Absolute Flaming Idiots

Yahoo News:US auto safety group wants to curb gadget use by truckers

Advocates even wants the FMCSA, the DOT agency that oversees commercial trucking, to study whether using Citizens' Band (CB) radios -- which provide short-distance radio communications -- or dashboard-mounted navigational devices should be banned.

CB radios are a lifesaver on the road, both for truckers and other users. You can find out about accidents and hazards ahead and have time to prepare. Advocates are being absolute flaming idiots. Maybe if they could take a break from their railroad funded Jihad against the trucking industry they could, I don't know, do something about AUTO safety.

Reality Bites

Ever wonder why contestants always act so crazy on "reality" shows? They're isolated, buzzed and Sleep deprived. Almost like Gitmo with cameras.

Kucinich cuts through the bull

Bloomberg: Obama Saving GM Needed Dealmaker Team to Break It in Bankruptcy

Obama was taking the wheel out of the hands of a GM veteran who spent his 32-year career with the company that sent him to Harvard University for a master’s in business. The Wall Street restructuring experts were in charge.....

Because, after all, Wall Street has done such a good job lately managing its own affairs lately.

“Who is this auto task force, and who do they represent?” asked Representative Dennis Kucinich, an Ohio Democrat. “They represent various Wall Street interests who have long looked at exporting jobs out of this country.”

Wall Street Blows up the economy, then is handed vast sums of money with no strings attached along with many lucrative opportunities for self dealing at the taxpayer's expense. GM is blown up by the economy we give it to the geniuses who have worked night and day to ensure the collapse of the middle class so they can get a couple more beeps of yield on the deal.

By the Way, why are labor contracts sacred for AIG but not the UAW? How did the titans of Wall Street get to DC for their 4 trillion dollar bailout? How is complaining about a worker making $25 an hour plus benefits populism and complaining about a CEO making $25 million envy?

The Financial Crisis continues apace

Brad Setser takes on the Foreign Bond Vigilantes story. He finds that Foreign Central Banks are not abandoning the treasury market, rather they are moving from longer dated (more than 2 yr) treasuries to shorter dated ones. This has an effect exactly the opposite of Greenspan's paradox, it lowers the cost of borrowing short and raises the cost of borrowing long. The effect is to drive up the costs of borrowing to fund the governments ongoing operations and to strangle the refinance boom (which is both getting Americans out of toxic mortgages and generating fee income for sick banks).

One of these things is not like the other

The Transportation Security Administration is warning truckers that Mexican drug gangs are out of control and may target trucking operations to move their goods. Meanwhile the Obama administration is trying to pitch another program to allow Mexican truckers to roam the country. I appreciate that in the current economic crisis the Obama administration is staying focused on long term objectives. What's sad is those long term objectives are. Not content with the declining real wages of working Americans and widening inequality the Obama administration is anxious to outsource more jobs and enhance corporate profits.

Sacrifice

Daniel Howes: Sacrifice? It's in this state's DNA

More rope to extend the federal lifeline -- now at $17.4 billion for General Motors Corp. and Chrysler LLC, and $5 billion for auto suppliers -- will come with conditions, the president says. He wants more sacrifice from unions and executives, bondholders and suppliers.
Sacrifice? What, exactly, has this town and its investors been experiencing the past three-plus years? Spring break? This notion, aired during the congressional inquisitions late last year, picked up by Team Obama and wielded by whoever's trying to score points, that Detroit Auto hasn't yet "sacrificed" in a (losing?) effort to fix itself is absurd.
The union has helped usher many thousands into retirement, bargained down its wage and benefit scale for new hires and agreed to sharp reductions in company health-care obligations. Brands have been sold, dealers lost, bonuses eliminated, salaries cut, tens of thousands of jobs eliminated in wave after wave after wave of reductions.
Plants are going or gone in communities across the country. Local and state tax revenue started plunging long before home values in Manhattan and the Bay Area did. Michigan's per-capita income, long among the nation's highest, has been dropping like a stone this decade and soon will be lower than Republican Sen. Richard Shelby's Alabama.
Sacrifice? We've seen a few, even if it doesn't look to be "enough" from the condescending heights of New York, Washington and San Francisco. And you know what? It isn't enough, not now anyway, not when technically insolvent companies are petitioning the Treasury Department for aid because their credit ratings are destroyed and car and truck sales are trending at terrifyingly low levels.
I, too, have argued Detroit's business model is hopelessly broken, that its costs were indefensibly high, its brand image tarnished, its culture mired in denial, its management and union leadership too often willing to accept short-term expedience at the expense of long-term success.
But sneering about sacrifice, as if there's been none, is a towering insult to the tens of thousands of families, white-collar and blue-collar, who took buyouts and walked out into a collapsing economy; to the dealers whose businesses have collapsed; to the 7,631 UAW members -- 53 percent of them in Michigan -- who this week accepted comparatively meager packages to walk away from GM.
Sacrifice? If there are two things this state and its bellwether industry understand, it's sacrifice and recession -- and the knowledge that there's more of both to come.

Gotta love how contracts are sacrosanct for the millionaire bankers at AIG, but when it comes to working people Obama is happy to use them for toilet paper. Obama's been busy this last week patting the poor persecuted bankers on the back and letting them know they are special after a few of them got their feelings hurt last week. The bankers, no doubt, are busy scraping the McCain bumoer stickers off of the back of the Beemer. The Union workers who helped put Obama in office may be allowed to eat the crumbs that fall from the bankers bacchanalian feast if they are suitably penitent and supine to receive what they've got coming.

Pump and Dump

Words just fail me.

Treasury is going to overpay for Bank of America stock. We're going to pay "10% below the bank’s average stock price for the 20 trading days ending Feb 9" ("By the way, Feb 9 was the high point for all of these bank stocks during the month of February. What a coincidence.")

Guess what Bank of America executives were doing on the "20 trading days ending Feb 9"? Manipulating their stock price higher.

Oh, by the way, Obama has quietly signalled his intent to double TARP and give 750 billion more to the bankers (but we only expect to lose $250 billion of that, or over $800 for every man, woman, and child in the U.S.).

This is Zimbabwe worthy.

Freight is "in a free fall"

So says FTR Associates

Truck purchases will continue to drop throughout 2009 due to overcapacity, and the first and second quarter will be incredibly difficult on fleets’ bottom lines, trucking industry analysts said today during an FTR Associates webinar.

“This recession, from a freight standpoint, started almost three years ago,” said Noel Perry, managing director of FTR Consulting. “There is a free fall right now, but it is also the effect of cumulative stress on the industry…We have such low capacity, as low as we’ve had since the 1970s—nobody working in the industry right now has experienced these levels.”

And railroads aren't doing so hot either.

The Multiplier that Matters

John Phipps takes on Greg Mankiw. Here's a taste:

The esoteric world of economists is reveling in the attention the ideas put forth to revive our languishing economy have generated. I have watched with interest as the normally tepid prose of the profession becomes more heated (OK - warmed) as various proposals are offered.

One powerful argument is represented by Greg Mankiw, who offers (to me at least) persuasive reasons why tax cuts at the top and to businesses will give us the biggest bang for the buck. He has also offered reasoned arguments on the issue of growing inequality over the past few years....

Let me suggest it is far more crucial to our economic health to convince more Americans our system still works for them, not just some. Further, doing more of the same, i.e. cutting top tax rates, does little toward that goal, even if the models suggest it is the best of all possible choices. In contrast, everybody gets to use good roads or new schools.

I get proponents' point about multiplier effects and how tax cuts are the fastest, easiest most powerful way to jump-start the economy. But it looks a like a economic sugar high to me. And recent tax cuts produced an awful lot of ephemeral wealth, it seems. Surely a mixture of the two should not be dismissed out of hand by the economic community.

Academia's estrangement from the real world by virtue of tenure allows it a curious detachment from such ideas that engage non-tenured minds, at least until sufficient historical data accrues to make it worth studying. This myopia seems most pronounced the further up the ladder experts ascend. I have begun to weigh opinions from private sector economists with more respect, since they have much more on the line when they put forth proposals.

Our economy is suffering from a crisis of confidence by a large number of people who don't even know what a multiplier is. Or particularly care. And oddly enough, their opinions matter too. Actions that cause them to view the future with less alarm, or make less dysfunctional econiomic decisions are not to be despised.

Right now everyone, including the rich, is unnerved by the economy. The money being sent to the banks by the Feds is not being lent. Some of it is being blown on bonuses, dividends and acquisitions—but a lot of it is being stuffed in the vaults. Tax cuts without a change in social psychology will just lead to more money being "stuffed into mattresses".

Moreover, as Mr. Phipps points out, infrastructure has tremendous multiplier effects on the future productivity of the economy. America has suffered through years of underinvestment in the public and private sector. We plunged into debt to fund consumption, not investment. Now we have a fairly massive infrastructure deficit along with an enormous financial debt. The ribbons of steel, concrete and fiber that our economy flows across are worn out and overloaded. Rebuilding them will not only put people to work (and in the process inspire confidence) but also lays the groundwork for future growth and prosperity.

Military Budget Crisis looming

The Big Picture: US Military Force Structure

My takeaways:
Massive Defense Budget cuts are coming due to competing Civilian Demands.
Military budgets are already inadequate for stated plans.
The Military is not structured for the missions it is taking on (Iraq, Afghanistan)
"....you can NOT train a force to do both kinetic war and win “Hearts and Minds” the psychological imbalance not only precludes a force from doing both, but when you try, you fail at both."
Procurement is utterly broken.
"....our current direction of recapitalization cannot be sustained in the face of fiscal realities, and it is probably the wrong direction anyway. Give the delays in new programs and the “LULL” that will exist in delivering them, there is about a 5 year gap in the 2013-2018 timeframe when our current readiness will drop below operational levels. Our current inventory was built on non-wartime metrics.
The 5 years of combat we have had has aged equipment 16-20 years and acquisition programs cannot keep pace and they are unfunded at even that level. For example HUMVEES were programmed for 8000 miles per year. The current inventory in the past 5 years has surpassed the 20 year life of the vehicle (i.e. the average is in excess of 150,000 miles). The vehicles replacement is due in 2014, but is expected to slip to 2018."

Opinion:
Either we need to transition to a full war footing or we need to disengage from Iraq and Afghanistan. No matter what we do we are going to be un-breaking the military for years, possibly a decade or more. We need a military that can "kill people and break things" a lot more than we need one for peacekeeping and that should be the basis for allocating resources.

Our one defining victory of the 20th Century was won on the China model. The "arsenal of democracy ' and the Russian war machine produced vast quantities of adequate weapons swamped the small number of fussy wonder weapons the Germans had. Like a bronze age king though we brought the vanquished enemy's fallen idols into our temple and bowed down before them. We became the ones counting on our wonder weapons that we could never afford to produce in quantity. Our resources are much larger than the German state so it took longer for us to hit a wall but we have. Moore's law does not apply to defense. If anything, it seems to be inverted.

The Death of Perspective

Michael Lewis, writing about the financial crisis, offers this bon mot:

OUR financial catastrophe, like Bernard Madoff’s pyramid scheme, required all sorts of important, plugged-in people to sacrifice our collective long-term interests for short-term gain. The pressure to do this in today’s financial markets is immense. Obviously the greater the market pressure to excel in the short term, the greater the need for pressure from outside the market to consider the longer term. But that’s the problem: there is no longer any serious pressure from outside the market. The tyranny of the short term has extended itself with frightening ease into the entities that were meant to, one way or another, discipline Wall Street, and force it to consider its enlightened self-interest.

This is the essence of the crises we face politically and economically: the short term has utterly eclipsed the long term in the consciousness of our leaders. We have sold our inheritance for a bowl of Porridge. Whether it is the Congressman handing the bill writing over to the Lobbyist or the Rating Agencies selling AAA ratings to Investment Banks. Credibility earned over decades is being pissed away for short term advantage.

Economically, it is even worse, as Angry Bear guest writer "Edward Charles Ponzi Jr" writes:

In time, our current society will be seen as one that ate all the food in fridge, all the food in the pantry, sent out for pizza, maxed out the credit cards and then burned the furniture while proclaiming that we are really very warm and well-fed. Financial historians in the future will say, "what were they thinking?" about our era.

We are seeing the inevitable conclusion of the World's dumbest pyramid scheme wherein those at the top of the pyramid have sought to destroy those at the bottom. Demand, kept on life support by the pawning of America, has finally collapsed.

An Odd Thought

The latest wave of fraud (Madoff) and the first wave of fraud (subprime) have both featured ethnic ties exploited by hucksters. Madoff was a pseudo-mensch who preyed upon the Jewish community. During the subprime debacle lots of of minorities were led into terrible mortgages by Judas goat Mortgage brokers who were their race or spoke their language.

Class Warfare

Dean Baker: More Class Hatred in the Washington Post

The Post editorial, after deploring the fact that bailout money was diverted from Wall Street to the real economy, celebrated the pay cuts that the bailout would impose on UAW workers. For some reason, the Post attaches enormous importance to reducing the pay of auto workers who earn $28 an hour. It shows no comparable concern for reducing the pay of auto industry executives to parity with their foreign competitors. (The top executives at Toyota, Honda, and other successful companies get paid in the neighborhood of $1-2 million a year. Unlike their U.S. counterparts, they don't get paychecks in the tens of millions of dollars even in the best years.) The Post has allso never felt the need to insist on large pay cuts for Wall Street executives even though their banks are now wards of the state.

Somehow resenting the excess pay of someone who makes 1000 times as much as you is the "politics of envy" while resenting the pay of someone who makes a few percent more than you do is "populism".

WMDs on Wheels?

Today's Trucking: Poultry a Road Hazard?

Apparently, it's not diesel exhaust exposure you should worry about when pacing behind another tractor-trailer. Instead, you might want to roll up the windows and hold your breath if you're ever trailing a live chicken hauler.

According to a new study by researchers at Johns Hopkins University, chickens hauled in crates on open flatdecks can release antibiotic-resistant bacteria along the highway and into vehicles traveling behind them.

There's a happy thought if the Bird Flu ever goes virulent.

Pay to Play is alive and well

Daniel Howes, Detroit News: Cashing in on double standards

The feds pump another $20 billion into teetering Citigroup Inc. and insure $306 billion in bad assets just days after Congress slaps Detroit's automakers for failing to table "a plan" to justify $25 billion in loans and folks 'round here cry, "Double standard! Double standard!"
......Double standard? You bet, but it's more than a geographic cabal of coastal Democrats and anti-union, pro-foreign auto Republicans from the South that clearly has it in for Detroit. It's money and political alliances, folks, neither of which the boys at General Motors Corp., Ford Motor Co. and Chrysler LLC have in abundant supply.
How come Citigroup gets a pass and a big fat check? First, failure of its sprawling operations truly would pose a mortal threat to the global financial system. Second, the banking giant is exceedingly well connected to the campaign wallets of the very same folks -- and their allies -- who are poised to foist draconian terms on Detroit to keep it afloat.

Howes goes on do detail all the incestuous ties between the twits who brought us the financial crisis and the Democratic powerbrokers. It's a good thing that John McCain did such a bang up job getting corporate money out of Washington.

One Question

It sounds like Congress had a great deal of fun hectoring the heads of the automakers and the union. One thing that bothers me though. If the principle holds that people who fail deserve a pay cut then it seems, given the failures in regulation and oversight at the root of this financial disaster, to be pertinent to ask "Where is Congress' pay cut?"

Make no mistake the vast sums of borrowed money from Uncle Sam Hu being stuffed into the carcasses of the banks this Thanksgiving are intended to save, not the assets of the imprudent Bankers, but the asses of the Congressmen whose sins of omission and commission were the prerequisites to this slow motion disaster.

[Update: Mitch Albom lays down a delightful rebuke of Congress.

Is a man an interchangeable part?

Right now the UAW is trying to present a united front with the management of the Big 3 but under the surface is a bitter mutual dislike. The UAW sees management as being incompetent, overpaid, and quick to blame the union for its own failures. Management for its part is very bitter about the above market wages and benefits that the unions are able to extract for "unskilled labor" and union workers "inflexibility".

Building a car with competitive efficiency is a highly complex process involving careful design of both the car and the production process. Henry Ford and Walter Chrysler both had the ability to build a car from the ground up with their own hands. Such skills are rare, though, and both turned to masses of semi-skilled laborers, used in very carefully engineered ways, to build their cars. One of the essential points of such an arrangement is that employees are expected to be like the parts they assemble: interchangeable. The process is developed with the intention that any capable person could be placed in any position on the line and keep up. There are some more skilled positions (usually in maintenance and setup) that require more education and pay a little more but the principle holds.

Is it any wonder that people trained to think that a person is an interchangeable part would find the idea of a few people making a huge multiple of what everyone else makes absurd? Management would take the other side and argue that paying a worker nearly double what another worker off of the street would cost* is absurd.

For my wooden nickel, the workers have the better side of it. But then again this is a world where a great inner city school teacher makes far less than a mediocre backup quarterback in the NFL.

*The difference in cost is not so much the wages and benefits being paid to the person on the line, but in pensions and benefits being to retirees that are part of the contract with workers.

A Little Naughty Fun

John Emerson explains the economic crisis.

An appetizer:

Tranches are bundles of loans mysteriously sorted and packaged according to how risky they are. Large corporations buy tranches and use them as collateral to borrow money from other large corporations. These corporations are owned partly by individuals, but mostly by still other large corporations, which themselves might very well also be owned by more large corporations yet. In the end you have millions of actual home loans at one end and millions of actual individual investors at the other, with an undecipherable maze of legal entities and financial instruments linking them. (You might as well discuss quantum theory, it’s easier). Few or none of the flesh and blood owners have any idea what’s going on, until finally one day they wake up and BOOM! their money is all gone. (If anyone knows what happened, it’s probably the managers hired to manage these various legal entities, but they have just voted themselves enormous bonuses and never have cared to socialize or communicate with the pitiful rabble who own the stock anyway.)

Economists don’t worry about these things, though. (Nader does, but Nader isn’t an economist and he’s crazy too.) Economists worry about welfare Cadillacs, transfer payments, and waste in Democratic budgets. Government, in sharp contrast to the free market, is inefficient and corrupt and can never do anything right.

So long and thanks for all the votes

Chicago Tribune: Obama's team on economy reflects times

In Chicago on Friday, President-elect Barack Obama will meet with his economic transition team. It's a group that looks a lot like America, or an America that wears very well-tailored suits, anyway.

Often, the "looks like America" phrase, which originated with the Clinton administration, is shorthand for saying the assembled members are not all white men. But the typical measures of diversity—race and gender—are not the principal distinctions in this case.

The America in this group of 17 high-powered advisers is the America of our troubled economy. Wall Street is represented, and so is Detroit. There's a dot-commer, an old-media guy, a real estate investor and some politicians.

....Perhaps the most interesting part of the grouping is the notable swath of the economy that is, in many respects, left out: industrial America and organized labor.

....The lack of labor presence might raise questions about whether Obama truly is committed to revising terms of the North American Free Trade Agreement to protect labor's interests. But perhaps the presence of Bonior, who opposed NAFTA as a representative from suburban Detroit, should put suspicions to rest.

I'm sure Obama will be "interested" in the Rust Belt again in time for the next election.

The Myth of the Spendthrift American

Robert Reich slaps a bad idea across the snout and sends it whence it came:

Post Meltdown Mythologies: Americans Have Been Living Beyond Their Means

What brought on the economic meltdown of 2008? Besides the bursting of the housing bubble, Wall Street's malfeasance and non-feasance, and Washington's massive failure to oversee Wall Street, fingers are also being pointed at average Americans. Some of them took on mortgages they couldn't afford, of course, but we're also hearing a more basic theme that goes something like this: For too long, Americans have been living beyond our means. We went too deeply into debt. And now we're paying the inevitable price.

.....But this story leaves out one very important fact. Since the year 2000, median family income has been dropping, adjusted for inflation. One of the main reasons the typical family has taken on more debt has been to maintain its living standards in the face of these declining real incomes.

.....The "living beyond our means" argument suggests that the answer over the long term is for American families to become more responsible and not spend more than they earn. Well, that may be necessary but it's hardly sufficient.

The real answer over the long term is to restore middle-class earnings so families don't have to go deep into debt to maintain what was a middle-class standard of living. And that requires, among other things, affordable health insurance, tax credits for college tuition, good schools, and an energy policy that's less dependent on oil, the price of which is going to continue to rise as demand soars in China, India, and elsewhere.

In other words, the way to make sure Americans don't live beyond their means is to give them back the means.

The hollowing out of the American middle class had the perverse effect of simultaneously holding down wages and interest rates. Jobs are outsourced to China, driving down demand for American Labor (and thus the price). China sends many of those dollars back to the US (to raise the price of the dollar versus the Yuan) and as a side effect lowering long term rates. For the worker it's rather like being robbed and then offered a low interest loan from your own wallet by the mugger.