Archive for December 2008

Purposeful Obfuscation

What better way to inaugurate the new blog site than to rant about a Kevin Drum post?  Drum posts this chart today from the NY Times showing a drop-off in the effective total tax rate (income+social security+other stuff) at very high income levels.


Well, no freaking duh.    I suspect that this has been true practically forever.  Why?  Because this is NOT an income tax chart, it is a total tax chart.  And as such, it includes social security and medicare taxes (collectively, with a couple of other minor things, called "payroll taxes".  These taxes, about 8% of total income, are a flat tax with a cap around $100,000.  This means that everyone with income under $100,000 pays 8% of all income.  Someone at $5,500,000 (midpoint of the $1 million to $10 million band) pays only 8%  of the first $100,000 or an effective rate of 0.146% of total income on payroll taxes.  For someone in the top 400 taxpayers, the rate is close to zero.   So you really have to add 8 percentage points or so to the higher rates to make them comparable ex-Social Security to rates for earners under $100,000.

Now, we can argue about the regressive structure of Social Security.  But many on the left have opposed making it more progressive.  They want Social Security to perceived as an insurance program, not a welfare/transfer program.   To be insurance rather than welfare, effectively the same income that is used as the basis for benefits must also be the income basis for taxation.  Income over $100,000 is not used to calculate benefits, so it is not taxed.

Here is one person on the left making this point in 2005:

...when his aides presented him with their initial Social Security proposals 70 years ago, FDR balked: "No dole," he said, "mustn't have a dole" "” because he knew instinctively that welfare programs are both fundamentally unpopular as well as corrosive to the human spirit. Conservatives understand this better than liberals, and know perfectly well that the best way to kill something is to convince the public that it's actually a welfare program.

But that's not what Social Security is. It's a modestly progressive social insurance program that's paid for by everyone and that benefits everyone. If it ever stops being that, if it ever stops being universal, it will eventually cease to exist. Don't let anyone fool you into thinking otherwise.

The person who wrote this was ... Kevin Drum.  It is wildly disingenuous to look at income taxes and payroll taxes mixed together.  It is even more so given Drum fully understands why payroll taxes are structured as they are.

Which is all not to say that there is not a really halide point in the article that people in the 100,000-200,000 range are getting hosed.  But I would submit this hosing is more due to work by Drum's intellectual allies than the reverse.  Phase-outs of deductions  occur mostly in this range in the tax code, as does phase-in of the AMT.  Both are leftish creations.

Also, there has clearly been something regressive in the tax code for the top 1% of earners over the last 10+ years.  I am not sure what it is, because it certainly is not in the base rate schedule.  My guess is that they just spend a hell of a lot more on managing their tax bill than you or I do.  I am sure if I spent a million dollars on tax advice, I would cut my bill by 3 percentage points.  Of course, that is a losing proposition for me, but a winning proposition for someone who makes $100 million a year.  But hasn't this always been the case?  And won't it always be the case, at least until we decide to radically simplify the tax code?

I wrote more about Drum's 2005 post here.  I demonstrated how Social Security is promising me a negative rate of return on my money here.  I showed despite Drum's protestations that Social Security is in fact mostly a transfer program here, if one defines a transfer as the difference in the return I get from SS and the return I would get on the private market.

Site Migration is Done (I Hope)

As of this evening, the site migration from the Typepad service to self-hosted WordPress is mostly complete.  I have gotten a few emails about broken links and such, but I am fairly certain most are chased down now (though you are welcome to email me if you have problems).  The RSS feed is the last thing I need to test -- which I will do with this post.  For those of you who have been accessing this site via the feed, I am hoping nothing has changed -- that should still be the primary feed in the future  (though you may experience about 10 duplicate posts from this weekend).  Folks who have been using other feed locations will have to migrate -- all those other feeds are now off (well, almost, I will put a few more messages on the old feeds to remind people to switch).  If you are seeing this post in your feed reader, you are good to go.

I have really tried to make the site more attractive, and I rejoiced in the much greater flexibility I had on WordPress.   Since several people have asked, I did all the design myself, though I paid a whopping $7 each for two stock images I used in creating the banner image.  Most folks read this blog via text feeds, but do me one favor and check out the new design just to make me feel better for all the work that went into it.

Actually, the vast majority of work went into migrating the site from Typepad without breaking hundreds of inbound links.  It is not impossible to maintain the permalink structure of the old Typepad blog, just hard, and I will post on how I did it soon.  On thing I will say now, though -- the new Typepad platform implemented for my site in October made it MUCH harder to migrate.  The last 50 days of posts took more time to migrate than the previous 4+ years.  That is one reason I have dropped a lot of my posting and really pushed up the priority of moving the site -- Every day I waited created a lot more work.

I have posted on my dissatisfaction with the new Typepad platform several times.  Suffice it to say that while the WordPress platform is a much better one, I would not have moved had it not been for three issues:

  • Typepad eliminated the blockquote option from the editor.  Yeah, I know, this seems a trivial concern.  But it is telling that a blog software provider could be so clueless about their customers as to think blockquotes to be unnecessary to bloggers
  • Typepad really screwed up the image functionality.  I have been on and off to customer service for weeks on images that simply would not post or would not post correctly.  Further, perhaps in an effort to make it impossible in the future for anyone to leave, Typepad implemented a new image storage system where it is impossible to actually access your image file.  What this meant for me was that, in blogging, the same images had to be uploaded over and over again, for every post in which they were used.  Further, it meant that my program that I used to scrape the old blog site and put all the images on my new site could not copy these images.  I had to painstakingly go into every post, right click and download the image, and then re-post it.  And I use a lot of images.
  • OK, so Typepad would have been fine if I did not ever quote any other sites and used no images (lol).  But it had one more problem-- when switching to the new platform, they built a new spell check program which is awful.  Folks who read my blog a lot know I DESPERATELY need a good spell checker.  But the new Typepad spell checker did not have an "add to dictionary" or even a "slip all occurrences" option, and somehow it disabled the built-in Firefox checker.   Image spell-checking a 3000 word piece on global warming and having to hit skip 150 times for each occurrence of "CO2" in the piece.

So, one blog down and one to go.    The second should be a lot easier with what I have learned.  My one screw-up on this one is I imported some old posts with Carriage Returns on each line so they don't wrap right, but I will just have to live with that -- I know how to avoid it with the next migration.  Expect blogging to be light, as I need to get my other site off Typepad before I post too many more items that I have to port manually.  I also still need to get the caching system up and tuned, so the site may be a tad slow for a few days.

Thanks to all those who complained about my site being the visual equivilent of nails on a chalkboard -- you gave me the final push to get this done.  In retrospect, an intervention was clearly necesary and I appreciate those who were forthright enough to provide it.

Corporate DNA

In a post on letting GM fail, I discussed what I called "corporate DNA"

A corporation has physical plant (like factories) and workers of various skill levels who have productive potential.  These physical and human assets are overlaid with what we generally shortcut as "management" but which includes not just the actual humans currently managing the company but the organization approach, the culture, the management processes, its systems, the traditions, its contracts, its unions, the intellectual property, etc. etc.  In fact, by calling all this summed together "management", we falsely create the impression that it can easily be changed out, by firing the overpaid bums and getting new smarter guys.  This is not the case - Just ask Ross Perot. You could fire the top 20 guys at GM and replace them all with the consensus all-brilliant team and I still am not sure they could fix it.

All these management factors, from the managers themselves to process to history to culture could better be called the corporate DNA.  And DNA is very hard to change. ...

Corporate DNA acts as a value multiplier.  The best corporate DNA has a multiplier greater than one, meaning that it increases the value of the people and physical assets in the corporation....Every company that has ever grown rapidly has had a DNA that provided a multiplier greater than one... for a while.

But things change.  Sometimes that change is slow, like a creeping climate change, or sometimes it is rapid, like the dinosaur-killing comet.  DNA that was robust no longer matches what the market needs, or some other entity with better DNA comes along and out-competes you. When this happens, when a corporation becomes senescent, when its DNA is out of date, then its multiplier slips below one.  The corporation is killing the value of its assets.  Smart people are made stupid by a bad organization and systems and culture.  In the case of GM, hordes of brilliant engineers teamed with highly-skilled production workers and modern robotic manufacturing plants are turning out cars no one wants, at prices no one wants to pay.

This seems to match the take of many insiders.

To John Shook, a former Toyota manager who worked at a joint-venture plant run by the Japanese company and GM in Fremont, California, that explains why the two automakers are in such different shape today. When it comes to engineering and manufacturing, Shook says, Toyota and GM are about equal. Where they differ is in their corporate cultures.

"Toyota is built on trial and error, on admitting you don't know the future and that you have to experiment," Shook said. "At GM, they say, "˜I'm senior management. There's a right answer, and I'm supposed to know it.' This makes it harder to try things."

The whole Bloomberg article this comes from is quite good.  Its pretty clear that GM had every reason to anticipate the current mess 3-4 years ago, and basically fiddled while the cash burned.  My strongest reaction from the article was, please let me have an epitaph better than this one:

Wagoner, a 31-year GM veteran, was the embodiment of its culture, an apostle of incremental change. Exciting as a Saturn, quotable as an owner's manual....

We're All Technocrats

The auto bailout is dead, at least for now:

A bailout-weary Congress killed a $14 billion package to aid struggling U.S. automakers Thursday night after a partisan dispute over union wage cuts derailed a last-ditch effort to revive the emergency
aid before year's end.

Republicans, breaking sharply with President George W. Bush as his term draws to a close, refused to back federal aid for Detroit's beleaguered Big Three without a guarantee that the United Auto Workers would agree by the end of next year to wage cuts to bring their pay into line with U.S. plants of Japanese carmakers. The UAW refused to do so before its current contract with the automakers expires in 2011.

Good.  Chapter 11 was made for this kind of situation, and folks will quickly come to understand that productive assets don't go *poof* in a bankruptcy  (though equity values can).

By the way, you will note that Senate Republicans did not suddenly become economic libertarians.  Their objection seems to be that the bill does not micro-manage the auto industry they same way they would want to micro-manage the auto industry.  You can see in these political battles that Congress brings its usual identity politics to these decisions:  Republicans want to hammer the unions, Democrats want to hammer executive pay.  Which is why these restructuring discussions don't belong in Congress.

Add GM, Ford, and Chrysler to this List

Via TJIC, who had a much better title, "poor credit risks remain poor credit risks, even after you give them a free pony"

Recent data suggests that many borrowers who received help with mortgage modifications earlier this year tended to re-default on their payments, a top U.S. banking regulator said on Monday.

"The results, I confess, were somewhat surprising, and not in a good way," said John Dugan, head of the U.S. Office of the Comptroller of the Currency, in prepared remarks for a U.S. housing forum.

"Put simply, it shows that over half of mortgage modifications seemed not to be working after six months," he said.

You can absolutely, without a doubt, add the Big 3 to the list of folks who will be facing default once again just months after getting their first dollop of federal money.

No Issue Too Small To Get Attention from the State

Criminalizing everything:

License-plate frames that celebrate your favorite college or sports team become illegal next month if the frame obscures the state's name.

Starting Jan. 1, police can stop you if "Arizona" isn't clearly visible at the top of the plate. Violators will be fined an average of $135, plus court fees, depending on the city where the violation is discovered.

Wow, while the police are chasing after that guy with a joint, lets make sure we also have the boys in blue vigilant for this.  And I am sure this new law will be enforced as equally and fairly as all the others and these guys will be he first to get tickets:

On Tuesday, half the 26 vehicles in the Arizona Senate parking lot bore frames obscuring the word "Arizona."

Yeah, right.  This is just another "probably cause" for Sheriff Joe Arpaio and his boys to pull over every person with brown skin they run into.

I Want Design Input

I run this blog mainly for my own enjoyment, so I mostly am just designing the new WordPress version whatever the hell way I want it.

But, I am split on the issue of fixed vs. variable width.  This blog currently is variable width.  Text expands and contracts to fill the screen width.  The pro of variable width is that it allows people with wider monitors to actually take advantage of the real estate they invested in.  The con is the site almost never looks as aesthetically nice as a fixed width site, where everything is a bit more in control  (example here of fixed width).

Any preferences out there?  Please comment.

More Auto Bailout Thoughts

I don't think I have ever gotten as much mail from as many different readers as I have received on the auto bailout.  Readers seem fairly unified in their outrage and horror at the prospect.

Via insty:

Nancy Pelosi calls the deal a barber shop, where everybody will take a haircut.

There is already an available process for operating companies that cannot meet their obligations where all the parties take a haircut:  Its called chapter 11.  We have about a zillion man-years of experience with it, in companies great and small.  And it does not take idiotic Senators flashing billions of our tax money to mediate it.

The auto industry is tremendously magnetic for wannabee technocrats in Congress, in large part because in perhaps no other industry is there a bigger gap between what the average American wants to buy and what the country's intelligentsia things they should buy.

But US automakers are failing because they have not been very responsive to customers; they have grown fat and complacent, feeling protected by their monopoly power position; they have consistently failed over decades-long periods to make tough decisions vis-a-vis labor and costs; and they have refused to make real prioritization decisions (GM brand strategy is a good example).  It is therefore hilarious that Congress thinks it can do better, because wouldn't these same traits be high on the list of failings of the Federal Government itself?

And this is funny, if you have not seen it yet.

More Thoughts On Recent Employment Losses

I posted some data this morning showing the current jobs report ranked not on absolute job losses but as a percentage of the total work force.  I have now pulled the whole data set from the BLS, which goes back to about 1939, and this is what the entire monthly series looks like of employment changes as a percentage of total employment (the purple line is a 3-month moving average).


Folks familiar with this data base may know of reasons the data has become less volatile (perhaps improved seasonal adjustments?) but never-the-less, I have a hard time reconciling this with the popular leftish notion that the decline of traditional American manufacturers (e.g. autos) and unions have led to increasing risk and job/income volatility.  I played around with a couple of ways to summarize the trends.  Here is the number of substantially negative (monthly losses greater than 0.25% of the workforce) jobs reports per decade:


And here is a metric of the volatility of the jobs number.  Since most folks don't really buy the classic economic argument that "risk" equates to volatility up or down, but feel that risk is only to the downside, I have looked at what is sometimes called the downside standard deviation of the jobs change numbers, in which all monthly data greater than zero are set to zero, and then a normal standard deviation is taken on the data.


You've Been Warned

I am switching over domain registrars as the first step in the porcupine mating ritual that will eventually lead to a migration of this blog to WordPress.  There may be short downtimes of the site or of the email associated with this blog as I futz around with nameservers and cnames and such.  But since I am unable right now to publish any content on typepad that includes a graph or drawing, I am willing to bear some problems to get on a new platform.

Typepad is Sick Again

Something is wrong in the Typepad editor such that trying to include images is causing the system to hang.  This is the third or fourth time I have had to stop posting until Typepad cleans this up, all since Typepad introduced its new editor which is really driving me crazy.  As soon as I can get the site to migrate correctly with all links intact to WordPress, I am moving off Typepad.

Q: What's The Fastest Way to Get 5 Million Green Jobs?

A:  Start with 10 million current jobs.

Kenneth Green argues that Obama's claim that obsoleting current infrastructure and requiring its replacement with new, greener infrastucture creates jobs is just the broken windows fallacy  (where have you heard anyone else say that?)

If Obama's energy promises rely on questionable science, they rely on even more questionable economics. We are to believe that replacing conventional energy sources (especially coal) with renewables (especially wind) will create 5 million new "green jobs." The hope is that armies of workers will be enlisted to build
tens of thousands of windmills; to manufacture and deploy solar-power installations; to harvest, transport, and process huge amounts of biofuel feedstock; and to string the power lines that will allow the U.S. power grid to incorporate a major expansion of intermittent energy.

Unfortunately, the idea of government "job creation" is a classic example of the broken window fallacy, which was explained by French economist Frédéric Bastiat way back in 1850. It is discouraging to think that nearly 160 years later, politicians still do not understand Bastiat's basic economic insight...

Now consider Obama's "green jobs" plan, which includes regulations, subsidies, and renewable-power mandates. The "broken windows" in this case would be lost jobs and lost capital in the coal, oil, gas, nuclear, and automobile industries. Currently, these industries directly employ more than 1 million people.
Conventional power plants would be closed, and massive amounts of energy infrastructure would be dismantled. After breaking these windows, the Obama plan would then create new jobs in the renewable
energy sector. The costs of replacing those windows would ultimately be passed on to taxpayers and energy consumers.

New Era in Race Relations

Our new era in race relations begins this week with the Federal government sending me a nasty-gram that I have not yet proven to the government that I know the race of every one of my employees.  The EEO-1, a quite distasteful annual requirement from the feds, is a report we must file showing the number of people we have employed of various races and ethnicities.  Rest assured, readers, I have, after naively believing that race was irrelevant in evaluating my employees, now educated myself as to the race and gender of all my employees and reported this understanding to the government.

The 41st Worst Jobs Report Ever

This was sent to me by a reader:  Much as looking at percentage moves in the Dow is much more meaningful than looking at nominal points moves (500 points means a lot less when the average is at 10,000 than when it is at 1,000), it is useful to look at the recent jobs report in the same way.  While 553,000 lost jobs is certainly a lot, it is only the 41st worst loss since WWII when looked at as a percentage of the workforce  (and it would be much further down the list if we had similar metrics back into the 1930's and 1920's).  Via Bespoke Investment Group:


This tends to confirm the statement I made last week, that this recession is likely worse than anything a 20-something Obama supporter can remember, but is not yet even close to some of the problem years of the 1970's, much less the 1930's.

By the way, it is interesting to see all those 1950's dates in there but no dates in the last 25 years, given there are many who have been writing about the current economy being so much riskier for workers than the 1950's.

The Glass Floor

I also thought about titling this post "Recession:  Rich, white males hardest hit."  This is one of the more interesting economic/demographics charts I have seen of late  (of course from Mark Perry):


See Mark Perry's post for more, and some guesses at explanations.

Depression Doubt

MaxedOutMamma (an economist somewhere but she seems to only drop tantalizing clues as to where she plies her trade) is concerned:

I was troubled by how many people seemed to feel the economy wasn't in deep trouble.   Profound skepticism and the belief that this is all media/political highjinks seem almost to be the consensus.

I guess you may have to put me in the majority.  I certainly don't doubt that we are headed for a recession.  And it would not surprise me if this is the worst recession that most 20-something Obama voters have experienced, though that is not saying much.  But I am not sure we are even facing the Seventies in this one and we certainly are not facing the 1930s.

Here is the problem that we more casual consumers of economic news must struggle with -- the media has fairly accurately predicted 20 of the last 3 economic downturns.  Everywhere you turn, you see analogies to the Great Depression, a period of time where unemployment topped 25%.  Given the media's track record and the nearly breathless panic about the looming economic disaster, any sane person has to put a divide-by-X filter on economic news.  It is certainly possible that I and other are using too large of an X as a correction factor, but is that my fault, or the fault of the purveyors of information who can't tell any story straight.

By the way, for us Polyannas, here are several interesting posts from Mark Perry

Debate on the Left

Apparently, there is a debate on the Left as to whether the 0.01% change in the world's atmospheric composition over the past century is sufficient justification for implementing fascist rule in the US.  David Roberts argues yes.  Kevin Drum, to his credit, argues no.

A Civics Lesson in One Sentance

A month or two back, I was participating in the California Regional Council of Rural Counties annual meeting.  At this conference, I was there to have a sort of informal debate on climate change with Joe Nation, a former California State legislator and currently a private consultant on climate issues.

To some extent my role was frustrating for the audience, because they were already stuck with complying with California's AB32 (a sort of state CO2 cap and trade system) and arguing that such legislation was pointless only served to upset them  (my presentation, both in powerpoint and video is here).  By the way, we often lump "government" together, but I can tell you that while the governor and the legislature of California may be 100% behind CO2 alarmism, the county commissioners were very sympathetic to the skeptic position.

Anyway, towards the end of my presentation I made a plea for a carbon tax over cap-and-trade, and said in fact that California's AB32 was living proof of my argument.  The California Air Resources Board (CARB), which is tasked with implementing the plan, has already added hundreds of people to its staff and worked for over two years, is still no where near finished with rule-making.  The complexity, and the battling political constituencies, is simply mind-boggling.  It is already clear that the result is going to be a Byzantine, Rube Goldberg structure of detailed industry-specific reporting and permitting rules.  Nearly 100% of CARB's time is taken up today with various groups running to them begging for some sort of special treatment (think "carbon bailout" and you will get the idea).  No one thinks the process is fair or rational.

Under cap-and-trade, every single industry will report greenhouse gasses, have industry and firm-specific limits, myriads of permits, etc.  For example, we had detailed discussions that day of how cattle flatulence will be treated and measured.  The alternative is a carbon tax, which is dead simple.  There is one single rate to set - the tax per weight of carbon in fuel.  Fuels with more carbon per BTU, like coal, thereby get higher taxes.  The system works like a sales tax, and could be administered by the BOE (who runs the California sales tax system) in its sleep.

The cap-and-trade system is far more expensive than a carbon tax.  By the basic laws of supply and demand, both systems have to raise the cost of burning certain fuels by about the same amount to get about the same reduction in use.  But the cap-and-trade system brings a huge overhead burden, both in government bureaucracy as well as compliance costs, that make it far, far more expensive for the same amount of benefit.  Until he started sitting on the boards of companies who depend on these inefficiencies in the cap and trade system to make money, Al Gore advocated a straight carbon tax over cap-and-trade.

But we had an opportunity that day.  Because the man who claims to be the author of AB32 is none other than Joe Nation, who was right there in the room.  So we asked him why he took this approach.  Here is what he said, really a civics lesson in one sentence:

I tried pass a carbon tax first, but there was absolutely no support for it among legislators [the same ones who overwhelmingly supported AB32]

If you can understand why this is, you can understand a lot about government.   Because all these concerns that you and I might have about crafting rational public policy are not important to legislators.  Here is how they think about it:

  • Private implementation and compliance costs are meaningless to legislators.  There is no public measurement or accountability for these costs, and most of these costs fall on businesses, who can be ignored as unsympathetic in political discourse.  I operate in Mono County, California, and they put out a new set of reporting requirements driven, they said, by the needs to save a few hours a year of their auditors' time.  But compliance with these new rules costs our company 10-20 hours, at least, a year.  And we are just one of many, many companies reporting.  I complained that it was crazy for them to ask taxpayers to spend hundreds of hours of labor to save them just a few, but they could not have cared less.
  • For legislators, particularly in California, creating large new bureaucracies is good.  It creates a patronage relationship between the legislators and these new government employees that is almost quasi-feudal.  Public employees are an enormous source of support for incumbent politicians, and these bureaucracies also offer future employment opportunities for legislators once they leave office (nice article here).
  • First, last, and always, the vast majority of politicians are gutless.  That means if they can pass the same tax in a way that is more hidden (ie cap-and-trade vs. carbon tax) they will prefer this approach, even if it means the tax is substantially less efficient.  In the case of cap-and-trade, since costs are hidden and spread around like peanut butter rather than easily identifiable, they can pretend the costs don't exist and, if someone starts worrying about rising electricity costs that result, simply blame the rising costs on the evil power/oil/coal/etc companies.  Obama has brilliantly taken this one step further, by outrageously claiming, in the broken windows fallacy of all time, that cap-and-trade will actually boost the economy through green job creation.
  • A carbon tax gives politicians very little room to extract personal value from the electorate.  Really, there is only one number for everyone to argue over.  But cap-and-trade is a Disneyland for lobbyists.  There can be special exemptions, industry specific caps, firm-specific caps, geography-specific caps.  Once everyone sees the first few guys giving campaign donations and parading into CARB for special treatment, everyone feels like they have to in order to avoid being the one guy left out.  My guess is that cap-and-trade will spawn more lobbying than any other legislation in US history.  And politicians, no matter what their public stance, love lobbying, because everyone who comes to ask them for something knows there has to be a quid pro quo.

Update:  A number of related thoughts and posts here, at Reason.

Jon Stewart on Mumbai

Pretty funny.  Even funnier when you consider it is probably the most dead-on analysis of terrorism you will see in the MSM this week.

Person Who Will Lose a Lot of Money in GM Bankrupcy Says that GM Bankrupcy Would Be Bad

Via the AZ Republic:

Fritz Henderson, president and chief operating officer of GM, said that choosing the bankruptcy route would further erode consumer confidence in the automaker and "we want them to be confident in their ability to buy our cars and trucks."

In order to save the value of their executive stock portfolios, which are a large part of their compensation, auto executives are promoting the line now that consumers will for some reason stop buying GM cars if the company is operating under Chapter 11 protection.

The auto-makers real strategy is to get some kind of money, almost any amount will do, from the government ASAP.  It really doesn't matter how much, because with their cash burn rate almost any amount Congress gives them right now will not last much more than 6 months, and certainly will not be enough to reach recovery (their requests go up by a few billion each time they appear in front of Congress).  Automakers are facing potentially several years of recession, and any real restructuring would take 5 years or more (and even that is doubtful since the industry has had 30 years of notice on these issues and have not done anything).  But if they get some cash, then there will be a psychological pull for Congress to put in more.  They will say -- well, you've already put in $5 billion.  If you don't put in another X billion, that first 5 will have been wasted  (few people understand that "sunk costs are sunk" and Congress is no exception).  This is how expensive transit projects are funded.

The position that customers will stop buying the product due to some loss of confidence in chapter 11 doesn't hold up.  Most every airline traveler has flown on an airline operating under chapter 11 in the last 10 years or so, and if I can have enough confidence that an aircraft is being adequately maintained in bankruptcy, I can probably muster the courage to buy a car.  I presume the issue here is downstream warranty support.  But this is about the last thing that would ever be slashed in a chapter 11.   For God sakes, airlines have never even substantially disavowed frequent flier miles in a bankruptcy, surely a much more obvious target than warranty repairs.

I would argue that it is uncertainty that is driving any loss of confidence  (in fact, sales have plummeted already, ahead of any chapter 11).  A chapter 11 filing would actually increase certainty, as those running the receivership could quickly communicate principles to be followed in the bankruptcy, such as protection of warranties. Right now, people have a perception that in a bankruptcy, GM would go *poof*.  Once it actually files a chapter 11, the media and executives would switch modes from fanning panic to actually explaining how receivership works.

In fact, if there is any fear on the issue of long-term warranty support, it is being created by executives like Henderson who are fanning the flames of fear in a brinkmanship game to try to avoid chapter 11.  If he were really worried about this loss of confidence, he and other auto executives would be out there assuring people that their cars and servicing and dealers will also survive a chapter 11 filing.  But he is not.  This is totally disingenuous.

More on why GM should be allowed to fail here and here.

So, We Are All to Blame

I blame the English and all of us in the media for the 9/11 attacks on Manhattan.  If we had just stuck with "New Amsterdam" rather than having the name forcibly changed to New York by Anglo chauvinists, the WTC would never have been attacked.  We all conspired in this tragedy by continuing to call it "New York."

Crazy?  I would have thought so, but apparently this logic is quite in vogue

Postscript:  I find it moderately hilarious to see folks on the left defending names imposed by western colonialists over indigenous names.  But if it makes us Westerners to blame for terrorism, I guess it's in a good cause.

United In Film Criticism

Kevin Drum and I disagree about many things.  I read his blog specifically to find things to refute.  But it turns out we had the exact same two reactions to Quantum of Solace:

Now, I also happen to think Quantum of Solace wasn't a very good movie. The pace was so frenetic "” chase, fight, chase, fight, chase, fight "” that there was hardly any story that seemed worth following, and what story there was just wasn't very interesting. (Cornering the water supply of Bolivia? Seriously? And you thought the later Roger Moore movies were ridiculous?)

My reactions were here and here.

If Only the US Been Part of the Soviet Economy...

... then it would be much easier to reduce CO2 production, because we could just shut down stupid-inefficient boneheaded and outdated Soviet-era industry, like Poland has:

Polish Prime Minister reminded that the economy of Poland, who has cut carbon emissions by about 30 percent since 1988, relies on coal for up to 90 percent of its energy needs. This, he argued, entitles Poland to encourage other countries, for whom climate protection is a hard nut to crack.

Amount of Polish CO2 reduction that would not have happened anyway in the course of modernizing their economy and is instead due to focus on CO2:  Zero.

More on how the vast majority of European progress towards Kyoto goals is due to the shutdown of Soviet industry, and how this is the primary reason the 1990 benchmark date was chosen, here.

New Climate Presentation (From the RCRC Climate Debate)

I have finally been able to publish a video of my presentation at the climate debate held by the Regional Council of Rural Counties last September.  The entire video is about an hour long.  As usual, I am offering several ways to view it.  First, it has been posted on YouTube but had to be broken into seven parts.  The playlist of all seven parts is below:

The playlist link is here:  RCRC Climate Debate (Skeptic's Side)

Unfortunately, YouTube crushes the resolution so many of the charts are hard to read.  You can download the full resolution windows media version (about 96MB) as long as my bandwidth holds out by right-clicking and downloading form this link:  Download RCRC Climate Debate (wmv)

Also, you can stream higher resolution version of this film (and all my other climate films) at this site.  The resolution is not as good as the downloadable version but is much better than YouTube.  Again, bandwidth pending.

Finally, you can download the actual powerpoint presentation shown in this video here or you can view the presentation online here.

In the future, all of my videos and presentations will be available via the links just under the banner at Climate Skeptic.