October

A summary of just how bad October was from The RGE Monitor.

The Piper

When are we going to pay him? Taxes will eventually need to be raised. The political will required to cut spending, especially non-discretionary spending (entitlements such as Social Security and Medicare) does not exist. The BE Press summarizes the two candidates' tax plans and asks when somebody is going to seriously address both sides of the fiscal question.

Maybe somebody has a magic recipe for double digit growth (any way for the American worker to live in dormitories?)

National Security

Frederick W. Kagan suggests that it should be the top priority in voters' minds in The WSJ.

That's a difficult thing to do when you're worried about putting food on the table. I don't see Mexico invading us any time soon.

The W - Westwood

I don't normally review hotels, but I had to make an exception for this one.

I've stayed at many a hotel. I've stayed at other Ws. I've never experienced anything quite like the W in Westwood. All Ws have the wannabe rave/nightclub thing going on, but this was extreme. I sat by the pool eating my cheeseburger and sweet potato fries (to the horror of the wannabe actresses/models/porn stars nearby) and just watched the slow roll of hipsters, yupsters, gansters, and "My new work just needs to be seen because I'm 53, but I look like I'm 27 (unless you look too closely - which I didn't) and please somebody rich take me home tonight" types walk by with their enormous and overpriced alcoholic beverages while I waited for my penthouse suite to be prepared.

And by penthouse suite, I mean the elevator button I pressed was "PH". Apparently platinum status means something at the W (unlike the Westin, which disturbs me a little).

The people watching was definitely entertaining, but what bumped the W up to four stars was the suite I stayed in. Kitchen, dining room, two bedrooms (the master is larger than my master) and at last count four giant plasmas. AND the decor. My interior design sister would have been in contemporary heaven. It was that sweet. I only wish my wife had been there to enjoy the mirror above the bed. Hi honey!

Farcical

Going through airport security two to three times a week has caused me to lessen my appreciation for the TSA. From The Atlantic: I'm going to start carrying my PLO, Islamic Jihad, Hezbollah flags through airport security. I could probably borrow them from Obama.

“The whole system is designed to catch stupid terrorists,” Schnei­er told me. A smart terrorist, he says, won’t try to bring a knife aboard a plane, as I had been doing; he’ll make his own, in the airplane bathroom. Schnei­er told me the recipe: “Get some steel epoxy glue at a hardware store. It comes in two tubes, one with steel dust and then a hardener. You make the mold by folding a piece of cardboard in two, and then you mix the two tubes together. You can use a metal spoon for the handle. It hardens in 15 minutes.”

Negative 0.3%

Third quarter GDP results from RGE. Consumers aren't spending, but governments are!

Another One

The Economist endorses Obama. Palin continues to be a dealbreaker for many on the center/right.

Fed Funds Rate

I'm going to be travelling most of the day, but I fully expect a 50 point rate cut. The only reason they wouldn't go with a 100 point rate cut is because then what? You're at a Fed Funds rate of .5%. When things get worse, what would you do? Oh, yea, I keep forgetting about that pernicious/blessed printing press. Print, baby, print.

From the WSJ in anticipation of today's 50 point rate cut.

Boom Noodle

My review of Boom Noodle here in Seattle. I went there last night with a good friend that I haven't seen in about six years.

Nicely done BN. The okonomiyaki was very good (although not quite what I'm used to) and the Tokyo ramen was definitely above average (a little too salty and not enough fat). The only disappointment was the omakase (chef's choice) pickle plate. A little stale. I wasn't aware that pickles could even be stale, but they were.

Would I go back? Yes. Would I take my Japanese friends here? No.

For all of my Yelp reviews, go here or click on the link on my sidebar.

Jumping Ship

First The National Review and now The American Conservative. The conservatives' long knives are out. Francis Fukuyama endorses Obama.

Not Very Good

The National Review's Rich Lowry rates McCain's campaign.

Stag-Deflation

I'll admit. I've never heard that word used before. Inflation, yes. Recession, yes. Stagflation, yes. Stag-deflation, no. From our favorite, very pessimistic, but usually right Nouriel Roubini: "The Coming Global Stag-Deflation".

I'm still not sure we're headed for deflation though. How can we be with the $10T debt and everyone promising to lower taxes? Oh, yea, the printing press.

Deflation rocks. As long as you have a job.

Zimbabwe

Make sure you have some time for this one. A fascinating look at Robert Mugabe from The New Yorker.

I recently watched The Last King of Scotland and was struck by the similarities between the current actions of Mugabe and Amin (minus Mugabe's very formal education) in the 70s.

The Return

Of state power and the weakness of multi-national organizations from Stratfor.

In the end, only the hand holding the gun to our heads matters.

Chicken or ...

David Sedaris writes a funny piece in The New Yorker on the undecided voter.

The Carry Trade

A three hour flight means lots of interesting reading. Why the yen is appreciating against all other currencies from Stratfor.

W.P.E.

Mr. Laffer (of Laffer Curve fame) offers his insights into "The End of Prosperity" on the Opinion page of the WSJ.

I still can't believe I voted twice for one of the worst presidents ever. Fool me once... Ouch, I can't even finish it.

Taxes

The candidates only seem to be speaking about income taxes. I thought I'd list a few more taxes and whether they are progressive (rich pay a greater % of their income), regressive (poor pay a greater % of their income), or neutral.

Income tax = progressive
Payroll tax (paid by both individuals and corporations) = neutral to progressive

Property tax = regressive
Sales tax = regressive
Inflation tax = regressive

"One of the greatest mysteries of our time is how the GOP convinced the poor and middle class to vote against their self-interest."

Prop 8 (CA) and Prop 102 (AZ)

Andrew is dead wrong.

The LDS Church supports these constitutional amendments to define marriage as being between a man and a woman because it believes that marriage is not just a word. Marriage is an eternal principle. A principle which modern day prophets have revealed to be strictly between a man and a woman (see The Family: A Proclamation to the World). In our view (and I know there are alternative views - I used to have one of them), defining it as anything else would be mocking God. And that is not something we(I) are prepared to do.

Today's Testimony

From Alan Greenspan. He has some 'splaining to do. Cheap money. Cheap money. Cheap money.

Equality

I've been thinking about equality and inequality lately. The above graph (generated from CIA Factbook data and posted on Wikipedia) represents income disparity by country using the Gini Index from the last 50 years. The fact that income disparity has been rising and that we are on par with China disturbs me. Income begets wealth (usually) and wealth begets wealth which begets sick amounts of wealth forever.

This rising gap between rich and poor is not just a moral issue (although in my mind, this is the more important of the two arguments for greater equality), it's a stability issue. The greater the gap between rich and poor, the less stable a society you have. Now I understand that inequality is an incentive for the poor to work harder to become rich (and they will work exponentially harder than the rich do to stay rich), but if economic mobility is not a reality for the majority of people, which I believe it isn't, then you have a huge French Revolution-like stability problem.

But back to morality. Is it right for the poor, not just in our country, but in the world, to be stuck in this poverty trap? (And it is a trap. I've lived in Brooklyn. I've lived next to the Bronx. I've driven very quickly through terrible parts of Oakland. I've been to places in South Phoenix that I never should have gone to. There is little hope and the likelihood of someone escaping is extremely low. There is no such thing as a level playing field.)

It's not right. It's not just. It's not merciful. It's not charitable.

US$

The rise of the US$ is really interesting. When you think of the awful state of the U.S. economy, the $ should not be rising, but it is, which means currency traders think that the $ is relatively safer than the Euro, the BP, the Yen.

The U.S. sneezes and the world gets a cold. Globalization. Gotta love it.

Air

$50T (as in trillion) spent on air, vapor, trust.

Cornered

Is this going to be another 1984 election or can McCain actually turn this thing around?

"...dumb Populist-in-Chief..." from The Economist! That's saying something.

"Real Responsibilities"

Being a mayor in Wasilla is pretty intense:

Don't Read This

If you want to remain in a good mood today. Bernanke's statement to Congress yesterday.

A 20% increase in unemployment this year. Nice.

Bernanke's life work has been a study of The Great Depression. Let's hope he learned something. More fiscal stimulus is on its way.

And if you're not depressed enough, from Nouriel Roubini:

...need traditional Keynesian spending of $300B to boost private consumption so that an unavoidable 2-yr recession doesn't become a decade long stagnation by hitting Main Street given that the private sector is not spending and the first stimulus was ineffective...

Bretton Woods III

Stratfor looks at the upcoming meeting of the U.S. and Europe in what could be the next Bretton Woods.

Tinny Tin Tin

From the Opinion page of the Wall Street Journal: Conservatives Against Conservatives.

European Vacation

Honey, pack the bags, it's time for a Royale with Cheese.

Contagion

A nice summary of the insanity from CASE.

SF

I come to San Francisco every couple of months just to make sure that the people in my office know that I have not yet been sacked. And to eat at the best sushi restaurant in America. Because I am not here on a regular basis, I sometimes forget what a unique city SF really is, which lasts about five minutes until the protest/parade inevitably rolls past my office window.

Early Exit Poll

"I got a decent sample anyway: half men, half women, half white; a third were over 50, and I'm pretty sure 12% were gay, even if 4% were probably denying it to themselves."

From The Treasury

This month's Treasury Report.

Page 5 shows you which departments are eating up the budget (in descending order Social Security, Defense, Health and Human Services (i.e., Medicare/Medicaid)).

Page 20 makes me physically ill.

Joe The Rich Freaking Plumber

I chose the wrong profession. A plumber makes more than $250K? Are you kidding me?

Great debate. If I was only listening, I would give it to McCain, especially the first 30 minutes. The Senator was a bulldog. Unfortunately this is television. McCain's pallor and grimacing reminded me of Nixon in 1960.

"I am not President Bush." was a great line from McCain.

Energy, education, and judges brought it back into Obama's court. Obama had a better closing.

The one issue that I completely disagree with Obama on is abortion. It's troubling.

Neither choice is perfect. Both pass the intellect test, although Obama has the edge here. Obama clearly wins the temperament test. Judgment. The key issue for me is Palin. Lest he die, lest he die, lest he die. Unacceptable.

The Final Debate - Factcheck.org

Is he really a plumber?

Fed Beige Book

The October Report.

High Lights
- International travellers continue to increase. Yea, Minnesota. It's awesome!
- Kansas City, Chicago, and St. Louis are offering higher incentives on automobile purchases. What? My worthless credit score is actually worthless?
- Kansas City and Chicago are still buying heavy machinery. With what? BBQ and nasty ass pizza?
- Consulting firms experienced reduced demand. Shit.
- Credit conditions are creating a heightened sense of concern about the economy. I need the Fed to tell me this??
- The prices of homes are declining and the supply is increasing. WTF??
- Businesses report difficulty in obtaining credit. How much did generating this report cost exactly? I'd like to undercut them by 50%. I'll have the next report ready by tonight.
- Conditions for energy and mining are positive. Is that why the Exxon guy down the street has three new cars and a boat?
- Higher retail prices are expected over the next few months. Merry Christmas to you too!

The Imperial Presidency

From Cato on how both candidates view extraconstitutional presidential authority and how they will wield The Magic Scepter of Inherent Authority. Where is that Constitution thing again?

"Debating the Debates"

In anticipation of tonight's debate, The Economist walks us briefly through the history of presidential debates.

My favorite line was, "Sarah Palin, meanwhile, avoided difficult questions by asking her own and then answering them."

I expect more of the same. Same questions. Same answers. No real interaction between the candidates.

But I can hope for a bloodbath. Politics is afterall just another form of entertainment.

Power

The Monday meeting between the government and the bankers.

To be a fly on that wall.

Thinking of the power being wielded in that room makes me a little giddy.

May I?

I think I am dreaming CNBC at this point. I've always enjoyed it, but travelling as much as I do gives me many more hours of evening and morning CNBC viewing. Mad Money, Squawk Box, Squawk on the Street, and of course Kudlow and Company. It's required viewing at the Westin these days.

The Treasury unveiled it's latest plan this morning. Click here for the full Treasury memo.

My favorite part is that if a corporation wants to increase its common stock dividend, it must ask the government for permission. Seriously, capitalism is dead.

It's Far From Over

Stratfor's look at Europe's and the U.S.'s current solutions to the financial crisis.

Why

Ever since I became politically conscious (~15 years old on the speech and debate and mock congress teams), I've been a self-described libertarian, realist, free market Republican. Ideologically, it is extremely appealing. Everyone looks out for his or herself, is self-sufficient, rises to his/her level of incompetence, and allows everyone else the same freedom. It's an extremely empowering ideology. All of your success is due to your hard work. Any failure is due to you not wanting to work harder. Having been born and raised in the Southwest, with all of its cowboy independence, it was a natural fit. I voted Republican down the line (with the exception of Bill Clinton in '96 - who was I to turn away from peace and prosperity?).

Last week, I voted for Barack Obama for President (early voting, as I'll be out of state on Election Day).

Up until a month ago, I was going to vote for John McCain. I voted for Senator McCain in the 2000 Republican primary (and how I wish he had been President the past eight years. And for full disclosure, I did not vote for him in the Republican primary this year. I voted for Ron Paul.). However, events over the past four weeks have convinced me that I cannot vote for him again.

First and foremost was his selection of Governor Palin. I wasn't immediately opposed to her because I knew nothing about her. I took a wait and see approach. Well, I've waited and I've seen. In my opinion, she lacks the intellect, the judgment, and the temperament to be a heartbeat away from the Presidency. I won't YouTube you to death, as I'm sure you've seen the interviews and debate (no press conferences though??), but I expect more from my leaders, especially after the past eight years.

McCain's political selection of her reflects poorly on his own judgment. Yes, it made sense politically. He did need to fire up his social conservative base, a base extremely wary of some of his more liberal tendencies (see campaign finance reform and immigration), but his selection of her as his running mate demonstrated that he was not putting 'Country First'. McCain selects Lieberman or Romney and I might not be writing this.

Which brings me to reason number two. The Republican social conservative base. I refuse to be affiliated with a group of people that hates/despises/thinks I am bound for eternal damnation and is pretty vocal about it due to my religion. The Republican base despises The Church of Jesus Christ of Latter-day Saints. I used to ignore it. I will not ignore it any longer.

Reason number three: The Republicans are no longer the party of small government. The romantic allure of Barry Goldwater's Republicanism no longer exists. In today's globalized environment of multi-national corporations and interdependent economies and governments, and as evidenced by the global financial meltdown now occurring, I'm not sure a small government approach is even possible.

Over the past thirty years, Republican administrations have increased the size of government in real dollars and as a percentage of spending year on year more than Democratic administrations have. We have a party that says government has a role to play and then spends pragmatically (relatively speaking) and another party that says government should get out of the way and then does the opposite and drives spending (the size of government) up.

If I don't have my romantic and possibly infeasible option any longer, I'll go with the pragmatic. Senator Obama is no messiah. He will not change our current situation with a wave or clap of his hands. However, I believe Senator Obama has the intellect, the judgment, and the temperament to do what is best for our country. My instincts tell me that he will put pragmatism over dogmatism. Could I be wrong? Absolutely. Only time will tell, but for now, this could be the end of my own personal history (see Francis Fukuyama). Ideology from both the left and right has demonstrated that what ideology is really good at is getting in the way of doing what is right.

Credit

"Part of the reason this crisis occurred is that everyone was living beyond their means – from Wall Street to Washington to even some on Main Street. CEOs got greedy. Politicians spent money they didn't have. Lenders tricked people into buying home they couldn't afford and some folks knew they couldn't afford them and bought them anyway.

We've lived through an era of easy money, in which we were allowed and even encouraged to spend without limits; to borrow instead of save."

For the full text of Obama's speech today, click here.

Plan B

How to save Wall Street AND Main Street (lots and lots of cash).

The G7

And I thought the past two weeks were interesting. What is the G7 going to do this weekend? Coordinated rate cuts down to 0%, insure all deposits, nationalize the banks, revalue all mortgages, suspend all foreclosures, massive public/international works? Or something even more drastic (Central World Bank anyone with a single new currency?)?

Two Years

Can't I just go to sleep and wake up in two years with everything all better? A Global meltdown is at hand. Here's hoping for effective coordination among governments and central banks.

Three-Headed Monster

And what can be done about it. From The Economist.

I bet we see another coordinated rate cut in three weeks (maybe a full 100 basis points from the Fed).

Spending Freeze?

He was just kidding. McCain's mortgage restructuring would put $300B immediately into the hands of shareholders and bank managers (via economist Brad DeLong). Seriously what happened to the John McCain that I knew a year ago? A month ago?

Passion

Donna Brazile - CNN contributor, Democratic superdelegate, and Obama supporter at The New Yorker Festival last weekend.

A Collection

Of thoughts from conservative bloggers on last night's debate.

The writing is on the wall.

Not So Doomy

An Op-Ed from a UCLA professor in the WSJ.

Immigration will save us. I thought I said that a couple of years ago.

CFR Debate

Dr. Doom at the Council on Foreign Relations.

You can watch it here. I'd recommend watching it if you can. The transcript doesn't convey the interplay between the panel very well.

Unprecedented

A coordinated rate cut. Thank you Sweden.

More money, more money, more money. Where's my $500 loaf of gluten-free bread?

Debate v3

- Obama started out weak and unclear. He had to warm up to his talking points. McCain was on point from the get go.

- Point/counterpoint with the Fannie Mae/Obama connection and the deregulation/Bush/McCain connection

- McCain is going to actually buy the loans? Not just the securities? Wow, I never thought I'd hear a Republican talk about nationalizing home ownership. Socialism with a capital S (and probably a good political move - he needs something radical at this point).

- Obama is for a net spending cut (balanced budget or just smaller deficits? Tax Policy Center shows that Obama balances the budget.)

- Health care, entitlements, energy - McCain is going to do all three at once? Really? You're going to take on the third rail of politics at the same time as solving the energy and health care crisis? Now that's ambitious.

- Of course Obama puts entitlements last. He is a Democrat. Also politically smart to prioritize in this way.

- McCain links Obama to Hoover. Now that's a neat trick.

- Brokaw is an excellent moderator. The best of the three so far and heads and shoulders above Iffel.

- Starting to get nasty with the responses to each other. Brokaw is clearly frustrated, but still some semblance of control.

- Obama just talked about his mother's death and health care. Health care is a right. IT IS!!

- Foreign policy - what, no "naivete" tonight Senator McCain?

- Obama - McCain - "Bomb, bomb, bomb Iran" Low blow and effective.

- And the rest...

Again, no gaffes. More nastiness, but that only solidifies positions, (see Sean Hannity's ravings preaching to the right wing choir). I think the 2% of undecideds are waiting for something spectacular and if that something spectacular does not happen, they'll go with what they perceive as either intellect and judgment or experience and judgment.

This election is Obama's to lose and he's doing a very good job at not losing it so far. FactCheck.org is up.

The German Question

From Stratfor. Germany's position on Ukraine/Georgia and Russia. Particularly interesting in light of McCain's and Obama's stances on foreign policy.

Only the Third Inning?

An IMF working paper written in August on recessions, credit crunches, and asset bubbles. Pages 17 through 33 contain the real meat.

Personal Plea

I'm too big to fail.

Senator Kyl

I wrote Senator Kyl twice over the past several weeks (along with Senator McCain and Congressman Jeff Flake). Today I received a reply from him that I'm sure several thousand other Arizonans received as well. The gist of it was:

- Our economy is in shambles
- We had to do something
- We talked to a lot of smart people
- We abandoned our free market principles
- This is the best we could do in the short term
- Let's cross our fingers and hope it works

Today's meltdown indicates to me that not enough of us were crossing our fingers.

FL

Holy Florida Batman! and a Transformed Election.

Talk about one of the worst three week stretches in American political history.

Will Work For Food

From the RGE Monitor: Something we are all concerned about (employment).

We Are All Socialists Now?

Or just socialism for the rich yet again?

I'm proud that my Congressman voted against this travesty.

Choked Up

Modern debates are not won on arguments. They are won on emotion. This was the moment of the debate:



Palin did surprisingly well, meaning expectations were so low that unless she had totally wigged out or said that she was Jesus, she was going to be perceived as having done a good job. Biden won the actual debate (pretty easy as Palin didn't really answer any questions posed to her by Iffel, only those questions written on her note cards, which once in a while corresponded to the question being asked).

FactCheck.org just for kicks.

From the WSJ

More on Moral Hazard

and

Lessons from the last 9 months for investors.

More from Dr. Doom

Coordinated 100 basis points reduction across all central banks globally. And that's just for starters. The man predicted this event two years ago. Maybe more people in Washington should start listening to him.

Deposit Insurance

Haven't our legislators ever heard of moral hazard? Deposit insurance is a terrible idea to begin with. It's not even insurance. It's a guarantee to the banks that they will not be held accountable for "insured" deposits if they engage in risky behavior that causes them to fail (think S&L crisis). Raising the limit to $250K simply means that cash strapped banks will need to put more of their cash into federal hands to meet their reserve requirements, which leads to higher fees from the banks and higher taxes from the government to cover the failures. Talk about these guys not understanding basic economics and only playing to their constituencies. Nanny state indeed.

The FDIC should be dissolved and we should be forced to invest our money with banks the same way we do with stocks, bonds, etc. Risk vs. return.

And yes, I realize that I suggested that moving money to insured and nearly insured (Treasuries) short to medium term investments would be a good idea. I don't make the rules, but I do play by them. Call me an idealistic pragmatist.

Politics and the Economy

"Political Nature of the Economic Crisis" from Stratfor.

As usual, excellent.

One Hit Wonder?

Daily podcast from Cato

I suspect it was. Some sort of debt funded bail-out is inevitable.

I Can Do That

Just to lighten it up a bit:

Sublime

Sometimes the Opinion page in the WSJ leaves me speechless. This is one such article.

Inflation is a tax. Deficits are a tax. Public debt is a tax. There is no free ride.

Advice

Save, save, save!. I'm going through every single expense to figure out what can be cut.

FDIC insured and Treasuries for all non-tax deductible short to medium term investments is where I am headed.

NH and VA

New Hampshire and Virginia have become battleground states? Talk about a demographic change. (Click on each state for details)

Now What?

This is insane.

Maybe I won't be reading those 110 pages tonight.

Full Text

All 110 pages of it. I'm going to read it when I have time tonight. I read the summary on the plane this morning and while I'm still pissed that we are funding this with debt, this is probably as good a deal as the taxpayer is going to get. Let's hope it actually works.

Nouriel Roubini, who I just found out is the economist that Glenn Beck uses (props to Glenn Beck for tracking him down at NYU), is beyond pessimistic. And that scares the hell out of me. The man is brilliant and has been predicting this exact situation for a couple of years. They don't call him Dr. Doom for nothing.

Does anyone else find it a little odd that our entire economy is wrapped around credit? I understand why it works, but maybe we need to rethink the credit paradigm.

I'll comment more tomorrow after I read the details.

3%

That's the percentage of the electorate that the debate was targeting, meaning voters that were using the debate to help them decide who to vote for.

Stratfor's Part 4 of its foreign policy debate series.

As I stated previously, I didn't see a clear tactical winner. From what I'm reading in punditland (both sides), it seems that there is a perception that Obama won strategically because he appeared presidential, thus alleviating any concerns of any fence sitters.

Not Quite Inspiring

But at least it wasn't concrete. 9 mile run this morning, with only about 1/2 mile of it being on concrete. I found my canal bank! My favorite parts were the amazing sunrise as the sun comes over the Superstition Mountains, the roadrunner that ran across my path, and the two floppy eared hound dogs that were sharing the yard with about five broken down vehicles baying at me. Not a bad way to start the weekend.

Debate Notes

My comments in bold:

McCain's opening statement was a little weird. "We Republicans" – out of control spending and corruption (uh, you're a Republican John)

McCain – Obama wants to increase spending by $300B (nice jab)

Obama – focus spending on health care and education – spend money wisely – help middle class instead of the rich

McCain – 11% business tax in Ireland vs 35% tax in U.S. means we need to cut taxes on businesses (great point until Obama follows up)

McCain – raise taxes slows down business

Obama – tax loopholes for businesses mean that businesses have lowest tax rates in the world (and a left hook)

Obama – have to have energy independence (10 years), environment, health care (didn't like that he didn't answer the question about what he would give up)

McCain – cut spending, eliminate ethanol subsidies, do away with cost plus contracts in the military (direct answer to the question)

McCain – saved taxpayer $6.6B (Boeing and DOD)

McCain – spending freeze except for Defense, veterans, entitlements (that's what I'm talking about)

Obama – hatchet instead of a scalpel(nice one)

McCain – nuclear power (700,000 new jobs)(double whammy - energy independence and jobs)

Obama – have to trust the values of the candidate (amen and he's shown better overall judgment)

McCain – doesn’t want to hand health care over to the federal government (talking point)

McCain - $800B in new spending via Obama (whoa nelly!)

Obama – McCain agreed with Bush 90% of the time, presided over deficits and increase in spending – (keeps slamming this home)

Obama – against Iraq from the beginning, spent $1T, lost 4000 troops, Al Qaeda is resurgent in Afghanistan, spending $10B a month, when Iraq has $79B surplus, borrowing money for basic functions

McCain – Obama said surge wouldn’t work, but Obama recently said that surge worked (it sucks when you're wrong)

Obama – better judgment based upon 2003, McCain pretends war started in 2007 (one of the top three lines of the night)

McCain – Obama doesn’t understand difference between tactic and a strategy (that's gotta hurt)

Obama – better judgment. McCain took eye off the ball and said we could muddle through Afghanistan (another top three line of the night)

McCain - Obama's initial reaction to the Georgia/Russia crisis showed inexperience (major foreign policy point in McCain's favor. why won't McCain look Obama in the eye?)

After that, it started to get slow and less interesting. McCain's focus on pork was nice until you realize that pork is only $18B out of a $3T plus budget. Peanuts in the grand scheme of things.

McCain's reference to Obama's naivety and his experience was his driving theme. Obama's was his judgment. McCain was better than expected on the economy, until Obama started hammering him on tax cuts for the rich.

McCain had the tactical advantage on foreign affairs with his knowledge of everything foreign and hammered him on the "no preconditions" before talks with axis of evil heads of state, but Obama's better judgment on Iraq in 2003 and Afghanistan (the muddle comment was brilliant) makes it about even for me.

Both had good poise. I liked the format. Obama took the initiative by talking to McCain first. McCain's creepy smile and using his nickname to refer to himself was a little odd. He obviously despises Obama.

Both appeared presidential and no major gaffes. Maybe next time.

Economists' Voice

Some questions for Paulson and Bernanke.

A better way?

Cato

Some history and a minimalist approach.

And an interesting podcast with Arnold Kling("Bailouts and Uncertainty").

"The day after the bail-out passes, the market is going to grind to a halt."

Deficits and Debt

You've seen me rail against debt lately. The problem is that during prosperous times (the last 6 or 7 years), the government has been running massive deficits (spending more than it takes in). This is due to three major items: the Bush tax cuts (yea!), the enlargement of Medicare(BOO!), and Iraq (DOUBLE BOO!). Where did the money come from then? We borrowed it from China (and other countries) by issuing debt (i.e., Treasuries). A lot of it. Almost $5 trillion, effectively doubling the debt and increasing the debt as a % of GDP (domestic productivity) from just below 60% to almost 70%.

Now deficits are not always bad. In bad times, deficit spending can help jump start the economy (see The New Deal) by injecting cash into the economy. However, we were deficit spending in good times. Unprecedented deficit spending.

Which leads us to today. We can't deficit spend our way out of this mess without long term negative ramifications to the dollar, inflation, and GDP. Pardon my French, but it's truly f*&$ed up. We're already in a serious hole and now we're going to dig it deeper.

Our options will be to raise taxes to pay for the debt (which will slow down growth) or just throw caution to the wind and let the dogs of hyperinflation loose (just print more money) in order to make the debt cheaper to pay off (which completely screws us over - just think Zimbabwe today or Germany in the 20s).

I honestly have no idea how we are going to get out of this mess. We need to see massive GDP growth (highly unlikely anytime soon) or cut both discretionary (things like defense and farm aid) and non-discretionary spending (things like Social Security and Medicare) off at the knees (a sure political loser).

Here's hoping for people much higher than my pay grade to solve this. Now I need a drink.

Here IT Is

The Mother of All Bail-outs.

Where are the details?

Equity sharing: How much? What type?

Profits to pay back the debt: How much? By when?

The debt sickens me. Unless the government is going to increase my income to pay for the inflation tax that it is about to laid at my feet via the printing press and more debt, this should not pass (I'm picturing myself as Gandalf shouting at the Balrog in Moria). We're heading for Zimbabwe territory.

I'm calling and emailing all of my elected representatives again.

The Bail-Out

What if one of the presidential candidates votes against the bail-out? Another game changer.

Discretion

Interesting little post on Volokh regarding the amount of distribution discretion (i.e., equity warrants, executive compensation, and help for homeowners) Dodd's and Paulson's plans have.

Part 3 - McCain

McCain's foreign policy stance via Stratfor.

The history lessons that this series is providing are exceptional. Rather than just looking at stated positions from each candidate, Friedman is looking at each party's foreign policy traditions and what that potentially means for each candidate.

Friday Debate

Some of you might not like the direction I'm headed, but Senator McCain's political stunt in refusing to debate Senator Obama Friday evening is an utter joke. Now IS exactly the time for a debate. Let us see the choices before us. Let us understand what they are thinking in the heat of the moment without their scripted and vetted talking points.

As if the past two weeks haven't provided enough evidence of McCain's lack of knowledge of economics and finance, this cancellation for the benefit of the country trumps his populism/socialism/or whatever flavor of the dayism that he keeps coming up with. I predict that this little gimmick will help speed up the erosion of his support. Although with more than a month to go, who knows what else could happen. Afghanistan could erupt or we could invade Iran.

At the end of the day, we're all going to need to have a gut check when we go to the voting booth. That gut check for me will be all about judgement and pragmatism in moments of both peace and crisis. It's becoming clear to me who that person is.

Bailout Necessary?

Some think not. The summary on RGE here.

Other alternatives via the Washington Post.

The trillion dollar question is, what happens without a bailout? Will credit markets really completely fail? Will all of the institutions that are currently holding these securities go the way of Lehman? How many bankruptcies is too many?

Ok, that was more than one. Shoot me.

Getting It Right?

From the WSJ Opinion page.

This is an interesting idea. Use the bail-out to buy homes, and in some cases neighborhoods, and demolish them. Get rid of the toxic supply. NIMBY of course.

I'm still wondering why I haven't seen many people talking or pressing on the issue of how we are funding this bail-out (increasing the public debt by ~10%).

Devotion

I have always been a political junkie. Few things get my mind and heart racing more than politics. It's fun, entertaining, and helps prevent brain atrophy. Most of the time, aside from my favorite P&E (Politics and Economics) links over to the left, I keep these topics off my blog. I do this for several reasons:

1. There is already a glut of high quality content out there.
2. I hate parroting back simply what I've read or heard.
3. I usually have nothing original to say regarding the topic (see #2).
4. My audience of two just isn't into politics the same way that I am and I'd hate to drive my readership away (i.e., it would be a bad marketing decision).
5. Running in Arizona just isn't as inspiring as running in NorCal or Westchester or even NYC.

However, as you have seen, I've recently begun changing my self-imposed policy. My ardor for politics has not changed, but the events that are taking place right now are too important for me not to express what I'm thinking and feeling (yes, I do feel).

I will continue to sporadically post about my running adventures, as they happen and as they inspire me, but for the immediate future, expect to see more links to political and economic articles that contain topics and opinions that I believe are important. I know that many of you ignore these topics, but (and here is where the editorialist in me escapes), you do so at your own peril. The events and decisions that we as friends, family, communities, and as a nation are faced with today will affect your day to day lives for a generation. It is that important.

Part 2 - Obama

Stratfor's Part 2 of 4: Obama's Foreign Policy Stance.

Beyond Outrage

The size of this potential bail-out (all funded by debt - that means we'll (and I'm including your children in that we) be paying for it for the next 50 years through our taxes) is making me physically ill.

Privatized profit and socialized losses are what we are looking at. And that is clearly unacceptable. The only way to do this is to swap this terrible debt (at prices well below book value) for majority equity stakes (i.e., control).

Write your Representatives and your Senators and voice your opinion.

An Open Letter to Secretary Paulson.

Virtue

"A virtuous leader is one who is clever, cunning, decisive, ruthless and, above all, effective." - Machiavelli

In preparation for the debates beginning this Friday: Part 1 of 4 presented by Stratfor, a top (in my opinion, the top) independent foreign policy think tank.

This is a non-partisan series. The editors of Stratfor have staffers who ardently support each candidate and who are standing by "...to crush" any perceived unfairness toward either candidate. Great reading.

The Socialist Bailout

Led by our favorite Republican.

My favorite line is from Gary Hart:

"I know why you are conservatives -- you favor private enterprise for the poor and socialism for the rich."

Summary of a Crisis

Very good read on the current financial mess. Yes, it's on Kos, but it's the best I've read so far.

And another on the potential cost of doing nothing.

For The Record

I get really angry when I run here in Arizona. Concrete drives me batty.

269

Please let this scenario happen. According to the Poll of Polls, I can see it.

Only look at the toss-up states.

For Obama:
CO
PA
MI
WI
MN

For McCain:
NV
MT
IN
OH
WV
VA
NH

Although with the economy on the forefront of everyones' minds (with the Republicans having been at the helm) and with the majority of Americans scared to death of a potential President Palin, this is probably unlikely (meaning Obama probably wins OH, IN, and/or VA).

Go Chaos!

In Keeping With The Season

Very interesting reading (open the PDF) that only looks at the tax side of the equation (nothing about spending, which is rarely cut anyway - cue the great sucking sound).

Tax Policy Center estimates of each candidates' tax plans.

For general tax/spending projections:

Congressional Budget Office

And just for giggles, one of my favorite Flash creations ever:

Death and Taxes

And for a state by state electoral map look (forget national polling, it is irrelevant):

Pollster

In Honor of Marvin

Liz recently posted about moving mountains. The genesis of this post was our watching Sicko. We both enjoy Michael Moore and even though we(i.e., I) don't always agree with his politics, he sure does know how to make an entertaining movie. My favorite part of Sicko was when he wrote a check to cover one of his critic's wife's medical bills. Like I said, if nothing else (and I do think there is something else), Moore is an entertainer. One of my favorite moments is his Charleton Heston (may he rest in peace) ambush in Bowling for Columbine. It's not often that a movie makes me squirm.

But I digress. Moving Mountains. The day after we watched Sicko, we were driving (we always seem to be driving in Az.) and Liz was doing her communication thing, which I stand in awe of, and I couldn't find anything to say (which wasn't that surprising). We talked about our passions and using those to build the foundation of some tool that we would then use to build a better world.

Liz's task is easy (to me). She has so many passions and more importantly talent that she just needs to pick and do. Me, that's a different story.

My passions (in no particular order and excluding family):

- Running
- Politics
- Um
- I swear I have another one
- Still thinking

It's interesting. People have commented to myself and Liz that I am difficult to decipher because I don't say much and that I must be thinking about really heady stuff. Well, let me clear that up. Here's a sample of my brain activity when I'm not speaking.

"--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------."

It's that exciting.

So here I am, approaching the peak of my intellectual powers, with two passions and without an extraordinary amount of talent in either one (this is NOT a not so silent plea for affirmation), and I have nothing interesting to use them on. Even worse might be the realization that my powers are unfortunately, not super. All I've ever wanted to do was to turn into a pterodactyl (why did the girl always get to turn into cool creatures and the boy was always stuck being a pail of water?)

In other news, twice this past week on separate flights, I thought for an instant that I was going to die. Flying does not freak me out. I've logged too many miles. However, there are occasions when something happens that hasn't happened the other 80 times I've flown this year and death does cross the mind. The weird part is what I thought about in those two instances.

"Well, this will be interesting. Or not" I probably would have been bored two minutes after dying anyway.

What To Do

when the client has taken away all of your resources and is still requiring the same amount of work?

Download NIN and make angry faces across the hall. A little fist pump doesn't hurt either.

It does wonders for business case and Powerpoint productivity.

And if angry, whiney Trent doesn't do it, Paul O. just might.

Reading

As with most things that have to do with this blog, my Reading Now section has been sorely in need of an update. I can't even remember when I read "A Swiftly Tilting Planet". I do know that I've read many books since then. One of my favorites was March. You'll notice that I continue to be on my novel kick.

I'm currently reading (and have been for quite a while)The Brothers Karamazov. I knew that this book was about a murder. I just didn't know that it would take 400+ pages to get to the murder. Don't get me wrong. Those 400 very dense pages were very entertaining, especially Father Zosima's musings on his youth and Fyodor's buffoon act at the monastery. However, I just didn't expect a book that revolves around a murder to have that murder take place more than halfway through the book.

That might have been Dostoevsky's intent. When it finally became apparent that something was going to happen, the crescendo building up to the murder was overpowering and I couldn't put the book down. It's a good thing that I have lots of hotel and flight time because there is no way I could have gone that last 100 pages uninterrupted at home.

So now poor Dmitri is being questioned by the police and it again appears that something strange is going on between himself and his two (three?) brothers. I'm looking forward to my flight home tomorrow night for more than one reason it appears.

Two Months?

It's been two months since I posted? What? During the past two months, I didn't finish an ultramarathon, I did pack up and move, I experienced summer and now fall in Seattle, I bought a house, I ran by Steve Ballmer, I've started running simply for the love, I almost killed three other people on one of my runs for the love, and I've started Yelping all of the restaurants I've ever eaten at (I'm only about 10% through and sorry Phoenix, but the highest rating I've given to one of your restaurants is 3 out of 5).

For Life

The Westin in Bellevue has me for life. If I'm anywhere in the Seattle area, this hotel is where I will be staying at (assuming someone else is paying for it of course).

Last night, I went out for an 8 mile run. Gorgeous sunny evening (the sun doesn't go down until about 10pm). Bellevue is right on Lake Washington, so I decided to follow the shore and ran to Kirkland (yes, the town that headquarters Costco).

Upon my return to the hotel, one of the doormen ran up to me with a bottle of water, handed it to me, and asked me how my run went. A bottle of water at the door. Now that is service.

Mice

My dear sister, Beja, is taking pictures of our home as it is being constructed. I am pleased to tell you that we have lots of cabinets. In other words, we have many places for mice to hang out. Now I love mice droppings as much as the next cowboy and I'm more than happy to let them hang out in my garage and nibble on my cardboard to their smart little hearts content, but c'mon, this is getting a little ridiculous.

You can tell looking at our home that the builder picked out items that would be pleasing to both your typical guy and your typical gal. (I know what you're thinking Liz, "Hey, we're not typical. We're like rock star skateboarder drummers. The coolest people on the block." Well you might be baby, but this farsighted guy in his khaki pants and his white board loving brain, most definitely is. Please keep holding up the cool flag for the family because cool, if ever it resided within this physical body, has long since fled.) That was a long tangent. Sorry.

So back to the house and the gender appealing typicalness aspects of it. Lots of cabinets, back yard, high ceilings, bouncy carpet, spacious master bedroom, bedrooms close to the master bedroom, etc, etc were definitely created and designed with a woman in mind. In fact, I didn't remember anything about these features until I recently looked at Beja's photostream.

Appealing to the male gender, a tower. A tower. A freaking tower. Sold. Honestly, I couldn't have cared less about anything else. "Yes, Mr. Realtor, you may show me other homes, but only if they too offer a tower. No tower, no deal." (Thank you Dale by the way.)

When I looked at Beja's photostream today and saw all of the cabinets, instead of being all aflutter, I thought of rodents. Tiny little rodent dwellings. I hope they don't offer me sweets and then attempt to slice open my brain to take a peek.

In more interesting news, my diarrhea spree of four days has finally ceased. Just in time for my first ultramarathon (50k or 31.07 miles with 9200 feet of climbing) this weekend. Pictures will be forthcoming. Let's hear it for my 60 year old father running it with me and one of my brothers. You are the man!