Tesla's Waiting For What?!?

I just read an article about the upcoming Tesla Model S sedan. It looks awesome and as I was reading it I was excited about the possibilities, despite the initial cost still being kind of high (unless you were going to buy an expensive sedan anyway). Anyway, what got me was this:

He also indicated that Tesla believes that it is close to receiving $350 million in loans from the U.S. Department of Energy to build a plant in California that would manufacture the Model S.

Whiskey tango foxtrot? The Department of Energy? Why? If this product is so destined to make a mint (as its founders obviously think it will), and will change the landscape of American (and world) automobiles, then why aren't investors lining up to drop down the dough to get this thing started? Why does the government have to come in here and essentially create a market where, apparently, there isn't one desired?

You can't tell me that there aren't enough 'green' richies out there that wouldn't love to have everyone driving electric cars. Why can't they invest in this company?

I'm left to assume that either: 1)There in fact ISN'T a market for this car, 2)Their marketing plan isn't sound and has potential investors nervous, or 3)It's just easy to get government money for anything green, and they figure it's the path of least resistance.

This same type of scenario came up in the comments of my comment on government-supported basic research, and I still am subscribing to the Field of Dreams analogy. If you can sell it, they'll come with money. It's not that complicated.

Then again, maybe neither is getting money from the Dept. of Energy.

Hannan Strikes A Chord

By now, in conservative circles at least, you've probably heard of Daniel Hannan who flat out scolded Prime Minister Gordon Brown of the UK a few days ago. It's all over YouTube, and he's recently become immensely popular in the world despite being an unknown over here in the US. However, despite the distance of the Atlantic Ocean physically separating him from us, his message resonates tremendously here at home. Take a look when you get a chance and see if you don't agree with him. This kind of blasting doesn't happen too often from our own elected officials...perhaps it should.

However, mark my words: Sometime today, over the weekend, or next week, the left-wing political machine will go on the attack on this guy. He's risen too far too fast with TV appearances, the YouTube videos, and blogs galore for them to sit idly while his viewpoints go unopposed. It won't be worthwhile debate, though; no, it'll be the same kind of attacks that Joe the Plumber, Sarah Palin, and others underwent (and are undergoing). They'll find out something about an affair, a money problem, or some other nonsense and will blast it in the regular media in order to get this guy discredited and to distract you from his message. If it has substance then that's one thing, but if it's like any of the others in the past, then it's all a smokescreen.

I bet they're already working on it.

American Idol Would Have Been Way Better Than This

Man, what a snooze-fest. Then again, most of these are, so can't fault him for that.

One little itsy bitsy comment though did stand out to me. The question was whether or not he would accept a budget from the Senate that didn't include his middle class tax rebates and Cap-and-Trade system in it. He didn't really provide a simple answer (not suprised at that - what politician does?), but what stood out to me though was when he said:

I expect that there's serious efforts at health care reform, and that we are driving down costs for families and businesses, and ultimately for the federal and state governments that are going to be broke if we continue on the current path.

(emphasis mine)

So let me see if I have this straight. The current plan is not working and will go broke at some point in the future. The country is technically broke now overall, and if you continue with this budget we'll be even more broke and our money will be worth less. So you're saying that you'd rather be broker-than-broke NOW, rather than broker-than-broke IN THE FUTURE??

I mean, we are 100% guaranteed to have to print money in order to pay for these programs (the health care is just one of them, but is the one highlighted in the quote above) because there's not enough money around. So he's trying to convince us that it's better to devalue our currency and definitely be broke now with the hope that it will pay off in the long run.

Hmm; guaranteed brokeness now vs. waiting to see if there's a better idea to, I dunno, maybe AVOID the whole broke situation?!?.

If the Medicare/Medicaid Trusts were going to die in a week or two, then maybe there'd be some justification for pulling out all stops and getting crazy with the currency. But it's not. Current estimates are that Medicare will go broke sometime around 2018. I'm not saying we should do nothing; I'm saying that it's not urgent we do THIS now.

Ok, I fibbed - there was one other comment that irked me. Here was the question posed:

At both of your town hall meetings in California last week, you said, quote, "I didn't run for president to pass on our problems to the next generation." But under your budget, the debt will increase $7 trillion over the next 10 years. The Congressional Budget Office says $9.3 trillion. And today on Capitol Hill, some Republicans called your budget, with all the spending on health care, education and environment, the most irresponsible budget in American history.

Isn't that kind of debt exactly what you were talking about when you said passing on our problems to the next generation?

To which he replied:

First of all, I suspect that some of those Republican critics have a short memory, because as I recall, I'm inheriting a $1.3 trillion deficit, annual deficit, from them.

Hogwash. Let's remember, Mr. Short Term Memory, that for the last two years of Bush's 2nd term the Democrats controlled Congress. Now don't misunderstand; while Congress was under Republican control, they were rabid spenders and went against conservative spending policies. Recently, however, Republicans seem to have recently had an epiphany about what sort of fiscal values they're supposed to have and have begun to take a stand. Now, whether it's because of determination to be the biggest obstacle they can be or because it's genuine is irrelevant to me. (for the record, I believe it is not genuine...'genuine' and 'politics' don't really work well together...) For now though, they're on my side (most of them).

However, let's pretend the actual deficit inherited was zero. It's still going to be almost $2 trillion by year's end!! With those kind of numbers, who cares what the deficit was when he "inherited" it!?!

C'mon!

Money Grows On Trees

Well, technically money is made from paper, so...I suppose there is an indirect truth to that title. However, the government would have you believe that it literally grows on trees, and all we have to do is 'harvest' (print) more.

Again, technically, they're right. They can print until the cows come home and it will increase the available money supply. They've done it before, and will likely do it again; probably more this year.

To clarify, they have not yet created this money. Last Wednesday, however, they announced their intent to do so. This, predictably, created a huge spike in gold prices. Gold, as I'm sure you're aware, is typically used as a hedge against inflation, which is exactly what will occur as the Fed pumps out more money.

Let me summarize what they're talking about doing, and then I want you to ask yourself if you think it's right.

Generally, the government raises money primarily through taxes, but more funds are needed, it raises funds by selling U.S. Treasury bonds. The problem is that the rest of the world is very hesitant in purchasing more of our bonds because they lack faith in our Dollar. So if the government can't find buyers for the Treasuries, guess who it sells them to?

ITSELF.

Yep, essentially, the Federal Reserve purchases the Treasuries, then prints money in order to pay for them. They literally create money out of thin air. The government gets the money it 'needed', and the Fed gets a big I.O.U from the government in the form of the Treasuries.

This is insane!

Obama is so determined to pass his agenda (the ginormous budget) that he's essentially forcing the Fed to print the money to pay for it. Do you understand that? There is NOT enough money to pay for this budget, so the solution is to create money and get something for nothing. There is no such thing as a free lunch, and that applies to our government as well.

It would be one thing if I just disagreed with how the money is to be spent (which I do), and we actually HAD the money. Then the argument could be about more substance and debating liberal vs. conservative agendas. However they're forcing the issue even when funds are non-existent, so it doesn't even matter what philosophy you follow.

It's like this: imagine if you really want to buy something that you think will, in the end, turn a profit AND perform a charitable service to the community. Cool deal, huh? Now let's pretend that you're flat broke. No; not just broke, but "on-the-verge-of-bankruptcy" broke. The only way to purchase this thing is to rack up every credit card you have and then go get more and rack them up too. Would any sane person advise you to do this? Would any bank lend you the money based on your belief? NO, but that's exactly what Obama is doing; only their credit limit is essentially unlimited since they (unlike you) have a really nifty printing press down in the basement somewhere...

More can be said about this issue, and I was going to elaborate, but I found this article yesterday that says it for me. No need in repeating it here. Please read it and think about it. We're heading down a road that's never been traveled, and, like the old Frost poem, it's probably going to make all the difference.

An Open Letter to My Representative

I just wrote a letter to my district's U.S. Representative here in Georgia, and I wanted to post it here. Obviously I don't expect a reply - they must get thousands of these every day. Still, I felt compelled to do it, and feel better for it. The full text is below.

I wanted to take a short moment to express my dissatisfaction of your vote yesterday in H.R. 1586. While I do not agree, on a personal level, that the executives in question should be receiving bonuses, I do not think the U.S. Government (i.e. YOU) should be using legislation to punish someone for following the letter of the law. As you heard time and again on the floor yesterday, the only reason these bonuses were even being paid was because of the verbiage in the stimulus bill passed weeks ago. I never once heard a valid response from the Democratic side in response to these charges, whether from Frank or anyone else.

It frustrated me to see that Georgia was split specifically down the party line, with Democrats (including you) voting Aye and Republicans voting Nay. Do I need to remind you that you're not being kept there to represent your party; you are there to represent US.

Your vote may or may not be representative of the population at large, but if so it is because they are angry, hurt, and in general misinformed about how things like this come to pass. You can't legislate things like this with knee-jerk reactions to raw emotions. This bill lasted all of a day from conception to voting. We pay you to exhibit levelheadedness and in general be non-reactionary to things that come up day-to-day.

I would have preferred that you, as a body, came out and said "You know what? We messed up, folks. We were a bit too hasty with that bill, and we fully admit that we weren't able to correctly process it in a manner that suited its complexities. We know you feel it is not fair for these bonuses to go out, and that is a sentiment we share. However, in lieu of treading on our Constitution, we have to abide by the law. We can not, and will not, craft legislation in order to punish someone for doing what we told them they could do. We should have caught it, but we didn't. We're sorry."

A pipe dream of mine would be for you to continue:
"Furthermore, in an effort to amend for our carelessness, we are voluntarily reducing our salaries by a collective amount of $165 million in order to make up for the bonus money we let get away. This is to be effective immediately. You can rest assured we will do our very best to make sure something like this never happens again."

Would that have been too hard?

Please feel free to use any of the above text in sending your own letter if you wish. (You may need to remove the Georgia part if you're not from here...) Here is the URL for writing your representative:

https://writerep.house.gov/writerep/welcome.shtml

Here They Go...

It's official. Mob rule has won over the hearts of Congress. People demand justice without knowing all the facts, and Congress answers by attempting to pass a resolution to fix their last boo-boo. Here's the link.

[Update: Not sure what happened, but there was a newer, shinier bill that they actually voted on. Here it is.]

From what I understand, Congress is set to vote on a resolution (HR1572 HR1586). It's not yet on their site, but don't worry; I'm sure it'll be there for 5 days for us to review. Oh wait..they're VOTING today...got it.

Anyway, the purpose is "To amend the Internal Revenue Code of 1986 to impose a 90 percent tax on bonuses paid by business that receive TARP assistance." Eh? What's that? They're going to revise the 1986 code to include TARP verbiage?? TARP didn't even exist until last Fall!!

[Update: The newer bill's text is actually To impose an additional tax on bonuses received from certain TARP recipients]

Let's review (from perspective of Congress):

AIG is in trouble - oh crap - let's save them (buy them).

Done.

Uh oh! Stimulus needed! But let's rethink that bailout stuff from last year. Y'know, not allow bonuses or extra stuff until they pay us back (the People will love that...)

Done.

Well, on second thought, let's not be too hasty. We'll say it only applies to bonuses after...uh...say...Feb 11.

Done.

Crap!! They're mad at those bonuses we protected! What do we do? Oh yeah, we're THE FRICKIN U.S. GOVERNMENT!! We can do anything! Let's get mad too! Let's tax the hell out of them! Say...100%? 1000%? Nah - we'll let them keep a bit. We'll say 90%. Besides, the state and local governments will probably take care of the other 10%. (Thank you, Mr. Rangel)

Done.

Hundred bucks says they're not "done".

Ooops - I mean 10 bucks, after taxes.

AI n't it G rand?

By now you've probably heard about the $165 million in bonuses that AIG is set up to give out to its executives. When I first heard the news Monday morning I was livid. How could these executives accept these bonuses in the face of the fact that had they not been bailed out by the government, they wouldn't even be around to GET the bonuses. Had the government not stepped in and basically taken over the company, the executives in question would have long since been forced to find other work and we wouldn't be having this discussion.

Thank God the government stepped in. Otherwise I'd have nothing to write about.

So, as I said, I was livid. I'm sure you were too. We have a right to be - this is an outrage. Like in the movie Network, we're "mad as hell, and we're not gonna take it anymore!" Only, in this case, I think we're mad at the wrong people. And the administration and Congress are only too eager to let us direct our anger at those execs. Who we should really be mad at is the folks in Washington who are squarely to blame for this debacle. How, you say? I'm glad you asked.

Do you remember the stimulus bill from a few weeks ago? I had a lot to say about that. You'll remember how it flew through the halls of Congress without any one member reading the whole thing. Little Easter eggs were bound to come out as time goes on, and as it happens, a couple of those directly relate to AIG bonuses. Yep, if you take a look at the stimulus bill, then scroll all the way down the bottom (kinda neat how it's just tucked there at the end, huh?), you will see `SEC. 111. EXECUTIVE COMPENSATION AND CORPORATE GOVERNANCE. Once you get on that page, look at (b)/(3)/(D)(i), you'll see the following text:

[The Secretary shall require each TARP recipient to meet appropriate standards...including] A prohibition on such TARP recipient paying or accruing any bonus, retention award, or incentive compensation during the period in which any obligation arising from financial assistance provided under the TARP remains outstanding...

To translate: Any recipient of the government bailout funds can't pay out bonuses as long as their loans are still outstanding. AIG obviously received these funds, so score 1 for the government right? I mean, Holy &#@%! The big G actually got one right - this is a bona fide restriction that says you can't pay out bonuses while you're on our dime. Perfect!

If only the document ended there. Sadly, keep reading... (section iii a few paragraphs later...)

The prohibition required under clause (i) shall not be construed to prohibit any bonus payment required to be paid pursuant to a written employment contract executed on or before February 11, 2009, as such valid employment contracts are determined by the Secretary or the designee of the Secretary.

(emphasis mine)

Excuse me, but whiskey tango foxtrot? This statement just single-handedly AUTHORIZED every bonus that was stated in a contract before Feb. 11. You guessed it...that would be inclusive of the AIG bonuses in question. And guess who put it in there. Guess who was responsible for putting this little escape clause in there? Chris Dodd, the Senate Banking Committee chairman. Mr. I Think the Government Should Tax 100% of the Bonuses himself. Oh, to hear Dodd's aides tell it, he had no clue about the AIG bonuses at the time that he put that amendment in there. Sure. Not only have these bonuses been on the books since last year, but Dodd was the highest paid recipient of AIG political contributions in 2008. You do the math.

AIG tells Congress and the public at large that they were contractually obligated to pay these bonuses. In effect, they'd be subject to lawsuits if they didn't pay out the money. Yet despite this, the government seems to think that it has the authority to come in an declare a contract null and void to suit its own political purposes. It's very popular to be against big business and seeming excess among corporate executives, especially those who obviously failed in their tasks. Like I said, before yesterday everybody in Washington was ready to tear down AIG over these bonuses. However, no matter how popular it may be to come in and void these contracts, in doing so the government would be directly violating the Constitution, which explicitly protects contracts. Think of the precedents that this would set. If the government can come in and change/modify/cancel a contract because it currently suits its needs/desires, then what is a contract? Why bother establishing one? Bankruptcy laws were specifically designed to circumvent contractual obligations, since "bankrupt" basically means "we can't fulfill our contracts". Bankruptcy: wow, wouldn't that be a novel idea - getting around these contracts by allowing AIG to fail! Now why didn't they do that?!

Well, they didn't; and since they're painted into a corner between public outrage and political viability, they're grasping at straws. One suggestion (as mentioned earlier) was to tax the bonuses at 100%. Are you kidding me? 100%? Can you even imagine how the verbiage would have to be on that kind of resolution? As if they'd write a law to cover a specific instance of a specific company paying specific executives a specific bonus for a specific purpose with specific money. Great idea.

Now, don't misunderstand me; I would be happy if these execs weren't being paid a dime in bonuses, but unless there is a rational, legal, and Constitution-backed methodology for preventing such payouts, then the feds need to just back off. It sucks, it's frustrating to us nobodies, and it's unfair, but it's the law. And they're the ones who wrote it a few weeks ago. Good job, Dodd. I'd hate to be you in 2010...

One final question on this issue. Where the heck were these Washington nitwits declaring outrage when AIG was fulfilling their other contracts? I'm not talking about millions either...try that times a thousand. I'm talking BILLIONS. What? You didn't know? Oh sure, AIG has been steadily funneling money to other institutions all over the world - to the tune of around $44 billion to American companies and $62 billion overseas. (!!!) Did you catch that? Over $100 billion, distributed from our government, through AIG, to these other institutions. I bet you didn't know your tax dollars were going to Europe did you? As Glenn Beck said yesterday, it's like a huge elaborate money laundering scheme. Think not? Who owns AIG again? Oh yeah, the federal government. So who was ultimately responsible for these monies being distributed to these institutions? Bingo.

And despite all this, they have the audacity to bitch and moan about 0.16% of that amount??? The cynic in me sees these shenanigans as a smokescreen to misdirect us, the American people, from the real travesty here. The travesty that we even bailed this company out to begin with. You know, the AIG company as a whole wasn't that bad of a bad company; in fact, their insurance division was actually profitable. It's just this one division or two that has caused the problems. If we would have split them off we would have had a potentially viable company there.

Next up we can all start complaining about the bonuses Lehman Brothers is going to pay out to its execs next week. What's that? Oh yeah. They were allowed to fail, so we're NOT talking about them, now are we?