Coyote Blog

It looks like Obama's plan to yank money normally due the secured creditors and hand it to politically more palatable parties may yet win out:

And, as in the Lehman case, the best asset of the bankrupt company is about to be stolen from under the noses of creditors, as the Judge is willing to appease the even bigger powers that be, using the threat that all hell could break loose if the deal is not consummated in T minus 0 nanoseconds. Same old song and dance. Will the last person leaving please turn off the lights on due process.

I already in a previous post deconstructed Kevin Drum and Joe Romm's critique of the carbon tax.  One reason they don't like the carbon tax is:

Well, for one, it doesn't have mandatory targets and timetables.  Thus it doesn't guarantee specific emissions results and thus doesn't guarantee specific climate benefits.  Perhaps more important, it doesn't allow us to join the other nations of the world in setting science-based targets and timetables.  Also, a tax lacks all of the key complementary measures "” many of which are in Waxman-Markey "” that are essential to any rational climate policy, but which inherently complicate any comprehensive energy and climate bill.

What they are basically arguing is that a carbon tax works by hundreds of millions of individuals making decisions in reaction to higher prices, and chosing their own way to reduce carbon production.  They don't trust this kind of bottom up chaos, despite the fact this is how our entire economy and society works, except for a few corners where beltway guys live and breath in their own reality.  They want a few "scientific" guys at the top picking winners and subsidizing technologies and particular approaches.

I described why I disagreed with this  (or you could spend some time with Hayek to really understand why it is wrong) but I found it staggering that the very next post from Kevin Drum in my feed reader was this one:

Via the LA Times, this is the best news I've heard all day:

The Obama administration on Tuesday proposed renewable fuel standards that could reduce the $3 billion a year in federal tax breaks given to producers of corn-based ethanol. The move sets the stage for a major battle between Midwest grain producers and environmentalists who say the gasoline additive actually worsens global warming.

....While biofuels as a whole "” including grasses and even algae "” are considered promising alternatives to petroleum, some researchers have begun challenging the use of corn for this purpose.

In particular, they point to the "indirect land-use" effects of pulling corn out of the world food supply, which could force farmers in developing nations to clear rain forests "” and release massive amounts of carbon dioxide in the process "” in order to plant corn.

Please dump the corn ethanol subsidies.  Please, please, please.  Dollar for dollar, it might well be the stupidest use of taxpayer cash in the entire federal budget.

Since ethanol is the largest example of Congress's past attempts to set "rational climate policy," what in the hell gives Drum confidence things are going to be any different in the future?  It is yet another example of technocratic planners arguing that the failure is not top-down planning, just the particular individuals doing the planning.  If only my guys did the planning, things would be different.  Right.

Besides, it was a Democratic Congress that passed the last round of ethanol subsidy increases and a Democratic Congress that is upping them again.  So it is Drum's guys doing the planning, and they are making a hash out of it, as all planners do.

For the record, I don't want my guys in DC doing the planning.  I want 300 million people making their own damn choices.  When did this ever stop being a liberal value?

Kevin Drum and Joe Romm offer a helpful primer on the politics of a carbon tax.  Unfortunately, they are a little shy in coming out with exactly what they mean, so I will add in a few helpful explanations.

1. A carbon tax, particularly one capable of deep emissions reductions quickly, is a political dead end....

What they are referring to is that though both are approximately equally costly, the government imposed costs of a cap and trade are better hidden from the consumer than those of a carbon tax, thus making it a more palatable plan for politicians.  By raising costs to producers, and then having the producers inevitably raise prices to the consumer, wily politicians can blame the producers,  not themselves, for the price increases.

2. A carbon tax that could pass Congress would not be simple. Advocates of a tax argue that simplicity is one of its biggest benefits.  Again, those advocates seem bizarrely unfamiliar with the tax code in spite of the fact that they pay taxes every year....

Basically, they are arguing that Congress is incapable of producing a simple, clean law.  Politicians used to be able to do this (the US Constitution will fit on the back of a cereal box -- the new EU proposed constitution barely fits in a large 3-ring binder) but have obviously lost the knack.  Or, more likely, as public choice theory tells us, as the dollar stakes have been raised, politicians are incapable of resisting the pressure of huge sums of money at stake for targeted tweaks and overrides for politically favored groups.

By the way, the comparison he is making to the US income tax code is a false one.  The carbon tax is much more like a sales tax, and many state governments in the US (though not all) maintain very simple and easy to administer sales tax systems with single rates and little complexity.  Our sales tax return in New Mexico, for example, consists of three numbers and a signature on a form about the size of a 3x5 card.

3. A carbon tax is woefully inadequate and incomplete as a climate strategy. Why?  Well, for one, it doesn't have mandatory targets and timetables.  Thus it doesn't guarantee specific emissions results and thus doesn't guarantee specific climate benefits.  Perhaps more important, it doesn't allow us to join the other nations of the world in setting science-based targets and timetables.  Also, a tax lacks all of the key complementary measures "” many of which are in Waxman-Markey "” that are essential to any rational climate policy, but which inherently complicate any comprehensive energy and climate bill.

Basically, their argument here is that they don't like the fact that the success of a carbon tax relies on the unmanaged, bottom up responses to higher prices by 300 million Americans acting in their own best interests and finding their own individual solutions to carbon reduction.  The authors instead prefer a few people in Washington, heavily influenced by a number of special interest lobbyists, setting policy and picking winners.  "Complementary measures" is shorthand for government picking of winners and subsidizing of ... whatever the hell Congress chooses to subsidize.  It is a great way to wrap pork in a nifty new green wrapper.

I think most folks who are not naive understand that what the authors are advocating for here is doomed to be hopelessly politicized -- this is, after all, how we got massive ethanol subsidies that do zero for carbon emissions.  But even if one believes the politicians in charge are monks of public service making purely science-based decisions, these guys still are advocating for at most a few hundred people making the major carbon reduction priority decisions from the top rather than 300 million making them from the bottom up.

Besides, isn't this argument deeply contradictory.  In points 1 and 2, they basically argued that the legislative process is deeply politicized and it is naive to think otherwise.   But then, in point 3, they make an argument for top down planning over bottom up response to planning that can only be even marginally valid if the process is not politicized and science, and not political pull, rule decisions.

Postscript: A couple of related stories, first from the Washington Times:

House Speaker Nancy Pelosi and House Energy and Commerce Committee Chairman Henry A. Waxman, both of California, were among the Democrats -- then in the minority -- who slammed Vice President Dick Cheney for holding closed-door meetings to draft energy policy early in the Bush administration.

Republicans "invited energy lobbyists to write the energy bill that gouges consumers with big payoffs to Big Gas and Big Oil," Mrs. Pelosi said in 2005. "They have turned Washington, D.C., into an oil and gas town when it is supposed to be the city of innovation, of new, of fresh ideas about our energy policy."

But the sweeping climate bill Mr. Waxman and Rep. Edward J. Markey, Massachusetts Democrat and chairman of the panel's key environmental subcommittee, introduced at the end of March includes a provision that benefits Duke Energy Corp., a founding member of the U.S. Climate Action Partnership (USCAP), whose climate plan released in January the lawmakers have frequently called a "blueprint" for their climate legislation.

The exemption would save Duke Energy -- along with other firms now building new coal power plants -- from having to spend millions of dollars outfitting its Cliffside, N.C., power plant currently under construction with "clean coal" technology.

"The USCAP companies must be delirious over the freebies that they've received after writing the blueprint for [the House draft bill]," said Larry Neal, deputy Republican staff director for the House Energy and Commerce Committee.

The second is from the Washington Examiner via Watts Up With That

In exchange for votes to pass a controversial global warming package, Democratic leaders are offering some lawmakers generous emission "allowances" to protect their districts from the economic pain of pollution restrictions.

Rep. Gene Green, D-Texas, represents a district with several oil refineries, a huge source of greenhouse gas emissions. He also serves on the House Energy and Commerce Committee, which must approve the global warming plan backed by President Barack Obama.

Green says Rep. Henry Waxman, D-Calif., who heads the panel, is trying to entice him into voting for the bill by giving some refineries favorable treatment in the administration's "cap and trade" system, which is expected to generate hundreds of billions of dollars over the coming years. Under the plan, companies would pay for the right to emit carbon dioxide, but Green and other lawmakers are angling to get a free pass for refineries in their districts.

"We've been talking," Green said, referring to a meeting he had with Waxman on Tuesday night. "To put together a bill that passes, they have to get our votes, and I'm not going to vote for a bill without refinery allowances."

I guess it is not surprising that Lester Brown continues to scream "famine" despite being wrong about global food shortages and agricultural collapse for forty years running.  What is amazing to me is that respectable journals like Scientific American still give the guy the time of day.  But here they are this month, giving Brown plenty of print space to repeat his warmed-over apocalyptic visions and manipulated data.  Ronald Bailey has the whole story.

One of Brown's problems is that he looks at food capacity  way too narrowly.   For example, a large amount of food growing capacity are currently used for fuel.  Farmers receive billions of dollars to divert huge portions of the world's crops from the food supply to motor fuel.  Should the world ever face a real food emergency, this capacity could quickly be freed up (as it should have been already) by elimination of ethanol and other biofuel mandates and subsidies.

Further, what Brown always seems to ignore is the fact that every year, the amount of farmland dedicated to growing crops is actually shrinking around the world.   Just as he doesn't look at the capacity that is diverted to the fuel supply as an effective food inventory that can be tapped, the same is true for millions of acres of farmland that, while by definition more marginal than current acreage, could again be pressed into service should the need arise.

I tried listing a grill and a bunch of old patio furniture on the Craiglist "free" section the other day.  I had no experience with the site, but the amount of hassle to try to sell these items, which are incredibly bulky, was really high compared to their value.  Anyway, I simply listed them as sitting beside my driveway and that anyone who wanted was welcome to take anything they wanted.  I chose a good weather period with the anticipation that they might sit outside for several days.

My son and I left for lunch and 45 minutes later it was all gone -- every one of 20 or so pieces.  Piranhas probably take longer to fully strip a cow carcas.

Finem Respice has a great post on the Administration's bare-knuckle tactics in trying to enforce its will (against the dictates of bankruptcy law) on Chrysler:

It should be obvious to most observers that, recent allegations of strong-arm tactics in negotiations with Chrysler creditors notwithstanding, given the current situation the White House shouldn't need to resort to anything so openly thuggish as naked threats issued by the likes of Steven Rattner. Assuming for a moment, and for the purposes of conversation, that the allegations are substantially true (and I believe they are), the fact that a bit of Chicago-style thuggery seems to have been required- and seems to have failed- says a lot about this White House. It also says quite a bit about the wild overconfidence intrinsic in the administration and how entirely unused to being denied their will are the senior members thereof. A more deft executive need not have pushed so hard, or rattled the saber of class warfare so loudly, but then a more deft executive would not have expected so much....

There are three things that are scarier than the actual resort to common thuggery. The ease with which it comes to this administration. The ubiquitous and rank ineptitude that makes a resort to thuggery necessary in the first place- and promises it will become a common tactic in the days to come. And the forgiveness the population regularly affords the administration after one or another of these episodes is, yet again, made public.

The tantrums that follow missed targets sketch an interesting family portrait of a class of politically spoiled children, think Hillary Clinton meets Paris Hilton- totally devoid of real executive experience but somehow still used to getting their way no matter what some silly law book says. I believe I'll take my chances with the "speculators" over these alternatives any day, particularly when the spoiled children have the 82nd Airborne Division in their toy chest.

When Obama, who has no real experience with bankruptcy or really with any business enterprise, attempts to substitute for a bankruptcy judge, we have to ask ourselves why.  He certainly does not have as much experience or expertise.  He has no particular unique knowledge of the business.  The only unique "quality" Obama has that a bankruptcy judge does not is that Obama does not feel bound by bankruptcy law.   The only possible reason for his involvement is to substitute his desired outcome for the one that would result from the normal application of contract law and bankruptcy precedents.  Since this is an inherently political process, it should not be surprising that at its core, Obama's actions are meant to promote the interests of a politically important Democratic constituency at the expense of a group of bondholders he is confident he can portray to the public as unsympathetic.

Megan McArdle said it quite well:

For the record, I have no problem with whatever cramdown those debtholders--or any others--get in bankruptcy court.  If the judge thinks that the reorganization can't be done without making the UAW basically whole, fine.  I just think that the reorganization should be done under the well-established procedures of the bankruptcy court, not at the behest of an administration trying to reward its supporters.

It's all very well to say that most of the senior lenders are going along, but of course, the leading senior lenders are doing this because the administration has them over a barrel.  I think most of the people enthusing about this actually recognize that in other countries, when the government uses the banking system as a slush fund to reward its constituencies, this generally turns out badly--and makes the banking system a lot more frail.

Nor will it fly to claim that the administration's threats--and note that Perella Weinberg has most carefully not denied that they were threatened--are just standard jawboning.  Standard jawboning does not involve the White House bloody press corps.  It is true that DIP financiers often get to demand serious concessions from creditors, but those creditors are limited by what those creditors would get out of a recession, and are aimed at either maximizing enterprise value, or maximizing the likelihood that the loan will be repaid.  This deal does neither.

Perhaps it's idealistic of me, but the American bankruptcy system actually works very, very well.  I think we should be very cautious about mucking with it, particularly when there's no reason to.  The administration didn't need to beat up the creditors in order to reorganize the company--or at least, they wouldn't have needed to do so, if they weren't trying to make the creditors take less than they'd get in a liquidation.  Nor did it need to do so to keep the UAW at the table--unlike capital, the UAW isn't going anywhere.  The administration is beating up the creditors because a) it wants to give the UAW a much better deal than they'd get in liquidation and b) they'd like someone else to pay for it.

Update: More of the same coming out (as I predicted here):

Although the focus has so been on allegations that the White House threatened Perella Weinberg, sources familiar with the matter say that other firms felt they were threatened as well. None of the sources would agree to speak except on the condition of anonymity, citing fear of political repercussions.

The sources, who represent creditors to Chrysler, say they were taken aback by the hardball tactics that the Obama administration employed to cajole them into acquiescing to plans to restructure Chrysler. One person described the administration as the most shocking "end justifies the means" group they have ever encountered. Another characterized Obama was "the most dangerous smooth talker on the planet- and I knew Kissinger." Both were voters for Obama in the last election.

One participant in negotiations said that the administration's tactic was to present what one described as a "madman theory of the presidency" in which the President is someone to be feared because he was willing to do anything to get his way. The person said this threat was taken very seriously by his firm.

The White House has denied the allegation that it threatened Perella Weinberg.

A while back I wrote about how irritated I get when a state calls its sales tax a "transaction privilege" tax, and piously tells me that free interchange of goods and services is not a basic right but a privilege that can only be granted by an accommodating government.

Today, via Reason, we hear that "priviledge" word again, this time from Britain's Home Secretary Jacqui Smith, and again it is used in the context of "Kiss your rights goodbye"

Home Secretary Jacqui Smith said she decided to make public the names of 16 people banned since October so others could better understand what sort of behaviour Britain was not prepared to tolerate. [...]

"I think it's important that people understand the sorts of values and sorts of standards that we have here, the fact that it's a privilege to come and the sort of things that mean you won't be welcome in this country," Ms Smith told GMTV.

"Coming to this country is a privilege. If you can't live by the rules that we live by, the standards and the values that we live by, we should exclude you from this country and, what's more, now we will make public those people that we have excluded. [...]

Ironically enough, among the banned is American conservative radio host Michael Savage.  I don't enjoy Savage's schtick, but my sense is that he would very much share Ms. Smith's view on borders, that we need to filter those we allow in the country based on various ideological and cultural screens.  In fact, my sense is that Smith and Savage are very closely alligned on this, and differ only in how they would define the filters.

I must say that it is deeply depressing to see the UK implementing content-based speech screens on immigration and even visitation.

Despite years and hundreds of millions of dollars of effort on electric vehicles, competitors are coming out of the woodwork to beat it to market with an all-electric sedan -- and, from the specs, seem to be beating it on price and features as well.

Miles Electric has confirmed that it's working on a family sedan-sized all electric car for release in North America sometime next year. The car -- which will be released under a different, unknown brandname -- will be a first for the company, which specializes in neighborhood cars that only go up to about 25 miles per hour. The sedan will have a top speed of around 80 miles per hour, and a 100 mile range. It will also require 8-12 hours to fully recharge its dead lithium-ion battery. Miles is currently running the vehicle though crash tests, and expects to see about 300 of them on the road in California sometime next year. The going rate for one of these? About $45,000.

Radical shifts in technology often obsolete first mover and scale advantages.  The winners in the market for diesel electric locomotives (GM and GE) were totally different players from those who dominated the steam locomotive market (Alco, Baldwin, Lima and others).  It will be interesting to see if such a change occurs in the auto market.

Get all the information and download links here.  I am going to try this on my extra PC this weekend.

I had to wait until TJIC left, but I joined Facebook today mainly so I can better monitor my kid's page.  The deal was that he could have a Facebook account but only if he accepted my wife and I as friends and we had access to his pages.

Having gotten an account, I am having nearly as much trouble trying to figure out what I can usefully do with it as I had when I signed up for a Twitter account (dropped within a week) over  a year ago.  Anyone who has ideas of how it might be useful (given that I am not in a business that runs on contact or relationship management) is welcome to send me those ideas.  Also, all you Facebook cultists are welcome to send me "friend" invites.  The least I can do is humiliate my kids by dwarfing their friends lists.   The email on my account is the same as for this blog, which you can get by mousing over the contact button on the top bar of this site.

The Thin Green Line has been running a series of articles complaining about price increases and service cuts at the local MTA.  I will leave aside for today the critique I have been putting in the comment section of that blog, which is that if you really care about transit service for the working poor, then you never should have started down the light rail path in the first place.  Light rail is an expensive yuppie toy that inevitably, through its high costs and continuing capital requirements, starves money from the bus services that the working poor actually depend on.

But anyway, I thought it was endemic of a certain type of political outlook that the author could write this with a totally straight face:

Also problematic is that the MTA did not hit drivers and riders equally [with proposed fee and fair increases].

Wow!  You mean a price increase for a service does not hit users and non-users of that service equally?  On what planet does one have to live on to believe that they should?

I am totally confused - under what reading of the constitution can this possibly be within Federal powers?  Is there an off-chance that a pool might pick up and move across state lines?

A new federal pool-safety law has cash-strapped Valley homeowners' associations and apartment managers scrambling to finish costly drain modifications so they won't have to close pools this summer.

Some have already locked gates and posted signs; a few are mulling permanent closure to avoid renovation costs or stiff penalties and legal liabilities if they fail to comply.

The Virginia Graeme Baker Pool and Spa Safety Act went into effect in December and requires that all outlet fittings and drain systems in public and semi-public pools meet new safety standards that prevent drain suction from holding swimmers under water. Backyard pools at single-family residences are exempt.

Certainly the old design can be dangerous -- we updated our drains when we re-did our pool.   But a federal law?

One might expect that the underlying problem was so grave that it necessitated the shortcut of federal regulation over state and local regulation (which normally covers things like pool construction standards).  But in fact the article says that, according to the law's promoters, less than 2 people per year have been killed by this problem, and presumably most of these have been in private pools not covered by the law (since their numbers statistically dwarf those of public pools).

So why has expensive extra-Constitutional federal legislation been passed to save less than one person per year?  Well, because that one person was once related to a famous politician:

The law was named after the 7-year-old granddaughter of former Secretary of State James A. Baker III who died in 2002 in a spa after the powerful suction of a drain held her underwater.

I have written before how politicians' personal experiences often lead to bad regulation.

Via Engadget:

Looks like the rumor of a new larger Kindle is true. Amazon just sent us an invitation to a press conference scheduled for Wednesday, May 6 at 10:30am ET. You know what Amazon does at press events? It launches new Kindles!

As noted by Peter Kafka over at All Things Digital, the location of the Amazon event -- Pace University -- is the historic, 19th century HQ to the New York Times which is said to be partnering with Amazon on the larger Kindle. That makes for a perfect symbolic bridge from old to new media. We'll have to wait and see if newspaper subscribers can be lured across.

I was an early Kindle adopter and love my Kindle 2.  My only complaint is the lack of electronic versions of a lot of older books I would like to read (example -- various James Clavell novels) but I am hoping this is similar to the early phase of CD's and DVD's when publishers had not yet seen the market or had the time to convert older music and movies to the new media.

So what may be the most important Chapter 11 proceeding in modern history has begun -- important not just because it is large, but because the court in a sense is being asked to validate or invalidate the unprecedented power grab by the Obama administration.  The results of this trial may well slow or accelerate America's devolution into a European-style corporate state where political pull rather than costs or products determine corporate success.  It also will have a lot to say as to whether the rule of law has any meaning any more, at least as far as President's go.

The first salvo, by the non-TARP secured creditors that Obama was unsuccessful in beating down, has been fired:

Just hitting the Chrysler bankruptcy docket is an objection filed by W&C on behalf of its clients, objecting to the 363 asset sale. The filing is attached below (and linked here). Some very harsh language with regards to Uncle Sam in there...

The summary of the grounds for the objection:

1. The Proposed Sale Constitutes an Illegal Sub Rosa Plan that Redistributes Value Among Creditor Classes.

2. The Proposed Sale Fails the Requirement of Section 363(f).

3. The Sale Is Not Proposed In Good Faith.

4. The Taking of Collateral through a Direct or Indirect Use of TARP Authority is Unconstitutional. (This one is Huge as it sets a case law precedent.)

Over the weekend, there was a lot of back and forth with W&C (White & Case) senior attorney Tom Lauria, who said that one of his clients gave in to the restructuring when threatened by the Obama administration with having its reputation destroyed by the White House press office.   Both the White House press office and the client in question denied this account of events, but never-the-less Obama was indeed vilifying the holdouts, though in a general rather than specific way.

This is probably only the tip of the iceberg.  I think if creditors start to see that the bankruptcy judge is unwilling to automatically roll over for the administration, more such revelations will emerge.  The blog Finem Respice has a doozy, though it is unsourced and so must be treated with caution.

Apparently a number of the lenders to Chrysler were recipients of TARP money, and thus were especially susceptible to Obama Administration blackmail to take less money for their Chrysler debt than they would normally get in bankruptcy court.   In effect, Obama is asking for partial payment for the TARP money in the form of concessions to Chrysler's other parties in the bankruptcy, mainly their unions.

But the TARP money is MY money.  And I don't want to get paid back this way.  If these lenders have the ability now to pay out billions of dollars (in the form of forgiven loans) then I would rather see them returning this money to the Treasury rather than sticking it in the pocket of the UAW or propping up a zombie auto company that hasn't made a car I would even consider buying in over 10 years.

TARP is going to turn out to be the greatest tool ever invented for increasing the power of government in the economy and accelerating the development of the American corporate state.  And Obama can laugh all the way to the bank(s) knowing that it was a Republican administration that handed him this power.

Postscript: I thought this was funny, via Instapundit:

And though I'm not a gearhead, I'm a little surprised to hear the administration saying that Chrysler is going to be saved by"“Fiat's world-class engineering.

All the more so given that Daimler couldn't help.

Kevin Drum posts (sorry, I have to quote the whole post or it won't make sense):

From a Washington Post story about wage cutbacks:

Members and employees of the Virginia Symphony Orchestra are bracing for more hard times. The orchestra has had to contend with a $1.5 billion debt....The musicians were furloughed, and the administrative staff, including Johnson, took a 20 percent pay cut. The two moves saved the VSO about $500,000.

Not bad!  At that rate they should have their debt paid off in another 3,000 years.

I know I'm being sort of prickish for even bringing this up, but seriously: at least one reporter and two editors worked on this piece, and apparently none of them were taken aback by the idea of a regional orchestra being $1.5 billion in debt.  At any rate, not taken aback enough to wonder idly if maybe it was $1.5 million instead.  Sheesh.

I don't know, Kevin.   Your guy Obama proposed to deal with a trillion dollars of deficit by seeking $100 million of savings, and everyone in the press nodded their head and said how wonderful that Obama guy is.  On a percentage basis, a $500,000 cut in a $1.5 billion debt is actually three times more impactful than what Obama proposed.   Is it any wonder the press accepted these numbers without skepticism?  Obama has trained them well.

Good for Megan McArdle:

when did it become the government's job to intervene in the bankruptcy process to move junior creditors who belong to favored political constituencies to the front of the line?  Leave aside the moral point that these people lent money under a given set of rules, and now the government wants to intervene in our extremely well-functioning (and generous) bankruptcy regime solely in order to save a favored Democratic interest group.

No, leave that aside for the nonce, and let's pretend that the most important thing in the world, far more interesting than stupid concepts like the rule of law, is saving unions.  What do you think this is going to do to the supply of credit for industries with powerful unions?  My liberal readers who ardently desire a return to the days of potent private unions should ask themselves what might happen to the labor movement in this country if any shop that unionizes suddenly has to pay through the nose for credit.  Ask yourself, indeed, what this might do to Chrysler, since this is unlikely to be the last time in the life of the firm that they need credit.  Though it may well be the last time they get it, on anything other than usurious terms.

I am not sure I agree with the last part.  While banks seem to have an unbelievably long memory when it comes to you or I trying to get a loan after we forgot to return those Columbia House records 15 years ago and couldn't pay our bills, major banks have goldfish memories when it comes to major losses.  Whether it be lending to Latin American companies or to industries like airlines that go bankrupt with clockwork regularity, banks seem perfectly capable of repeating the same mistakes over and over again.

This is in part due to something I was trying to tell folks waaaaay back in October with the threatened liquidity crisis -- banks have to lend.  There is simply no good business model for a bank that involves sitting on hoards of cash under the mattress.  And when you have tens of billions of dollars to lend, you can't just do it in $100 increments -- you have to lend big slabs to large institutions.  And given that lots of other banks are trying to lend to the same guys, someone is going to issue that $300 million line of credit to Chrysler a couple of years hence.

Somehow I am on a couple of Minutemen / anti-immigration email lists  (I suppose I was put there by a staffer that did not read my site very carefully).  Anyway, I got this from some such group called the ALIPAC:

While hyper political correctness tries to hold sway in America as not to offend or disrupt trade with our Mexican neighbors to the south, the official name of the new flu pandemic is Mexican Flu and not the PC terms 'Swine Flu' or 'H1N1'.

Swine Flu and H1N1 are terms that describe large volumes of flu like viruses and not the specific strain at hand. Traditionally, pandemic flu strains are named after their points of origin. The point of origin for the new H1N1 pandemic flu, with swine flu DNA components is Mexico.

"It's a sad day in America, when you can't even call this pandemic strain by it's proper name 'Mexican Flu'," said William Gheen. "We are calling on all members of the media and citizens alike to refer to this pandemic virus as the Mexican Flu."

The World Health Organization (WHO) and several nations are now referring to the new H1N1 pandemic strain from Mexico as the 'Mexican Flu' which is now the official name.

The last three global pandemic flu viruses were named the Hong Kong Flu (1968), the Asian Flu (1957), and the Spanish Flu (1918).

Yeah, I am just sure these guys would have issued this same press release had the virus originated in Canada.  The attempt here to try to tar an entire ethnic group by hanging this flu around their necks is so transparent that I can't believe someone actually had the guts to issue this press release.  And I find it hilarious that a strongly Conservative group suddenly is looking piously to a UN organization (the WHO) for "official" guidance.  That had me laughing out loud.

I am glad he mentions the Spanish Flu, because it both 1) proves the author is historically illiterate and 2) shows the danger of trying to hang blame for a pandemic on one particular country.

First, it is pretty clear that the Spanish Flu did not begin in Spain.  As I understand it, as the world's governments clamped down on the media and suppressed news of the pandemic, the Spanish media was (relatively) unregulated.  The world therefore had a lot of its first reports about the flu from Spain, even though the first cases were not there, so people got in the habit of referring to the Spanish flu.

In fact, America firsters at the ALIPAC need to be really careful on this naming thing.  One of the leading theories of the Spanish flu's origins was that it began in the US (possibly Kansas or Boston) or at least that the mutation to its more deadly form occurred in the US, and then was brought to Europe by American soldiers.   I suppose if the ALIPAC is willing to call the 1919 flu the American Army flu, then I will call the current one the Mexican flu.

By the way, we as Americans should be very, very careful trying to demonize and wall off Mexico over this flu.  Because it might feel good here, but around the rest of the world most nations are lumping the US and Mexico together as the source, so any worldwide calls for closing borders and isolation are likely to backfire against the US.

Megan McArdle points out the real problem that carbon taxes and other CO2-abatement approaches have -- they only really work if it they are painful.  I mean, the whole point is not supposed to be to raise government revenue or just arbitrarily raise prices.  The whole point is to change behaviors, and the most powerful tool for behavior change is price changes.

Global warming activists are talking about 80% CO2 reductions.  This is an enormous number, especially since the relative cut has to be even higher to account for future growth, as reductions are generally pegged to current (or as in Kyoto, past) CO2 emissions levels.

A 40-cent gas tax is not going to do it.  Or, looking at how much behaviors changed when gas prices recently went up to $4, a $2.00 gas tax is not going to do it.  The Europeans have $6+ gas taxes and that is not enough to reach the levels activists want for this country.   It is likely going to take $10+ gas to even start to get the reductions in use and the shifts to much more expensive carbon-less technologies that would be required to hit 80% type goals.

All this means that we are NEVER going to have a carbon tax that really reflects the necessary rates to hit the emissions targets Obama and the alarmists claim to be committed to.  That is why we will get backdoor taxes that try to hide the tax and shift the blame away from Congress.    But none of these schemes, including cap and trade, will have any meaningful impact unless they lead to consumer price increases that change behaviors of the end users**.  But these approaches are preferable to lawmakers, as they somewhat disguise the relationship between legislation and prices, and give them some ability to blame private companies for the price increase, even where these increases are the inevitable result of carbon caps.

Postscript: This is further complicated because the major technologies the government is attempting to subsidize as part of meeting these goals are virtually useless.  Two in the transportation sector - ethanol and electric vehicles - are of questionable merit.  Ethanol has about zero efficacy in reducing Co2, and may actually increase it (but it is essential if one wants to win the Iowa caucuses).  Electric vehicles have some potential, but their impact is dependent on how electricity is generated.  Based on the current mix, shifts to electric vehicles just shift emissions from one place to another without much net reduction.  If someone were to propose a massive nuclear and electric vehicle program, they might convince me they were on to something.

**PS#2: I suppose you could reach these goals without fuel price increases.   Two alternatives:

• Mandate certain transportation and other technology solutions, as well as certain limits (e.g. maximum house size, maximum number of TV's, etc).  This still has cost, though, in terms of enormous losses in personal liberty as well as likely enforced higher costs of major purchases, like cars.  So this is still likely a price increase, it just shows up in a different place.  Also, this may well not work -- there is very good evidence that without price changes in fuel, consumers react to higher MPG in their cars by driving more, thus sibstantially dilluting the carbon effect.
• Enforce carbon limits combined with price caps on fuel and electricity.  This would be effective, probably, but of course would result in massive shortages of gas and electricity.  The rationing challenge would be enormous.

Love this picture of 30 Rock, via Shorpy (including full-size image)

Queen Beatrix of the Netherlands survived an assassination attempt, though several of her staff and onlookers were not so lucky.

Years ago, my parents actually hosted Queen Beatrix's visit to Houston.   As a libertarian, I don't have much use for hereditary monarchy, but she was quite approachable and helped smooth over my wtf-am-I-doing-here nervousness at the event.  She also paid a visit to Princeton University while I was there, so she's got that going for her too.

Radley Balko linked to this article for a different reason (at least I think it was for another reason -- I actually can't figure out why he linked to it, but all those Reason guys are often too hip for me to follow).  But I thought this line was funny:

An off-duty Essex police officer could face charges for shooting his allegedly neighbor's dog after it tangled with his Pug, state police say.

"Allegedly neighbor's dog?"  Is the fact that he is a neighbor in doubt?  Or is the ownership of the dog in doubt?  Or is it the species of the animal that is in doubt?

From the Economist via TJIC:

the United Automobile Workers "¦ can own half of Chrysler's stock and a third of General Motors' stock if everything goes through"¦

anti-labour activists might also feel a bit of cheer. As Conor Clarke points out, today's events can only have one of two consequences:

It will change the incentives of the unions"”such that they realize their demands were bad for the company"”or it will run the company (further) into the ground and leave the union to pick up the pieces.

Worker ownership rarely works the way it's expected, so it's entirely possible that the UAW has sped up its own demise by cutting this deal.

I don't have any hope that it will work out this way.  The only incentive alignment that will exist is that union ownership of GM will align Congressional incentives to issue GM a near infinite stream of subsidies, bailouts, tax breaks, import restrictions, consumer incentives, etc.

We are switching ownership of GM from a politically fragmented and unorganized group (ie current GM shareholders) to a single organization that already has political clout and massive political lobbying infrastructure  (UAW).  Just look at the large corporate states of France and Germany.  Union involvement in corporate management doesn't change union practices, it changes government practices.

Update from Q&O:

There's some interesting stuff out there to read about the Chrysler bankruptcy, like people asking "why wasn't this done in the beginning"?

Simple answer - in the beginning there was no way to secure the UAW a majority stake in the company. Now, as Felix Salmon points out, that's been accomplished

Given the deal Obama is trying to foist on them, it is no surprise bondholders are ready to take their chances with bankruptcy court.  I makes me sick to see Obama piously calling out these bondholders as if they are somehow corrupt and evil, when in fact their only crime is not to take the hosing Obama is trying to give them:

According the Treasury-GM debt-for-equity swap announced Monday, GM has $27.2 billion in unsecured bonds owned by the public. These are owned by mutual funds, pension funds, hedge funds and retail investors who bought them directly through their brokers. Under Monday's offer, they would exchange their $27.2 billion in bonds for 10% of the stock of the restructured GM. This could amount to less than five cents on the dollar.

The Treasury, which is owed $16.2 billion, would receive 50% of the stock and $8.1 billion in debt -- as much as 87 cents on the dollar. The union's retiree health-care benefit trust would receive half of the $20 billion it is owed in stock, giving it 40% ownership of GM, plus another $10 billion in cash over time. That's worth about 76 cents on the dollar, according to some estimates.

In a genuine Chapter 11 bankruptcy, these three groups of creditors would all be similarly situated -- because all three are, for the most part, unsecured creditors of GM. And yet according to the formula presented Monday, those with the largest claim -- the bondholders -- get the smallest piece of the restructured company by a huge margin.

This seems to be by political design

From the WSJ via Reason