Stimulus Nattering

I know the stimulus bill argument is over and done and Obama is signing it in Colorado today, but I was struck by a question that I really had no answer to and it was — how are tax cuts stimulative right now at all?  This makes no sense to me but I am looking at and it lists $228B in tax cuts.

* How does patching the AMT hole keep people from paying AMT when they aren’t rolling over their stock options and taking out enough in profit to pay AMT?  I asked H&R Block about AMT, since I am starting to get concerned about paying it, and they gave me a handy little ‘your introduction to AMT’ thing which basically said if you cash out your stock options, it will bite you.  But if everyone is taking a 40% bath on their stock options, is anyone cashing them out and thus avoiding AMT?

* How does fixing the rate of capital gains taxes at 15% help… anyone?  If no one is making money from capital gains because all their stocks and funds took a huge bath, how does that get money into the economy?

* If small businesses are falling over one after another after another, and the banks won’t lend to start new ones or keep revolving credit for existing ones, how does giving tax cuts to small businesses help any small businesses?  How does some $100 a week or even a $1000 a week help if what the business needs is $50K in revolving credit?

* How does a tax cut to me — which I will not see because I make too much money — giving essentially me $30 a paycheck — do anything?

These are real questions.  I am not trying to be facetious.  I just don’t understand how tax cuts on $0 moves money around the economy.  The problems are so much fundamental that sloshing pennies around just doesn’t do anything.

I am generally in favor of direct Keynesian stimulus because hey, a job at least gets a paycheck into someone’s pocket, even if it is short-lived, and at the end of the day someone gets a road or a train out of it.  But realistically, I don’t think it will work, either, not without coupled with some seismic shift in understanding:

– How the credit crisis works
– How we got into this mess
– What it means when there is oversupply
– Why retail is massively overbuilt
– etc.

The system has shown cracks that painting over and patching with some spackle is not going to help.  In the last 10 years everything in the world changed and we were busy having two wars and spending ourselves into the grave.

The days when someone can graduate from high school, get a factory job, go buy a house and be content until retirement are very much over.  But how do you tell that to the 45 year old autoworker at GM?  What do you do?

Warning: Politics and Football Metaphors Ahead

Watching the brand shiny new Obama White House is like watching Michigan Football before it started to Drastically Suck beyond All Comprehension: two fruitless runs up the middle and then OH hand off to the half-back in the back field. Two fruitless runs up the middle and then OH we decide to pass and hey that sometimes works. Two fruitless runs up the middle and then check this out it’s the Option.

This generally makes me want to throw things at the TV. Here we are at 3rd and 8 again for the 42nd time this game! Are they going to do something now?

I am picking up the same frustrating vibe. Sure, yeah, they’ll eventually drive down the field but look at all the messing around first. The newest incarnation is the complete so-called “Geitner Plan” that was “released” yesterday. There’s no plan. It’s the political incarnation of running up the middle for maybe a yard. We have a banking crisis, the banks are refusing to lend (still), foreclosures are still hoovering capital out of the market, banks are turning into capital-eating zombies, and the entire system needs a good, solid audit from the top down. We have lots of bankers who are out of work who I bet would like a paycheck to become government auditors.

What are we going to do? Not what Geitner and Larry Summers recommended to Japan (which they eventually did) or the Sweden plan of lopping off heads of zombies. Oh no. We’re going to do… what? Sort of bad bank? Sort of not? Sort of be very nice to banks and half-privatize, half-nationalize and not really bother with audits or try to figure out what we wrong and force the banks to suck up their bad risk and bad bets and close the doors on the ones that are clear failures? Because we most certainly have zombies running around going “Oh give us 6 months and our assets will be worth something OH give us 6 more months and we’ll have it figured out OH just 6 more months really…”

And now Team Obama, who clearly plays by the Big 10 Playbook, will be forced to sort of try another run up the middle and will get roundly thunked for it and then come around and go oh I guess we should come up with something real if we’re going to make the down.

Gah. I still love Obama for his Incredibly Wonky Ways and his ability to craft an actual sentence but come on guys. I’d rather you take an extra two weeks and present something real than whatever nonsense is being picked off the bottom of your shoes.

Obama: Snowy Washington Needs ‘Chicago Toughness’

Barack Obama discovers that Washington DC is not, in fact, in the Midwest:

Obama: Snowy Washington Needs ‘Chicago Toughness’ –

“We’re going to have to apply some flinty Chicago toughness to this town,” Obama said this morning. “I’m saying that when it comes to the weather, folks in Washington don’t seem to be able to handle things.”

Our new President is learning that DC does not have:

– Meijer

– Faygo

– Chicago Dogs, or the Detroit Implant, Koney Dogs

– People who can drive, let alone in snow

– Sense

However, it is full of crazy people. In BMWs.

Welcome to your new home, Mr. President.

Layoffs Financed by You and Me

This is a brilliant post from yet another happily sarcastic economist:

EconBlog Review: Pfizer Buys Wyeth: Layoffs Financed by You and Me.

Follow with joy how AFM turned into Wyeth because drug margins are so much better than pots and pans margins.  How TARP money went to financing this merger, how Pfizer will lay off thousands of people — funded by TARP! — to maintain its dividend.

It’s a laugh a minute. and other stories went off the air at around 11:45am this morning and came back up at noon. Other than now it has blogs, twitter feeds, RSS feeds, hosting for videos, and eventually the forums from (I have already requested my username for the forums so I can complain about technology issues.)

But the big thing is this: the site is now indexable by regular search engines.

Under Bush, no web sites attached to the White House could be indexed by anything. There were 2400 exclusion rules to keep all index engines out which have now been lifted. I’m not sure why I feel this is such a momentous event, since it is just a web site. Clearly the tech team came in, unplugged the ancient Windows 2000 server running the old website, slapped in the new machine, turned it on, got all the systems booted, and were good to go. But it feels like, the first major event of the brand new Inauguration was to welcome the Administrative Branch to the 21st Century by sticking it online.


I didn’t go down to the Mall for a whole host of reasons but I am watching it on CNN HD on my couch. If we didn’t have Katie Rose I am sure I would have been down there yesterday and then been staking out my spot since 3am, but such is life.

For those at home who are watching on TV, the Washington Post is running a really magnificent article on Obama’s Journey from disaffected, angry 20-something who felt the need to give up a high paying New York job in International Banking to go beat the streets of Chicago to the President of the United States. It is worth a read if you are either waiting for things to happen or coming home and warming up from freezing for hours and hours outside.

Barack Obama is not just the first African-American President. He is the first African-American leader in the Western World. He is never going to be perfect. Like all American Presidents, we will never really be satisfied and Liberals, above all, like to grouse and whine and complain. But today is a day to step back, and simply marvel at the enormity of what has happened here. The country will never be the same. Yes, it will be a terrible haul, and yes, there will be massive mistakes, and yes, things will happen we don’t like. But the change is tangible and constant and a marker on American History. It is a seismic shift.

Although, in the end, we’ve hired a black man to clean up a white man’s mess.

And wow, the Mall on CNN HD looks cold and so packed no one can move.

Obama vs. George Bush’s Computers

I read this morning on Politico (sorry, I misplaced the link) that the Obama staffers have been informed that they are no longer allowed to use IM.  Obama himself won his fight of Treasury Department vs. Blackberry (although they are making him move to one of the Blackberries approved by the NSA and armored for in theater combat which, as a security nerd, I find totally cool but everyone else finds abhorrent) but now they cannot use IM.  For reasons that absolutely are beyond me, they apparently don’t have Microsoft Communicator IM server hooked up internally to their Outlook server, likely because no one knew they could do that.

But it’s worse than that.  Apparently, leaking out of the White House through disgusted Obama staffers, is that the machines themselves have not been upgraded since Bill Clinton left office.  The machines are largely running Windows 2000 and pre-2000 OSes that Microsoft no longer supports.

This actually explains an awful lot about the Bush Administration.  At their core, they were anti-science, anti-engineering, anti-technology, anti-21st century.  A complete Faith-based Administration.  They hated smart people, and smart people use computers, so they hated computers, too.  Thus the entire system is running on a creaky edifice.

I am looking forward to reports over the next month of the Obama people vs. the White House tech staffers and the new mandates for upgrades.  I can understand why, perhaps, they don’t let people get on external AIM but really, this is a new world and for god’s sake, let these people have their internal IM.  And yes I know there are issues with the Presidential Records Act but that is why the White House has lawyers.  It collects logs!  Automatically!  Sheesh.

Frankly, when I read this factoid this morning I laughed and laughed.  I look forward to battles over hardware acquisition and upgrades to *gasp* Windows XP.  The next few months are going to be delightful from a pure technology perspective.

The Failed Bailout

I am attempting to figure out, and failing, what the Senate Republicans got out of blocking the $14B bailout for the Big 3 from coming to the Senate floor.

It was okay to hand over $700 billion to financial institutions and AIG with no strings attached so, say, completely worthless institutions that should die and die horribly like the insanely crappy Capital One can go acquire a very nice bank like Chevy Chase at the taxpayers expense. It is okay that AIG sends executives on junkets and gives out “retention bonuses” (who exactly would ever hire an AIG executive?) with taxpayer money. They’re Republican Senate Donors!

But no, it is the evil unions who would not suddenly, without any negotiations, give up huge chunks of benefits and pay for the workers so no bridge loan. I would like Senate Republicans to be forced to give up pay and benefits with no negotiations.

And of course, the US Treasury is handing the money out of TARP because they have to. The alternative is GM goes under the first week in January and unemployment spikes to 10% and entire Midwestern states are wiped off the map.

I am so full of froth I have no idea where to start.