Suitably Flip

NYC Top Marginal Combined Tax Rate Would Near 60%

Who wouldn't want to work for the government until August every year?

Congressional plans to fund a massive health-care overhaul could have a job-killing effect on New York, creating a tax rate of nearly 60 percent for the state's top earners and possibly pressuring small-business owners to shed workers.
...
The top rate in New York City, home to many of the state's wealthiest people, would be 58.68 percent, the Washington-based Tax Foundation said in a report yesterday.

That means New York's top earners, small-business owners and most dynamic entrepreneurs will be facing new fees and penalties.

The $544 billion tax hike would violate one of President Obama's ironclad campaign promises: No family will pay higher tax rates than they would have paid in the 1990s.

On the bright side, government control of private sector compensation ought to help ease New Yorkers' concerns about reaching the top bracket.

Call a Doctor If You Experience Cognitive Dissonance That Last For More Than Four Months

These expensive stimulus pills don't seem to be stimulating us...

So let's take some more!

In an interview this morning with ABC News Good Morning America, Warren Buffett suggested that a second government bill to give the economy a jolt, saying “I think that a second one may well be called for.”

In an effort to explain his thinking, the septogenarian Billionaire investor turned to something of a strange simile. “Our first stimulus bill, it seems to me, was sort of like taking a half a tablet of Viagra, you know, and then having also a bunch of candy mixed in you know — everybody was putting in things for their own constituencies — it doesn’t have really quite the wallop that might have been anticipated.”

Presto: Obama Saved or Created Another 130 Million Jobs In June

Unemployment ticked up to 9.5% and the economy shed a much-worse-than-expected 467,000 jobs in June, meaning nearly 132 million grateful Americans saw their livelihoods saved by their President during the month.

The June data brings the total payroll shrinkage since Obama's inauguration to 2.9 million.  A significant majority of those job losses (nearly 2.2 million) have occurred since enactment of the "stimulus" plan.

Surprise: Americans Even Cooler On Socialized Medicine Now Than In 1993

And it's disproportionately Dems and independents who account for the lesser support for a "complete rebuild" of the health care system.

A narrow majority of 55% was on board when Hillary was donning her lab coat, a number that's dwindled to a mere 41% with Dr. Obama on call.

Have the trillions in incremental spending and the accelerating creep toward a centrally planned economy somehow convinced the populace that the federal government isn't the best choice for your primary care physician?

Obama's "New Foundation" In a (Big) Nutshell

WSJ's Washington Wire blog maps out the President's proposed overhaul of the financial system in 56 easy bullet points.

The unabridged version runs 89 pages and prescribes throwing a helluva lot of spaghetti at a helluva lot of walls.  Some of it's bound to stick, no?  And it's not like there's a downside risk to over-regulation.

The ObamaCare Panacea: 30 Million Left Uninsured For the Bargain Price of $1 Trillion

Befuddling.  It's almost as if government running a major sector of the American economy is a bad thing.

Muchausen By Stimulus

The economy was sick, stricken with a more virulent strain of an illness that it suffers every 7 or 8 years.  Its newly elected caretakers prescribed a peculiar medication that has been demonstrated time and again to be poisonous, assuring naysayers that upping the dosage to elephant-grade levels was the surest path to recovery.  And when the economy's pulse weakened further, and its condition deteriorated beyond the prognosis absent the poison, the head nurse shrugged off accusations of malpractice, insisting that the patient simply must've been sicker than we thought.

"No one realized how bad the economy was. The projections, in fact, turned out to be worse. But we took the mainstream model as to what we thought -- and everyone else thought -- the unemployment rate would be."

"Everyone guessed wrong at the time the estimate was made about what the state of the economy was at the moment this was passed."

Biden's grapple with cognitive dissonance must be exhausting.  His boss's plan doesn't work and the only explanation he can fathom is one that absolves their historically demonstrably harmful remedy, instead pinning the blame on "everyone" having been wrong about the diagnosis three months ago.

Once you adopt the "create or save" mindset, you can truly do no wrong.  Everything good is to your credit; everything rotten is, well, better than it would've been if you hadn't been on the job.

You're welcome, still-employed 91.6% of the labor force.  And just think, before long, the federal government will be your literal healthcare providers too.  Early projections suggest Drs. Obama and Biden will create or save hundreds of millions of lives.  And you might be one of those lucky Americans who don't promptly die!

Previously:  For the Love of God, Please Stop Creating or Saving Jobs

Update:  Innocent Bystanders catalogs the not-quite-everyone who thought stimulus was the best medicine a few month ago:

• Obama reminds GOP in stimulus meeting: “I won” (Hot Air): 1/23/09
• House passes stimulus plan, but with no Republican votes (McClatchy): 1/28/09
• Pence Opposes Democrat Stimulus Bill: “It Won’t Work”: 1/28/09
• Economists say stimulus won’t work (St. Louis Post-Dispatch): 1/29/09
• Analysis: Stimulus Won’t Jump-start Economy (AP): 2/13/2009
• Sen. Cornyn: Stimulus Won’t Work (Fox): 2/13/09
• Republican Governors Step Up Attacks on Obama Economic Policies (Bloomberg): 2/23/09

Breathe, Barney

Dude, seriously?

Yes, we want to lose you.

Americans Tiring of Stimulation

That's all we can stands, we can't stands no more.

Forty-five percent (45%) of Americans say the rest of the new government spending authorized in the $787-billion economic stimulus plan should now be canceled. A new Rasmussen Reports national telephone survey found that just 36% disagree and 20% are not sure.

According to news reports, only $36 billion of the stimulus plan had been spent as of late May.

Since the impact of the stimulus to date has been roughly, well, the opposite of what its architects pledged, maybe it's not too late to put the check book away and quit constraining the economic recovery.

(HT: Hot Air)

For the Love of God, Please Stop Creating or Saving Jobs

The flagrant waste of trillions of "stimulus" dollars was supposed to "create or save" some 3.5 million jobs.  In the months since the bill's passage, the economy has disappeared a whopping 1.6 million payrolls, but we are assured all is going according to plan.

With that in mind, this news that another 600,000 jobs will be created or saved over the summer is daunting indeed.

President Barack Obama promised Monday to deliver more than 600,000 jobs through his $787 billion stimulus plan this summer, with federal agencies pumping billions into public works projects, schools and summer youth programs.

Obama is ramping up his stimulus program this week even as his advisers are ramping down expectations about when the spending plan will affect a continuing rise in the nation's unemployment.

(HT: JWF)

Update:  Drew at AoSHQ points out this illuminating comparison of actual unemployment data versus Obama's own predictions about life with and without the stimulus.

Is it too late to go back to without?

Also, is his entire economic team now fired for such comically abysmal forecasting?

Thus far, the mathematical rationale behind "created or saved" has consisted primarily of a smiling shrug, so let's give them a hand.  Taking the President's sales team at their word, unemployment should've risen to 8.6% by May if we'd done nothing.  With the actual May unemployment rate at 9.4%, the missing 80 basis points translate to 1.2 million jobs (0.8% * labor force of 155 million) neither created, nor saved, but lost because of the stimulus.

In other words, based on Obama's own pre-stimulus projections (and in the absence of any other substantiation of his magical mathematics), 75% of the 1.6 million total jobs we've shed since being stimulated were destroyed at the hands of Messrs. Obama and Keynes.

Strategy Room Rewind

A segment of our panel discussion on GM and the state of the American auto industry on Tuesday afternoon has been enshrined in the Best of Strategy Room archive.

This guy's the one on the left.

Please to enjoy.

Look Kids, Someone Who Isn't Guessing

Mitt Romney, a Michigander who knows a thing or two about salvaging and reorganizing failing enterprises, seems to suggest that the Presidents of the United Auto Workers and United States aren't necessarily the best stewards for General Motors.

Blasphemy.

Obama will take to the podium at noon to discuss his acqusition and, presumably, to publicly smite the insolent Romney.

"Saved Or Created" Green Collar Jobs Destroying Value All Over the Place

Much like you, I'm just delighted that we're finally transitioning to a 21st Century, post-capitalist, centrally controlled, green economy.  Still, something about this new Air Force solar field has me scratching my head.

Maybe you can help me put my finger on it.

President Barack Obama on Wednesday hailed solar energy as a cost saver for a major Air Force base, one stop on a Western trip devoted to raising political money and promoting his economic policies.

Obama's aides had mocked reporters for making a fuss over his first 100 days in office, but the president was eager to assess the first 100 days of his $787 billion economic stimulus package.

It has "saved or created nearly 150,000 jobs," he said, including "jobs building solar panels and wind turbines; making homes and buildings more energy-efficient."

Obama also announced more spending for renewable energy after touring a large field of solar panels at Nellis Air Force Base, near Las Vegas. The sun-powered cells provide a quarter of the base's power needs, Obama said, speaking in a large hangar warmed by the desert heat.

"That's the equivalent of powering about 13,200 homes during the day," he said, and it will save the Air Force nearly $1 million a year.
...
The base's $100 million public-private solar power system covers 140 acres and generates more than 14 megawatts of electricity.

Assuming the taxpayers' discount rate is 4.5% (based on the 30-year Treasury rate), a $1 million perpetual annuity is worth about $23 million today.  Of course, that assumes the plant lasts forever.  If its useful life is 30 years, chop that $23 million down to about $16 million.

Did the public foot more than 20% or so of the bill for this public-private project?  If so, it'd be a lot easier (and it'd make for much more entertaining show-and-tells) if the Treasury would just put our money into a big pile and light it on fire.

What's more, the "private" side of this partnership is compensated with multi-million dollar taxpayer-funded incentives.  So while the project may pay off for private investors, it's only because we're showering them with enough taxpayer money to make it worth their while to invest in a value-destroying project.  Here, again, Obama and Geithner could save a lot of time and paperwork by flushing the money down an Earth-friendly, low-flow toilet.

Obama: We're Already Broke, So We May As Well Keep On Spending

Charming logic.

Just Because I Wrote It Doesn't Mean I Read It

Rep. Henry Waxman (D-Hanna Barbera) is quite astonished that his colleagues might presume he's aware of the contents of the Waxman-Markey cap and trade bill.

He should check it out if he has a bit of free time over the long weekend.  It's full of unpleasant surprises.

Well, Duh

Turns out there are unintended consequences when the federal government begins nullifying contracts and sticking its grubby little fingers into capital markets.

Hedge fund manager George Schultze says he may avoid lending to any more unionized companies after being burned by President Barack Obama in Chrysler LLC’s bankruptcy.

Obama put Chrysler under court protection on April 30 after lenders balked at a proposal giving them about 29 cents on the dollar for their $6.9 billion in debt. The investors said the president’s plan favored a union retiree medical fund whose claims ranked behind them for repayment. It was offered a 55 percent equity stake in the automaker.

Pacific Investment Management Co., Barclays Capital and Fridson Investment Advisors have joined Schultze Asset Management LLC in saying lenders may be unwilling to back unionized companies with underfunded pension and medical obligations, such as airlines and auto-industry suppliers, because Chrysler’s creditors failed to block Obama’s move. The reluctance may put additional pressure on borrowers seeking capital in the worst financial crisis since the Great Depression.
...
“It’s terrible precedent,” said Schultze. “The sad thing is it impacts the manufacturing sector and the companies that have legacy liabilities directly. It will be nearly impossible, or much more expensive, to get secured financing for these type of companies.”

(HT: Hot Air headlines)

Galt-isano

Billionaire Tom Galisano has had enough.

I LOVE New York. But how much should it cost to call New York home? Decades of out-of-control budgets, spending hikes and relentless borrowing have made New York simply too expensive.

Politicians like to talk about incentives -- for businesses to relocate, for example, or to get folks to buy local. After reviewing the new budget, I have identified the most compelling incentive of all: a major tax break immedi ately available to all New Yorkers. To be eligible, you need do only one thing: move out of New York state.

Last week I spent 90 minutes doing a couple of simple things -- registering to vote, changing my driver's license, filling out a domicile certificate and signing a homestead certificate -- in Florida. Combined with spending 184 days a year outside New York, these simple procedures will save me over $5 million in New York taxes annually.

By moving to Florida, I can spend that $5 million on worthy causes, like better hospitals, improving education or the Clinton Global Initiative. Or maybe I'll continue to invest it in fighting the status quo in Albany. One thing's certain: That money won't continue to fund Albany's bloated bureaucracy, corrupt politicians and regular special-interest handouts.

Previously:  New Evidence Confirms: People Rational

Root Cause of Financial Crisis Identified

The culprit: the Y chromosome.

Indeed, the financial services industry – one in which lap dancing is apparently considered appropriate corporate entertainment (UK Equality and Human Rights Commission) – is overwhelmingly male dominated. ... If men are especially prone to being insufficiently risk averse and overly confident, then this male dominance may have contributed to the financial crisis.

... There is also a sizable literature documenting that men tend to be more overconfident than women. Barber and Odean (2001) find that men are substantially more overconfident than women in financial markets. In general, overconfidence is not found to be related to ability (see Lundeberg et al (1994)) and that success is more likely to increase overconfidence in men than in women (see, for example, Beyer (1990)). Thus, if confidence helps produce successful outcomes, there is more likely to be strong feedback loop in confidence in men than in women.

In a fascinating and innovative study, Coates and Herbert (2008) advance the notion that steroid feedback loops may help explain why male bankers behave irrationally when caught up in bubbles. These authors took samples of testosterone levels of 17 male traders on a typical London trading floor (which had 260 traders, only four of whom were female). They found that testosterone was significantly higher on days when traders made more than their daily one-month average profit and that higher levels of testosterone also led to greater profitability – presumably because of greater confidence and risk taking. The authors hypothesise that if raised testosterone were to persist for several weeks the elevated appetite for risk taking might have important behavioural consequences and that there might be cognitive implications as well; testosterone, they say, has receptors throughout the areas of the brain that neuro-economic research has identified as contributing to irrational financial decisions.

(HT: Freakonomics)

India Embraces Capitalism, Apparently Fails to Grasp Incontrovertible Lessons of Financial Crisis

Poppycock.

NEW DELHI -- A surprisingly strong showing by India's ruling Congress party gives a decisive mandate to Prime Minister Manmohan Singh and raises hopes that an important engine of the developing world will continue on a path of economic reforms.
...
A government with a convincing majority, unshackled from communist political allies of the past, was viewed as crucial at a time when officials are expected to explore fresh approaches to spurring India's economy, reforming its archaic labor laws and perhaps opening it further to global capital flows.

"The best thing is that the Left has been left behind. This is great news for the markets, and we are going to see strong foreign inflows into the country," said Arun Kejriwal, founder and managing director of Kejriwal Research & Investment Services Pvt. Ltd.

Morgan Stanley has been similarly hoodwinked by India's capitalist folly.

Morgan Stanley (MS.N) on Monday raised its end-2009 target for India's benchmark stock index .BSESN to 15,300 points, up by quarter from current levels, after a decisive victory for the ruling Congress coalition.

"We, now believe, that there is greater probability of our bull case rather than our bear case," analysts Ridham Desai and Sheela Rathi wrote in the note, adding companies will gain from government policy.
...
The earnings growth for the stock index constituents will likely be 2.5 percent in 2009/10, up from the previous view of 10 percent fall, Morgan Stanley said.

Eat Fast and Prosper

Laziness and productivity inversely correlated.  Who knew?

The OECD has released its Society at a Glance survey, which reveals some interesting social trends in OECD member countries. Floyd Norris points out that countries with fast eaters, including all of North America, have higher economic growth rates than slow-eating countries like France. In addition to leisurely meals, the French also enjoy the most sleep...

ADP Jobs Number Significantly Less Awful Than Expected

The ADP National Employment Report showed a loss of 491,000 jobs in April, far fewer than the 645,000 expected and a notable deceleration from the revised 708,000 jobs shed in March.

The official government data for April will be released on Friday.  ADP hasn't been wonderfully correlated with the official jobs number in the past, but folks still see it as the best single predictor and a deviation this large is enough to warrant some attention.  Shortly after its release, Dow futures jumped from -20 to +60.

Pandemics: Pathway To Negative Nominal Interest Rates

Econ humor.  Gotta love it.

Warm Feelings About 100 Days of Obama Buoy Stocks, Despite GDP Report

At midday, the major indices were all up about 2%, notwithstanding the advance 1st quarter GDP report showing economic contraction at an annualized rate of -6.1% (versus expectations of -4.7%).

Even so, the unexpectedly severe shrinkage constitutes a deceleration from the previous quarter, when the economy contracted 6.3%.

Are Hugs the Elusive "Giffen Good"?

Perhaps (despite the strong possibility that this is staged).

Of course, previous empirical work in the area of hugs as Giffen goods was conducted at Dunder Mifflin, where Phyllis' went for a cool $1,000 at auction.

Either way, anything that teaches a hippie a lesson in economics is honorable work indeed.

I'm All For Reducing the Size Of Government...

But the prosecution of crime seems like one of those functions we oughta hang onto.

It's Broken Windows theory in reverse.

Don’t even bother submitting the cases, [District Attorney Robert] Kochly said Monday in a memo to the Contra Costa County Police Chiefs Association. “If they are submitted, they will be screened out by category by support staff and returned to your department without review by a deputy district attorney,” he wrote…

Supervisor John Gioia, who represents Richmond, said the list of crimes that Kochly says he won’t prosecute is far longer now than what he told the board during its budget deliberations.

“I don’t think it’s a good idea for the chief prosecutor in the county to inform the public at large what cases they’re not going to prosecute,” Gioia said…

Kochly said prosecutors will still consider charging suspects with certain misdemeanors, including domestic violence, driving under the influence, firearms offenses, vehicular manslauhter, sex crimes and assault with a deadly weapon.

(There's also a video.)

At least Kochly had the good sense to announce this policy to the general public.  Recessions can be stressful enough.  The criminal element, so often the hardest hit by economic strife, doesn't need to be further disquieted by fear of reprisal for their indiscretions, instigated in the first place by the likes of Jamie Dimon and Vikram Pandit.

Happily, Andrew Cuomo's office remains sufficiently well-heeled to pursue the real villains.

(HT: Hot Air)

Bad Naked

"But the thing you don't realize is that there's good naked and bad naked. Naked hair brushing, good.  Naked crouching, bad."

- Jerry Seinfeld, The Apology

Self-declared socialist Senator Bernie Sanders (?-VT) doesn't seem to grasp the difference.  Today, he succeeded in passing his non-binding budget amendment that seeks to "force the Fed to reveal the names of the entities it has lent money to, how much they've received and what they are doing with the money."

Transparency - particularly as relates to emergency lending programs and extra-particularly when we're getting so casual about throwing around trillions of dollars - is important.  But not all transparency is created equal.  Forcing disclosure on all Fed lending is a dangerous overreach, one which is certain to introduce a stigma that disincents banks from tapping traditional, long-standing, short-term funding mechanisms, like the discount window.

We have an urgent, crushing need for more transparency into where our trillions are being strewn around (and into how, by whom, and at whose behest those decisions are being so hurriedly made), which is why it's all the more regrettable that counterproductive (and possibly retroactive) transparency is being tossed in the mix.

I don't know that it's a coincidence that the market began to shake off its ebullience as soon as we got word of the amendment's passage.

Wishful Photoshopping

Previously:  Trillionometer Check

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Longest-Serving Fed Official: Suck It Up, It's Not That Bad

(I'm paraphrasing, slightly.)

It seems to me that sober assessments like these, from people in a position to know, go a lot further toward stemming irrational economic doomsaying than let's-cry-together websites from the federal government.

The U.S. economy should find its footing around the middle of the year even after another “significant” contraction in the first quarter, Federal Reserve Bank of Minneapolis President Gary Stern said Tuesday.
...
His tenure, the longest of any current Fed official, spans the chairmanships of Paul Volcker, Alan Greenspan and Ben Bernanke.

“One of the things I’ve observed coming out of the last two recessions is that there’s always a lot of concern about (how) ‘this is a very fragile recovery’” and worries that “if the Fed doesn’t do just the right thing…the whole thing will collapse again,” he said, leading to talk of “double dips, triple dips.”

Stern knows from experience how hard it is to spot the trough of a business cycle. Recalling his days as the Minneapolis Fed’s research director in 1982, he said that he told the Minneapolis Fed’s directors that there was “no sign of the recession ending” in November of that year. Of course, the National Bureau of Economic Research eventually determined that the recession did in fact end that
same month.
...
Stern disputes comparisons between the current economic downturn and the Great Depression. ... For those of us who were around for ‘80-’82 and ‘73-’75, what’s happening in the economy and a lot of the rhetoric that goes with it rings more familiar,” he said.

Trillionometer Check

Now at 12.8 and rising, the cumulative trillions thrown into emergency pork, "stimulus" and social spending are about to surpass U.S. GDP.

Are we done arguing about the $0.00016 trillion in AIG bonuses yet?

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Update:  Whoops, there's another $2.2 trillion.  That brings us to an even 15, comfortably above U.S. GDP.

Annual planetary output is currently around $70 trillion.  At this rate, the cost of government programs addressing the financial crisis should pierce that some time in the fall of 2010.

Saving the Markets From Free Marketeers

Regrettably, Bush opened the door to this Alice In Wonderlandish reasoning when he said, "I've abandoned free-market principles to save the free-market system," leaving Joe Biden free to burrow a little further down the rabbit hole.

Vice President Biden, echoing President Franklin Roosevelt's famous admonition about saving capitalism from capitalists, urged world leaders on Saturday help "save the markets from free marketeers."

Biden made the remarks while speaking Saturday at the Progressive Governance Conference in Vina del Mar, Chile.

The assembled leaders "have to, in a sense, save the markets from free marketeers right now," Biden said in remarks released by the White House.

If we slide much further into the abyss of central planning and wealth confiscation, we may need to save democracy from the Democratic party.

Hey, the SarbOx Knee-Jerk Worked Out Pretty Well For Everyone

So this sounds like a swell idea.

Treasury Secretary Timothy F. Geithner plans to propose today a sweeping expansion of federal authority over the financial system, breaking from an era in which the government stood back from financial markets and allowed participants to decide how much risk to take in the pursuit of profit.

The Obama administration's plan, described by several sources, would extend federal regulation for the first time to all trading in financial derivatives and to companies including large hedge funds and major insurers such as American International Group. The administration also will seek to impose uniform standards on all large financial firms, including banks, an unprecedented step that would place significant limits on the scope and risk of their activities.

Neologism Of the Day

Flump.

"... And If It Stops Moving, Subsidize It."

Reagan was on to something.

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

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

A Cardin spokesman said the bill had yet to attract any co-sponsors, but had sparked plenty of interest within the media, which has seen plunging revenues and many journalist layoffs.

Cardin's Newspaper Revitalization Act would allow newspapers to operate as nonprofits for educational purposes under the U.S. tax code, giving them a similar status to public broadcasting companies.

Under this arrangement, newspapers would still be free to report on all issues, including political campaigns. But they would be prohibited from making political endorsements.

Advertising and subscription revenue would be tax exempt, and contributions to support news coverage or operations could be tax deductible.

"Remember Smoot-Hawley"

Wisdom from down-under.

In times of crisis, the U.S. loves a rallying cry. “Remember the Alamo.” “Remember the Maine.” “Remember Smoot-Hawley?”

Ok, “Smoot-Hawley” doesn’t exactly roll off the tongue, but Kevin Rudd, prime minister of Australia, suggests it is just the rallying cry needed to keep the global financial crisis from morphing into the 1930s redux. That protectionist tax, enacted in 1930, was in the eyes of many financial experts a low point in U.S. economic history. (Those who are not history buffs can read up on it here.)
...
After Rudd’s speech, one thing was clear: If he is ever looking for a second act after Australian politics, Wall Street would be happy to have him. “Why don’t we have him?” wailed one prominent attendee at the conference after Rudd’s speech. Rudd also got high marks from embattled Treasury Secretary Tim Geithner, who said, “The prime minister is A+ on these issues. If we followed his advice we’d be in a better position.”

Color Me Snubbed

Cor blimey.

The New Econoblogger A-List

It's the invite everybody wants to have gotten: were you invited to join Treasury's econoblogger conference call? Clusterstock, Dealbreaker, and Paul Kedrosky found the golden ticket in their inboxes, and Brad DeLong asked a question -- although one would hope that Treasury would be talking to him informally anyway.

As for the list of people who didn't get an invite, they include John Hempton, Yves Smith, and me; rumor has it that obvious names like Mark Thoma, Nouriel Roubini, Tyler Cowen, and Calculated Risk weren't invited either, but I haven't checked. Certainly the call seems to have been very short; if many econobloggers did get the invites, they quite possibly -- like Kedrosky -- didn't get them in time.

Here's Clusterstock's abbreviated liveblog of the call.

Massive Sleeper Cell Uncovered In Wilton, CT

I guess that means we're now state sponsors of terrorism, to the tune of $150 billion.

The "Too Ambitious" Straw Man

Obama just delivered a press conference discussing his proposed budget.  Of his critics, he again laments the "some" out there who believe his plans to be "too ambitious".  This is a nifty way to dismiss the grave and genuine concerns of the some who know well that Keynesian stimulus doesn't work (and, on a large scale, can make things much worse), who know that raising tax rates will stymie growth and prolong malaise, and who recognize that the trillions of dollars already committed to ostensible stimulus are primarily comprised of unrelated social programs and pet projects, stretching over a decade and hurriedly enacted under the fog of emergency.

Contrary to the implications of the "too ambitious" framework, critics of the President's budget don't quibble with the size of his ambition, believing his theses to be sound, if just a bit too grand for their taste.  They believe the levers are being pulled the wrong way.

Throwing water on a grease fire, shaking a crying baby, peering slack-jawed into the barrel of a gun that won't seem to fire... these are also poor ideas likely to take a situation from bad to worse.  If you find yourself being yelled at for hosing down a thousand grease fires, shaking a thousand babies, or peering dumbly into a thousand gun barrels, these aren't examples of cynical bystanders naysaing the grand ambition of your endeavors.

If - despite all historical evidence - you really believe that this time your repudiated methods are going to work out, better to at least argue the point, rather than dismissing dissenters as lacking your unflappable capacity to do several ill-advised things at once.

Earth: Too Big To Fail

It seems Geithner has finally seen the counter-Keynesian light.  You can't enrich yourself by taking money from one pocket and putting it in the other (particularly when the hand facilitating the transfer is a governmental hand with governmentally sticky fingers).

Scott Ott's exclusive peek at the new plan may sound far-fetched, but it's got sounder economic footing than its predecessor.

Just a day after U.S. Treasury Secretary Timothy Geithner proposed increasing U.S. contributions to his former employer, the International Monetary Fund (IMF) by $100 billion, he offered another plan to increase funding for NASA space probes to search for life, and sources of bail-out cash, on other planets.

“Let’s face it,” said an unnamed Treasury source, “Earth is too big to fail. We can all boost funding to the IMF, but at some point that’s like scooping water out of a bucket to fill the same bucket. The fundamental problem is that Earth is a closed economic system. To rescue the global economy we need help that’s literally out of this world.”

A Taste Of Things To Come

For those who've failed to learn the lessons of the behavioral effects of taxation from Jimmy Carter, Ronald Reagan, or George W. Bush, one need look only to Zug.

The tidy towns and mountain vistas of Switzerland are an unlikely setting for an oil boom.

Yet a wave of energy companies has in the last few months announced plans to move to Switzerland -- mainly for its appeal as a low-tax corporate domicile that looks relatively likely to stay out of reach of Barack Obama's tax-seeking administration.

In a country with scant crude oil production of its own, the virtual energy boom has changed the canton or state of Zug, about 30 minutes' drive from Zurich, beyond all recognition. Its economy was based on farming until it slashed tax rates to attract commerce after World War Two.

It still has a chocolate-box old town with views over a lake to the high Alps, but is now surrounded by gleaming corporate offices -- including commodity trader Glencore and oil refiner Petroplus -- shopping malls and housing developments.

Local authorities say about 13 percent of full-time jobs in Zug canton are in the raw materials sector.

Over the past six months companies including offshore drilling contractors Noble Corp and Transocean, energy-focused engineering group Foster Wheeler and oilfield services company Weatherfield International have all announced plans to shift domicile to Switzerland.

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An Hourly Rate That Would Make Ashley Dupre Blush

As noted this morning by Senator Minority Leader Mitch McConnell (R-KY), the combined cost of the stimulus and omnibus spendgasms amounts to roughly $1 billion for every hour since the 111th Congress took over.

“In just 50 days, Congress has voted to spend about $1.2 trillion between the Stimulus and the Omnibus,” McConnell says. “To put that in perspective, that’s about $24 billion a day, or about $1 billion an hour—most of it borrowed. There’s simply no question: government spending has spun out of control.”

Of course that tally doesn't include the interest costs associated with the new spending, nor the true cost of the stimulus bill's sticky new programs that are unlikely to be quashed in coming years.  If you include the CBO's estimates of these costs, the $1.2 trillion becomes something closer to $4 trillion.  And since Congress has only been in session for 27 of those 50 days (and only several hours on each of those 27 days), one could argue Congress is frittering away your money at a rate of more than $18 billion per hour on the job.

Here, as ever, insights from the Gipper seem germane:

"It's been said that politics is the second oldest profession. I have learned that it bears a striking resemblance to the first."

Mere Hint Of Reduced Uncertainty Enough To Extend Huge Wall Street Rally

If the market abhors uncertainty, then in the current political climate, the market pretty much abhors life itself.  As we've cruised through countless versions of TARP, TALF, and trillion dollar guesses about both how to stabilize the economy and how to push through unprecedented social programs under the guise of economic stabilization, the markets have responded predictably, with multi-thousand point slides in the Dow and stock valuations rooted not in economic fundamentals, but an ugly mix of fear of guessing at what the federal government's next guess might entail.

Yesterday, with the (seemingly unremarkable) one-two punch of a surprise profit from Citi during the first two months of the year and an indication that the uptick rule would return, we saw a gargantuan broad-based rally.  Many predicted this "bear market rally" would prove fleeting, possibly giving up a significant portion of those gains in the following session.  (And just 90 minutes into the trading day, that could still come to pass.)

But so far, the major indices have all managed to push higher today, following comments by Treasury Secretary Tim Geithner last night that:

...he wanted to make it "compelling" for banks to cleanse balance sheets of toxic assets and in coming weeks would set up details for financing bad asset sales.

If that's considered incremental certainty about the bank stabilization plan, then it illustrates just how opaque things had become, thanks to the barrage of hastily devised and jettisoned plans, not only to address the crisis itself, but to rewrite the rules of how the American economy is permitted to function.

Don't get me wrong - I'll take it.  Thanks to the 1.5-day rally, the Dow is off a mere 16% since the new administration took office, a significant improvement from the 21% decline we'd incurred 36 hours ago.

The Fruition Of Hope

The February employment report, put out today by the Labor Department, showed unemployment swelling from 7.6% to 8.1%, with the loss of 651,000 payrolls.

That means our Savior-in-Chief saved nearly 142 million jobs during his first full month on the job.  He only pledged to "create or save" 2-4 million, so this has to be seen as one of the more significant achievements in political history.

I admit I was late to the Obama bandwagon, but count me on board.

(HT: Jack M., for the pilfered sarcasm)

Obstruction Of Reduction Of Mortgage Deduction

Now, if they'd only look into thwarting the income tax hike, the capital gains tax hike, the carried interest tax hike, and the oil and gas tax hike, we'd be getting somewhere.

President Barack Obama is meeting strong Democratic Party resistance to his proposal to reduce tax deductions enjoyed by upper-income Americans and could be forced to drop or modify the idea.

Mr. Obama in his budget blueprint last week proposed a cap on itemized deductions for mortgage interest and charitable donations to help pay for his health-care overhaul. The plan would cost wealthier taxpayers about $318 billion in new taxes over 10 years, according to government estimates.

But after objections from Democratic lawmakers, Treasury Secretary Timothy Geithner appeared to suggest at one point Wednesday that the administration was willing to consider dropping or modifying the proposal.
...
Sen. Max Baucus (D., Mont.), the Senate's top tax writer as chairman of the Finance Committee, told Mr. Geithner he was especially concerned about paying for expanded health coverage with a deductions curb that "has nothing to do with health care." He added: "I'm wondering about the viability of that provision."

Increasingly Unreliable Private Employment Report Worse Than Expected By Those Who Still Lend It Credibility

I still take note when ADP releases its payroll report, but given its modest month-to-month predictive powers vis a vis the Labor Department's employment figures, it's become little more than a numerical diversion.

So, let's get to it.

The market expected to see a reduction of 630,000 jobs in February (versus a revised loss of 614,000 in January), but ADP pegs it at a considerably worse 697,000.  That makes the 13th consecutive month of job losses and the worst decline of the decade.

Despite the sour number, the market's in positive territory (I know, get the kids, they'll want to remember this), but after 5 days of murderous selling, who can blame it?

It oughtn't be long before we're served another spoonful of recovery sugar (like this, perhaps) to help the market go down.

Do As I Ordain, Not As I Entertain

How does this square with the administration's outrage over private companies spending shareholders' money (and, in some cases, taxpayers' money forced on them at knife point by Henry Paulson) on entertainment of clients and employees?

The White House is the place to be on Wednesdays.

Since the presidency changed hands less than six weeks ago, a burst of entertaining has taken hold of the iconic, white-columned home of America's head of state. Much of it comes on Wednesdays.

The stately East Room, where portraits of George and Martha Washington adorn the walls, was transformed into a concert hall as President Barack Obama presented Stevie Wonder with the nation's highest award for pop music on Wednesday.

A week before that, the foot-stomping sounds of Sweet Honey in the Rock, a female a cappella group, filled the East Room for a Black History Month program first lady Michelle Obama held for nearly 200 sixth- and seventh-graders from around the city.

Cocktails were sipped during at least three such receptions to date, all held on Wednesdays.

Bookending the midweek activity were a Super Bowl party for select Democratic and Republican lawmakers and a dinner for governors, the new administration's first black-tie affair. It was capped with a performance by the 1970s pop group Earth, Wind and Fire. And a conga line.

40 Days Of Hopenchange

After 40 full days on the job, the Obama administration has achieved a singular feat - namely presiding over a 17.1% slide in the S&P 500.

Ford came close, as the combination of a Presidential resignation and the latter stages of a severe oil crisis and market crash dogged the early days of his administration with a 16.99% decline.

But with today's intraday market slide, Obama is now poised to take top honors.

Prestige of Stimulus-Touting Economists Has Little Correlation To Demonstrable Talent

I know, shocking.

Presidential Address Pick'em

The Dow Industrials have shed 10% over Obama's first 5 weeks in office and more than 25% since Election Day.  It seems that each time he or a member of his economic team takes to the podium, the markets descend into deeper despair.

Tonight at 9 pm ET, the President will deliver a daunting 50 minutes worth of malaise-infused oration, replete with promises of sweeping tax hikes.

Your predictive challenge is simple:  When the U.S. markets open Wednesday morning, how exuberant or suicidal will the reaction be?

Update:  If you said "Down 0-1%" (which just 6% of you did), congratulations.  With the only mild declines in early trading, the post-speech action outperformed the expectations of 85% of respondents.

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Bread Lines In the Age Of Internets and Reality TV

Pimp This Bum.  Sensational.

Expect to see Tim on Letterman by week's end.

(HT: Hot Air Headlines)

Spend and Tax

No, they didn't mention it until after they sold the stimulus, but anyone to whom this comes as a surprise never bothered to count all those zeroes.

President Obama is putting the finishing touches on an ambitious first budget that seeks to cut the federal deficit in half over the next four years, primarily by raising taxes on businesses and the wealthy and by slashing spending on the wars in Iraq and Afghanistan, administration officials said.
...
Obama also seeks to increase tax collections, mainly by making good on his promise to eliminate some of the temporary tax cuts enacted in 2001 and 2003. While the budget would keep the breaks that benefit middle-income families, it would eliminate them for wealthy taxpayers, defined as families earning more than $250,000 a year. Those tax breaks would be permitted to expire on schedule in 2011. That means the top tax rate would rise from 35 percent to 39.6 percent, the tax on capital gains would jump to 20 percent from 15 percent for wealthy filers and the tax on estates worth more than $3.5 million would be maintained at the current rate of 45 percent.

Obama also proposes "a fairly aggressive effort on tax enforcement" that would target corporate loopholes, the official said. And Obama's budget seeks to tax the earnings of hedge fund managers as normal income rather than at the lower 15 percent capital gains rate.

Contending with a sharp recession by reversing demonstrably effective pro-growth tax cuts... this can't miss.