Guantanamo

Just watched Obama on the ABC Sunday pundit show. He is still going to close Guantanamo Bay, at least the terrorist prison camp part of it. There was a lot of talk about trying the inmates. Trouble is, most of the Guantanamo inmates are in Guantanamo because they were captured on a foreign battlefield for bearing arms against the US. They aren't guilty of war crimes, and no US court or court martial is going to convict them for war crimes they didn't commit. These guys are enemy soldiers. If and when released they will take up arms against us again.
We have to adjust to the fact that enemy soldiers have to be locked up without a trial just because they are enemy soldiers. We had no trouble doing it in WWII or Korea. Few voters and taxpayers have a problem with this, although it upsets the MSM and liberal Democrats.

Economic Stimulus

The news has been talking about a $300 billion tax break/rebate/handout to citizens. That's about $1000 per person. The theory is, we will all rush out and spend the $1000 on something. Or at least, be grateful to the Obama administration for the money. If everyone spends $1000, then stores will order $1000 worth of merchandise, and factories hire workers and buy raw materials and we are out of Great Depression II.
Does this rosy scenario work in real life? Most Americans are worried about loosing their jobs, have humungous credit card debts, and have seen their savings vanish in the stock market crash and the real estate disaster. Most rational Americans will use the free money to pay down debt or save up for a rainy day. Although it's raining pretty hard now, a pink slip makes things get a lot wetter. In short, much as I like the idea of free money for me, I don't think it's going to do much to stimulate the economy.
Give the tax breaks to business. One of the reasons so much manufacturing has moved to China is that taxes on business are lower in China. US businesses pay 35% on profits, higher than nearly every other developed country. Lower that tax rate and more US businesses will survive Great Depression II and/or decide to retain operations in the US as opposed to outsourcing them to China.

Fixing Wall St. Part II

What's the difference between a futures market and a casino? Very little. Futures markets began with farmers needing to find buyers for their crops before harvest time. Partly to have an arrangement for the harvest (what do you do with tons of crops if you don't have a buyer lined up?) and partly to lock in a good price. Crop buyers found the futures market leveled out prices over the year. Used to be, crops were dirt cheap right after harvest, and got steadily more expensive as harvest time receded into the past. Companies making bread or corn flakes or what ever, liked the steadier and more predictable prices provided by the futures market. All well and good, commodities futures markets have real economic value.
Now let us consider futures markets in stocks, crude oil, and God knows what else. Neither stocks nor crude oil has a harvest time. Production stays steady year round. Price fluctuation is unpredictable. Lucky buyers like Southwest Airlines can save them themselves lots of money, Unlucky buyers loose their shirts. This is really gambling and serves no economic purpose. Money sunk into commodities speculation isn't available for real economic investment. The recent spike in oil prices had a lot to do with tipping the economy into Great Depression II. And the even more recent fall has bankrupted a whole bunch of speculators.
In a free market economy we cannot prohibit buying and selling, but we can tax the bejesus out of it. And we can forbid Federal y insured banks from speculating in, our lending to speculators in the commodities markets.

Too many codes.

Blogger is Word hostile. Cutting and pasting from MS Word brings in a raft of invisible HTML codes which causes Blogger to choke. Saving from Word in plain ASCII helps a bit but someone (Blogger or Notepad or Word) turns quote marks and apostrophe's into question marks. That's a bug somewhere, both quotemark and apostrophe are in the ASCII character set, have been in ASCII since the beginning, and they should convert. Pain in the tail.
Blogger really ought to accept cut and paste from Word. It wouldn't take all that much code for Blogger to merely discard any HTML that it doesn't understand.

Republicans organize

North Country Republicans gathered for an evening of fellowship, good cheer, and organization at Liam Shaw's tavern in Franconia on Friday evening. A good turnout was present, filling the room to capacity. Much discussion of the last election, and what is needed to win the next one, ensued. All those present agreed that the Republican Party does still stand by "the Pledge" (no broad based state taxes).
It was decided to form the Northern Grafton County Republican Committee. All present voted in favor. David Starr was elected chairman, and Melanie Kerr treasurer, both by unanimous votes. Dues were collected, and a membership list created.
The Committee plans to increase its membership, all Republicans, Independents and Libertarians are welcome. Everyone present pledged to bring at least one new member to the next meeting. The next meeting is planned for Friday February 6; same time and place (Liam Shaw's, 5:30 PM).

Fixing Wall St. Part I

Many clueless Wall Streeters bought sub prime mortgage backed securities because the rating companies, Moody's and Standard and Poor's, gave them AAA ratings. Unfortunately, those AAA ratings had been paid for by the issuer of the securities. "Give my security a AAA rating or I will take my business, and your fee, elsewhere". Naturally the rating agencies issued a lot of AAA ratings that shouldn't have been issued. And even more clueless brokers bought trash on the strength of a AAA rating.
In real life, rating a security is fairly simple, and any real broker ought to do his own rating, just in case the agency rating is phoney. All you have to do is look at the borrower's cash flow and decide if his cash flow is large enough to pay off the security on time.
Ratings should be based upon cash flow, never upon collateral. In a collateral loan (like a car loan) the borrower pledges to turn over the collateral to the lender if he cannot pay off the loan. Problem with relying upon collateral, is that when times are bad, the value of the collateral falls, in extreme cases the collateral becomes unsalable (worthless).
Lender's should look at cash flow, is this borrower making enough money to pay off the loan. No cash flow, no loan.
And never again believe a rating agency.

How to testify without saying anything

Congress had the SEC up in front of a Congressional hearing yesterday. Question before the committee; Why wasn't Madoff discovered earlier?
Testifying was a fresh faced youngish guy from the SEC. His answer to every question was "Yes I agree completely and I will look right into it". And the congress critters let him get away with it.
The SEC was created after the first great depression to prevent it from happening again. It has clearly failed in that mission. Congress ought to abolish the SEC completely, and since the SEC people have been totally derelict in their duty, their employment by any branch of the federal government should be forbidden. Ever. Again.
To prevent today's economic catastrophe from happening again Congress should abolish the secondary mortgage market, outlaw the practice of insuring bonds against default, and revise the accounting rules to prevent carrying imaginary assets on the books. Just last year GM revealed that it had been carrying $36 billion dollars of purely imaginary assets on its books for years.