- The Eloi King And The Emperor ...

Nothing makes a people prouder than seeing their duly elected leader debase himself before every foreign dignitary in the world.

Maybe while he's at it, he can apologize to the emperor for Pearl Harbor.

- Public Pension Trouble: Part 3,299,873

California's public pension system (CalPers) is in "deep financial doo doo" according to the Sacramento Bee.

Hey ... you know what might help them out? If the government were to take over all their health care costs for retirees. Then the taxpayers would pick up that tab instead of the pensions having to go to politicians for a direct bailout. That would probably be much more politically palatable... they can even call it 'health care reform' so it sounds like an overall improvement.

Man... that's just genius ... even if I do say so myself.

Now if I could just think of someone someone in government who is sympathetic to the issues of big labor who can champion a plan like this... That will be tough, but what might make it easier for them is if they can find a way to make it seem like it will reduce overall health care costs. Maybe if they included 10 years of tax revenue but only 7 years of benefits so it seems like it's deficit neutral...

I don't know... not even the US taxpayer is stupid enough to believe an obvious ploy like that. but I'll keep thinking about it.....

- While The Eloi King Fiddles...

Today the king of the Eloi is meeting with the Japanese prime minister. They’re missing every salient and important point between the two countries, and instead focusing on the no nukes movement. Which as you know has been recently revived from it’s suspended animation tank in the Whitehouse basement, where it had slumbered undisturbed since the end of the Carter administration.

That they are focusing on this idiotic stuff is criminal and that the dimwit press is letting them is negligent. Of course Japan is no nukes… who else if not them. But if we can set aside the pacifist movement (as most Americans did a generation ago), there are issues of today that should really be discussed. Japan’s economic condition is deteriorating rapidly. It will be the first country to go over the economic waterfall, and rather than addressing that and dealing with the all but certan disaster, Obama continues to paddle us closer to their position.

Japan is about to face that crisis of all social crises, a haircut for their pensioners. The after affects of that will be dramatic to say the least. (To imagine what this means, just picture what would happen if we told everyone in America that we're cutting social security payments in half regardless of what was promised or what you may have paid in.) Japan will no longer be in a position to help support the dollar or to buy US debt. Their domestic economy will go into freefall as the price of commodities soar, and they’ll try to cope with the social changes when energy becomes so expensive in yen that the worlds second most modern economy will begin to more closely resemble the 15th century.

But not to worry … the Eloi king is on the job. He’s got a rousing speech about ‘international cooperation’ and our ‘shared goals’ and world without nuclear weapons. He’s so much like Carter that the secret service should start carrying small gauge shotguns to repel all the rabbits that are bound to attack.

Carter was an incredibly weak president; so weak that even herbivores scared him witless. The same is obviously true of Obama. But Obama has an ability to ignore the facts that Carter never had. At least Carter tried to run the country, but all Obama seems to be doing is continuing the election campaign.

God help us all.

- Intrade Odds On The Public Option

In most cases I think these intrade markets are useless and stupid because they ask questions where the public perception holds no sway. What can we possibly learn about reality from asking questions like "Will Michael Jackson's Doctor be charged with Manslaughter?"

The answer of course is nothing at all. In this particular case however, I think there may be some small (OK very small) merit in looking at the intrade odds. Much of the future of the healthcare bill relies on the public perception. If it really does look like a kamikazi run at the good ship capitalism, then it's going to be very hard for the Democrat leadership to find pols who are willing to fly the plane. But if it turns out to be anything else, then big labor says they won't support it. And what's the point of paying the political price of implementing an expensive new bill over the objections of the voters, when the interest group who gives you your marching orders says that they don't want it anymore?

I know the talking heads of the right say that this is all a power grab... it may be that as well. But what it really is, is a bailout for the unions. Big Labor's pensions are hopelessly underfunded, and shamefully mismanaged. Many of them will never be viable again. In the case of the public sector unions, the taxpayers will be forced (by law) to make up the difference, but that will mean that the pols will have to raise everyone's taxes, and that means that they'll be voted out. As you can imagine, they don't want to be put in that situation.

This healthcare bill and particularly the public option, are really just a little political sleight of hand. It's a way for the congress to transfer money to the pension plans of the public sector unions without having to tell the voters about it. When the public option is adopted, the unions will fold up their benefit plans and put their membership on it immediately. And with that cost absorbed by the taxpayers, their plans become viable for a few more years at least.

Of course, the public plan will then end up costing 2 or 3 times what we're told it will, like all government plans. But the pols know that once the deed is done it's unlikely to be undone, so there is no point in worrying about underestimation.

This is all just another case of the people in government (the union people in government) demanding a bigger slice of pie for themselves, and telling us it's for our own good. No one really believes that a public option will 'increase competition' or 'lower costs', not even the people who say so. When in all of human history has a government plan ever done either of those things? And if you are so stupid that you do believe it just because some self interested politician told you so, then you'll be getting exactly what you deserve.

I think the most common mistake finance industry professionals are making when looking at the hopey-changey crowd is that they are underestimating the high degree of importance that big-labor is playing in defining policy. We give the pols too much credit, and assume that they know things that we see as obvious. But the truth is that they have no idea. Even the most basic rules of reality for us are deep and abiding mysteries to them.

While we all spent the last 20 years learning how markets and economies work, they were reading "A people's history of the United States" and banging undergrads. They don't know that borrowing is connected to interest rates, is connected to bond prices, is connected to currency rates. Even the law of supply and demand isn't universal as far as they're concerned. They think that the price of something and the cost of something are the same thing and that if you lower the price, you've lowered the cost too.

To us that seems unbelievable... it's totally breathtakingly in it's stupidity. But I assure you... it's what they really think. For them wisdom went on hiatus when Reagan was elected. Since then they've been frozen in amber, the permanent adolescents, waiting for yet another chance to make the same old mistakes.

Just think about some of the horrifyingly stupid things that Nancy Pelosi says... or Harry Ried... or gasp...Joe Biden. Even the simplest most obvious facts about how the world works remain totally unlearned by them. And because that's so, the people who hold internal sway in the Democrat party don't know anything useful, and the people among them who do are all hopelessly marginalized.

That's why Obama seems like he's always campaigning... because it's quite literally all he knows how to do. And whats worse.... he's so shut into a bubble and so insulated from reality, that he probably has no idea of how quickly the edge of the cliff is approaching, or how the childish and simplistic 'stimulus' plans he promotes every couple of months are speeding us faster toward the edge. He doesn't see it, and neither does any of his staff. I know this will seem hard to believe, but from his perspective, he probably thinks he's helping things.


Anyway... if the intrade numbers can be believed, then the public option is finished. And that could very well mean that Obamacare is finished too. At least that's one change we can all hope for.

- How Can Government Screw You?

- The Cost Of Socialism

This is the 20th anniversary of the fall of the Berlin Wall. For those of you too young to remember, that event even more than the collapse of the soviet government, was the moment we won the cold war.

But now, among the young in this country, the sins of totalitarian socialism have all become 'theoretical'. They forget that real lives were effected and runied by central planning. So I offer this clip from the brilliant German movie "The Lives Of Others", about life in East German just before the wall fell.



What you don't see here is that the young man was consigned to purgatory for that joke. He appears much later in the movie sorting cards in a windowless basement, not quite in prison but all but. His life was destroyed because he made a joke in front of someone who had the political power to harm his career. And what's much worse is that I'm quite sure Nancy Pelosi and Rahm Emanuel look at the Stazi officer who did it to him with envy.

Socialism is a bad idea. It's always been a bad idea. It's not 'different this time"... it never is. And it's a little ironic that most of the cost of socialism, is actually social.

- I Really Laughed At The Wet Spot

Offered without Comment.
(Although the temptation to mention Howard Dean is really pulling at me.)