Yahoo News / Soviet Supermen

My high school history teacher taught that when the Soviets walked out of the UN, just in time for the UN Security Council to approve the Korean War, it shot down the myth of the Soviet supermen who were just smarter than our dumbass elected leaders. (Admittedly, this would seem to be a low bar to beat.)

Now, I see something similar from China.

China to pursue trade case against US automakers

China to launch investigation that could result in higher tariffs on US autos

Let's review how dumb this move is:

1. In a global recession, you don't want to play around with free trade. Smoot-Hawley

2. China has a huge trade surplus. Is it smart to play tit-for-tat with the USA even if we were mean about some Chinese products? I mean, if you just won all the big hands, you can afford to fold a hand or two. America sells you 9,000 cars a year while you have forced the world's car makers to invest and transfer technology so China can make millions of cars domestically. You can deal with 9,000 foreign made cars.

3. Lead in Toys. Chinese Dry Wall. Melamine in Milk. Melamine in pet food. The Chinese trade image is not so hot. Maybe it would be a good time to lie low on this stuff?

4. 2 US automakers are now owned by our government. You basically just bitch slapped our government, not just two companies. You may want to pass our safety tests and eventually export to the USA - do you think our government is going to look on you favorably now?

5. Did I forget to mention that US car companies are also owned by their Unions who are very politically connected and anti-trade? Jesus, you are asking for China bashing.

6. You just bought Hummer. So now, we can't sell you some piddly 9,000 cars, but you sell everything you want to us, plus buy our companies to ship the tools and dies back to China most likely. Better pray that the news this week is not that Hummer production is moving to China.Unemployed people in America start getting uppity when they think that they are not getting a fair deal.

7. You keep holding your currency down artificially - which is very noticeable compared to say, the Euro. US lawmakers have threatened to add a tax to your exports that would add 30% to the price of your products. Don't tempt them.

Yahoo Headlines

'Crash' director quits Scientology church

In a letter, Oscar-winning filmmaker Paul Haggis expresses frustration with the church over gay marriage.

Dude, this is so awesome, combining gay marriage and Scientology.

Wait, so if they allowed gay marriage on Xenu, he would still be in the Church?

Wait, wait, maybe he will form a reformed church of Scientology that allows gay marriage, which will be known as Gay Scientology (oxymoron?)

Tom Cruise. What about Tom Cruise.

Banker's Pay/Bonuses etc. (Boni?????)

I read the Economist every week. The quality has slowly gone downhill and they have drifted a bit away from their liberal roots (old school liberal, that is), but the articles are the perfect length for eating a meal or taking a bathroom break. Yep, its like Reader's Digest except with Britishisms.

But this editorial is spot on and a must read. It explains why "the free market" does not equal "letting banks hand out millions of bonuses after the 2008 melt down." I highly recommend it.

A better alternative would be to claw back the subsidy banks get through being too big to fail. Taxing bonuses is a poor proxy for this. It may be possible to capture it more accurately. Assume that America’s top five investment banks would pay two percentage points more on unsecured borrowings without an implicit guarantee. On that basis the subsidy is $36 billion a year (compared with pay this year of perhaps $120 billion). Providing banks have built up adequate capital, they could face a funding “premium” in much the same way that they already pay premiums for deposit insurance. This would have to be paid before bonuses. Regulators should cap bonuses only to the extent they cause losses which erode capital, but assuming shareholders, including governments, show some spine, pay would be squeezed at profitable banks. If some traders left weaker banks to join unguaranteed hedge funds, so much the better for the taxpayer.

BOOM. Head shot. Make them pay for backing up the financial system from systemic risk.

One other question for me, is if anyone in the media is following up on what was supposed to happen with all of these plans? For example, I distinctly recall during the original bonus crisis with AIG, we were told they had to keep some insiders on staff because only they could figure out how to wrap up the company.

So, is AIG's CDS unit "wrapped up" now? Its been about a year. Is it that complicated? Are they still selling product? I have no idea, but I would be very interested.

Maybe I am not reading the right news sources for this stuff. I mean Yahoo News isn't going to in-depth anything. You'd think the Economist would do this stuff, but they really don't do "investigative" journalism. Maybe I need to read the New Yorker or something.

On the Other Hand

Thinking about the government subsidized cell phones, I have some devil's advocate thoughts.

1. How much does it cost the taxpayer? It seems it could almost be a Tracphone marketing concept. What if its basically price segmentation with a veneer of subsidy to keep normal people from using it? Like, let's charge the rich guy 25 bucks, because he can afford it, but the poor guy gets a cheaper rate. Let me know how much it costs the taxpayer. Maybe its really cheap.

2. Cell phones / phone lines in general can spur economic growth. (At least in poor countries where fisherman use them to determine where to sell their catch, etc.) I would bet this effect to some extent applies to the US and to low-income "income eligible" households as well. I was not joking about the ne'er-do-wells using them to find jobs.

Also, note that I have previously complained that US cell phone rates are fairly steep - US$ 69.99 for a single line from AT&T for a barebones package vs. 10 bucks in Taiwan. My mother already uses Tracphone and it is far less expensive. In fact, I wish I had opted for it myself. Damn teenagers and their needs for mobile internet access! So I could see this providing some savings to a needy but thrifty household and keep them available for the normal job market.

3. Maybe they just tax I-phone users to pay for this. Those people clearly have too much money and will not miss the money for a couple of stupid apps anyways.

4. The built-in bugging and GPS functions will make sure these are not used by drug dealers, illegal aliens, or anti-government malcontents. Seriously, you don't show up for that second TB vaccination shot, we track you down via your phone. OK, maybe not.

5. Worst evil thought I have ever had: Sell these phone numbers to telemarketers to pay for the phone and minutes. OK, shoot me now. Damn, that is completely evil. And would result in a complete elimination of point 2.

Free Cell Phones from the Government

My mother always complains when she sees the ne'er-do-wells in our neighborhood walking down the street smoking their cigs and chatting on their cell phones, usually en route to the Circle K to buy booze, sodas, or lottery tickets.

"They don't have the money for food, but they can certainly afford their cell phones and cigarettes!"

I always try to remind her that they might need that cell phone to look for a job and what not (and sort of ignore the cigarette/booze part. Hits too close to home.)

But now I have some good news! They are not wasting their money on that cell phone.

No, they are wasting the taxpayers!

SafeLink Wireless is a government supported program that provides a free cell phone and airtime each month for income-eligible customers.

Please, someone tell me this is a spoof.

There are already discounts for electricity and gas for "income-eligible" people. Now a free cell phone and minutes. If we get free healthcare going, and free food stamps too, pretty much all of life would then be covered. Hmmm, wait - the car. I need the "income-eligible" free vehicle with monthly gas allotment. I bet GM would okay with providing those. Then I campaign for free broad band (already a 'right' in Europe) and all I need is beer money.

Maybe I am just being crabby.

Yahoo Headlines

Pakistan hits Taliban, urges NATO to seal border

Isn't this the exact opposite of the headlines we were seeing in 2002 and such?

So, now we will probably pull out, and the Taliban will concentrate on Pakistan, with a safe base in Afghanistan.

Take your partner and Dos-i-Dos! Switch positions!

I guess the Paks sort of deserve this.

Just hope they can stave off calamity and keep the keys to the nukes in a very safe place.

The Other Shoe

So, the US credit bubble burst - that's the demand side.

What about the supply side of that bubble?

(Maybe being re-inflated by the Fed now, but that's another story.)

USD vs. Chinese Yuan

Don't let those spikes fool you. The range the currency trades in is less than 2% change.

Essentially flat. They are still buying our debts. They are still holding their currency down.

Europe takes it on the chin - they have to bear the brunt of currency adjustment because the Chinese currency just won't move. You think that is healthy?

New York Times article

Lacey Act

Another regulation for the US market.

Apparently you need to know the genus species and amount of plant material you use in your products that you ship to the USA. To make sure that nobody is using endangered species or stuff.

They even mention cardboard and paper - I hope that this will not apply to packaging materials.

But it probably will. Lawyers will decide that it does. Then we will have to explain to the Mom and Pop guys who make the boxes and print the instruction sheets that they need to tell us what tree was chopped down in Indonesia to make the paper for the instruction sheet.

Why can't we let Indonesia or China or whoever regulate their own markets for this stuff? I assume that Greenpeace can pressure them to ensure protected trees are not killed.

And it sure is a lot of paperwork (LOL) to comply to these laws - do they really save any trees? You know for sure that criminals clear-cutting ancient teak forests are going to figure out how to cheat the system - I doubt the US will be testing actual products - or will simply ship to other customers.

I guess it may make everyone use recycled materials for packaging, etc., as those are exempt I think. Even then, you still need to fill in the paperwork. I wonder how many mountains of data have to be collected and then ignored.