I heard Obama saying things that ain't so

This evening Obama said the deficit he inherited from Bust was 3 trillion dollars. No so, Bush was running about a half a trillion. Then he said his budget cut the deficit in half. Not so, his budget deficit is going to be 2-3 trillion a year, which is 4 to 6 times the Bush deficits.
Then he said the solution to Great Depression II was education, health care and green energy. Not so. The US has college graduates driving taxi cabs, and the best (and most expensive) health care in the world. US energy needs call for more nuclear power plants, off shore drilling, shale oil development, not windmills and solar cells.

The electric grid, need for smartness thereof

Wired Magazine is pushing for spending money on the national electric grid. They claim the existing grid (transmission line network) is worn out, old fashioned, and hindering the progress toward a green future. Clearly more porkulus money is required to bring the system up to modern greenie standards.
They go on to rave about clever electronic boxes that monitor this and that and allow consumers to see how much juice they are using.
Actually, the transmission grid is there to keep customers lights on if/when a generator fails. The generators are connected together by transmission lines, and if one fails, power from neighboring generators flows into the affected area to keep the lights on. With a few exceptions, like the great blackout of 1965, the grid works well. The grid only needs capacity to flow enough power to support one or two downed generator plants, say 1 or 2 gigawatts.
The grid does not have capacity to route 100 gigawatts from the midwest to the east coast. Line losses grow the farther the electricity travels, and 400 miles is about as far as is practical. Losses are set by basic physics and no amount of R&D is going to lower the resistivity of aluminum or raise the voltage at which air breaks down and permits a lightening bolt to leap from wire to ground. 400 miles is enough to bring power from Niagara to New York City or from Quebec Hydro to New England. It ain't enough to ship Iowa windmill power to Boston. No amount of porkulus money will make transmission lines work over that distance.

George Soros gets it (WSJ Op-ed)

Soros at least understands the dangers of "credit default swaps" otherwise known as bond insurance. He is in favor of limiting sale of credit default swaps to holders of the bonds to be insured. He claims that bears drive down the value of company bonds, and hence their credit rating, but taking out credit default swaps against their bonds. As more and more credit default swaps are bought, the price goes up, and the market takes the rise in price as a sign of financial weakness.
The trouble is, buying credit default swaps costs little but can pay off big, where as selling them makes little money but carries humungous risks. The $170 billion bailout to AIG has gone to pay of the credit default swaps that defaulted. $170 billion is enough money to choke a hog.
According to Soros, the big Wall St disasters, Lehman, Bear Stearns, AIG, were caused by bear raids, groups of traders deliberately driving down their stock prices. I don't buy that, I figure the Wall St disasters occurred when investors wised up to the fact that the emperor had no clothes. After making huge loans on real estate that defaulted, the market decided that the dear departed firms were broke.

We Need Honest Accounting (WSJ op-ed)

The author, James Chanos, argues for retaining "mark-to-market" accounting rules. Bank folk have been whining that mark-to-market has ruined them, after they mark their dodgy assets down to market, they find they no longer have the legally required reserves on hand. Chanos says that carrying worthless assets at the purchase price is a way of hiding losses from stupid investments. He favors relaxing the reserve requirement rather than hiding losses.
The reason we require banks to have reserves is so they can pay out withdrawals AFTER a big loan goes bad. If the bank cannot honor a withdrawal, it's toast right then and there. To this end, the reserves have to be liquid, preferable cash. Really solid things like US treasuries might be OK, but unsalable mortgage backed securities are not OK.

Toxic Assets push Dow up 500 points

The long awaited "toxic asset relief" program was rolled out today. Timothy Geithner had a long and exceedingly vague op ed in the Wall St Journal. The Dow is up 500 points at closing, so the market likes the idea. Or perhaps the shares of Citibank (one of the 30 Dow industrials) got a big boost. So on the surface the plan is working, at least for now.
Geithner's WSJ piece was remarkably vague as to who would put up how much money. Listening to Fox and WLTN I get the impression that us taxpayers are putting up the bulk of the money, with just a thin 6% cover layer of private money and 94% taxpayer money.
There is a lot of happy talk about how these toxic assets aren't really so bad and investors who buy them now will profit in the future.
There is some question in my mind as to why we taxpayers should be shelling out to prop up a handful of Wall St banks who threw vast amount of cash down sewers and now find them selves short. The vast majority of real banks, the ones located out in the real world rather than Wall St, don't have toxic asset problems. There are about half a dozen big banks that got stuck on stupid and lost all their money on the housing bubble. There is no reason to believe that these banks would be smart enough to make loans that grow the economy, so why keep them alive. Close them up, pay of the depositors and move on. They have proved their unfitness to survive.

Paying bills by Internet

So far, I haven't done the electronic bill pay thing, not trusting the security of the internet, Windows, and clueless IT departments at my vendors.
But my bank is driving me toward it. First they gave up on returning canceled checks some years ago. Now they are giving up on furnishing a facsimile of the check. My last statement just has DDA Check number so and so and an amount. Unless I am supermeticulus at filling out the check book, when I write the check, balancing the check book is a totally lost effort. So much for "progress" by "financial service companies" aka banks.

So what's wrong with cramdown?

The banks are against it, naturally. The way things work now, bankruptcy court has full power to tell creditors how much they are going to recover, if anything, and in general divvy up the bankrupt's assets among his creditors. Typically the holders of credit cards and car loans take a haircut, the bankrupt gets to keep enough of his salary to buy groceries and everyone goes away mad, except the bank. Home mortgages are exempt, the bankruptcy court cannot write them down ("cramdown"). The banks get a bigger slice of the bankrupt's assets than the other creditors.
The banks like it this way, and claim that mortgage rates are lower because the mortgage is more secure, so they can offer a better rate, and are more likely to do a mortgage than they would be if bankruptcy could lower the value of said mortgage.
Of course, as we struggle with Great Depression II, that was caused by absolutely reckless mortgage lending by the banks, we might have been better off if the banks had been less eager to do sub prime, alt A, and liars loans.
In the real world, banks shouldn't be granting mortgages to people likely to declare bankruptcy. Plus the mortgage rate is whatever Fannie, Freddie, or the Fed are willing to lend at.
Maybe cramdown would improve mortgage lending standards, something sorely needed.