walks away having sold the fruit of his labor at a higher price.

Capitalism seeks out win-win scenarios. Other scenarios will result in participants walking away from deals. Other models punish producers on behalf of the “oppressed”. Instead of oppressing the unfortunate, there are more opportunities for success – sometimes extreme success – in a capitalistic economy than in other systems, just for the fact that as soon as one becomes more successful in socialistic or communistic societies, the extra success is removed from the producer and “distributed” to the less productive. After making stops in the usually corrupt redistribution channels, of course.

The smugness belongs to the capitalists, frustrated and dismayed that we may be:

Additionally, I purchase the satisfaction of knowing that the “muddleheaded socialists” loading up and comparing their reusable shopping bags are unwitting participants in a market economy that they claim to reject. For me, that satisfaction alone is worth almost the price of membership. The vegetables are just a bonus.

Weekend Open Comments

The New York Times ramps up the idol worshiping as we get closer to election season:

At the White House podium a few minutes later, the president radiated a righteous fury he rarely displays in public, finally placing the blame for this wholly unnecessary crisis squarely where it belongs: on Republicans who will do anything to upend his presidency and dismantle every social program they can find.

Smite them, oh Great One! Smite them dead with great vengeance and furious anger those who attempt to poison and destroy your Democrats!

Friday “Discover Yourself” Open Comments

I came across this interesting website. I like to read almost everything science, and especially items about the human body. My favorite column in Discover magazine is “Vital Signs,” which is kind of like “House” but without the misogyny or ill-tempered curmudgeon.

As far as what’s on the site, I had no idea I generated four cups of nose milk a day. And now I know why men are so protective of their manly stuff. And while some liberals may have very little common sense, they are blessed with more than five of them. Most interesting to me was the knowledge that I breathe one nostril at a time – you’d think I would know that, eh?

Go. Discover. Enjoy yourselves.

Girls – The Expendable Sex

I was heartbroken to see this story: Baby Girls Hanged, Burned, Stabbed To Death In Pakistan Those poor babies, lined up on a table, unloved, unwanted, and unknown. Did their killers have any remorse as they murdered these innocents? Did their cries ring in their ears as they left them to die?

And then there’s the story about A Shortage of Girls in China.

Deng Xiaohong, Deputy Director of Beijing’s Bureau of Health, revealed on May 12 that a normal ratio of baby boys to baby girls should be around 104:100-106:100. But last year’s ratio reached 108:100, and that of the floating population even went as high as 128:100, indicating that the practice of willful abortion is upsetting the standard ratio.

And what is the result? Already, young girls are being kidnapped and raised as future wives for the families that have money. Their sons will be guaranteed wives of some kind, and their family lines will not die out. Meanwhile, there will be cries and tears for the real parents of these missing daughters. Will the government of China all them to have another child? In addition, the article also states:

Experts predict that serious gender imbalance can cause complicated social problems. If this imbalance is allowed to proceed unchecked, the following damages may occur:

1) Pressure on marriage. Owing to their excessive number, males will find it difficult to find marriage partners.

2) Adverse impacts on families and society. The gender imbalance is likely to cause more sexual crimes and adversely affect the stability of monogamous families.

3) Difficulties in maintaining the population. With the decrease in the number of women, the country’s population reproduction capacity will decline.

4) The surplus of male employees will place more pressure on female employees. In the next 10-20 years, men will find it more difficult to find jobs. Some sectors that females used to have advantages in, such as textiles and service, will hire more males, upping the pressure on female workers.

It is rather ironic that infant girls are being killed on the one hand – and stolen for their value elsewhere.

And it is not just Pakistan and China, either:

China has 118 boys per 100 girls under age 5, Korea has 117 to 100, and Taiwan is 110 to 100.

And even the United States is leaning towards selective gender birthing:

It is currently legal to use sex selection techniques in the United States though the practice hasn’t yet become widespread. The MicroSort technique of pre-fertilization sex selection removes the need for abortion but costs a few thousand dollars and while it pushes the odds heavily toward one sex or the other its success rate is less than perfect.

Where does this lead us? What kind of political ramifications will this world face as societies become less stable? What kind of shifts will occur as the demographics change? And the question I have – why is it that in so many cultures, girls are considered less valuable than men? After all, it takes less men than women to propagate the species. If it was a matter of simple population and passing on of genetic material, then women would intrinsically be more valuable. In so many cultures, however, women are considered less valuable and often are relegated to second- or third-class status. Is it because women are physically weaker – and men can physically dominate, so they do?

Perhaps all of those lonely men out there can find wives….in Japan:

ISEHARA, Japan – In a surprising repudiation of the traditional Asian values that for centuries have put a premium on producing male heirs, surveys show that up to 75 percent of young Japanese parents now prefer baby girls. Daughters are seen as cuter, easier to handle, more emotionally accessible and, ever more important in this fast-aging society, more likely to look after their elderly parents.

Meanwhile, I’ll say a prayer for all those little babies, murdered at the hands of those carried them so intimately for so long.

Thursday Pommies Are Haters Open Comments

Can I get an opinion from you people? We all seem to think that the least worst option for these posts is leveraging the limited wit (such as it is) of the front-page posters here 24/7. We then wait on these posts to appear so we can all touch base and get over the issues we all have.

Oftentimes, we give each other a heads up on the news of the day. I do feel that it’s my bad sometimes if we can’t maintain a sense of normalcy, or can’t keep moving forward.

I just felt a need to reach out to you people for a clue to help make this the winningest blog. Although I could care less if you know where it’s at. I suspect that this will be a case of me finding out something that’ll learn me.

You do the math.