U.S. Bailout, Stimulus Pledges Total $11.6 Trillion

All information culled from Bloomberg:

The following table details how the U.S. government has pledged more than $11.6 trillion on behalf of American taxpayers over the past 19 months, according to data compiled by Bloomberg.

Changes from the previous table, published Feb. 9, include a $787 billion economic stimulus package. The Federal Reserve has new lending commitments totaling $1.8 trillion. It expanded the Term Asset-Backed Lending Facility, or TALF, by $800 billion to $1 trillion and announced a $1 trillion Public-Private Investment Fund to buy troubled assets from banks.

The U.S. Treasury also added $200 billion to its support commitment for Fannie Mae and Freddie Mac, the country’s two largest mortgage-finance companies.

--- Amounts (Billions)---
	Limit	Current
=================================	===============	===========
Total	$11,623.63	$3,800.18
---------------------------------	---------------	-----------
Federal Reserve Total	$7,565.63	$1,478.88
Primary Credit Discount	$110.74	$65.14
Secondary Credit	$0.19	$0.00
Primary dealer and others	$147.00	$25.27
ABCP Liquidity	$152.11	$12.72
AIG Credit	$60.00	$37.36
Net Portfolio CP Funding	$1,800.00	$248.67
Maiden Lane (Bear Stearns)	$29.50	$28.82
Maiden Lane II (AIG)	$22.50	$18.82
Maiden Lane III (AIG)	$30.00	$24.34
Term Securities Lending	$250.00	$115.28
Term Auction Facility	$900.00	$447.56
Securities lending overnight	$10.00	$5.59
Public-Private Investment Fund	$1,000.00	$0.00
Term Asset-Backed Loan Facility	$1,000.00	$0.00
Currency Swaps/Other Assets	$606.00	$417.86
MMIFF	$540.00	$0.00
GSE Debt Purchases	$600.00	$33.58
Citigroup Bailout Fed Portion	$220.40	$0.00
Bank of America Bailout	$87.20	$0.00
---------------------------------	---------------	-----------
FDIC Total	$1,551.50	$400.30
FDIC Liquidity Guarantees	$1,400.00	$261.30
GE	$139.00	$139.00
Citigroup Bailout FDIC	$10.00	$0.00
Bank of America Bailout FDIC	$2.50	$0.00
---------------------------------	---------------	-----------
Treasury Total	$2,206.50	$1,621.00
TARP	$700.00	$387.00
Tax Break for Banks	$29.00	$29.00
Stimulus Package	$168.00	$168.00
Stimulus II	$787.00	$787.00
Treasury Exchange Stabilization	$50.00	$50.00
Student Loan Purchases	$60.00	$0.00
Citigroup Bailout	$5.00	$0.00
Bank of America Bailout	$7.50	$0.00
Support for Fannie/Freddie	$400.00	$200.00
---------------------------------	---------------	-----------
HUD Total	$300.00	$300.00
Hope for Homeowners FHA	$300.00	$300.00

No comment is neccesary.

MBA, CFA, BFD

"MBA, CFA, BFD."

I once had a boss that used that phrase anytime some greenhorn equity salesman would try to impress him with their spit-shined education credentials. I always got a kick out of that, especially since he was a CFA chartholder himself, and several of my colleagues had either an MBA, a CFA or both. He was a cynical man with a chip on his shoulder who was also fond of referring to this elite crowd as "the lucky sperm club." His roots were quite different than what he assumed were the roots of those he denigrated. He worked his way through a state school while supporting a young wife and special needs daughter as a tire salesman before launching a career in investment bank equity research which lead to his eventual early retirement as a rich, successful portfolio manager. I think it was his snide way of saying what Mark Twain once said: "I never let my schooling get in the way of my education." He had an excellent nose for bovine excrement, and was particularly suspicious of the brand that Ivy league MBA-types were fond of peddling.

There's an opinion column on Bloomberg today titled, "Harvard Narcissists With MBAs Killed Wall Street."

Twenty or 30 years ago, it was common for the best and the brightest to be doctors or engineers. By the 2000s, they wanted to be investment bankers.

When Wall Street was run by people randomly selected from the population, it was able to survive everything. After the best and brightest took over, it died the first time real-estate prices dropped 20 percent.

If you walked into any major Wall Street firm a year ago and randomly selected an employee, chances are that person would either be from an Ivy League school like Harvard University, or have an MBA, or both.

While there may be a handful of multi-talented people working on Wall St. for reasons other than the money they earn, the vast majority are attracted to Wall St. for one reason: the pay scale. The rationale being that if one is going to be a working stiff, one may as well be a working stiff at the top of the pay scale. The problem from the employer's point of view is that the pay scale becomes a self-reinforcing juggernaut rather quickly. The best and brightest are attracted to Wall St. for the money, so Wall St. firms get into a bidding war to attract the best and brightest. Elite universities then use that salary data to persuade the next crop of the best and brightest to attend their program, which further concentrates the size of the pool in which the best and brightest swim. Pretty soon all you have to choose from is the most elite pool that exists--the Ivy league and a handful of other institutions of the same caliber. The dangers of the resulting groupthink are rarely discussed, though today they are as apparent as a Skid Row hooker in a nunnery, and need no further elaboration.

What do you get from an MBA? One recent study found that MBAs acquire an enormous amount of self-confidence during their graduate education. They learn to believe that they are the best and the brightest.

This narcissism has a real career impact. Psychologists at Ohio State University studied the behavior of 153 MBA students, who were put in groups of four and asked to orchestrate a large financial transaction on behalf of an imaginary company. The psychologists observed that the students who had the strongest narcissistic traits were most likely to emerge as leaders.

According to Amy Brunell, the lead author, the results of the study had large implications for real-world settings, because “narcissistic leaders tend to have volatile and risky decision- making performance and can be ineffective and potentially destructive leaders.”

There is no shortage of narcissism on display in the upper echelons of Wall St. firms. Less overt but even more destructive is the narcissism displayed in the upper echelons of government officialdom. I say more destructive because government seldom makes any pretensions of fiscal constraint. Why should they? Afterall, it is not their own money they are borrowing and spending. Though it must be noted that TARP 1.0 has done a pretty thorough job of making private sector banking just as unaccountable as the public sector.

All of this may sound familiar to anybody who has read Herman Hesse's 1946 Nobel prize winning novel, The Glass Bead Game. In it, a member of the futuristic ivory tower elite--long having been insulated from the realities of life--decides to cast his privileged status aside for a life of rubbing elbows with the commoners. Tragedy befalls the protagonist when he drowns during what would be considered a routine swim across a lake by anybody who had not grown up insulated in the ivory tower. The moral of the story is that no matter how smart you think you are, nobody is above the laws of nature.

Another word that comes to mind when trying to describe the predicament Wall St. finds itself in is incest. When you choose the bulk of your work force from a single gene pool--no matter how gifted that gene pool may seem to be--the weakest traits inevitably surface and manifest themselves in such a way that makes the destruction of the host a real possibility. Ask the Ptolemaic Dynasty how incest worked out for them.

It is done

It looks like both houses of Congress have agreed to the 1,000+ page, $787,000,000,000 "stimulus" package that is going to save our country from the abyss.

Before you accuse our elected officials of vigorously scratching the itch to spend our children's money, remember, it could have been worse:

The nonpartisan Congressional Budget Office said the stimulus package will cost $787 billion, rather than $789 billion lawmakers estimated earlier this week.

That is what passes as fiscal responsibility on Capitol Hill.

And this, from San Francisco's favorite carpetbagging daughter:

“The jobs the American people care about most -- their own -- will be dramatically safer the day that President Obama signs this plan into law,” said House Speaker Nancy Pelosi, a California Democrat.

I know I feel much safer about my job after reading that. Please, somebody find me one sound-byte that falls out of her yapper that isn't plum-crazy talk.

This is interesting:

Lawmakers dropped provisions barring funds from going to museums, arts centers and theaters. A ban on money to casinos, golf courses, zoos and swimming pools was retained.

I like museums, arts centers and theaters as much as the next guy, which is why when I use them, I pay the price of admission which I assume is structured to cover the costs of doing business. Why they should get free money from the government; while casinos, golf courses, zoos and swimming pools(??) are all forced to survive in the capitalist--sorry--socialist wilderness on their own is beyond me. Well if this results in a reduction of the $25 price of admission to the shiny new California Academy of Sciences I suppose I will be forced to reconsider my stance on the entire "stimulus" bill.

Lawmakers deleted provisions requiring businesses receiving stimulus funding to use E-Verify, a government program used to ensure workers are in the country legally.

By all means, we must not upset the largest potential block of new democratic voters, at least not until after the 2010 census. If Obama successfully wrestles control of the census count away from the Dept. of Commerce and into the White House--which is illegal if the US Constitution is your guiding principle anyhow--illegal aliens will be a permanent fixture of the democratic machine.

Most senators had left the chamber’s floor hours before the final tally was announced. The vote was held open for five hours until Senator Sherrod Brown, an Ohio Democrat, returned from his home state to cast the deciding vote for the bill. Brown had been in Ohio following the death of his mother earlier this week.

Rest In Peace Mrs. Brown; government has yet to invent a way to tax you in the afterlife. And if you thought curious, inquiring congressional minds may want to stick around and read what they just signed , you'd be wrong:

“It is over a thousand pages,” said Representative Tom Price, a Georgia Republican. “It is physically impossible for any member to have read this bill.”

I've been reading the abridged version of the History of the Decline and Fall of the Roman Empire for almost 3 years now. It comes in a little under 1,000 pages. It is taking me a long time to read because it is a lot to digest, and nobody is paying me to read it. Maybe I should just thumb through it and tell people I read it instead. At least I wouldn't let contemplating any of the details hold me back from taking a first-class trip to Europe.

On a more positive note, what we need are more economists like Michelle talking no-nonsense economics with Obama supporters, capturing it on video and broadcasting it on YouTube.


(h/t texas rainmaker via instapundit for the image at the top of the page. Probably photoshopped or a prank, but it does capture the spirit of the Obama rapture rather well.)

The United States of Insolvency

This chart caught my eye over the weekend (from the Economist):

The biggest force behind the bond-market shock is the onslaught of new issuance as the government seeks to finance the gaping budget deficit, Fed liquidity programmes, mortgage purchases and bank bail-outs. Yields moved still higher this week partly on the Treasury’s announcement that it would borrow a whopping $493 billion this quarter. Wrightson ICAP, a research firm, predicts the Treasury will issue $1.8 trillion this year, which combined with $1.5 trillion last year, would exceed all the net borrowing of the prior 27 years combined.

Where are all the hyperventilating voices that expressed outrage when Dick Cheney said, "...deficits don't matter" almost 5 years ago?

The "state" of California

Speaking as a third generation Californian, my family has lived through many of the ups and downs our state has experienced over the last 100 years. One of the things that has always impressed me about this great state is its uncanny ability to reinvent itself in the face of adversity. Lately though, I have become worried about the future of this state. This goes against my nature, as I am generally an optimist and not given to alarmist reactions to events.

Though, when our state's elected officials cannot do the job we pay them to do by reaching an agreement on how to close a $46bil budget gap while our general obligation (GO) debt rating gets cut to "A"--giving us the lowest credit rating of any state and making borrowing even more expensive; this worries me. Sacramento, please end your symbiotic, incestuous relationship with your public union enablers immediately.

When in the midst of this, the "prison czar" has proposed $8 billion of wildly excessive prison health care construction (with the additional cost of $2bil a year for maintenance) complete with fitness centers for "wellness promotion," music and art therapy, contemporary landscaping and maybe even a yoga room for prisoners; this worries me. Hey guys, don't forget to grab a condom on your way back from arts and music so you can engage in a little state-sanctioned sodomy while $300,000 a year guards look the other way.

When a public employee can retire at the age of 52 and collect 78% of the $112,000 salary he earned before stepping down and maintain full health care coverage for life while the rest of us working in the private sector watch our 401(k) retirement plans vanish like a puddle in the Mojave desert and fret over the astronomical cost of COBRA should we lose our jobs; this worries me.

When the recently sworn in city supervisor in my district makes his first order of business to investigate allegations of police department racial profiling of Latinos in what is a predominately Latino district; this worries me. Next he'll be investigating ice for its habit of being frozen.

I fear we're about to reach a tipping point. We simply cannot continue on this fiscally irresponsible path. I may be old fashioned, but I always thought the public sector was supposed to serve the private sector, not the other way around. What we now have is a shrinking private sector that is being choked to death by a self-entitled public sector.

The one thing I am absolutely certain of is that the golden egg-laying goose is in its death-throes. When the autopsy comes back, there will be nothing but state politician and public sector union fingerprints all over its neck.

The time warp is stuck on continuous play

Trivia time! Guess the year of the following headline:

Fannie Mae to Loosen Rules for Home-Loan Refinancing

a) 1989
b) 1999
c) 2009

If you guessed "C" give yourself a prize!

From the article:

Feb. 5 (Bloomberg) -- Fannie Mae, the mortgage-finance company under government control, will loosen rules for homeowners seeking to lower their loan payments by refinancing.

Fannie Mae will drop some credit-score requirements, reduce income-documentation standards and waive the need for appraisals in some cases, according to a notice yesterday to lenders posted on the Washington-based company’s Web site.
The changes apply to loans that the company owns or guarantees.

The company, which accounts for more than 40 percent of the $12 trillion in residential mortgage debt, is seeking to break a “logjam” in refinancing and allow more homeowners to take advantage of near-record low interest rates, according to Brian Faith, a Fannie Mae spokesman. The increased flexibility for consumers isn’t large enough to significantly harm mortgage- bond investors and mortgage insurers, analysts said.

Imagine if your house was burning down and when the fire department showed up, instead of turning on the water hoses they busted out the flame thrower instead.

For some strange reason, this scene from Groundhog Day keeps playing in my mind's eye.

Death and T...oh nevermind.

It is pretty clear to me that the reason Democrats are such big fans of taxes is because they don't pay any taxes.

Leona Helmsley was right, when she allegedly said to one of her housekeepers, "We don't pay taxes. Only the little people pay taxes ..."

Though I wonder, what would happen if all of us little people simultaneously decided to stop paying taxes?

Trashed Prius

You see the darnedest things when you come to work a couple hours late:

I took this photo just down the street from my office this morning. Apparently, somebody has it in for hybrids; or maybe it's just the Toyota Prius. The windshield and the four side windows are smashed, sideview mirrors pulverized, all four tires flat, random black spray paint all over it; at least they could have left us with some thoughtful graffiti instead.

Who's to blame? Supporters of Big Oil, livid at the impressive, profit-crimping gas mileage the Prius delivers? A marauding gang of Chinese youths celebrating New Year and simultaneously administering symbolic payback for the rape of Nanking on the nearest symbol of Japanese success? This is the edge of Chinatown after all. Maybe it was done by a gaggle of patchouli drenched eco-youths who are confused by their conflicting feelings about global warming on this much colder than normal morning? If that's the case, it will probably be chalked up as a hate crime.

No matter who is to blame, were it my car, I'd be pretty freakin' pissed off.

Government front running

This is what happens when government front runs the private sector:

Bailouts Punish Investors in Bank Capital Notes
2009-01-23 12:13:34 .845 GMT

By John Glover
Jan. 23 (Bloomberg) -- Investors in bank capital securities
are being punished as the notes plunge in value on concern
government bailouts will make them effectively worthless.
Lenders use so-called Tier 1 notes to bolster regulatory
capita and cushion senior bondholders and depositors against
losses. The CHART OF THE DAY (above) shows the $93 billion market is
suffering the biggest slide on record, according to data from
Merrill Lynch & Co.’s Euro Sub-Debt Tier 1 Index.
Banks may be forced to stop paying interest on the
securities as a condition of getting billions of dollars of
taxpayer’s cash, according to Simon Adamson, an analyst at
CreditSights Inc. The price slump is hurting investors such as
U.S. insurer Aflac Inc., whose shares fell the most in more than
25 years yesterday as Morgan Stanley called the firm’s
investments in “a rapidly escalating concern.”
“Tier 1 investors are being punished,” London-based
Adamson said in an interview. “Now that governments are bailing
out banks or nationalizing them, the risk of interest deferral is
increasing.”
Tier 1 bonds, which combine elements of equity and debt,
typically have no set maturity and issuers can defer or pass
interest payments. Holders are paid after other debt investors in
the event of a bankruptcy.

If there's one thing the market absolutely hates, it is uncertainty. As a private investor, why would you consider investing in anything if there was the chance that government was going to either change the rules of the game on a whim or step in front of you in the queue to book a return on investment?

This is a perfect example of why excessive government intervention will effectively prolong our much anticipated economic recovery.

Seems we may be doomed to learn the lessons of the 1930's all over again.

The notion of too big to fail

The following bubble chart compares the current market capitalization of our nation's biggest banks to what they were in the second quarter of 2007:

The chart is a little fuzzy, but the blue bubble represents Q2'07 and the green bubble represents Q1'09 YTD. The giant bubble with the tiny inset bubble that looks like the earth against the sun is Citigroup.

This link leads to a state-by-state breakdown of the allocation of TARP funds. Interestingly, those states that are politically known as "blue" are the reddest of red in this depiction.

Nouriel Roubini, a professor at NYU who has been getting a lot of press lately for correctly predicting the current banking crisis, thinks that losses may reach $3.6 trillion before we're through the woods:

“I’ve found that credit losses could peak at a level of $3.6 trillion for U.S. institutions, half of them by banks and broker dealers,” Roubini said at a conference in Dubai today. “If that’s true, it means the U.S. banking system is effectively insolvent because it starts with a capital of $1.4 trillion. This is a systemic banking crisis.”

Losses and writedowns at financial companies worldwide have risen to more than $1 trillion since the U.S. subprime mortgage market collapsed in 2007, according to data compiled by Bloomberg.

President Barack Obama will have to use as much as $1 trillion of public funds to shore up the capitalization of the banking sector, following the $350 billion injection by the Bush administration, Roubini told Bloomberg News. Congress last year approved a $700 billion rescue fund, of which half remains to be disbursed.

I have been opposed to the TARP bailout since it was first proposed on the grounds that nobody is too big to fail. What we have is a perversion of capitalism, where fiscally irresponsible behavior is rewarded not with failure, but with a government handout. This is then presented as "proof" that capitalism does not work by those who fail to consider that what it really is is an example of crony capitalism. It takes two to tango, so as easy as it is to blame all of this mess on greedy bankers as many do, even the current darling of progressive economic circles, J M Keynes, realized that, "it is a mistake to believe that businessmen are more immoral than politicians" as he wrote in a letter to FDR in 1938. What we are now witnessing are the legislative fruits of millions of dollars in lobbying efforts and generous campaign donations paid for by hedge funds and banks.

If we were living in a pure capitalistic system, those banks that chose to leverage themselves 40 to 1, chose to engage in hyper-risky lending and chose to create and sell derivatives with little to no intrinsic value would have to live with the consequences of their actions, which most likely would be either reorganization in bankruptcy or going out of business altogether. For every bank that failed, there would be another--a fiscally responsible one with a strong balance sheet--to take its place. These banks would then be allowed to sink or swim based on their ability to navigate the rough seas of finance. Contrary to what those "too big to fail" banks may tell you, these banks do exist.

Like many Americans, I "get" TARP, I just can't stand it either. Unlike the practitioners of crony capitalism who run our nation, I can see that the billions already spent and the billions more promised will have little to no effect in stimulating our economy. So why spend it in the first place?

Too handsome to lampoon

Two hours and thirty five minutes into Obama's presidency, and already he's off limits to least one European cartoonist:

Obama too handsome for good satire -caricaturist

Tuesday, January 20, 2009 11:35:00 AM (GMT-08:00) BRUSSELS, Jan 20 (Reuters) -

U.S. President Barack Obama is too good looking to provide inspiration for cartoons in the same way George W. Bush served as fodder for some of their most biting commentary, a caricaturist on said Tuesday.

"It's never a gift for a caricaturist to draw a handsome man," said Pierre Kroll, from Belgium, which prides itself on its comic book culture including Tintin.

"Somehow, we prefer overweight people, people with a beard, huge noses, ridiculous glasses ... If caricaturists could elect presidents, we would choose people with faces we enjoy drawing, and not a playboy like him," said Kroll whose works appears in the Belgian daily "Le Soir".

Kroll said positive public sentiment towards the incoming U.S president might also make it harder for caricaturists whose portraits have to underline a person's weaknesses and flaws.

"Caricaturists like to be a bit nasty and here, he comes with a lot of sympathy, it's harder for us to do our job and mock him while Bush had become a favourite target for cartoonists," he said.

(Reporting by Bate Felix and Marine Hass)

I feel sorry for poor Pierre Kroll. He is so blinded by Bush-hatred that he fails to see that Obama's ears are almost as big as Dumbo the Elephant's. If those suckers aren't perfect caricature-fodder I don't know what is. Then he goes on to describe what really makes a good caricature, "overweight people, people with a beard, huge noses, ridiculous glasses" without stopping to consider that Bush possessed none of those features, yet they had a field day with him. I hope he has another skill to fall back on, because caricatures of the former President Bush are going to start to look a little out dated pretty quickly. Maybe he makes a really bitchen' Belgian waffle!

Keynesian Economics and Venezuelan Amerindians

Barron's takes a dig at Keynesian economics:

IN FACT, HALF A LOAF COULD BE BETTER FOR the economy, and better for Obama's ultimate treatment in the history books, not to mention his re-election odds. A $500 billion package -- say, 60% tax cuts and 40% increased spending -- could realize his stated aim of spending money wisely, while providing significant fiscal stimulus.One reason for caution is that priming the pump never quite works the way the textbooks say it should. The economy's lifeblood isn't consumer demand, but rather credit, both for the financing of business investment and the purchase of consumer durables like cars. No amount of fiscal stimulus will make much difference if credit is constricted. If credit is available, jobs and higher incomes will follow.

Even the indigenous people of Venezuela realize that receiving free money and food from the government is not the path to prosperity (from the Economist):

The Yukpas are divided. Some oppose the land invasions and even support the ranchers. “Invasions are very bad,” says Rosario Romero, a Yukpa woman. “The ranchers worked for what they have. In the sierra there’s lots of land to cultivate maize and other crops.” She adds that, contrary to what radical Yukpa leaders say, her parents never suggested these lands were theirs. Her community had never received government help until Mr Chávez came along, she says, “Now we get money and food.” However, this encourages indolence. Many Yukpa women have married non-Amerindians, as she has done, “because the Yukpa men don’t want to work.”

I hereby nominate Rosario Romero for Treasury Secretary.

Inauguration Day Carbon Footprint

This sort of thing matters to some people--mostly to the anthropomorphic global warming disciples who do not understand that correlation does not imply causation. Fortunately it doesn't matter to me, but just in case anybody needs ammo when pointing out the hypocrisy among the patricians of our nation, well here ya go:

Carbon Bigfoot: 2009 Inauguration Expected to Generate More Than a Half-Billion Pounds of CO2

WASHINGTON, Jan. 15 /PRNewswire/ -- Next week scores of celebrities including Leonardo DiCaprio, Sharon Stone, Sting, and Steven Spielberg are all expected to flock to the nation's capitol, many by private jets, to the historic inauguration of Barack Obama. The swearing-in extravaganza will surely be the largest yet and is seeing ballooning costs and a major environmental footprint.
In a report released today, the Institute for Liberty (IFL) utilizes data from federal agencies, environmentalist organizations, and news accounts to extrapolate the estimated environmental impact for the 2009 Inauguration. IFL estimates that, given the millions of people expected to converge on the nation's capital. IFL concludes:

-- The 600 private jets expected to fly visitors to and from the event will
produce 25,320,000 POUNDS of CO2
-- Personal vehicles could account for 262,483,200 POUNDS of CO2
-- In the Inaugural parade, horses alone will produce more than 400 POUNDS of CO2
-- The total carbon footprint for the Inauguration will likely exceed 575
million POUNDS of CO2
-- It would take the average U.S. household 57,598 years to produce a
carbon footprint equal to that of the new president's housewarming
party

The Inauguration of President Obama is truly an historic occasion that should be celebrated," said IFL President Andrew Langer. "However, it would be very hypocritical for the scores of celebrities, VIPs and political elites to lecture on environmental policy to middle America and small businesses that are merely trying to survive in these difficult economic times, and then turn around and contribute to the half-billion pounds of emitted CO2. This is a celebration -- DC's small businesses, and thus DC's working families, are going to greatly benefit from this event. The rest of America should share in that opportunity."

Of course, the star-studded list of carbon offenders will be given a free pass by their would-be censors for at least two reasons. First, this is an historic occasion. Second, they're mostly the same people, so they'd be censoring themselves. They'll also give Obama a free pass on the estimated $146mil price tag for the whole affair; forgetting that just 4 years ago they pilloried Bush for his inauguration excesses which cost us taxpayers a fraction of what the Obama affair will cost.

It seems you just can't put a price tag--carbon or otherwise--on the celebration of tokenism, especially since the Senate voted to ban ticket scalping at the event. And anybody dumb enough to try to scalp a ticket to what is supposed to be a free event ought to be allowed to. Clearly, they have too much money. That's the kind of wealth redistribution I can get on board with.

Posted so as not to be lost for posterity

Here are what I feel are the two most clearly written pieces I have read on the causes of the current economic crisis.

The first, Deciphering the Liquidity and Credit Crunch 2007-08, explains in simple terms the financial causes of our current predicament.

The second, Anatomy of a Trainwreck, explores both the political and the financial causes.

Fiddling while Rome burns

In light of all the economic turmoil we are presently experiencing, if I were about to be inaugurated as the 44th President of the United States of America, I might think it wise to tone down my inaugural ceremony just a tad.

It seems that Obama is choosing the opposite course by allowing it to become the most expensive swearing in ceremony in history.

Barack Obama's inauguration is set to cost more than £100m ($146 million) making it the most expensive swearing-in ceremony in US history.

The President-elect will take less than a minute to recite the oath of office in front of an estimated two million people in the US capital next week.

But by the time the final dance has been held at one of the many inaugural balls the costs for the day will be a staggering £110m ($160.6 million).

So many people are expected in the U.S. capital that President Bush declared a state of emergency.

In doing so he paves the way for unlimited funding to be released to those local authorities responsible for staging the event. (who says democrats and republicans can't work together? -ed)

Washington Mayor Adrian Fenty revealed that is the amount that will be billed in the days after the January 20th event. US authorities had previously budgeted just £10m ($14.6 million) for the day based on previous inaugurations for George Bush and Bill Clinton.

Though questions remain as to the legality of the means utilized to raise the money, the fact is Obama raised $741.7 million during his presidential campaign. His inauguration is set to cost 10 times as much as his most recent predecessors. It might be a good idea to use part of the $30 million left in his campaign coffer to help pay for this historic moment since a token show of fiscal restraint seems like too much to ask.

Ah well, party on faithful! Enjoy the moment, because I have a suspicious feeling that Inauguration Day may be the high point of the Obama administration.

A trillion is the new billion

“Never confuse motion with action.” --Ben Franklin

This simple wisdom is apparently beyond the understanding of our elected leaders as demonstrated by the following headline:

Obama Warns of Irreversible Decline Without Action

Jan. 8 (Bloomberg) -- President-elect Barack Obama warned that without immediate steps by the government to revive the economy, family incomes will drop, the unemployment rate could reach “double digits” and the U.S. risks losing a “generation of potential and promise.”

In excerpts of a speech he’s scheduled to give today at 11 a.m. New York time in the Washington suburb of Fairfax, Virginia, Obama says that while the cost of his economic recovery plan will add to a deficit already projected to exceed $1 trillion, he “won’t just throw money at our problems.”

“It is true that we cannot depend on government alone to create jobs or long-term growth,” Obama will say. “But at this particular moment, only government can provide the short-term boost necessary to lift us from a recession this deep and severe.”

Not to make light of what is now a very serious economic problem, but it often seems as though government's main function is to take something that should not have been a problem in the first place (had they been doing their job properly) and allowing it to snowball into a big crisis that only government can fix. This serves their real unspoken job rather well, which is the continual search for the justification of their own existence. At the risk of oversimplification, the main reason the Great Depression lasted as long as it did was that FDR firmly inserted government in the middle of all aspects of our economy. While his intentions were arguably well meaning, his policies were outright hostile to the private sector. So what did the private sector do? They kept their job creating, GDP expanding, entrepreneurial enabling capital on the sidelines for almost 10 years, which gave rise to the term, "idle rich." This had the effect of making government the only game in town, which further justified more government intervention.

What our economy needs is not more stimulation--overstimulation is what got us into this mess in the first place. Our economy needs to rest. Like a drunk coming down from a binge, you don't make him feel better by sticking another bottle of Jack Daniels in his hand and telling him to drink it, you let him sleep it off. Increasing unemployment (the reallocation of human capital) is a byproduct, but unemployment is in the future no matter what. Better for the private sector to put capital to work as soon as possible--creating real jobs--than letting government mis-allocate borrowed money to pay for "make work" jobs designed as a short term fix.

I feel we are in real deflationary danger. Private sector capital will continue to sit on the sidelines until our economy is well rested. But government will not let it rest, which will prolong the rough times ahead.

A better solution would be for government to temporarily cut all corporate and personal tax rates to say, 10%. It would reduce government revenues significantly of course, but borrowing money from the future to put in place a fiscal stimulus package that will surely be in excess of $1 trillion will have an even more drastic long term effect. Government can always borrow to keep critical programs and institutions running on a case by case basis.

I hold no illusions of anything like this happening, as the two things that are fundamentally anathema to big government are small businesses and the entrepreneurs that create them; for neither has any reason to pay tribute to an entity whose main purpose seems to be administering death by a thousand paper cuts. Small businesses employ far more Americans than big businesses do, but it is big business--through expensive lobbing efforts and campaign contributions--that have convinced our elected officials that they are "too big to fail" and are deserving of a taxpayer-funded bailout. Small businesses, having no such resources, are stuck scrounging for life lines of credit from banks who are simultaneously told to loan their TARP money and rebuild their capital base. If they do not secure a line of credit, they are forced to lay off workers, or close altogether, which perpetuates the economic downward spiral.

Alexis de Tocqueville had it right over 175 years ago:

The American Republic will endure until the Congress discovers they can bribe the people with their own money.

It seems the price of the bribe is somewhere north of $1,000,000,000,000

Closing the barn door after the horse has escaped

There are those that feel if only there was more government regulation we'd not be in the financial mess we're currently in. The problem with regulation is that like most legislation, it is a fairly blunt instrument with which to try to fix a specific problem, and it is not uncommon to find instances where the unintended consequences outnumber the intended consequences--often significantly. The Sarbanes-Oxley Act of 2002 (Sarbox) is a perfect example. Put in place with the intention of halting further accounting scandals like the ones that brought down Enron, WorldCom, Tyco and a host of other publicly traded companies, it has also acted to limit the choices a small business has regarding its growth and has moved most of what was left of our IPO market overseas and out of its jurisdiction. Rather than go public in the Unites States and wade through the sea of red tape and absorb the added costs that Sarbox has created, many companies ready to take the next step in their natural growth cycle instead choose to either sell out to a larger company--which makes a big company even bigger and has the correlative effect of limiting the competitive landscape--or go public in London where they will not be subjected to the excessive scrutiny that Sarbox mandates. Furthermore, you'd have to be crazy to choose to go public in the United States if you were a foreign company contemplating such a move.

Unsurprisingly, the monetary cost of compliance seems to not have been considered when Sarbox went into effect. If you are a $25bil company, this additional compliance cost is more easily absorbed than if you are a $25mil company. Setting aside the regressive nature of a law that burdens small companies more heavily than large ones, consider that micro, small and mid-cap companies outnumber large-cap companies by at least an order of magnitude. Also worth considering is the fact that if you are a CFO and you sign off on your company's quarterly financials and malfeasance later surfaces that you knew nothing about, you can be held criminally liable. Imagine what that does to a company's risk-taking initiative.

Though surely there are others, the most glaring unintended consequence of Sarbox is that thousands of law-abiding, jobs-providing, tax-paying smaller companies are penalized with significant added operating costs as a result of the regulatory reaction to the illegal actions of literally a handful of much larger companies. Forcing a firm to esentially prove their innocence each quarter is a perversion of the whole "innocent until proven guilty" theory that is the foundation of our laws.

Now to the point:

Yesterday it was revealed that IndyMac Bank is guilty of altering its records in order to appear more financially sound than they actually were just weeks before they were seized by regulators last summer. The twist is that a senior government regulator helped them do it.

A senior bank regulator was removed from his job after being accused of helping mortgage lender IndyMac Bancorp alter its records so it appeared to be in better shape -- weeks before it was seized by the government.

The Office of Thrift Supervision has reassigned its top West Coast official, Darrel Dochow, who was also a controversial figure in the regulatory lapses surrounding the savings-and-loan crisis of the late 1980s.

In a letter sent Monday to Sen. Charles Grassley, the senior Republican on the Senate Finance Committee, the Treasury Department's inspector general wrote that the federal OTS allowed the bank to backdate records of capital infusions last spring. That leeway made IndyMac appear more solid than was actually the case, shortly before federal regulators seized the bank in July -- at a cost of $8.9 billion to the government's deposit-insurance fund.

The key concern raised by Treasury Inspector General Eric Thorson in his letter was that OTS supervisors allowed IndyMac to register an $18 million capital injection from its holding company made on May 9 as if it had been carried out before the end of March. That appeared to put the bank's total risk-based capital ratio for the first quarter of the year over the 10% threshold for a "well-capitalized" institution, when in fact the bank had been below that mark and qualified only to be considered "adequately capitalized."

Mr. Thorson said in the letter that his investigators had also uncovered other incidents in which OTS supervisors had allowed banks to backdate capital infusions. The letter didn't specify which banks those incidents involved.

Darrel Dochow must be a cat, for surely he has 9 lives. Here's a guy that played a significant role in the Keating 5 Scandal by holding off on cracking down (which was his job BTW) on the unsound business practices of Lincoln S&L. Then he was only demoted for his role, and managed to work his way back up the ladder to again be named Western Regional Director of the Office of Thrift Supervision in 2007, only to again help at least one bank in trouble survive a little longer to again cost the taxpayer money. To add insult to injury, don't forget we're paying him a handsome taxpayer funded salary and benefits for all his "hardwork". This is not even a one-off event, there are other banks yet to be named. It will be interesting to see what other banks are also guilty of backdating capital with Mr. Dochow's help.

Lincoln later collapsed, costing taxpayers billions of dollars and triggering a political scandal for the "Keating Five" senators who had intervened with regulators on the thrift's behalf. Mr. Dochow was demoted in the wake of the scandal, but worked his way back up the OTS hierarchy.

Is this an example of more of the type of government regulation our nation should expect?

Institutions such as banks and our government are really a reflection of the habits of the citizens that make up the society that grants them legitimacy. Lately it seems that many of the institutions that make our nation what it is have been under assault by either the arrogant, the brazenly greedy, the incompetent, the criminal or all of the above. There will come a tipping point where those of us who keep our heads down, abide by the law, pay our taxes on time and generally behave like good citizens will say, "enough is enough." What happens then is anybody's guess, but whatever happens, it won't be pleasant for somebody.

"Those who destroy the protocols of civilization may well one day wish to rely on them".--Thucydides Book III

Dominos falling

Here's The Cato Institute sharing a little bit of common sense:

Daniel Mitchell, a senior fellow at the libertarian Cato Institute, said the government should have no role in helping the (auto) industry, except to provide positive economic conditions -- "a lower corporate tax rate, less red tape and things like that," he said.

Mitchell added that if the government takes control of the auto industry, it will be a recipe for disaster.

"The free markets allocate resources and reward people for doing good things and punish them for doing dumb things," he said. "Government misallocates resources and rewards people for doing dumb things and punishing them for doing good things.

"We're in this very dangerous situation where you're going to have people, Harry Reid and Nancy Pelosi, making these decisions," he said. "I wouldn't trust these people mowing my lawn, much less running a private company."

That quote is a little dated. As we now know, last Friday Congress approved a $13.4bil loan package to GM and Chrysler. Lest you think that money comes without any strings attached, here are the terms of the deal:

Fact Sheet: Financing Assistance to Facilitate the Restructuring of Automobile Manufacturers to Attain Financial Viability.

Purpose: The terms and conditions of the financing provided by the Treasury Department will facilitate restructuring of our domestic auto industry, prevent disorderly bankruptcies during a time of economic difficulty, and protect the taxpayer by ensuring that only financially viable firms receive financing.

Amount: Auto manufacturers will be provided with $13.4 B in short-term financing from the TARP, with an additional $4 B available in February, contingent upon drawing down the second of TARP funds.

Viability Requirement: The firms must use these funds to become financially viable. Taxpayers will not be asked to provide financing for firms that do not become viable. If the firms have not attained viability by March 31, 2009, the loan will be called and all funds returned to the Treasury.

Definition of Viability: A firm will only be deemed viable if it has a positive net present value, taking into account all current and future costs, and can fully repay the government loan.

Binding Terms and Conditions: The binding terms and conditions established by the Treasury will mirror those that were voted favorably by a majority of both Houses of Congress, including:

• Firms must provide warrants for non-voting stock.
• Firms must accept limits on executive compensation and eliminate perks such as corporate jets.
• Debt owed to the government would be senior to other debts, to the extent permitted by law.
• Firms must allow the government to examine their books and records.
• Firms must report and the government has the power to block any large transactions (> $100 M).
• Firms must comply with applicable Federal fuel efficiency and emissions requirements.
• Firms must not issue new dividends while they owe government debt.

Targets: The terms and conditions established by Treasury will include additional targets that were the subject of Congressional negotiations but did not come to a vote, including:

• Reduce debts by 2/3 via a debt for equity exchange.
• Make one-half of VEBA payments in the form of stock.
• Eliminate the jobs bank.
• Work rules that are competitive with transplant auto manufacturers by 12/31/09.
• Wages that are competitive with those of transplant auto manufacturers by 12/31/09.

These terms and conditions would be non-binding in the sense that negotiations can deviate from the quantitative targets above, providing that the firm reports the reasons for these deviations and makes the business case to achieve long-term viability in spite of the deviations.

In addition, the firm will be required to conclude new agreements with its other major stakeholders, including dealers and suppliers, by March 31, 2009.

Basically they have 3 months to get their acts together. Judging by how long it has taken them to not adjust their business models in order to stay competitive in the first place, it is laughable to think that they will, in fact, get their acts together in a mere 3 months time. No doubt they will ask for a time extension or use the "non-binding" clause to bend the terms more to their liking when nobody is looking. Besides, in this day and age a $13.4bil loan is almost a rounding error, so who really cares if they pay it back at all?

Do not get me wrong, I want to see our domestic auto industry succeed. From what I understand GM's Rick Wagoner is a helluva nice guy to boot, but I do not think that any good will come from the government getting involved in what should be a private industry affair. The excessive statism that we are now witnessing will only serve to undermine the economy in the long run.


This whole auto industry bailout story is old news already. Though if you listen closely, you'll hear jostling and footsteps as the commercial property developers line up for their alms from Uncle Sam.

Where does it end?

The Banana Republic of Illinois

If you’re looking for a great non-fiction read that reads like fiction, look no further. The complaint filed yesterday against the current Illinois governor, democrat Rod Blagojevich, almost reads like a John Gresham novel. They ought to just slap a cover on it and sell it on Amazon.

The reader will recall that this is the same fetid swamp from which our current President-elect emerged. No doubt he has insulated himself well from this particular scandal, but there's that age old wisdom, something about the apple not falling too far from the tree, that may be appropriate here. Unfortunately, the young aspiring representative Jessie Jackson Jr. may not be so lucky. His handlers stand accused of offering the Governor $500,000 for Obama's empty Senate seat.

Since it is 78 pages long, I've highlighted some of my favorite parts below.

Careful now, there's more F-bombs dropped here than Al Pacino dropped in Scarface.


On quid pro quo:

a. Defendant ROD BLAGOJEVICH and at times defendant JOHN HARRIS, together with others, obtained and attempted to obtain financial benefits for RODBLAGOJEVICH, members of the Blagojevich family, and third parties including Friends of Blagojevich, in exchange for appointments to state boards and commissions, state employment, state contracts, and access to state funds;

On pesky media bias, the Cubs and Wrigley Field:

b. Defendants ROD BLAGOJEVICH and JOHN HARRIS, together with others, offered to, and threatened to withhold from, the Tribune Company substantial state financial assistance in connection with Wrigley Field, which assistance ROD BLAGOJEVICH believed to be worth at least $100 million to the Tribune Company, for the private purpose of inducing the controlling shareholder of the Tribune Company to fire members of the editorial board of the Chicago Tribune, a newspaper owned by the Tribune Company, who were responsible for editorials critical of ROD BLAGOJEVICH

71. Based on a review of intercepted phone calls, it appears that the Tribune
Company, in connection with its efforts to sell the Cubs, has explored the possibility of obtaining financial assistance from the Illinois Finance Authority (“IFA”) relating to the financing or sale of Wrigley Field.19 During the course of this investigation, agents have intercepted a series of communications regarding the efforts of ROD BLAGOJEVICH and JOHN HARRIS to corruptly use the power and influence of the Office of the Governor to cause the firing of Chicago Tribune editorial board members as a condition of State of Illinois financial assistance in connection with Wrigley Field. The phone calls reflect that ROD BLAGOJEVICH directed JOHN HARRIS to inform Tribune Owner and an associate of Tribune Owner, Tribune Financial Advisor (Tribune Financial Advisor is believed to be an individual identified in media accounts as a top assistant and financial advisor to Tribune Owner, who played a significant role in Tribune Owner’s purchase of the Tribune), that State
of Illinois financial assistance for the Tribune Company’s sale of Wrigley Field would not be forthcoming unless members of the Chicago Tribune’s editorial board were fired. Set out below are summaries of certain of those conversations. This affidavit does not include all calls dealing with the corrupt efforts of ROD BLAGOJEVICH and JOHN HARRIS to misuse their influence over the expenditure of state funds to cause the firing of employees of the Chicago Tribune editorial board.

On standing by your man:

During the call, ROD BLAGOJEVICH’s wife can be heard in the background telling ROD BLAGOJEVICH to tell Deputy Governor A “to hold up that fucking Cubs shit. . . fuck them.”

On Global Warming, jet flights and personal loyalty:

4. According to Levine, in approximately late October 2003, after Levine was reappointed to the Planning Board, he shared a private plane ride from New York to Chicago with ROD BLAGOJEVICH and Kelly. Levine, ROD BLAGOJEVICH, and Kelly were the only passengers on the flight. According to Levine, at the beginning of the flight, Levine thanked ROD BLAGOJEVICH for reappointing him to the Planning Board. ROD BLAGOJEVICH responded that Levine should only talk with “Tony” [Rezko] or [Kelly] about the Planning Board, “but you stick with us and you will do very well for yourself.” ROD BLAGOJEVICH said this in front of Kelly. According to Levine, Levine understood from ROD BLAGOJEVICH’s manner of speaking and words that ROD BLAGOJEVICH did not want Levine to talk to ROD BLAGOJEVICH directly about anything to do with the boards, but that Levine should talk to Rezko or Kelly. Levine also understood that ROD BLAGOJEVICH meant that Levine could make a lot of money working with ROD BLAGOJEVICH’s administration. According to Levine, ROD BLAGOJEVICH did not seem to expect a response from Levine, and Kelly then shifted the conversation to something else.

Most appropriate acronym ever:

36. Levine’s criminal activities included his abuse of his position on the Planning
Board to enrich both himself and Friends of Blagojevich. The Planning Board was a commission of the State of Illinois, established by statute, whose members were appointed by the Governor of the State of Illinois. At the relevant time period, the Planning Board consisted of nine individuals. State law required an entity seeking to build a hospital, medical office building, or other medical facility in Illinois to obtain a permit, known as a “Certificate of Need” (“CON”), from the Planning Board prior to beginning construction

On tolls and highways:

63. According to Individual A, after Individual B left the meeting on October 6, 2008, ROD BLAGOJEVICH told Individual A that he was going to make an upcoming announcement concerning a $1.8 billion project involving the Tollway Authority. ROD BLAGOJEVICH told Individual A that Lobbyist 1 was going to approach Highway Contractor 1 to ask for $500,000 for Friends of Blagojevich. ROD BLAGOJEVICH told Individual A that, “I could have made a larger announcement but wanted to see how they perform by the end of the year. If they don’t perform, fuck ‘em.” According to Individual A, he/she believed that ROD BLAGOJEVICH was telling Individual A that ROD BLAGOJEVICH expected Highway Contractor 1 to raise $500,000 in contributions to Friends of Blagojevich and that ROD BLAGOJEVICH is willing to commit additional state money to the Tollway project but is waiting to see how much money Highway Contractor 1 raises for Friends of Blagojevich.

On using a children's hospital as leverage for a political donation:

65. According to Individual A, on October 8, 2008, during a discussion of
fundraising from various individuals and entities, the discussion turned to Children’s Memorial Hospital, and ROD BLAGOJEVICH told Individual A words to the effect of “I’m going to do $8 million for them. I want to get [Hospital Executive 1] for 50.” Individual A understood this to be a reference to a desire to obtain a $50,000 campaign contribution from Hospital Executive 1, the Chief Executive Officer of Children’s Memorial Hospital. Individual A said that he/she understood ROD BLAGOJEVICH’s reference to $8 million to relate to his recent commitment to obtain for Children’s Memorial Hospital $8 million in state funds through some type of pediatric care reimbursement. As described in further detail below, intercepted phone conversations between ROD BLAGOJEVICH and others indicate that ROD BLAGOJEVICH is contemplating rescinding his commitment of state funds to benefit Children’s Memorial Hospital because Hospital Executive 1 has not made a recent campaign contribution to ROD BLAGOJEVICH.

On selling Obama’s vacated Senate Seat for personal gain:

c. Defendants ROD BLAGOJEVICH and JOHN HARRIS, together with others, attempted to use ROD BLAGOJEVICH’s authority to appoint a United States Senator for the purpose of obtaining personal benefits for ROD BLAGOJEVICH, including, among other things, appointment as Secretary of Health & Human Services in the President-elect’s administration, and alternatively, a lucrative job which they schemed to induce a union to provide to ROD BLAGOJEVICH in exchange for appointing as senator an individual whom Minimization procedures were implemented during the interception of conversations at the Friends of Blagojevich offices and over phones. At times, these minimization procedures were stricter than required under law so as to avoid intercepting certain potentially privileged conversations. ROD BLAGOJEVICH and JOHN HARRIS believed to be favored by union officials and their associates.

c. ROD BLAGOJEVICH said that the consultants (Advisor B and another consultant are believed to be on the call at that time) are telling him that he has to “suck it up” for two years and do nothing and give this “motherfucker [the President-elect] his senator. Fuck him. For nothing? Fuck him.” ROD BLAGOJEVICH states that he will put “[Senate Candidate 4]” in the Senate “before I just give fucking [Senate Candidate 1] a fucking Senate seat and I don’t get anything.” (Senate Candidate 4 is a Deputy Governor of the State of Illinois).

On planning for the future:

d. One of ROD BLAGOJEVICH’s advisors said he likes the idea, it sounds like a good idea, but advised ROD BLAGOJEVICH to be leery of promises for something two years from now. ROD BLAGOJEVICH’s wife said they would take the job now. Thereafter, ROD BLAGOJEVICH and others on the phone call discussed various ways ROD BLAGOJEVICH can “monetize” the relationships he is making as Governor to make money after ROD BLAGOJEVICH is no longer Governor.

On non-profits:

104. On November 11, 2008, ROD BLAGOJEVICH talked with JOHN HARRIS
about the Senate seat. ROD BLAGOJEVICH suggested starting a 501(c)(4) organization (anon-profit organization that may engage in political activity and lobbying) and getting “his (believed to be the President-elect’s) friend Warren Buffett or some of those guys to help us on something like that.” HARRIS asked, “what, for you?” ROD BLAGOJEVICH replied, “yeah.” Later in the conversation, ROD BLAGOJEVICH stated that if he appoints Senate Candidate 4 to the Senate seat and, thereafter, it appears that ROD BLAGOJEVICH might get impeached, he could “count on [Senate Candidate 4], if things got hot, to give [the Senate seat] up and let me parachute over there.” HARRIS said, “you can count on [Senate Candidate 4] to do that.” Later in the conversation, ROD BLAGOJEVICH said he knows that the President-elect wants Senate Candidate 1 for the Senate seat but “they’re not willing to give me anything except appreciation. Fuck them.”

Maybe the whole world was not listening, but the FBI most certainly was:

ROD BLAGOJEVICH told Fundraiser A that “you gotta be careful how you express that and assume everybody’s listening, the whole world is listening. You hear me?”

On being stuck in a dead end job and dreaming of reaching for the stars:

116. In addition, in the course of the conversations over the last month, ROD BLAGOJEVICH has spent significant time weighing the option of appointing himself to the open Senate seat, and has expressed a variety of reasons for doing so, including frustration at being “stuck” as governor, a belief that he will be able to obtain greater resources if he is indicted as a sitting Senator as opposed to a sitting governor, and a desire to remake his image in consideration of a possible run for President in 2016, avoid impeachment by the Illinois legislature, make corporate contacts that would be of value to him after leaving public office, facilitate his wife’s employment as a lobbyist, and assist in generating speaking fees should he decide to leave public office.

In my opinion, of the many outrages against all that our nation is supposed to stand for present in this complaint, the hubris displayed by Mr. Blagojevich and his associates is the most breathtaking. His behavior as outlined in this complaint reveals that he may be a borderline sociopath as well. It begs the question; do sociopaths become politicians, or do politicians become sociopaths? That's beyond the scope of this post, but I think the brass knuckle, "pay to play" world of Illinois politics would be a great place to conduct a study on the subject.

I have a feeling that when Thomas Jefferson said, “If once the people become inattentive to the public affairs, you and I, and Congress and Assemblies, Judges and Governors, shall all become wolves. It seems to be the law of our general nature, in spite of individual exceptions” this is exactly the sort of thing he was afraid could happen.

Karmic Payback is Alive and Well

O.J. Simpson gets at least 15 years in prison:

"Earlier in this case, at a bail hearing, I said to Mr. Simpson I didn't know if he was arrogant, ignorant or both,"(Judge) Glass said. "During the trial and through this proceeding I got the answer, and it was both."

I hope he enjoyed that fine meal, because I hear Nevada prison food isn't quite so tasty looking.

By they way, that's some nice ham carving skills on display there.

Coincidence?