Coyote Blog

On September 12 last year, I linked an article in the Arizona Republic that I declared to be ridiculous wishful thinking on the part of the author, completely disconnected from how people have responded to price changes in the past:

The worst oil shock since the 1970s has put a permanent mark on the American way of life that even a drop in oil's price below $100 a barrel won't erase.

Public transportation is in. Hummers are out. Frugality is in. Wastefulness is out....

As prices come falling back to earth, Americans aren't expected to drop their newfound frugality. The jarring reality of $4-a-gallon gasoline stirred up an unprecedented level of consumer angst that experts say will keep people from reverting to extravagant energy use for years to come - if ever again....

"I see a permanent shift," said Kit Yarrow, a consumer psychologist at San Francisco's Golden Gate University who has studied how high oil prices have affected Americans' buying behavior. "Historically, when gas prices come down, people use more. But we've learned a lot of new things during this period and it will be hard to go back to our gas-guzzling ways."

Thank God for consumer psychologists.  From the LA Times last week:

Americans have cut back on buying vehicles of all types as the economy continues its slide. But the slowdown has been particularly brutal for hybrids, which use electricity and gasoline as power sources. They were the industry's darling just last summer,  but sales have collapsed as consumers refuse to pay a premium for a fuel-efficient vehicle now that the average price of a gallon of gasoline nationally has slipped below $2.

"When gas prices came down, the priority of buying a hybrid fell off quite quickly," said Wes Brown, a partner at Los Angeles-based market research firm Iceology.

Prices matter.  Nearly every other form of communication, from advertising to public education to presidential fireside chats to go-green guilt promotion campaigns pale in comparison to the power of prices to affect behavior.

Postscript: I studied a lot of marketing in business school and was a marketing guy for years in corporate America.  I wonder how a marketing guy and a "consumer psychologist" differ?  The only differences I can think of are 1) a marketing guy's pay will suffer over time when he is this wrong and 2) I found in marketing that bringing facts to the table often yielded better forecasts than simply applying my personal biases and wishful thinking.  About 10 seconds of looking at how consumer focus reverted away from conservation after the oil price collapse in the 1980's might have given these guys a hint.   Particularly since the price shock of 2008 was far shorter and less severe than the shocks of the 1970's.  Here is my measure of gas price pain (I have not updated it for the recent price collapse):

MaxedOutMama echoes many of my thoughts on recent economic activity and the shameless way our President has been manipulating these issues:

In January, I was writing that fundamentals had taken an upswing, and that the US economy was going to try to resurge in the third quarter.

The numbers that came in for January and February did show what P-Nat projected, which was a gradual bottoming pattern overall and the beginning of some upticks. Bloomberg today:

Orders for U.S. durable goods unexpectedly rose in February on a rebound in demand for machinery, computers and defense equipment.
...
Combined with reports showing improvements in retail sales, residential construction and home resales, the figures indicate the economy is stabilizing after shrinking last quarter at the fastest pace in a quarter century. Stepped-up efforts by the Obama administration and Federal Reserve to ease the credit crunch may help revive growth later this year.

Last night Obama took credit for these events, but the stimulus package had nothing to do with it - the effects of that haven't even hit the economy yet. Very little of that package will be felt in the first half of 2009, in fact, and less than 25% of the effect will be felt in 2009. I would also like to point out that at the time the stimulus bill was being debated, the administration was claiming that the economic emergency was so dire that the representatives and senators shouldn't even be allowed to read the thing before they voted on it. Instead, this was what was really going on in the economy.

She also shares my concerns that the recovery may in fact be undone by recent government actions, not the least of which is the Weimar Republic-like printing of money to buy back government bonds and help fund a mushrooming deficit.  In fact, she and I must be fairly attuned, as she wrote:

Last week I was so sick at heart that I didn't think I could continue writing this blog.

I too felt almost exactly the same last week.  Never have I been so depressed about the direction of domestic policy (I might have felt about the same around 1978, but I was only 16 and had other things on my mind).  Every day last week there seemed to be a new policy directive crazier than the last.  I had a real feeling like I was living through the last half of Atlas Shrugged, where an increasingly desperate government initiates a series of policies with disastrous long-term effects crafted just to survive a little longer in office.  The only difference was several years in the book seemed to have been compressed into about a week of real time.

Fortunately, I am basically a happy soul and I seldom stay depressed long.  I just did what I always do when I despair for the world - spent some time with my family and concentrated on what I could fix, namely the health of my own business.

I tell folks all the time -- there are very few bad people in government, just people with very bad incentives.   Government inspectors are no exception.  They look around them and see falling government tax revenues.  They know that state and local governments are looking to cut costs, and they know further that lawmakers are likely to look at falling construction starts and reduced business activity and say "I bet we could do with fewer inspectors."

So state inspectors, naturally, want to hold onto their jobs, so they have to go out and look busy.   One way to look busy (and to further look like one is being useful) is to be more picky about small, meaningless violations. Writing up more violations makes it look like one is needed (after all, if there are so many violations out there, surely we need inspectors to find them).  Also, violations demand return visits and follow-up inspections, which again create the illusion of activity.

Which leads to stuff like this:

Sherrie Nielson owns two Chandler bars, antique-filled Priceless Too at Alma School and Elliot roads, and Priceless Primetime at Dobson and Elliot.

An inspector with the county department of environmental services has told her she needs to install a sink at the bar so it's convenient for the bartenders to wash their hands

Nielson has one sink in the bar area, but that's for washing glasses. County regulations say employees can't wash their hands in the same sink that they wash dishes.

"I've owned 'Too' for 30 years," Nielson said. "The sink we use is probably 20 feet in a different direction. . . . I have a dishwashing sink; (the inspector) wants a hand sink next to it."

Nielson says counting the sinks in the kitchen and the restrooms, she has four sinks available for washing hands. But the key point is that it has to be convenient for the bartender.

"If I don't comply, they will start proceedings to shut me down," she said.

Johnny Dilone, a spokesman for the county environmental services department, verified that Nielson's license could be revoked if she doesn't install the new sink.

This story resonates with me, as we have had to fight the sink battle in a number of locations as well.  Take one small store we run in a state park in northern California.  Because we make coffee there, we must comply with food preparation rules (including 8 hours annually of training, lol.  I am not a coffee drinker, but for all that I sure hope we have good freaking coffee).  We eventually had to install:  A three sink dishwashing station, a sink in the employee bathroom, a separate sink for handwashing in the store a few feet from the sink in the bathroom, and a mop sink.

The problem is that the regulations are confusing, and no one in the local health department would look at our plans in advance.  Obviously, it is a lot easier to fix missing sinks and such at the planning stage, but the health department in this county would only inspect actual facilities, so would only tell us if our design met their requirements once it was built!

Glen Reynolds linked this a while ago, but I was fascinated that two of President Tylers grandsons are still alive.   President Tyler was born in 1790 and died before the Civil War was over.  The younger of the two is profiled here. The key seems to be that his father was conceived when President Tyler was in his 60's, and he was conceived when his father was about 75.

Just a few days ago I wrote about proposals for government subsidies / bailouts / partial control of print media. Already, it seems that bills are popping up in Congress. I guess this is not surprising -- as Congress loves to throw pork at particular industries in exchange for help getting elected, the temptation to make the newspaper industry, with its unique political muscle, beholden to the political class must be overwhelming.

But I must say this makes zero sense to me:

With many U.S. newspapers struggling to survive, a Democratic senator on Tuesday introduced a bill to help them by allowing newspaper companies to restructure as nonprofits with a variety of tax breaks.

"This may not be the optimal choice for some major newspapers or corporate media chains but it should be an option for many newspapers that are struggling to stay afloat," said Senator Benjamin Cardin.

I don't see how allowing organizations (whose problem is that they are making no profits) to avoid income taxes on their non-existent profits is really going to solve much. Is the thought that donations will save the day? Are we to endure endless pledge drives in print media?  Or maybe Democrats are hoping ACORN will use its stimulus funds to start buying up local papers?

This is classic government in the corporate state.  Economics and new technologies are driving huge changes in an influential business.  These changes will force survivors to adopt new business models, and will force formerly dominant competitors who refuse to change out of business.  Rather than face these changes and deal with risks to their leading positions, powerful incumbents run to government to try to get the state to lock in historic business models and prevent new entrants for poaching on what they consider their protected market preserves.

After the first two rounds of the NCAA tournament, here are the standings:

Note your humble scribe in 7th place.  Moses has led right from the starting gate, and still has a decent chance of ultimate victory, but his chances fell a lot when the Longhorns couldn't quite pull out the win the other day.

You can look at your best possible finish here.  Retain hope -- even Andrew Ivey, at #137, still has a statistical chance of victory, as do many others.  A large majority of the top 75 current brackets still have a statistical chance of victory.

Update: If you wonder why so many folks have a chance, from this point forward there are 32,768 different possible bracket outcomes.  After this weekend, there will only be 8.

One of the images I remember form reading Atlas Shrugged was of darkened skyscrapers, as the government forced the closure of the upper stories of buildings to save energy.  Only building owners with political pull were excepted.  It seems San Francisco is following a similar plan:

Turn the lights out -- or pay.

That's the message of legislation being revived by Board of Supervisors President David Chiu, who will introduce a measure Tuesday mandating that skyscrapers turn off all nonemergency lights at night as a way to save energy. The introduction comes just days before Earth Hour Saturday, in which people are urged to turn off their lights for an hour at 8 p.m.

The legislation is essentially a new run at a law introduced a year ago by former board president Aaron Peskin that ultimately withered after strong opposition by the Building Owners and Managers Association of San Francisco. (We couldn't reach them by press time Monday). Peskin's proposal mandated building owners turn the lights out, or face administrative fines, but it was criticized as difficult to enforce. Chiu actually pushed Peskin to introduce that legislation, he said.

I would have assumed that if electricity consumption were really so high and so useless, that building owners would have had sufficient reason on their own to turn lights off.  After all, isn't it already turn the lights out or pay?  Unless of course electricity is free in SF.

One problem poorly understood by academics and government officials is that many folks outside of government actually work longer than a 9-4 work day.  As it happens, I am in my office tonight, likely until midnight, catching up on some things I could not with the phone ringing off the hook all day.  The only time I have ever occupied prime downtown real estate in an office tower was when I consulted with McKinsey & Co., and I can say for sure that there was seldom if ever a night when there weren't people in the office working well past midnight  (unfortunately, I was often one of them, which explains why my consulting career outlasted the birth of my first kid by only as long as it took me to find a new job).

Postscript: There is an incentive mis-match at work here in most leases.  Few commercial leases include individual metering for utilities, since most buildings are not set up for it  (it would actually be moderately hard, since office space is often reconfigured over time, shifting from one suite to another).  As a result, there is a kind of tragedy of the commons where renters pay their share of average use for all occupants, diluting the effect of their own usage on their own bills.  I am not sure how fining building owners when their tenants work late is going to help, though.

At the end of the day, this is all micro-managed bullsh*t.  If you want less electricity usage, raise rates, and let individuals figure out how to get the savings.  Just because a particular use (eg night lights in skyscrapers) is the most visible to policy makers does not make it the marginal use or the low hanging fruit for energy savings.

Government health care initiatives are not about cheaper or better care.  They are about control, and increased power for government officials.

First, via Carpe Diem:

The state is trying to shut down a New York City doctor's ambitious plan to treat uninsured patients for around $1,000 a year. Dr. John Muney (pictured above) offers his patients everything from mammograms to mole removal at his AMG Medical Group clinics, which operate in all five boroughs. His patients agree to pay $79 a month for a year in return for unlimited office visits with a $10 co-pay.

"I'm trying to help uninsured people here," he said.But his plan landed him in the crosshairs of the state Insurance Department, which ordered him to drop his fixed-rate plan - which it claims is equivalent to an insurance policy. Muney insists it is not insurance because it doesn't cover anything that he can't do in his offices, like complicated surgery. He points out his offices do not operate 24/7 so they can't function like emergency rooms. The state believes his plan runs afoul of the law because it promises to cover unplanned procedures - like treating a sudden ear infection - under a fixed rate. That's something only a licensed insurance company can do.

"I'm not doing an insurance business," he said. "I'm just providing my services at my place during certain hours." "If they leave me alone, I can serve thousands of patients," he said.

Expect similar efforts by Wal-Mart and CVS to run afoul of the government soon, under some pretext.   Massachusetts debated for over a year before allowing just two licenses for this type of clinic.   I have already observed lefty bloggers turning their nose up at this trend, and sense they are scrounging around for some kind of meme or message to consolidate around to oppose this kind of care.  Because having people find private solutions to their problems is the last thing they want to see.  (Seriously - is this the goofiest indictment of the US medical system you have ever seen? How deep are we reaching here?)
Anyway, should you think I am exaggerating, I will leave you with this story I saw on Radley Balko's site:

The five plaintiffs, who now include former House Majority leader Dick Armey, are challenging a policy of the Department of Health and Human Services (DHHS) that denies Social Security benefits to anybody who refuses to enroll in Medicare.

Read that again: As the policy now stands, if you want to pay for your own health care rather than let taxpayers finance it through Medicare, government will not let you receive the Social Security benefits for which you have spent a lifetime paying taxes.
Note that nobody is trying to avoid contributing to Medicare. The plaintiffs merely want to decline the tax-funded benefits for which they already have paid. None of them want the bureaucracy, the governmental intrusions into their privacy, and the rationing of care they believe Medicare entails - so they volunteer to let taxpayers off the hook by providing their own health care coverage.

But DHHS won't let them. Or at least not if they want to receive Social Security benefits. Forfeit Medicare, says DHHS, and you must also forfeit Social Security even if you've paid for it for half a century.

Here is a real journalistic triumph -- the story of a multi-party conflict in which I immediately dislike absolutely everyone in the story on all sides of the conflict, up to and including the jury and the third parties quoted.  Via Overlawyered.

Update: I failed to make clear that what really makes the article special is that the writer herself is at least as bad as everyone involved.  She writes in the first paragraph, "If you are black, you probably call the act of disciplining a child with corporal punishment 'a whupping.'"  Really?  What's next, is she going to tell us that they all like watermelon too?  Is this kind of blanket unsupported supposition about the habits of a particular race really in the the Chicago Sun-Times style manual on how to open a news feature?  I grew up in Texas and "getting a whupping" was a term favored right across racial lines.  Anyway,  I gotta go now and chase some varmints away from my cement pond out back.

Update #2: I just got an email that said "If you are white, you probably trade jars of Grey Poupon out the windows of your Rolls Royce."  LOL.

The Liberty Papers thinks we have become a lawless Banana Republic.  George Will is thinking along the same lines, snarkily observing that Sweden, China, and Mexico have all observed in one way or another that the Feds seem to be acting outside the rule of law.

I have opined in the past that what really extended the Great Depression was not any real underlying economic issue, or even vast increases in government spending per se.  It was that arbitrariness with which the Roosevelt administration dealt with economic matters.  With nutty programs like the Mussolini-inspired National Industrial Recovery Act coming and going, investors and businesses never knew from day to day what the rules of the game would be next year, or even next week.

I fear that this is exactly the climate Obama and Congress are creating today.

• When Congress reacts to CNN headlines by retroactively confiscating legal compensation that it had protected just weeks before, what will happen to my compensation?
• When government deficits soar by trillions of dollars, what will taxes look like next year?
• When the Administration says that Co2 will have to be reduced by 80%, what numbers do I plug into my forecasts for fuel and electricity?
• When the government decides on a whim to print a trillion dollars more money to pay off government debt, what will inflation look like in the coming months and years?

As of two months ago, my company was still investing.  We were still getting bank credit, particularly for equipment financing, though it took more work than in the past to secure it.  We still saw opportunity in our business, and in fact saw increased opportunity in the recession for low-cost recreation options and outsourcing of public recreation facilities.

But today, I am reluctant to make any new investments.  Investing $5000 now for $8,000 a year from now normally sounds good, but what happens now that the Feds have more than doubled the money supply?  How much will $8,000 really be worth a year from now?  What will my taxes be on the increase?**  What new costs or liabilities  might be retroactively placed on me for making the investment?  What happens if beltway pundits start thinking I am making too much money?

All this commotion of government intervention started when Paulson and other Bush appointees started screaming that the banking system was going to shut down and therefore crash the whole economy.  As my readers know, I believe to this day that this was all sky-is-falling over-reaction and panic-mongering, and most of the credit crunch resulted from uncertainty about the Treasury and its statements, not due to realities on the ground.   However, whatever tightening of credit we might or might not have avoided by government action, it pales in its effect on investment in comparison to the arbitrariness and trillion-dollar-plan-of-the-day that has been the first 60 days of the Obama administration.

** footnote: For those of you who have not lived through high inflation times, taxes and inflation are a deadly combination.  That is because the Federal Government, after creating inflation, then taxes each of us on its effects.  Here is an example:  Invest $5000 now at a fixed 10% a year.  Suddenly, inflation goes up to 8% a year.  In five years, I now have a bit over $8000.  In economic terms I have made a small profit of, since $8000 in five years at 8% inflation is worth $5,445 today.

But the IRS thinks I have made $3000, not just $445, and will tax me on the full $3000.  If they take a third, I only have $7000 at the end, or $4,764 in current dollars, meaning that after taxes, I actually lost money.

I often discuss government actions in terms of one's theory of government.   Here is a good example:  What does one's theory of government have to be to justify this:

The American Jobs Creation act of 2004, passed by the Republican-controlled government, amended section 877 of the Internal Revenue Code. Under the new law, any individual who has a net worth of $2 million or an average income-tax liability of $127,000 who renounces his or her citizenship and leaves the country is automatically assumed to have done so for tax avoidance reasons and is subject to some rather unbelievable tax laws.

Any individual who is declared to have expatriated for tax reasons is forced to pay US income taxes on all US based income for 10 years following expatriation, regardless of the country in which the individual resides. Additionally, in the 10 years following expatriation, if a qualifying individual spends 30 days in the United States during any year, he or she is taxed as a US citizen on all income derived from any place in the world. To make matters worse, if an individual happens to die in a year in which he or she spent at least 30 days in the United States, the entire estate is subject to US income tax law.

The only relationship I can think of that justifies this is master to slave.   When slaves run away, the master feels that he has suffered a financial loss that deserves recompense.  I guess it is somewhat comforting to see Republicans consistent on this issue -- they typically  are strong supporters of having to get government permission to enter this country, so I guess it is no suprise they want to assert government rights on individuals when they exit as well.

As has been the case for decades (the gun-to-the-head federal strategy to force 55 mph speed limits and seat belt laws come to mind), the feds are sending money to the states with many strings attached.  Apparently, Arizona is running afoul of one of those provisions:

Arizona's receipt of $1.6 billion in stimulus funding, including more than $300 million already being spent to help keep the state in the black, is at risk because a federal agency says the state is not in compliance with a prohibition against health-care rollbacks.

Arizona could lose the money if the federal determination stands or if state law isn't changed to eliminate a health-care requalification provision that was the basis of the determination, state officials said Monday.

According to Brewer's letter, the agency determined that the Arizona Health Care Cost Containment System's requirement that some enrollees requalify every six months instead of annually violated a stimulus-program prohibition against tightened eligibility standards, methodologies or procedures for a state's Medicaid program.

There is something supremely irritating about Federal bailouts to states that are tied to restrictions that make it more difficult for states to close their budget shortfalls on their own.  It's almost as if Congress wants to institutionalize dependency on the Feds  (where have we seen that before?)

Apparently, in the spirit of the retroactive tax-taking of the AIG deferred compensation payments, the restrictions are retroactive to state actions taken as early as July 1, 2008, meaning that Obama is asking states to roll back legislation that was passed months before he was even elected as a condition of getting the cash.

The actions causing problems for Arizona occurred in September, 2008, and were, according to our governor, the result of legislation passed in June of 2008.

Via the NY Times:

As David Myers scans the rocky slopes of this desert canyon, looking vainly past clumps of brittlebush for bighorn sheep, he imagines an enemy advancing across the crags.

That specter is of an army of mirrors, generators and transmission towers transforming Mojave Desert vistas like this one. While Whitewater Canyon is privately owned and protected, others that Mr. Myers, as head of the Wildlands Conservancy, has fought to preserve are not.

To his chagrin, some of Mr. Myers's fellow environmentalists are helping power companies pinpoint the best sites for solar-power technology. The goal of his former allies is to combat climate change by harnessing the desert's solar-rich terrain, reducing the region's reliance on carbon-emitting fuels.

Mr. Myers is indignant. "How can you say you're going to blade off hundreds of thousands of acres of earth to preserve the Earth?" he said.

Terry Frewin, a local Sierra Club representative, said he had tough questions for state regulators. "Deserts don't need to be sacrificed so that people in L.A. can keep heating their swimming pools," Mr. Frewin said.

I ordered me some custom Nike's for my 25th Princeton reunion, to go with this fine jacket.  It ain't cheap, but Nike allows for some pretty heavy modding of certain shoes at this customization site.

A while back on my other blog, Climate Skeptic, I wrote vis a vis my policy not to moderate the comments except for outright spam (which is also my same policy on this blog):

It might have been that 10 years ago or even 5 that visitors would be surprised and shocked by the actions of certain trolls on the site.  But I would expect that anyone, by now, who spends time in blog comment sections knows the drill "” that blog comments can be a free-for-all and some folks just haven't learned how to maturely operate in an anonymous environment....

In fact, I find that the only danger in my wide open policy is the media.  For you see, the only exception to my statement above, the only group on the whole planet that seems not to have gotten the message that comment threads don't necessarily reflect the opinions of the domain operator, is the mainstream media.  I don't know if this is incompetence or willful, but they still write stories predicated on some blog comment being reflective of the blog's host.

Well, I was wrong.  It appears that even in 2009, people who should know better about how blogs work are trying to tar blog proprietors with their commenters actions.  I would put Klein in the "should know better" category, though as a MSM guy as well he may fall into my one exception.  Which would mean I wasn't wrong after all.  It's like that old joke:  I was wrong once ... I once thought I had made a mistake, but it turned out I didn't.

I don't have time right now to editorialize in depth, but I found many of the links in this Reason piece on newspaper bailout proposals to be really creepy.  Nothing could be worse for the First Amendment than making news organizations dependent on government largess.   This bit from the Nation is not only totally misguided, but it demonstrates an utter lack of understanding of history, to the point of demonstrating contempt for hist0rical accuracy:

Only government can implement policies and subsidies to provide an institutional framework for quality journalism. [...]

Fortunately, the rude calculus that says government intervention equals government control is inaccurate and does not reflect our past or present, or what enlightened policies and subsidies could entail.

Our founders never thought that freedom of the press would belong only to those who could afford a press. They would have been horrified at the notion that journalism should be regarded as the private preserve of the Rupert Murdochs and John Malones. The founders would not have entertained, let alone accepted, the current equation that seems to say that if rich people determine there is no good money to be made in the news, then society cannot have news.

I find the arguments that such intervention is needed because publishing is too expensive and effectively excludes all but the largest players to be hilarious in the Internet age.  The real problem of newspapers is in fact that it has become so cheap to publish, and competition is rampant.  The problem papers are struggling with is not monopoly, but just the opposite -- that their historic monopoly is gone.   (Take yours truly, for example.  With a $10 a month hosting fee and some of my free time, I have a circulation of almost 5,000 per day).

This appears to me to be yet another veiled attempt by current incumbents to use the government to give them a boost against competition.  Murdoch's empire is utterly assailable -- all you have to do is a better job.   The only thing that makes a business position unassailable is government protection or political advantage aimed at selected players.

Which reminds me of an interesting story.  Ben Franklin  (you know, one of those founders that the Nation refers to as horrified by domination of journalism by moneyed interests) is pretty famous for being among the country's first postmasters.  Before the Revolution, he was postmaster of Philadelphia and later one of the lead postmasters for all the colonies.  We all read in school how he did all kinds of innovative things, because Franklin was a freaking smart guy**.

What you may not know is why he sought out the postmaster job.  Ben Franklin was a printer, and a large source of income for him was running a periodical in Philadelphia  (the names changed over time but among them were the Philadelphia Gazette).  At the time, there were no wire services  (and no wires!)  News came via mail.  Franklin actively sought the postmaster job as a way to get special, privileged access to the mail, which he monitized via his publications.   He had fresher news, and he used the mails to deliver his own publication to customers for free  (a right competitors were not granted)  In a strategy that he did not invent (it was fairly common at the time, and in fact he took the Philadelphia job from his main journalistic competitor who had pursued the same strategy) the surest route to success in the newspaper business was to secure an advantaged position via the government, specifically in a postmaster role.

I am perfectly happy not to go back to this model.

** Postscript:  Franklin seldom gets credit in popular literature for the real areas he contributed to science.  Everyone knows the kite in the thunderstorm story, but I always thought this kind of made him look like a goof, rather than a real scientist.  But Franklin did some real theoretical science, for example by describing what was really going on in a Leyden jar, and substantially advancing how scientists thought about electrical charge and capacitance.

via Paul Kedrosky (click to enlarge)

I guess the disputed $175 million in deferred compensation payments should be on here as well, though the line would be too infinitesimally thin to draw.   The CDS stuff gets the attention, but the securities guarantees are the largest flow.  Are these guarantees of traded securities, like bonds and equities?  If so, it sure is a happy notion for all of us taxpayers with portfolios that are well under water that we are going to send some of our money to help bail out the losses in the Goldman Sachs portfolio.

We had 144 brackets entered (thanks everyone!) and this is the distribution of picks.   Interestingly, the most popular first round upset pick (excluding 9-8 games) was #10 Maryland over #7 California, with 61% calling the upset.  And the majority were right, as Maryland won today over Cal.   Overall the picks show an incredible lack of respect for the Pac-10 and the Big-12, with teams like Cal, Washington, Missouri, Oklahoma, and Kansas getting a lot of votes to fall in early to mid round upsets.  North Carolina garnered the most picks to win it all, followed by Louisville and Pitt.

We have taken over a demolished campground near Guntersville, AL  (Honeycomb, if anyone is familiar with the area) and are currently in the process of rebuilding it and opening it to the public.  We have not previously done business in Alabama, so here is what we have had to do so far to be legal:

1.  Identified and retained an attorney in the state to act as our registered agent (required for in-state process service)

2.  Registered as a "foreign corporation"  (foreign meaning we are from another state) with the Secretary of State

3.  Registered with the state for a Corporate income tax number

4.  Registered with the state for a business privilege tax number  (Nothing sets me off faster than when I get the pious "doing business in our state is a privilege" spiel from a state.  What an awful theory of government and individual rights that statement represents!)  The privilege tax (which is in some sates, like AZ, a euphemism for sales tax)  seems to be a second income tax in AL, calculated on a slightly different basis. (Update: apparently the first year's taxes must be paid in advance, at the time one starts business in the state).

5.  Registered with the state (yes, with another ID number) to collect sales taxes

6.  Registered with the state to collect lodging taxes  (By the way, spent a couple of hours with the code trying to figure out what these taxes apply to and what they don't, as this varies by state.  Also, the tax rate tables are a complicated mess, and can vary for two locations located a few yards from each other).

7. Registered with the County (yes, with another ID number) to collect county sales tax.  Actually, they outsource this collection to a private company called "Revenue Discovery Systems" which is a nice Orwellian name for a private tax collector.  Is tax farming coming back in vogue?

8.  Registered with the County to collect county lodging tax.   (sigh, we are going to have to file multiple reports each month to report all of our transaction taxes - some states actually have unified reporting and payment).

9.  No city taxes, it turns out, because we are just outside of any incorporated areas.  Thank goodness for small favors

10.  Registered for state unemployment taxes  (yes, with another ID number).  This was one of those circularities that really drive you crazy.  I can't pay people until ADP has the state set up for us in the payroll system, but they need an unemployment number that the state refuses to provide until we have issued at least $1500 in state payroll checks.  Arrrgghhh.  Fortunately (?) ADP will go ahead and start issuing the checks without a number, but there is a $50 per month fee for doing so.

11.  Registered for state income tax withholding (yes, with another ID number).  Again, need this to pay people legally

12.  Don't know yet if there is County withholding.  There are county income taxes in some places.

Expect in these forms to fill out the exact same data over, and over, and over again.  The state will maintain corporate records in about 6-8 parallel data bases and corporations are responsible for keeping every one of these data bases correct.

What I have not done yet, but know from experience I will have to do

1.  Obtain county occupancy permits or licenses

2.  Obtain county and/or state health inspections

3.  Obtain Coast Guard inspections of the docks

4.  Register with the state and/or county to pay personal property taxes

5.  Get miscellaneous bizarre licenses that are absolutely unpredictable and impossible to discover until we are in violation, like the egg merchant license in KY and CO.

I thought for about 3 microseconds about selling beer and wine in our store, but I am sick and tired of the intrusive, picky, petty, and time-consuming liquor licensing processes in most states, and the income we make from alcohol sales simply doesn't measure up to the hassle.

Postscript: I try to remember that we should actually be thankful for this mess.  Though it represents almost 20 hours of my personal time to set up, and hours of time each month  filling out forms and reports, not to mention thousands of dollars a year to ADP to help manage, this mess is still orders of magnitude better than what an entrepeneur would face in France or Germany.

Apparently there is some debate about the true cost of Obama's proposed cap-and-trade system - is it $646 billion?  it is $2 trillion.  My sense is that it doesn't matter, because these costs are to the total cost of a full Co2 abatement program what shooting the first monkey into space was to the moon-landing program.

Just to get this out of the way, it is absurd to argue this is anything but a tax on individuals.  It HAS to result in a price increase to individuals, for things like electricity, or it is not working.  Price increases are a core feature of the program, not a bug.  The whole point is to reduce fossil fuel use, and in the near term, with infrastructure fairly fixed, this can only be achieved via reduced electricity consumption.  And, unless you are a fan of rolling brown-outs, this in turn will only be achieved by raising the price.   Long-term this reduction might come from shifts in the mix of electricity producing facilities (ie from coal to gas or nukes) but this takes time, and never-the-less the wholesale replacement of perfectly serviceable electrical generation infrastructure will certainly have a cost as well.

Further, now matter what the initial cost is, the costs will almost certainly have to increase by orders of magnitude over the next decades, if the programs is to have its desired benefits of substantially reducing CO2 production  (currently targeted by the administration as an 80-85% reduction).  How much of a price increase is it going to take for you to reduce your home's electrical use by 80%?  We have examples of parts of the country where electricity rates have doubled in a short period of time, and electrical consumption changed by far less than 80%  (the EPA apparently uses near-term price elasticities around 16%, meaning that a doubling of prices might result in a 16% reduction in demand).

It is probably easier to think about gasoline use (though this initial system will not apply to most transportation uses).  Last year, gas prices doubled.  Did your driving go down by 80%?  Probably not, since a doubling of gas prices reduced driving and demand by about 5-10%.  How high would the price of gas have to go to get you to really cut back your driving by 80%?  Europeans have $8-$9 a gallon gas, and much more onerous regulations on fuel economy in cars, and their per capita consumption has not fallen 80%  over the last decades  (Germany's per capita gas consumption, for example, has dropped about 20% since 1990).  How high will our gas prices have to go?

According to climate alarmists, Co2 levels in the atmosphere have already passed a point of no return leading us to a tipping point and rapidly accelerating temperatures.  As a result, again according to alarmists, incremental reduction steps that slightly slow the rate of increase of Co2 are useless -- only enormous reductions in Co2 output that result in declining world Co2 levels will suffice to save us from doom.

What this means is that Obama's cap-and-trade scheme as currently configured is both expensive AND useless, as it will, by almost any estimation, make only a trivial dent in Co2 growth  (similar to the Kyoto treaty, where even supporters admit that full compliance would have made an immeasurably small difference in global temperatures).   A real plan that would actually hit the goals he has set for us would be so expensive as to make even $2 trillion seem cheap.  This is just a toe in the water, to set up the infrastructure -- the real cost increases come later.  Using a fairly crude analogy, Obama is merely grabbing the waistband of our underwear now -- he won't start to pull and twist until later.

A couple of questions about AIG:

1.  Is there any real legal difference between the contractual commitment by AIG to pay bonuses to employees and their contractual commitment to pay off mortgage bond guarantees to companies like Goldman Sachs? **

2.  In a bankruptcy, how senior would contractual promises of deferred compensation to employees be?  Everyone comes after the government, of course, but would such claims be more or less senior to, say, commitments to pay counter-parties?

** before claiming one commitment was outrageous and unjustified, one needs to be clear which commitment he is referring to, since both commitments in retrospect seem crazy to me.  It is just that one party (ie Goldman Sachs), which has the added advantage of being represented by many of its former employees in the Treasury department, has convinced Congress and the Administration that not paying them carries systemic risk to the economy.

That seems to be the new key to government largess:  Carrying systemic risk.  It used to be one wanted to be poor or female or black to merit special consideration in the government spending sweepstakes.  But nowadays, in our post-racial society, the key is to be the one who can wrap himself in the flag of "systemic risk."  Here is .

Cato has a good 6-minute video on the Kelo imminent domain case.  As an update, the Kelo house has been bulldozed, along with the rest of the neighborhood, but no construction has or is expected to take place in the area any time soon.

PS- the Maxine Waters pious defense of property rights is simply hilarious

Brackets are due circa noon Eastern time on Thursday.  Right now we have 107 brackets!  This should be a blast this year.

To join, go to http://www.pickhoops.com/CoyoteBlog and sign up, then enter your bracket.  This year, you may enter two different brackets if you wish.  The detailed rules are here.

Online bracket entry closes Thursday, March 19th at 12:20pm EDT.  Be sure to get your brackets in early.  Anyone can play "” the more the better.  Each participant will be allows to submit up to two brackets.

Referring the Senator Grassley's statement that AIG executives who are receiving bonuses should "resign or go commit suicide," David Harsanyi responds:

C'mon. If suicide were a proper penalty for piddling away taxpayer dollars, the National Mall would look just like Jonestown after refreshments.

I have been negligent in covering some of the nuttiness that is resulting from the CPSIA, the law last year passed in response to the Chinese toy recalls that allows greatly increased regulatory authority (requiring extensive testing of every lot, aircraft-manufacturing-like supply chain documentation, etc) over the entire toy distribution chain for certain perceived health threats like lead and pthalates.  Worse, the law provides enormous openings for third party groups to sue for ridiculous amounts of money over unproven health risks.  It is not clear to me a group suing under this law even needs to prove injury, but just some mythical small percentage chance of potential injury.

What all the targets of this law have in common are absurd overreactions to trivial risks of ingesting microscopic quantities of certain substances like lead.  Recently, a whole bunch of mini-bikes were taken off the market because 12-year-olds might suddenly start gnawing on the engine parts and ingest some lead.  For reasons that are not really clear to me, this country finds it impossible to rationally assess risks -- we have schools shut down with hazmat teams called out to clean up the mercury when someone drops a thermometer in the lab, while day after day the school probably serves fish in the cafeteria with higher mercury content than any kid would get from being near a broken thermometer.

Overlawyered has been all over this story, for example here.  The most recent episode came the other day when an EPA spokesman suggested that all libraries needed to pull books from the shelves printed before 1985 because there might be a billionth of a gram of lead in the ink:

It's been a day of dramatic developments on the CPSIA-and-libraries front. An Associated Press article out yesterday quoted Scott Wolfson, a spokesman for the Consumer Product Safety Commission (CPSC) as officially urging the nation's libraries to remove from their shelves children's books printed before 1986 until more is known about their possible dangers from lead in their inks, dyes and pigments:

Until the testing is done, the nation's more than 116,000 public and school libraries "should take steps to ensure that the children aren't accessing those books," Wolfson said. "Steps can be taken to put them in an area on hold until the Consumer Product Safety Commission can give further guidance."

Within the day, however, commission chief of staff Joe Martyak said that Wolfson had "misspoke", and that the commission has neither concluded that the books might be dangerous nor recommended that libraries take any action. An early version of the AP story is here, with the Wolfson quote, and a later version here, for purposes of comparison.

It's not as if Wolfson was making things up here. As readers will recall, one of the two CPSC commissioners, Thomas Moore, called weeks ago for some undefinedly large share of old books to be "sequestered" from children for the time being. However, the full commission has left the issue up in the air rather than endorsing Moore's view.