I believe that Americans (as well as everyone else in the world) are incapable of relating to the size of the various sums of money that are tossed about in the media on a constant basis.
One minute a $100 million reserch project is denounced and in the next a trillion dollar bailout is discussed.
So what I propose is that every year the government publish on some arbitraty date what the average population of the United States is expected to be for that year. This number would be used by news organizations and government agencies and others to normalize all the big numbers. For example, let's say the average population is expected to be about 300 million people. Then an expenditure of a million dollars could be additionally characterized as a third of a cent per person. A billion becomes $3.33 per person and a trillion becomes $3333 per person.
I think that this might help put things into a better perspective than the incomprehensible numbers used today.
Saturday, April 4, 2009
Thursday, March 19, 2009
Why the AIG Contracts were Okay
Discalimer: This is based on stuff I know and not facts.
AIG is/was? the world's largest insurance company. Insurance companies sell insurance policies for all kinds of things but one thing is critical they have to take the premiums in and invest the money so that they will have enough to pay all the claims as well as pay all their costs (including employee salaries) and make money for their shareholders.
AIG like a lot of people invested in these so called subprime mortgage securities and when the market melted down (caused IMHO by $4/gas but that is another subject) they found themselves in a heap of trouble.
The government (which at the time happened to be the Bush Administration) decided that allowing AIG to fail was a bad idea. You can argue with that decision but it is a fact that they did.
Now here's the thing. If it becomes known that an organization is either going to disappear for sure or maybe disappear or maybe just become a lousy place to be, the best and brightest people leave. Sometimes the people on top who want the place to run at some level of performance for some amount of time will say to these people. Look, we know you want to look out for yourself and get out but we are asking you to stay. Stay, do your job and help us keep the place running. If you do, we will give you some money for your trouble. Contracts are drawn up, hands are shaken and life goes on.
So, I think that is precisely what happened. If you stay for a long as the contract stipulates you get the money. You can quit one day after the contract period and that is really fine. If they wanted you longer they would have given you more money and a longer contract.
The people who inherited this debacle (the Obama administration) were probably not really in a position to say: Oh, the Bush people were just kidding when they gave you all this money and told you to operate the company. Let 'er fail!
So they wrote the law and allowed these contracts to take place because it was the right thing to do. I'm not saying keeping AIG afloat was right. I am saying that once you make the decision to do so those contracts make all the sense in the world.
Now apparently if you go against public opinion, in the heat of the moment the government can just come in and take stuff from people who signed contracts and did the work!
And I swear this has spun so far out of control that a reporter almost said: We want to know what the president knew and when he knew it.
When a decision that was probably correct (despite the current blast of public opinion against it) starts sounding like a conspiracy to hide a felony something is out of whack.
Isn't there anyone who can stand up and explain why screwing these people is going to create a simply horrible mess and set a terrible precedent? (Yes, even more of a mess than we have now.)
What's more if the government takes 90% of 163 million dollars that means that there will be lots of lawyers that will want to fight to get it back cause they would stand to make like $40 million bucks. And if they do we, the taxpayers, will spend a pile of dough fighting it.
I've never seen or been in a lynch mob but I feel at this moment like congress is the next closest thing.
"You've done enough. Have you no sense of decency, sir, at long last? Have you left no sense of decency?"
AIG is/was? the world's largest insurance company. Insurance companies sell insurance policies for all kinds of things but one thing is critical they have to take the premiums in and invest the money so that they will have enough to pay all the claims as well as pay all their costs (including employee salaries) and make money for their shareholders.
AIG like a lot of people invested in these so called subprime mortgage securities and when the market melted down (caused IMHO by $4/gas but that is another subject) they found themselves in a heap of trouble.
The government (which at the time happened to be the Bush Administration) decided that allowing AIG to fail was a bad idea. You can argue with that decision but it is a fact that they did.
Now here's the thing. If it becomes known that an organization is either going to disappear for sure or maybe disappear or maybe just become a lousy place to be, the best and brightest people leave. Sometimes the people on top who want the place to run at some level of performance for some amount of time will say to these people. Look, we know you want to look out for yourself and get out but we are asking you to stay. Stay, do your job and help us keep the place running. If you do, we will give you some money for your trouble. Contracts are drawn up, hands are shaken and life goes on.
So, I think that is precisely what happened. If you stay for a long as the contract stipulates you get the money. You can quit one day after the contract period and that is really fine. If they wanted you longer they would have given you more money and a longer contract.
The people who inherited this debacle (the Obama administration) were probably not really in a position to say: Oh, the Bush people were just kidding when they gave you all this money and told you to operate the company. Let 'er fail!
So they wrote the law and allowed these contracts to take place because it was the right thing to do. I'm not saying keeping AIG afloat was right. I am saying that once you make the decision to do so those contracts make all the sense in the world.
Now apparently if you go against public opinion, in the heat of the moment the government can just come in and take stuff from people who signed contracts and did the work!
And I swear this has spun so far out of control that a reporter almost said: We want to know what the president knew and when he knew it.
When a decision that was probably correct (despite the current blast of public opinion against it) starts sounding like a conspiracy to hide a felony something is out of whack.
Isn't there anyone who can stand up and explain why screwing these people is going to create a simply horrible mess and set a terrible precedent? (Yes, even more of a mess than we have now.)
What's more if the government takes 90% of 163 million dollars that means that there will be lots of lawyers that will want to fight to get it back cause they would stand to make like $40 million bucks. And if they do we, the taxpayers, will spend a pile of dough fighting it.
I've never seen or been in a lynch mob but I feel at this moment like congress is the next closest thing.
"You've done enough. Have you no sense of decency, sir, at long last? Have you left no sense of decency?"
Saturday, February 21, 2009
I Don't Get It
A Democrat wins the presidency. Democrats take control of both houses of congress.
The economy is a disaster.
Classical Keynesian economics says when in recession, deficit spending by the government will help. People aren't spending cause they aren't working or they are afraid of losing their jobs. Companies aren't spending cause they can't get any credit and no one is buying, etc. So the government must spend.
Now it would seem to be that there is bad spending, good spending and great spending. Bad would be buying stuff from overseas, good would be any spending in the US (and the longer the dollars stay here the better) and great spending would create jobs, end energy independence, fix infrastructure, cure cancer and help one be a better lover, etc.
Spending and tax cuts are sort of the same thing.
Spending: the government goes out and buys something.
Tax cuts: the governement cuts your taxes then with the money you didn't send to the government you buy something.
Maybe you are smarter than the government. Or maybe you buy an expensive Swiss watch.
Who knows?
The Democrats were elected by people that tend to think that government (by and for the people) can come up with great ideas to make everything run well so they end to lean towards government spending.
The Republicans were elected by people that tend to think tax cuts are good because they put more money into the hands of private citizens that can use the money to innovate and create jobs etc.
The powerful Democrats put together an economic stimulus bill and every Democratic legislator with any brains at all will try and put all the spending he wants for his state and/or district into that bill cause it is going to pass.
The Republicans are against the bill because they want more tax cutting and less "pork"
The initial bill passes the house with EVERY SINGLE REPUBLICAN VOTING AGAINST IT!
The news media seizes upon this as a sign that the "Obama Mystique" is dead, that bipartisanship can't work, that this is somehow amazing or newsworthy.
I don't get it.
Ask yourself these questions:
Did the bill pass? Well, yes.
Did the Democrats vote in a way that would tend to please their constituents (or should I say their constituents that voted for them?) YES
Did the Republicans vote in a way that would tend to please their constituents (or should I say their constituents that voted for them?) YES
If it works will anyone remember the Republicans voted against it? No.
If it fails will anyone remember the Republicans voted against it? Yes. And if no one remembers the Republicans will remind them.
Isn't this Dog Bites Man?
Why exactly is this news?
Because Obama had congressmen over for drinks and asked them to vote for it promising to be their bff...and they didn't vote for it?
A bunch of people did exactly what one would expect and it's news?
I know people will say, "But the Obama administration promised bipartisanship."
Yes, but isn't bipartisinship when people from both parties put aside their differences to pass legislation that is needed for the good of the country?
THE BILL PASSED!
I mean if some Republicans had been needed to pass the legislation and they had voted against it that would have been news.
But the bill passed. The Dems and Repubs can tell their supporters they did what they were supposed to do.
So why is the news media acting as if this is so unusual?
I don't get it.
The economy is a disaster.
Classical Keynesian economics says when in recession, deficit spending by the government will help. People aren't spending cause they aren't working or they are afraid of losing their jobs. Companies aren't spending cause they can't get any credit and no one is buying, etc. So the government must spend.
Now it would seem to be that there is bad spending, good spending and great spending. Bad would be buying stuff from overseas, good would be any spending in the US (and the longer the dollars stay here the better) and great spending would create jobs, end energy independence, fix infrastructure, cure cancer and help one be a better lover, etc.
Spending and tax cuts are sort of the same thing.
Spending: the government goes out and buys something.
Tax cuts: the governement cuts your taxes then with the money you didn't send to the government you buy something.
Maybe you are smarter than the government. Or maybe you buy an expensive Swiss watch.
Who knows?
The Democrats were elected by people that tend to think that government (by and for the people) can come up with great ideas to make everything run well so they end to lean towards government spending.
The Republicans were elected by people that tend to think tax cuts are good because they put more money into the hands of private citizens that can use the money to innovate and create jobs etc.
The powerful Democrats put together an economic stimulus bill and every Democratic legislator with any brains at all will try and put all the spending he wants for his state and/or district into that bill cause it is going to pass.
The Republicans are against the bill because they want more tax cutting and less "pork"
The initial bill passes the house with EVERY SINGLE REPUBLICAN VOTING AGAINST IT!
The news media seizes upon this as a sign that the "Obama Mystique" is dead, that bipartisanship can't work, that this is somehow amazing or newsworthy.
I don't get it.
Ask yourself these questions:
Did the bill pass? Well, yes.
Did the Democrats vote in a way that would tend to please their constituents (or should I say their constituents that voted for them?) YES
Did the Republicans vote in a way that would tend to please their constituents (or should I say their constituents that voted for them?) YES
If it works will anyone remember the Republicans voted against it? No.
If it fails will anyone remember the Republicans voted against it? Yes. And if no one remembers the Republicans will remind them.
Isn't this Dog Bites Man?
Why exactly is this news?
Because Obama had congressmen over for drinks and asked them to vote for it promising to be their bff...and they didn't vote for it?
A bunch of people did exactly what one would expect and it's news?
I know people will say, "But the Obama administration promised bipartisanship."
Yes, but isn't bipartisinship when people from both parties put aside their differences to pass legislation that is needed for the good of the country?
THE BILL PASSED!
I mean if some Republicans had been needed to pass the legislation and they had voted against it that would have been news.
But the bill passed. The Dems and Repubs can tell their supporters they did what they were supposed to do.
So why is the news media acting as if this is so unusual?
I don't get it.
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