Friday, January 14, 2011

America's Ridiculously Large $15T Economy

The Economist has a great interactive map that compares the economic output of American states to the economic output (GDP) of entire countries, which helps put the ridiculously large U.S. economy (GDP of about $15,000,000,000,000) into perspective.  The map also compares the population of U.S. states to comparable countries.  I featured a similar map on CD back in 2007, but it wasn't interactive. 

HT: Robert Kuehl

84 Comments:

At 1/14/2011 12:23 AM, Blogger Colin said...

America -- the world's biggest free trade zone.

 
At 1/14/2011 3:58 AM, Blogger PeakTrader said...

Many people assume the U.S. economy was better over the 1995-00 asset bubble than over the 2002-07 asset bubble, because national income accounts, e.g. real GDP and real wages, grew at faster rates.

However, after the quick and massive Creative-Destruction process, mostly from 2000-02, the U.S. economy became much more efficient (in producing more output with fewer inputs); U.S. living standards improved at a steeper rate; U.S. gains-in-trade increased (while our trading partners gains-in-trade decreased); U.S. real assets were created or accumulated at faster rates, etc.

U.S. military spending as a percentage of GDP remained at relatively low historical levels, although the U.S. no longer had the "peace dividend." The real marginal increases in U.S. military spending was only $100 billion to $200 billion a year (beyond maintaining a standing military). Yet, the budget deficit shrunk to $162 billion in 2007.

It's remarkable, the U.S. economy did so well in the structural bear market that began in 2000, and with rising commodity prices, including oil (which eventually resulted in the biggest oil shock in history). The 2001 recession was so mild, it wouldn't be considered a recession using annual per capita real GDP growth. Using that data, the U.S. had the longest economic expansion in history from 1991-07.

 
At 1/14/2011 9:07 AM, Blogger juandos said...

Oh my but that is impressive...

Still I wonder how long this situation can last if this commodity stays expensive and we have more people as dumb as this union?

 
At 1/14/2011 9:39 AM, Blogger Scott Miller PMP said...

I like the graphic about GDP of Texas equaling the super huge country of Russia.

 
At 1/14/2011 9:55 AM, Blogger Walt G. said...

juandos,

What's wrong with a union, or any investor, requesting a company that they have a financial interest in to identify risk if it in fact exists?

Without seeing the union letter, I don't see the linkage between a request to identify existing risk and the company having its taxes increased that the author states unless the company is doing something illegal. Would the union be the bad guy in that case?

As for unfunded pensions and other benefits, governments and businesses should have funded those when times were better and fewer people were collecting on them. GAAP accounting procedures require money to be expensed when the revenue that produces the expense is earned. The full future-value retirement costs for a worker who bolted on a 1975 Chevy hood should have been captured and invested in 1975 with present-value dollars when the car with the hood on it was sold. Workers deferred wages were reinvested in the company, spent on executives, or distributed to stockholders over the years instead of invested in the retirement plans like they should have been.

Actuaries have known for many years about the demographic shift with the baby boomer retirements and the deferred compensation they have earned. I’ve worked two or more jobs and saved over 35 years to fund a retirement with a 100% income replacement for when my cash flows will be much smaller. Why didn’t the brightest minds in the business world and government do the same? Placing the blame on unions for contracts that were mutually negotiated and agreed upon is just plain scapegoating.

 
At 1/14/2011 10:30 AM, Blogger Michael Hoff said...

Hmm. Pennsylvania = Indonesia. I'm not sure that's something to brag about.

 
At 1/14/2011 10:38 AM, Blogger Paul said...

Walt,

The only "risk" the union thugs are worried about is the possibility their sweet pension deals, after 20 years of gold-bricking, may meet reality. I love how you're suddenly a stickler for contractual obligations when it suits your needs.

 
At 1/14/2011 10:48 AM, Blogger Walt G. said...

Paul,

Sweet pension deals that were negotiated just like any business tranaction. Can I get my house payment lowered because my income drops? I've always been a stickler for details.

 
At 1/14/2011 11:06 AM, Blogger Paul said...

"Sweet pension deals that were negotiated just like any business tranaction."

The GM bondholders negotiated business deals too. How'd you respond to their plight? Oh wait, we have it on record: "Do you wonder why GM's unsecured bondholders came out on the short-end of the stick in the 363 bankruptcy? Let's see: the U.S. Treasury, GM, the UAW, and the bondholders. When the music stopped, there were only three chairs, and the powerful got them. Don't expect any legal system to protect your ass: Protect yourself."

So, tough shit for the unions.


"Can I get my house payment lowered because my income drops?"

No, but you can buy enough Democrats to have your union's ass saved after they destroyed GM.

 
At 1/14/2011 11:07 AM, Blogger Paul said...

More Walt and his fidelity to contractual obligations:

"In my America, I deal with asymmetrical power relationships as they exist instead of crying “life is not fair.” If you want to fight a gang by yourself, be my guest, but don’t complain when you get the snot stomped out of you. And, yes, I will hire a goon to take care of the goon you send after me."

 
At 1/14/2011 11:07 AM, Blogger Buddy R Pacifico said...

This map is really interesting. Another map that matches per capita % income growth or decline with states and countries would offer another perspective of interest.

 
At 1/14/2011 11:15 AM, Blogger Walt G. said...

Paul, those with power usually win while those without power usually lose. There is power in money and numbers, so you can pick your poison.

 
At 1/14/2011 11:15 AM, Blogger VangelV said...

However, after the quick and massive Creative-Destruction process, mostly from 2000-02, the U.S. economy became much more efficient (in producing more output with fewer inputs); U.S. living standards improved at a steeper rate; U.S. gains-in-trade increased (while our trading partners gains-in-trade decreased); U.S. real assets were created or accumulated at faster rates, etc.

This is nonsense. The Fed acted to mitigate the damage of one bubble popping by blowing up another one. Profits were booked based on accounting fraud, not increased productivity and the economy moved even closer to the abyss than it had been.

As Mark shows in the chart, the US is still the dominant economy in the world but when you look at the composition of its output there are certainly storm clouds on the horizon. Spending billions on defense systems is no more useful than spending it on building monuments to governmental folly. Earning money by pretending that impaired assets have real value is not a long term path to prosperity, no matter how much we want to pretend otherwise.

 
At 1/14/2011 11:24 AM, Blogger juandos said...

"What's wrong with a union, or any investor, requesting a company that they have a financial interest in to identify risk if it in fact exists?"...

Walt! Walt! Walt!

You missed the point, the union is also one of the shareholders and if the investment firms are going to have more taxes extorted from them then the union members will NOT see as much income from their investment...

 
At 1/14/2011 11:45 AM, Blogger Walt G. said...

juandos,

I am thinking like an investor. Were there undisclosed risk factors that could be quantified through probablity if they were transparent?

If so, then you have an uncertainty. Risk = good. Uncertainty = bad. I will make high risk investments if I am compensated for that risk accordingly, but I will avoid those with uncertainty factors like the plague.

Any uncertainty can harm the union's investment, so the concern and the letter were prudent. It's not the devils you know that causes the problems. It's the ones you don't know that bites you in the ass.

 
At 1/14/2011 11:46 AM, Blogger Che is dead said...

Placing the blame on unions for contracts that were mutually negotiated and agreed upon is just plain scapegoating.

Actually, those contracts were not "mutually negotiated", in the case of public unions, the taxpayers were defrauded. The unions simply purchased a political party with which to control and divide the public spoils.

Unions contribute hundreds of millions of dollars in campaign contributions and provide manpower for Democrat politicians in return for what are essentially multi-billion dollar no-bid contracts that pay excessive wages and benefits to their members. It is not uncommon for the unions and Democrats to secure major increases to future and existing retirement benefits without regard to whether or not they are sustainable. The contracts they "mutually negotiate" are often filled with loop holes that allow union members to receive more in retirement pay and benefits than they were paid on the job, while retiring at 55.

I’ve worked two or more jobs and saved over 35 years to fund a retirement ...

So have I, and not once during that time did the taxpayer give me a one-way bet on the markets, which is exactly what the Democrats have given the public unions. They are allowed to make insanely risky bets with pension fund money. Often, these bets are made through former union officials or Democrat politicians acting as intermediaries and collecting an obscene fee. If the bet works out, they keep the money and "negotiate" an increase in their benefits. If the bet falls flat, resulting in massive losses, the taxpayer fills in the hole.

No one is "scapegoating" the unions, we just pointing out the corrupt bargain they've struck with the Democrat party.

 
At 1/14/2011 11:48 AM, Blogger Che is dead said...

The most important risk factor an investor needs to consider is whether the company in question is unionized. Unionization ALWAYS proves fatal.

 
At 1/14/2011 11:53 AM, Blogger Paul said...

"Paul, those with power usually win while those without power usually lose. There is power in money and numbers, so you can pick your poison."

Gotcha. So then spare us your phony concern over "mutually agreed upon business transactions." You only care that your gang gets what it wants.

 
At 1/14/2011 12:11 PM, Blogger Walt G. said...

Paul,

Those are not individual contracts. Those are collective bargaining agreements from a position of power on one side some years and on the other side some years. I guess I don't see your point. I doubt you will ever see mine, too.

Che is dead,

I think it is a pretty well-known policy that unions usually support Democrats and business usually supports Republicans. The pendulum of power shifts back-and-forth. You win some. You lose some. I do see less animosity between unions and business nowadays. I think that is good.

 
At 1/14/2011 12:41 PM, Blogger Ron H. said...

Walt G. said:

"I’ve worked two or more jobs and saved over 35 years to fund a retirement with a 100% income replacement for when my cash flows will be much smaller. Why didn’t the brightest minds in the business world and government do the same?"

Two words: different incentives.

They have done the job they were tasked with.

Whether a retiree deserves anything is not relevant. If the brightest minds' job is to bake a chocolate cake (mission = maximize benefits to influential friends and get re-elected), and they bake the best chocolate cake ever made (measureable goals from legal and non-quota strategies), They have done their job even if you don't like chocolate cake.

If you think it was unfair because they did not make your retirement secure , that is your problem and not the baker's problem. You can always attempt to join the board of directors to change what type of cake is made, join a union for collective bargaining power (apparently that isn't enough by itself), hire a lobbyist, or maybe file a lawsuit if you believe the mission and/or strategies are illegal. I doubt an individual who just likes a secure retirement will have much power to change anything.

 
At 1/14/2011 12:44 PM, Blogger juandos said...

"I am thinking like an investor. Were there undisclosed risk factors that could be quantified through probablity if they were transparent?"...

Walt just because some clueless clown in the front office decides to lable it as 'uncertainty' doesn't make it so...

Did you read the last paragraph in that opinion piece Walt?

Did it not actually answer your questions?

Consider this other problem government unions are facing whether they want to admit it or not: With the market for municipal bonds tumbling, cities, hospitals, schools and other public borrowers are scrambling to refinance tens of billions of dollars of debt this year, another sign that the once-safe market is under duress...

In light of this type of problem what it the point of American Federation of State, County and Municipal Employees' union to throw more gasoline on the fire?

 
At 1/14/2011 12:51 PM, Blogger juandos said...

"No, but you can buy enough Democrats to have your union's ass saved after they destroyed GM"...

Hey Paul, you might find this opinion piece from the Investors Business Daily of interest...

You too Walt, I'd be interested in your comments...

Taxpayers Get Bill For GM Bailout

 
At 1/14/2011 12:58 PM, Blogger Walt G. said...

Ron H.

I attribute that we still have a pension funded by GM instead of the PBGC as one of the reasons I gladly pay union dues (that was one of the reasons the auto loans were a good deal for the taxpayers). I think my people are doing their job, and accordingly I am not an individual who likes a secure retirement. GM's job is to make money. The UAW's job is to see the suppliers of human capital get their share.

 
At 1/14/2011 1:06 PM, Blogger Ron H. said...

Walt,

"Those are not individual contracts. Those are collective bargaining agreements..."

Do you really think this play on words is helpful? Do you really believe there's a difference? This union doesn't seem to think so.

Paul's point is that you talk out of both sides of your mouth by advocating either following the rules or ignoring them and relying on brute force, depending on which best supports your position. This is real obvious to others here, even if you don't see it yourself.

 
At 1/14/2011 1:19 PM, Blogger Walt G. said...

Juandos,

I saw that yesterday from multiple paid media sources and found the spin different at each one using different excerpts. I am in the process of reading the source document. See what you think.

Source Material.

Ron H.,

Which rules are you writing about?

 
At 1/14/2011 1:20 PM, Blogger VangelV said...

Those are not individual contracts. Those are collective bargaining agreements from a position of power on one side some years and on the other side some years. I guess I don't see your point. I doubt you will ever see mine, too.

I question the entire idea of some politicians binding future taxpayers in perpetuity. The contracts are not legitimate. When they end everything should be up for negotiation.

 
At 1/14/2011 1:21 PM, Blogger VangelV said...

I think it is a pretty well-known policy that unions usually support Democrats and business usually supports Republicans.

Obama got a lot more money from most sectors than McCain did so let us not go there. The fact is that both parties are bought and paid for by special interests looking for handouts from taxpayers and consumers.

 
At 1/14/2011 1:25 PM, Blogger VangelV said...

GM's job is to make money. The UAW's job is to see the suppliers of human capital get their share.

The two goals are not compatible because you can't determine what a 'fair share' is unless you use market forces and can't make a profit if you pay above market rates for a particular level of productivity.

 
At 1/14/2011 1:29 PM, Blogger Walt G. said...

VangeIV,

Everything is open to negotiation and mutual agreement, but present value compensation accepted to be paid in the future as deferred compensation is still legally owed. This is as legitimate as the numerous SCOTUS rulings make it. Of course, future rulings could change all of that. As morganovich can attest, they recently changed bondholders’ rights.

 
At 1/14/2011 1:31 PM, Blogger Walt G. said...

"The fact is that both parties are bought and paid for by special interests looking for handouts from taxpayers and consumers."

I agree. And we all have our own special interests.

 
At 1/14/2011 1:41 PM, Blogger Walt G. said...

"The two goals are not compatible because you can't determine what a 'fair share' is unless you use market forces and can't make a profit if you pay above market rates for a particular level of productivity."

VangeIV,

Maybe that's why the UAW's main priority is to organize the Southern transplants and set the labor market rates. You think?

 
At 1/14/2011 1:45 PM, Blogger VangelV said...

Everything is open to negotiation and mutual agreement, but present value compensation accepted to be paid in the future as deferred compensation is still legally owed. This is as legitimate as the numerous SCOTUS rulings make it. Of course, future rulings could change all of that. As morganovich can attest, they recently changed bondholders’ rights.


I disagree. Why should taxpayers be bound by contracts signed by people being paid by the other side? I do not give politicians the right to sign a contract on my behalf so why should I comply to that contract?

If I get control of a condo board and sign a contract with my uncle's company that pays it four times the market price for the next 20 years why should owners and future boards be bound by that agreement? And if they shouldn't why should taxpayers for similar contracts singed by politicians and their union supporters.

 
At 1/14/2011 2:10 PM, Blogger Walt G. said...

VangeIV,

They are not on the other side when the campaign is over and they are elected. They are your representatives whether you like them or not. I teach an online political science class, so I know that political theory goes over like a lead balloon :) It's always, "I didn't vote for the son-of-a bitches."

I can't answer why you are bound to contracts made by others and way into the future. I suppose that is just part of our society and its legal system.

 
At 1/14/2011 2:59 PM, Blogger Che is dead said...

... we still have a pension funded by GM instead of the PBGC as one of the reasons I gladly pay union dues (that was one of the reasons the auto loans were a good deal for the taxpayers).

Why do we even have a PBGC? This was just another Democrat payoff to the unions. Why should the taxpayer guarantee private sector union pensions? Where does that sense of entitlement come from?

Of course, the Democrats on the union payroll made sure that those with a legitimate legal claim were screwed, while their cronies made out like bandits:

Craig Coffey, a retiree in Nevada who invested $55,000 in bonds in the old GM that are now worthless, was outraged that the union is on its way to recovering all its money before investors get even a cent of compensation ... Mr. Coffey has had to make ends meet by finding odd jobs, which can be difficult in the hard-hit Las Vegas area.

Taxpayers and investors not as fortunate as UAW, Washington Times

 
At 1/14/2011 3:12 PM, Blogger Che is dead said...

What's wrong with a union, or any investor, requesting a company that they have a financial interest in to identify risk if it in fact exists?

If only all your union brothers felt the same way, we wouldn't need a federal law to force transparency on them.

On December 2nd, U.S. House Representatives Devin Nunes (R-CA), Paul Ryan (R-WI), and Darrell Issa (R-CA) introduced the Public Employee Pension Transparency Act. The bill is aimed at providing more transparent accounting standards, as well as ensuring that, if a pension fund causes a municipality, city or state to go belly up, federal tax dollars won’t be used as a trough from which public-sector pension plans can steal more money from the American taxpayers if they fail:

“The American people have a right to know the truth about the unfunded liabilities being run-up by state and local pensions. Quite frankly, if they have nothing to hide, there’s no reason why the states and local governments who control public employee pensions should not embrace this effort to ensure that the taxpayers have a more transparent accounting of the true nature of pension liabilities.”

Public Pension Cost Cover-Up? The Union Effort to Kill Transparency

The SEIU, AFSCME, AFT, UFT and other unions immediately came out against the bill. Go figure.

 
At 1/14/2011 4:08 PM, Blogger Paul said...

"I can't answer why you are bound to contracts made by others and way into the future. I suppose that is just part of our society and its legal system."

Unless it doesn't go your way, Walt. Then it's goon squad time.

The GOP just took over the Congress and they owe AFSCME, SEIU, UAW, etc. exactly nothing. We'll see where the unions are left "when the music stops" and states go bankrupt, this time.

 
At 1/14/2011 4:37 PM, Blogger Walt G. said...

Che is dead,

The PBGC was formed when American Motors when bankrupt taking the pension plan down with them (I believe in the mid to late 1960s). A lot of Republicans and Democrats have not changed the laws since. The U.S. Secretaries of Labor, Commerce, and Treasury are the board of directors. Do believe as some people do that it is a private corporation without public liability?

Personally, I want all of my compensation now/today in present-value dollars so I can invest/control it, but that is not the system I have to use and make work for me.

Craig Coffey must never have heard of diversification: First rule of investing. The bonds are not worthless, but they are back-loaded with new GM stock. Mr. Coffey should hope new GM stock does well; then he will too. I only directly have 3% of my investment portfolio in the new GM stock, and it has been a very lucrative investment for me so far. I am not sure if my mutual funds have any old or new GM stock, but I know some of my bond funds still have old GM bonds in them.

Paul,

Well, of course it can go the other way at any time. Everyone should have a plan "B." You have to work within the constraints you are given or figure out a way to advantageously widen them.

 
At 1/14/2011 4:59 PM, Blogger Paul said...

"You have to work within the constraints you are given or figure out a way to advantageously widen them."

In other words, by hook or Democrat crook.

 
At 1/14/2011 5:22 PM, Blogger Walt G. said...

Paul,

Did Democrats corner the crook market while I was not looking?

There are people who are and always will be poor, people who are broke, and people who are rich. Broke and rich can be temporary conditions. Which one are you? Which one do you want to be?

 
At 1/14/2011 5:40 PM, Blogger PeakTrader said...

VangelV, the aggregate data, along with all U.S. firms, outweigh a few frauds. I've cited one example of higher productivity before:

The U.S. created 17.6 million jobs between 1993-98, and created only 3.7 million jobs between 2001-06. However, U.S. real GDP growth was only slightly higher from 1993-98 than from 2001-06. So, the U.S. became much more productive in the 2000s.

I'm surprised you didn't mention debt, or the paper economy, which you've done many times before.

However, if you can borrow $100, and pay back only $95 in one year, or $90 in two years, then of course you'll borrow.

There's a big lie about the U.S. economy of the 2000s, which hasn't been defended, most likely because of ignorance and incompetence.

 
At 1/14/2011 6:05 PM, Blogger Ron H. said...

Ron: - "This is real obvious to others here, even if you don't see it yourself."


Walt: - "Which rules are you writing about?"

I rest my case.

 
At 1/14/2011 10:30 PM, Blogger VangelV said...

Maybe that's why the UAW's main priority is to organize the Southern transplants and set the labor market rates. You think?

The UAW cares only about the organization, not the members, their families, or their employers.

 
At 1/14/2011 10:33 PM, Blogger VangelV said...

They are not on the other side when the campaign is over and they are elected. They are your representatives whether you like them or not. I teach an online political science class, so I know that political theory goes over like a lead balloon :) It's always, "I didn't vote for the son-of-a bitches."

I don't care what goes over and what doesn't. I do not believe that people can be bound in perpetuity by corrupt politicians and expect that most voters will agree and vote to end the benefits. Let politicians spend their money as they see fit.

Since you teach political philosophy you may want to go over Spooner's writing about the Constitution. I have seen a few Spooner T-shirts around, which means that he is getting some attention from the young people out there.

 
At 1/15/2011 9:22 AM, Blogger Walt G. said...

VangeIV,

It's impossible to convince union haters they do any good, but I personally think they do. You are partially right about your self-preservation comment because any organization or individual has to care about itself to survive. That would mean avoiding extinction by recruiting new members. New members is the same thing to a union that air is to an individual.

Voters don't vote their own politicans out, and they can't vote on the others. Presidents are term-limited at eight years. The average historical re-election rate for a Senator is in the 80% range and the average historical re-election rate for a Congressman is in the 80% range. This suggests a valid plan would be a join-em-if-you-can't-beat-em appraoch, yet very few people from my experience have ever contacted their representatives or worked on a campaign with their concerns (you need to propose a solution to the problems you have and not just vent).

Also, as a special interest group of one, people don't vote to cut their own benefits. A great example of that is Social Security, which should be ended with those my age considering their contributions are sunk costs in those before them. You think that will happen? Most U.S. programs that have huge costs are like Social Security to the electorate.

 
At 1/15/2011 11:47 AM, Blogger Walt G. said...

Correction: Congressmen are re-elected at a 90% historical rate. I volunteer for one, and I like to think I helped get him re-elected once again last year.

 
At 1/15/2011 9:41 PM, Blogger VangelV said...

It's impossible to convince union haters they do any good, but I personally think they do.

I do not think that it is impossible at all. Union haters can look at the public unions and see that they have done very well for their owners as they transformed what were supposedly public servants into the public's masters. It is just hard to convince them that they did any good for society and for those that they took advantage of when using force to extract benefits for their members.

 
At 1/15/2011 10:22 PM, Blogger juandos said...

Hey Walt G, I'm sorry but I'm quite skeptical of the Congressional Oversight Panel...

Maybe I'm being excessive here since the Oversight Panel does cover how the taxpayer is losing with regards to the GM IPO pricing (page 47)...

 
At 1/16/2011 5:59 AM, Blogger PeakTrader said...

It's better to say total marginal increases in U.S. military spending increased $100 billion to $200 billion a year (beyond maintaining a standing military) over much of the 2000s.

U.S. military spending as a percentage of GDP has been in a downtrend, since WWII, and remains at a historically low level.

 
At 1/16/2011 8:28 AM, Blogger Walt G. said...

VangeIV,

I just got my Blue Cross reimbursement bill for a medical procedure I had done. The hospital charged $1000 but my bargaining agent (Blue Cross) used their purchasing clout and said they would pay $680 and the hospital accepted that amount as payment in full. Should I be upset that the hospital is "out" $320 or that someone without insurance (non-unionized) has to pay the $1000? Why do people want universal health care but not universal union representation?

Why do we accept that business capitalists can pool their money and get political clout and economies of scale but the suppliers of human capital cannot do the same by using their legal rights to join a union and likewise lobby and bargain?

 
At 1/16/2011 9:13 AM, Blogger Walt G. said...

juandos,

I accept the Congressional report more than the paid media because it is full and in context for evaluation. That report was cherry picked by the paid media resulting in drastically different stories. Our local paper (Flint) used one part of the report and said the loans were a fantastic success while many others reported the loans as a complete failure. I suppose the media picked what they thought their readers wanted to hear. Populism is big nowadays. We owe it to ourselves to make our own evaluation before it goes in the horse instead of after it comes out of the horse.

Any money lost in the IPO would be due to the Treasury Department's exit strategy and their call alone. I know I would like to blame others when I buy high and sell low by mistiming the market, but I realize that is my responsibility alone.

I felt GM was a good buy at the IPO price using the objective criteria I use to manage my financial portfolio just looking at the financial aspects. I try to disassociate my finances from my personal feelings, so I bought on GM's projected sales, future earning projections from those sales, their overseas' presence, and the fact that got to keep the carry loss forward tax credits after the 363 bankruptcy to increase their bottom line.

GM's increased profits will help develop new products by reinvestment in the company, reward their stockholders, reward the employees, and protect the retirees' pensions and health care. I am not sure what criteria the government used to sell at the IPO price. So far, I seem to have been right with a $5.20 per share profit as of the closing market price on Friday. Look on the bright side, the stock price increase will help positively affect the value of the approximately 26% of GM that the U.S. still owns.

Overall, I will stand with my earlier position that at this point in time, the U.S. is much better off as a result of doing what they did than if they had not done anything at all. What I can see on paper and quantify in $$ looks good, and nobody has been able to supply alternative data/reports that show a no-action policy would have made the public better off than the bridge loans have.

 
At 1/16/2011 2:58 PM, Blogger Ron H. said...

"I just got my Blue Cross reimbursement bill for a medical procedure I had done. The hospital charged $1000 but my bargaining agent (Blue Cross) used their purchasing clout and said they would pay $680 and the hospital accepted that amount as payment in full. Should I be upset that the hospital is "out" $320 or that someone without insurance (non-unionized) has to pay the $1000? Why do people want universal health care but not universal union representation?"

First of all, Walt, people DON'T want universal health care. Haven't you been paying attention? Do you recall that a REPUBLICAN senator was elected in the People's Republic of Massachusetts to fill the seat of the ultimate universal healthcare advocate, former Sen. Ted Kennedy, on this very issue? Have you seen the poll numbers? Do you recall how many incumbents lost their seats last November because their opponents promised to repeal obamacare?

Then, to your medical bill example: You should be aware that in reality, the $1000 billed to your insurer was unlikely to have any relationship to the actual costs, and was more likely an amount your insurer instructed the hospital to bill them. By accepting Blue Cross, the hospital has decided that $680 is adequate payment, so they are not out $320. Someone with other insurance or method of payment would likely pay some different amount.

The person without insurance might pay $500 cash for that procedure, which is probably the best indicator of the actual cost.

If the procedure was an emergency, a person without insurance and without money might eventually not pay anything, so your $680 helps make up for those losses.

Refusing to pay the amount of actual costs isn't a way to control those costs, but a way of discouraging providers from accepting that method of payment. Some doctors no longer accept new Medicare or Medicaid patients.

 
At 1/16/2011 3:10 PM, Blogger VangelV said...

U.S. military spending as a percentage of GDP has been in a downtrend, since WWII, and remains at a historically low level.

Actually, it does not. First, given the fact that much of the economy was dedicated to fighting WWII you should be spending much less than you did then in times of peace. Second, having troops stationed in 140 countries around the world is not cheap. Also, hiding some of the expenditures in other places does not change the reality that you spend more on your military than the next ten countries combined.

 
At 1/16/2011 3:13 PM, Blogger Ron H. said...

"I just got my Blue Cross reimbursement bill for a medical procedure I had done. The hospital charged $1000 but my bargaining agent (Blue Cross) used their purchasing clout and said they would pay $680 and the hospital accepted that amount as payment in full. Should I be upset that the hospital is "out" $320 or that someone without insurance (non-unionized) has to pay the $1000? Why do people want universal health care but not universal union representation?"

First of all, Walt, people DON'T want universal health care. Haven't you been paying attention? Do you recall that a REPUBLICAN senator was elected in the People's Republic of Massachusetts to fill the seat of the ultimate universal healthcare advocate, former Sen. Ted Kennedy, on this very issue? Have you seen the poll numbers? Do you recall how many incumbents lost their seats last November because their opponents promised to repeal obamacare?

Then, to your medical bill example: You should be aware that in reality, the $1000 billed to your insurer was unlikely to have any relationship to the actual costs, and was more likely an amount your insurer instructed the hospital to bill them. By accepting Blue Cross, the hospital has decided that $680 is adequate payment, so they are not out $320. Someone with other insurance or method of payment would likely pay some different amount.

The person without insurance might pay $500 cash for that procedure, which is probably the best indicator of the actual cost.

If the procedure was an emergency, a person without insurance and without money might eventually not pay anything, so your $680 helps make up for those losses.

Refusing to pay the amount of actual costs isn't a way to control those costs, but a way of discouraging providers from accepting that method of payment. Some doctors no longer accept new Medicare or Medicaid patients.

 
At 1/16/2011 3:15 PM, Blogger VangelV said...

I just got my Blue Cross reimbursement bill for a medical procedure I had done. The hospital charged $1000 but my bargaining agent (Blue Cross) used their purchasing clout and said they would pay $680 and the hospital accepted that amount as payment in full. Should I be upset that the hospital is "out" $320 or that someone without insurance (non-unionized) has to pay the $1000? Why do people want universal health care but not universal union representation?

You forget that there is no free lunch. First, the procedure could still yield a profit at $680, which Blue Shield paid, in which case the hospital is happy. Second, if it were not profitable and the hospital had to overcharge someone else, the problem would not go away if everyone was covered by Blue Shield because Blue Shield could not force hospitals to accept payments that are below cost. The hospital would either make its margin or go out of business. In the first case you would still have to pay costs plus profit. In the second, you could not get the procedure done. In either case there is no free lunch because someone always pays. The fact that you don't seem to understand that shows that your ignorance of economics is getting in the way of seeing reality as it is.

Why do we accept that business capitalists can pool their money and get political clout and economies of scale but the suppliers of human capital cannot do the same by using their legal rights to join a union and likewise lobby and bargain?

The can. But businesses are not allowed to use force to prevent you shopping somewhere else. Unions can use force to stop businesses from hiring others who are willing to do the job for less than the union members.

 
At 1/16/2011 3:18 PM, Blogger VangelV said...

Any money lost in the IPO would be due to the Treasury Department's exit strategy and their call alone.

No. The money was lost during the entry stage. The government paid far too much for assets that were worth significantly less. The loss was an attempt to recover some of the initial expenditure and create a bit of good will.

 
At 1/16/2011 3:24 PM, Blogger VangelV said...

I felt GM was a good buy at the IPO price using the objective criteria I use to manage my financial portfolio just looking at the financial aspects.

Good luck to you. GM still makes crappy cars that are not priced properly and has too many contracts that doom it to failure. While it is possible that over the short term the shares could go up significantly for a while with the rest of the market they should under-perform other asset classes. And if GM does well, hires more workers and sells more vehicles, that success will most likely come in Asia, not in the US.

GM's increased profits will help develop new products by reinvestment in the company, reward their stockholders, reward the employees, and protect the retirees' pensions and health care.

As I said, most of the reinvestment will come in Asia and any protection of rich pension and healthcare plans will harm present investors just as they did past investors who lost everything. GM needed Obama to reject the rule of law and rob bondholders in order to get this far. If that happened before what makes you so sure that your rights as an investor will be respected in the future?

 
At 1/16/2011 3:28 PM, Blogger VangelV said...

Overall, I will stand with my earlier position that at this point in time, the U.S. is much better off as a result of doing what they did than if they had not done anything at all.

I disagree. Had Obama allowed GM to go into bankruptcy the assets would still be around except that they would have been owned mostly by the bondholders instead of the UAW and the government. The fact that Obama ignored the rule of law hurt the corporate bond market and weakened the economy.

What I can see on paper and quantify in $$ looks good, and nobody has been able to supply alternative data/reports that show a no-action policy would have made the public better off than the bridge loans have.

As I said, the main difference would be who owned GM today. Would it be the UAW and government or the bondholders? Now you could argue that the government and UAW are better managers than the private sector but I would disagree.

 
At 1/16/2011 3:39 PM, Blogger VangelV said...

Yeah, until I read about Ron Paul's crackpot views on the Fed. Paul is a danger to the REPUBLIC, along with the Nipponistas.

Your ignorance is showing. Try looking up the word republic and see how the Fed fits in.

Global demand is pushing up commoidties prices. So what? The long, long term trend on commodities is down. Commodities, as a group, have only tripled since 1967, underperforming many other asset classes.

True. The best way to get commodity prices down is to let them run up and attract investment into the sector. But you are missing an important factor. Many of the currencies that were around no longer exist so your statement is not valid. In many of the original fiat currencies the price of commodities has gone up millions of percent.

Gold peaked at $2300-2400 an ounce in 1980, adjusted for inflation. If you bought at the height of gold fever then you are still down half after 30 years. You are a big loser. And we have gold fever now--buyer beware. When halfwits like Glenn Bleck are braying about gold, then probably it is time to cash in your chips.

How could you buy at the height? Gold only hit the high price on two or three trades on one day. If you look at the price and weight it by volume you see that gold is doing fine. You are also cherry picking. Why not look at the average price in the year before the peak? Or when Nixon closed the gold window at the NY Fed? If you look at the data you will see that gold has been doing fine.

As for Beck, how may people actually own much gold? Most people are about as dumb as you are and won't see reality until long after the price has really gone up. It is after an ounce of gold buys the Dow that losers like you will sell what is left of their dwindling asset reserves to buy what the smart money is selling. With the sector of less than 1% of market value compared to around 30% near the last peak that you were talking about, it is clear to anyone paying attention that gold will have a long time to go. Of course it would help us long time holder to have a nice contraction that shakes out the weak and stupid who do not deserve the gains out of the market. The problem for us is that we can't guess when that contraction will come. I guess that we will have to look to contrary indicators like you for guidance.

 
At 1/16/2011 6:23 PM, Blogger Walt G. said...

Ron H.,

"First of all, Walt, people DON'T want universal health care."

The people I talk to do. And the people who we elected do or it would not have passed. Personally, I think it is a bad policy.

The odds are an incumbent will be re-elected regardless of how they vote. That's been true in the past as it will be in the future. We will have shifts at times that will get people's attention, but the long-term trend will hold. You can bet on it. The incumbents will shift to the left, right, or center as necessary to be voted back in.

If President Obama is not re-elected it will probably be because of the economy and not health care. Both Bush I and Carter lost re-election in my era mostly over the economy while all the others overcame low ratings to be re-elected.

VangeIV,

If the GM IPO is any indicator, nothing has been hurt. The former stockholders were wiped out and the evidence shows it was not held against GM. Why would the bond market be any different? If they want to give me 6% or so, I will make a prudent investment of about 5% of my portfolio in GM bonds tomorrow.

 
At 1/16/2011 7:14 PM, Blogger VangelV said...

The people I talk to do. And the people who we elected do or it would not have passed. Personally, I think it is a bad policy.

Didn't you guys just have an election that dealt with the subject? It seems to me that the people voted for those that opposed universal insurance.

The odds are an incumbent will be re-elected regardless of how they vote.

That did not work out well. Most of the people who voted for healthcare or cap and trade got killed at the polls.

If the GM IPO is any indicator, nothing has been hurt. The former stockholders were wiped out and the evidence shows it was not held against GM. Why would the bond market be any different? If they want to give me 6% or so, I will make a prudent investment of about 5% of my portfolio in GM bonds tomorrow.

The bond market would be different because Obama broke the law when he wiped out the bondholders who had first dibs on a bankrupt GM. And GM has not been 'saved' because most of its problems are still in place. While the Asian factories may yet bail it out, the company will underperform because it has too many problems with the UAW and legacy commitments.

 
At 1/17/2011 8:52 AM, Blogger Walt G. said...

VangeIV,

We still have health care. We will still have health care next year and the year after that. Some adjustments might be made, but the power structure is not in place to totally repeal it.

Yes. Some people got voted out who backed health care, but the high re-election rate trend of incumbents will continue in the future. Money gets people elected, and the incumbents have the money. There's nothing that indicates the high re-election rate will change until campaign financing changes.

No secured bondholder at GM lost any money, and how much if any the unsecured bondholders will lose has not been settled yet. Every dollar of the increase in the price of GM stock is in their favor, and GM stock has been soaring lately.

 
At 1/17/2011 9:23 AM, Blogger VangelV said...

We still have health care. We will still have health care next year and the year after that. Some adjustments might be made, but the power structure is not in place to totally repeal it.

Health care is not created by governments but by people who choose to provide it for a fee to their customers. It will be with us as long as there is a demand for it even if there is little desire for government controlled health care.

Yes. Some people got voted out who backed health care, but the high re-election rate trend of incumbents will continue in the future. Money gets people elected, and the incumbents have the money. There's nothing that indicates the high re-election rate will change until campaign financing changes.

You did not pay attention. Many of the incumbents who got reelected only did so because they turned their back on Obama and Pelosi. Now we see Obama turning his back on his own supporters on the left and trying to move further to the middle just as Clinton was forced to. I would expect that the new Congress will pass new legislation to do away with many of the deals made to pass Obama's health care legislation.

No secured bondholder at GM lost any money, and how much if any the unsecured bondholders will lose has not been settled yet. Every dollar of the increase in the price of GM stock is in their favor, and GM stock has been soaring lately.

Under the law unsecured bond holders stood ahead of the UAW or the government. Obama violated the law and put the government and UAW before them.

 
At 1/18/2011 8:29 AM, Blogger Walt G. said...

"Under the law unsecured bond holders stood ahead of the UAW or the government."

Show me that law as it exists after the Chrysler decision that supports your position. None of Obama's appointees were on the SCOTUS when that law was made. Many were Republican appointees including the bankruptcy judges and appeal's judges in both cases. Bush II was in on the initial deal, too.

Yes, many of the provisions will probably change, but Health Care will not be repealed with a Democratic Senate and President. The 80% and 90% re-election rates of the Senate and House are trends that will continue--they have held constant since tracking in the early 1960s by Open Secrets. Nothing suggests that will change unless the advantage incumbents have raising money changes. Presidents often move to the center to be re-elected.

 
At 1/18/2011 12:09 PM, Blogger VangelV said...

Show me that law as it exists after the Chrysler decision that supports your position. None of Obama's appointees were on the SCOTUS when that law was made. Many were Republican appointees including the bankruptcy judges and appeal's judges in both cases. Bush II was in on the initial deal, too.

In the Chrysler decision the court denied the bondholders' challenge to the Fiat deal because it claimed that the bondholders did not prove why judicial intervention was needed. That is very different than saying that the established rules that would put unsecured bond holders higher up the food chain than the union were wrong and that Obama was right to violate those rules.

Yes, many of the provisions will probably change, but Health Care will not be repealed with a Democratic Senate and President.

It does not matter because the country is moving towards bankruptcy in either case. The long term prognosis for healthcare is poor no matter what regulations Congress decides to push. That said, I suspect that Congress will do what the voters wanted in the last election and roll much of Obamacare back.

The 80% and 90% re-election rates of the Senate and House are trends that will continue--they have held constant since tracking in the early 1960s by Open Secrets.

But that has not happened. Many sitting legislators got killed in the primaries or got taken out by the opposition during the election. Many Democrats who saved their seats ran against some of Obama's policies.

Nothing suggests that will change unless the advantage incumbents have raising money changes. Presidents often move to the center to be re-elected.

Money will follow sentiment, not lead it. In competitive states you will see a great deal of volatility as both of the major parties are discredited and you see more individuals run against some of their party's platform.

 
At 1/18/2011 1:38 PM, Blogger Walt G. said...

VangeIV,

That’s a unique reading of the Chrysler decision. I read it as the Court stating that the secured bondholders would have to prove that they would get more in liquidation than a 363 bankruptcy to stop the Fiat deal, and they could not do that. In essence, they could not screw themselves to screw someone else. Either way, the secure bondholders at Chrysler lost and the unsecured bondholders’ suit at GM was denied using Chrysler as precedent. I found it surprising that the appeals’ court stated the GM decision could not be used in the future as precedent. They closed the barn door after that favorable ruling that Treasury wanted. I can see where that would piss a lot of people off.

I agree that the country is heading towards bankruptcy from entitlements and discretionary spending cuts cannot stop that (actually, we are already there).

Incumbents might shift their position a bit. I still expect to see the 80 and 90% re-election trends hold through the rest of my lifetime. The money will follow the incumbents. The candidates with the most money will generally win.

 
At 1/20/2011 5:05 PM, Blogger VangelV said...

hat’s a unique reading of the Chrysler decision. I read it as the Court stating that the secured bondholders would have to prove that they would get more in liquidation than a 363 bankruptcy to stop the Fiat deal, and they could not do that.

You obviously have trouble understanding the ruling.

Here is someone else who has the same interpretation as I had. And here is another.

 
At 1/21/2011 11:47 AM, Blogger Walt G. said...

Vange,

We all have our opinions. Try citing Buzzle.com in a research paper. I read it "as no harm no foul." One of the key points clearly cited in the decision was the lack of evidence that the bondholders were harmed more by the 363 than a straight liquidation. The burden of proof was on the bondholders, and the bondholders, according to the Supreme Court, didn't have any. You and Buzzle are certainly entitled to your own interpretation.

 
At 1/21/2011 11:53 AM, Blogger VangelV said...

We all have our opinions. Try citing Buzzle.com in a research paper. I read it "as no harm no foul." One of the key points clearly cited in the decision was the lack of evidence that the bondholders were harmed more by the 363 than a straight liquidation....

Read the decision again. The bond holders were told that they had no standing in front of the court and the court allowed the government to rob them. No doubt a parasite like you liked the process because it gave people like you access to unearned gains and gave them a chance to find a new host to live off of for some more time.

 
At 1/21/2011 12:23 PM, Blogger Walt G. said...

The first rule of a grievance of any kind is to show you are disadvantaged by someone's actions. That someone else gets something you don't get is a weak argument that will usually lose if it is even written up in the first place (it's like Joey arguing Pete got two candy bars and he only got one when both should be happy to get anything).

A winning case cites an amount that you want and how you want the deciding party to rule. Did Chrysler really want to argue for a liquidation? No. The case was about stopping the 363 and forcing a liquidation (read Lionel, too). You can't change the case into a bondholder vs. UAW and put the UAW on trial because the UAW was not a party to the case (the bankruptcy law ruling was on trial).

Whether I like the ruling or not is irrelevant to understanding the rationale or the process. You win some. You lose some.

 
At 1/21/2011 12:28 PM, Blogger VangelV said...

The first rule of a grievance of any kind is to show you are disadvantaged by someone's actions.

The pension plans that owned the bonds received less than what they expected. All they wanted is for the law to be applied as it would have been in a normal case. But that is not what they got because the government put a lot of pressure to sell Chrysler to Fiat and keep the UAW happy. Because the government has huge influence in the court system it got its way as expected. But let us pretend that what the court wanted demonstrated was possible in the absence of a normal liquidation process.

 
At 1/21/2011 12:36 PM, Blogger Walt G. said...

A normal case would have been the lquidation process you speak about, and the bondholders would have received nothing just like the old GM stockholders did. The Court kept the bondholders from shooting their own feet off.

If the bondholders wanted a lawsuit against the UAW (or a UAW trust) they should have filed one against them instead or in addition to the one they filed.

Vange, You've never written a case for arbitration, have you? With your methodology, you would lose them all.

 
At 1/21/2011 12:39 PM, Blogger VangelV said...

A winning case cites an amount that you want and how you want the deciding party to rule.

Let me be clear. The ruling actually helped me become wealthier because it actually weakened the US capital markets. My argument is that what the government did was not just. It was political and designed to keep the UAW donating to Obama causes and candidates.

Did Chrysler really want to argue for a liquidation? No.

If by Chrysler you mean management then you are right. It wanted to keep the money losing game going because managers got to keep their jobs. If you mean the UAW then you are also right because it did not want to see its pension funds get wiped out as the salaried plans were. If you mean the creditors then you would be wrong because they wanted more value than the government forced them to accept.

 
At 1/21/2011 12:48 PM, Blogger VangelV said...

A normal case would have been the lquidation process you speak about, and the bondholders would have received nothing just like the old GM stockholders did. The Court kept the bondholders from shooting their own feet off.

First, it is not up to the court to prevent the bondholders from exercising their rights. Second, the bondholders and their advisers clearly saw more value in acquiring the assets without being constrained by the UAW salary structure, retirement benefits, and contract provisions. The right thing was to have the process go through without political pressures.

But that is OK. The next bankruptcy should go better because it is unlikely that the government will make the same mistake again.

 
At 1/21/2011 1:03 PM, Blogger Walt G. said...

Vange,

“The right thing was to have the process go through without political pressures.”

Maybe, but the Treasury and UAW were not parties to the case. Maybe they should have been. I don’t know how the legal strategy was decided. The bondholder exercises the rights you mention through the bankruptcy court, and that was who the case was actually against. It’s always a bitch to try to beat the house.

Your conjecture does not provide the overwhelming evidence needed to support your position and win the case. If someone throws you a bone, you better take it. A lot of people lost, and sure, some lost more than others--this time.

As you and many others have stated about these events and others like them, it could easily go the other way next time. I hope everyone prepares themselves for that possibility. Can we at least agree on that point?

 
At 1/21/2011 8:58 PM, Blogger VangelV said...

Maybe, but the Treasury and UAW were not parties to the case....

Treasury was pushing the sale. That required wiping out the bondholders. The UAW wanted its pensions protected.

As Bill Bonner points out, the GM/Chrysler option may be tried again, this time with the muni market. To save the public union pensions some people in Washington are calling for creditors to be wiped out as the feds pass laws that would allow cities and states to restructure their debts by defaulting.

This is going to be a fun show to watch. The public unions, politicians and the courts against bond holders and the voters. It is possible that the US could wind up looking like Greece or Portugal.

 
At 1/22/2011 7:11 AM, Blogger Walt G. said...

Yes, I agree. A lot of money was promised to a lot of people that does not exist. It will be interesting. That the process will be politically and judicially determined, which does not mean fair, is a certainty that people will have adjust their lives to whether they want to or not.

Change is coming, and it will come very fast. Some will cry in their beers at the bar, and others will find a way to prosper.

 
At 1/22/2011 9:54 AM, Blogger VangelV said...

Yes, I agree. A lot of money was promised to a lot of people that does not exist. It will be interesting. That the process will be politically and judicially determined, which does not mean fair, is a certainty that people will have adjust their lives to whether they want to or not.

The process that created the mess was certainly not 'fair'. The unions and other special interest groups funded election campaigns and were paid off by politicians who in many cases violated the Constitutional limits on their power.

Change is coming, and it will come very fast. Some will cry in their beers at the bar, and others will find a way to prosper.

Sadly, few will proposer from the downfall of the parasite class because the revolt against the public sector was triggered by a crisis that destroyed savings and the death of the currency. Only a small minority was ready for the obvious end game and even many within that minority will see their gains confiscated.

 
At 1/22/2011 11:21 AM, Blogger Walt G. said...

"The unions and other special interest groups funded election campaigns and were paid off by politicians who in many cases violated the Constitutional limits on their power."

Take the second word out "unions" and replace it with some of these words and see if the truth value of the sentence changes any at all: elite, business groups, lawyers, right, left, Christians . . . . Next, use my definition of special interest groups: those other people who got something you did not get.

Vange, I take it you do not believe in deferred wages. I don't either. I want my compensation all in present value dollars now. Anything else is just smoke and mirrors. That does not change the fact that money was contractually/legally promised in the future at future value dollars for people who worked all their lives for it.

 
At 1/22/2011 8:22 PM, Blogger VangelV said...

Take the second word out "unions" and replace it with some of these words and see if the truth value of the sentence changes any at all: elite, business groups, lawyers, right, left, Christians . . . . Next, use my definition of special interest groups: those other people who got something you did not get.

I have no problem with including rent seeking corporations, religious groups and other special interest groups with the unions. All of them are thieves and conspire with Congress to rob the productive class in order to promote their parasitic existence. That is why all barriers to voluntary activities should be removed by government and individual rights to property need to be recognized.

Vange, I take it you do not believe in deferred wages. I don't either. I want my compensation all in present value dollars now. Anything else is just smoke and mirrors. That does not change the fact that money was contractually/legally promised in the future at future value dollars for people who worked all their lives for it.

The contract is signed by politicians so let them honour it. The way I see it, taxpayers did not agree to the outrageous benefits and salaries so they should not be on the hook for them. When the unions, special interest groups, and companies buy votes they should not benefit from actions that transfer wealth from consumers and taxpayers to themselves.

 
At 1/23/2011 9:04 AM, Blogger Walt G. said...

Money is to power what air is to humans. Wishing it were different will not make it so. The special interest groups will always have more access to our elected representatives (power) than individuals, and access will provide corresponding influence. We are all part of a special interest group, so you have to be belong to one to reap the rewards. I've had the opportunity to work with a U.S. Congressional office as a volunteer. Very few groups, from my observation, ask for less of something, and very few representatives get voted out of offfice, so our representatives are just doing what the voters want them to do.

In a representative democracy there is no difference between our elected repsentatives making a promise and the public making a promise. We are them. I hear complaints about "the union" all of the time from members who do not get involved in the union. We have the same 30-40 people at each union meeting out of 1000 members. I guess it is easier to sit at home and watch the football games on Sunday than attend meetings where decisions are made, and it is easier to complain than do something. There are no shortage of people who will show up the same day at GM for double-time pay.

 
At 1/23/2011 12:16 PM, Blogger VangelV said...

Money is to power what air is to humans. Wishing it were different will not make it so. The special interest groups will always have more access to our elected representatives (power) than individuals, and access will provide corresponding influence.

Only because the voters permit the access. When the demos turns on those special interests the parasites will figure out what a dangerous game they played.

It is because politicians are unethical and will seek power and money as they sell votes to special interests that are also seeking power and money that government must be very small and without much power.

We are all part of a special interest group, so you have to be belong to one to reap the rewards.

Some of us do not subscribe to the morality of parasitism as you do and do not seek to rob our neighbors of purchasing power so that we can benefit. All we want is for everyone to mind their own business as property rights are protected. Theft is theft, no matter who does it. And it is not comforting to be a part of the majority which oppresses others not only for moral and ethical reasons but because it is only a matter of time when the tide turns and one's favoured status is lost as parasite turns to host as a new special interest coalition gains the upper hand.

 
At 1/23/2011 3:24 PM, Blogger Walt G. said...

All special interest groups are made up of the individual voters. Few people I notice that are nearing 60-years-old want to cut Social Security. That's just one example of how it works. Representatives are elected and continually re-elected for "bringing home the bacon" in their own districts while people are bitching about what the other representatives do.

Watch what the "Tea" party does and not what they say are going to do by going to their Websites and observing their actions over time. If you monitor them, I think you will find them emphasizing what they are doing for the voters back home ($$$) - more so as re-election nears.

If you are a whole lot younger than I am, you might see our political system change, but I doubt I will get to see it. It's not the person who can do the job will all the resources they need at their disposal who are the best workers. It is the person who can take what they are given and still get the job done.

All this does not mean you cannot strive for things to change to an optimal condition, but you need to survive and thrive in the meantime. Those who can quickly adapt to the three Ps will do fine (People, Processes, and Power).

 
At 1/24/2011 11:51 AM, Blogger VangelV said...

If you are a whole lot younger than I am, you might see our political system change, but I doubt I will get to see it. It's not the person who can do the job will all the resources they need at their disposal who are the best workers. It is the person who can take what they are given and still get the job done.

There is no doubt that the system will change over the next few years. The US is broke and the USD is on the edge of the abyss that all fiat currencies fall into. The system of robbing others so that you can survive is not stable and not sustainable. It will have to go and will go.

All this does not mean you cannot strive for things to change to an optimal condition, but you need to survive and thrive in the meantime. Those who can quickly adapt to the three Ps will do fine (People, Processes, and Power).

Thriving by living off the productive output of others is not a long term path to surviving. The parasite class is about to go over the edge no matter how many judges are found to screw the taxpayer by protecting pensions of public unions that 'serve' bankrupt municipalities and states. Even if the rent seeking companies and unions do all that they can to protect themselves they cannot save the currency. Or keep voters on their side for very long.

 
At 1/24/2011 1:34 PM, Blogger Walt G. said...

The voters will do what everyone does: Protect their own interests as our own special interest group. It's the voter equivalent of Adam Smith's invisible hand. It's natural, and it’s probably unchangeable. People, as a rule, are not altruistic (well, maybe some nuns and priests are). Vange, are you a nun or priest?

Are you one of those guys who just assume the other side of the intersection has a red light when yours is green? Who pays to make that happen? You, or your representatives, made an “I’ll pay you some now and some later” deal with those people to cut present costs. The bill is now due and you didn't put enough in the bank to cover your promises.

Unless you are a survivalist living off-grid somewhere like a cave man you are probably not as self-sufficient as you think you are. Where's the deed recorded for your "private property"? Who protects your life and your house from burning down? Probably the same people who were promised pensions and health care in the future, and they vote, too.

 

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