How I spent my holiday

I drove over 1,000 miles roundtrip between the yuppie paradise of Northern Virginia and the rustiest part of the rust-belt: Flint, Michigan.  I saw friends and family.  I ate pigs, turkeys, Greek food, McDonald's and did not sleep too much.  I've got another 5 days off til I work again.

Everyone's hurting

Toyota's first loss.  Ever.

The Bailout

The bailout is upon us.  GM, a one-time symbol of America and Chrysler have receive bailouts.  It is good news if you work for those companies; however the Bush administration did give them quite a few conditions to meet including renegotiating with the unions.  Ford, meanwhile, got nothing.  For a good article on how getting nothing could be a good thing, read this: http://www.nytimes.com/2008/12/20/business/20ford.html

The End of Chrysler?

Chrysler is shutting down all of its plants for at least one month...maybe forever.  All they promise is that the plants will not reopen before January 19.

Also, if you haven't heard they will likely be out of cash before then.

America's Third World City In Pictures

It is truly stunning what has become of Detroit when you consider its history; although since I was young it has always looked pretty run down.

Time has a photo slideshow.

The End of the AFL? And NASCAR?

The Arena Football League is cancelling the 2009 season due to the economy.  

They aren't quite a major league, but they are somewhere between hockey and soccer.  Pretty sad state, when sports leagues are going under.

Sure, the AFL says it will be back, but I doubt it.  Especially with the UFL going to start up soon.  Can our country support 3 professional football leagues?  Maybe, but I doubt it.  Look at the XFL.

In related news, NASCAR is hemorrhaging as their corporate sponsors (GM, Toyota, Ford, Chrysler, et. al) start cutting their advertising dollars.

The Spending We Need

Soon to be President Obama plans to spend between 500 and 700 billion dollars on public works projects.

While this figure approaches all of the money spent on economic bailouts of financial institutions, I believe it is a debt we must incur.  If you take a look at many roads and bridges within America, particularly in areas that are not economically prosperous, things are bad.  Whether it is a pothole or a structurally unsound bridge, the public's safety is at risk.  

The last time we spent such a large amount of money on infrastructure was likely in the 50's when Ike created our Interstate System.  Since then, time has taken a toll on our roads.  We aren't building any new ones but desperately need to maintain those that we have.  It is inconceivable for a non-government entity to fix all these roads, unless we created a private toll road system that would rival any government bureaucracy.

The good news is that these are construction jobs that will not be outsourced and that the extra work may be able to help a good amount of the unemployed construction workers (who lost their jobs after the housing bust) get back to work.

This is a win-win for all.

The Biggest Ponzi Scheme

Bernard Madoff admitted yesterday to running a $50B ponzi scheme for a very long time. Basically, what he would do is take money from you or your organization and pay out some money each year, so-called returns on the investment. Anyone who is even remotely intelligent should have noticed something, as his returns were about equal and increased by an equal amount each year. He never had a loss in 10 years.

It seems he made most of his money off his own people, the Jews. He cultivated relationships with Palm Beach and Long Island society and used his contacts at Yeshiva university to get to the money. Several Jewish charities are now going out of business because they had entrusted him with their endowments, which are now gone.

Overall a very strange case, but it brings us back to the maxims:

• If it sounds too good to be true, it probably is.
• Don't put all your eggs in one basket.

Clean Coal

This is my new favorite ad.

Good thing I sold F

The bailout is dead. At least for now, and now is all that GM and Chrysler had.

Even so, tomorrow is going to be a really rough day in the market. GM and Chrysler are weeks from Ch 11 and months from liquidation, while Ford may be able to drag on a bit long enough for a sliver of hope. I predict that Dow could be down 700+ pts within the next week. Could be a good buying opportunity in some sectors but the worst is still out in front.

The Free Market Responds

Ayn Rand fans are speaking out against the bailouts and the current regulatory climate. They are also blaming Ayn Rand's friend, Alan Greenspan, for the mess. I concur, at least with the Greenspan part. We'll see how the increased spending turns out. For now, I'm siding with Krugman.

Obama doing well, says everyone

Barack Obama is doing extremely well in this transition effort, so say the polls.

I know of many who did not back him in the primaries who are happy with his presidency so far. Including the stock market, which is up considerably since he won the election.

I can't think of anyone who is pissed off with what he's been doing/saying. Some are reluctant to endorse him, but I don't see much criticism with his current choices (with the possible exception of Clinton).

Negative Interest Rates

Wow.

Another IL Gov Bites the Dust

It looks like another Illinois governor will be going to jail.  The current winner of this contest, Rod Blagojevich, allegedly attempted to sell President-Elect Obama's vacant senate seat to the highest bidder. 

 

Obama, who had put in a recommendation for the appointment, was apparently not well liked by the governor.  Blagojevich said that all Obama would give him is appreciation, "fuck that."  Or so the complaint reads.

 

 

More here: http://www.washingtonpost.com/wp-dyn/content/article/2008/12/09/AR2008120900987.html?hpid=topnews

The One Tax We Need

Tom Friedman's right. The one tax we really need is that on carbon. We need to tax the greenhouse gas emissions of various products, changing consumer buying power. Want a good example? I, like anyone who has done the math, have changed all my lightbulbs to CFL's, since they will save me abaout $10 each over the long run, even though they cost at least $2 more each compared to old fashioned light bulbs. But Joe the idiot doesn't see that. He sees the "weird curly" lightbulbs costing $3 while he can buy the old kind for $.50 cents. Well a carbon tax would probably make the old lightbulb cost $3.50 or more, making the decision more easy. In the end, he'd still save money, but this would be a good nudge in the right direction.