2/7/11
I’d like to say that the Chrysler ad (almost mini-documentary about Detroit, really) that ran during the Super Bowl was the best ad that ran during the game, but that would be saying that the aforementioned ad merely stepped over a bar that happened to be rolling around on the ground only because there was not an indent into which it could fall. So I will say that the Chrysler ad was one of the best five or so commercials I have ever seen in my life. It was simply GREAT: awe inspiring, tear jerking, get up and cheer, let’s show ‘em what were made of, we can do what no one says we can do GREAT. And I say this despite the almost indetectible slap the ad made at the greatest city on earth.
Perhaps my enthusiasm for the ad had more to do with my affection for Detroit and the role it played in our nation’s achieving the greatness that it has since flushed down the sewer. But one did not have to be an enthusiast for Detroit to experience a flash of emotion for the paean the ad comprised for the industrial might that our country once displayed and may (but probably doesn’t) have a chance at recovering. Further, this ad was the greatest of a series of quite good Chrysler ads of late (“We are what we make.”), though I still haven’t decided what I think about the ad in which George Washington charges the British line in a hemi-equipped Challenger.
Despite the Detroit ad’s greatness, it did have two downsides. First, it was narrated by a young man with whom I was at first impressed, especially at the end in which he joined a choir on a very old and somewhat ornate stage, until my daughters informed me that this young man was none other than Eminem, a practitioner of the “art” of rap, a form of music emblematic of the decline of our society that the commercial argues can somehow be countered. At least the young man has some pride in the city whence he came, though, and is willing to show it, so he deserves some credit for that.
Second, the car featured at the very end of the ad, the Chrysler 200, is a mediocre entry for which no manual transmission is available, so it will be nearly impossible for me to act on my enthusiasm for the ad. Now, if the ad had featured the new Chrysler 300 and some day I were to get over my obsession with manual transmissions, then I might conceivably be able to tangibly act on my enthusiasm for the ad. But two points need making: First, Chrysler is trying to sell cars to millions of people, not to me and to those with my peculiar tastes in automotive transportation. Second, Chrysler is wise, at least for the time being, to emphasize its heritage, rather than its product line, in its ads.
I can’t wait to see this ad again; I’d hate to think it was a one-off for the Super Bowl.
Monday, February 7, 2011
Sunday, February 6, 2011
“TO SERVE MAN”
2/5/11
In his most recent television ad (not the ad in which President Obama tells us what a great guy Emanuel is, what a sacrifice it was for him and his wife to leave Chicago, and how Emanuel had no choice but to go to Washington to work for the President; the latter two aspects of that ad apparently have lost their usefulness), Rahm Emanuel states:
"We're going to deliver a service to the taxpayers. We're going to get them the best price for what they pay for, and that means making sure that everyone that works for the city government knows that they're (sic) actually a public servant representing and helping the people that pay them."
Source: http://www.nbcchicago.com/blogs/ward-room/chicago-fraternal-order-of-police-rahm-emanuel-ad-115330389.html#ixzz1DCp2sUsG
Who can argue with the sentiment Mr. Emanuel expresses regarding the taxpayers’ getting what they pay for? Taxpayers in Chicago are certainly used to getting, for the most part, good services but at a price that seems astronomical compared to that paid in other cities, hence the term “corruption tax.” However, the last part of that sentence, in which Rahm Emanuel, of all people, lectures city workers in Chicago that they are public servants, so reeks of hypocrisy and poor timing that it calls into question his temperament, political skills, and, certainly, the breadth of his experience and his capacity for self-evaluation.
City workers are indeed public servants and, if we are to examine the true nature of work and the reasons for which we are all here, all of us, regardless of our employers, are public servants, but I digress on the latter point. However, city workers do not need to hear Rahm Emanuel proclaiming pious platitudes on the virtues of public service for at least three reasons:
First, it is politicians, not typical public sector workers whose jobs consist of actual work rather than preening for the cameras and effecting concern for anyone who can write a campaign check or cast a vote, who most need reminding that they are public servants. The politician who goes into his or her field (“Politician” should not be a job at all in a democratic republic, such as America is supposed to be, but I digress.) out of a sense of public service, rather than a febrile, insatiable desire for self-aggrandizement, is a rare bird indeed.
Second, of the preening popinjay class that comprises our modern crop of politicians, Rahm Emanuel is among those most exposed to charges that his career in “public service” has achieved far more for him than for any of his constituents, however defined. He has made millions in his “investment banking” job that consisted of no more than selling his influence and in his high level patronage “job” on the board of Freddie Mac. That a guy who has made millions in the pursuit of “public service” should be telling the typical cop, fireman, garbage man, or snow plow driver that s/he should be mindful that s/he should be serving the public displays a degree of hypocrisy that is shocking even by standards of the typical Washington politician, the class into which Mr. Emanuel falls.
Third, the timing of Mr. Emanuel’s homily on public service was outrageously poor, coming right after what has been labeled the Blizzard of 2011. No one saw Mr. Emanuel responding to fires, or answering other 911 calls, down impassable streets, digging through the snow to get to garbage cans (which killed Streets and San man Mr. William King yesterday), or plowing snow encrusted streets morning, noon, and night. His job consists of feigning fawning concern in neighborhoods he had never heard of before moving back here to run for mayor and convincing us that he is a “real Chicagoan” while tallying up money flowing in from Hollywood, Washington, and New York. As Fraternal Order of Police President Mark Donahue put it,
“None of these public servants need a lecture from Rahm Emanuel on the meaning of public service."
If the obtuseness, hypocrisy, and tin-eared timing Mr. Emanuel displayed with this ad are indicative of his judgment and ability, perhaps he is not the political and administrative Superman that his sui generis cheerleaders in the city’s media are trying to convince us he is.
In his most recent television ad (not the ad in which President Obama tells us what a great guy Emanuel is, what a sacrifice it was for him and his wife to leave Chicago, and how Emanuel had no choice but to go to Washington to work for the President; the latter two aspects of that ad apparently have lost their usefulness), Rahm Emanuel states:
"We're going to deliver a service to the taxpayers. We're going to get them the best price for what they pay for, and that means making sure that everyone that works for the city government knows that they're (sic) actually a public servant representing and helping the people that pay them."
Source: http://www.nbcchicago.com/blogs/ward-room/chicago-fraternal-order-of-police-rahm-emanuel-ad-115330389.html#ixzz1DCp2sUsG
Who can argue with the sentiment Mr. Emanuel expresses regarding the taxpayers’ getting what they pay for? Taxpayers in Chicago are certainly used to getting, for the most part, good services but at a price that seems astronomical compared to that paid in other cities, hence the term “corruption tax.” However, the last part of that sentence, in which Rahm Emanuel, of all people, lectures city workers in Chicago that they are public servants, so reeks of hypocrisy and poor timing that it calls into question his temperament, political skills, and, certainly, the breadth of his experience and his capacity for self-evaluation.
City workers are indeed public servants and, if we are to examine the true nature of work and the reasons for which we are all here, all of us, regardless of our employers, are public servants, but I digress on the latter point. However, city workers do not need to hear Rahm Emanuel proclaiming pious platitudes on the virtues of public service for at least three reasons:
First, it is politicians, not typical public sector workers whose jobs consist of actual work rather than preening for the cameras and effecting concern for anyone who can write a campaign check or cast a vote, who most need reminding that they are public servants. The politician who goes into his or her field (“Politician” should not be a job at all in a democratic republic, such as America is supposed to be, but I digress.) out of a sense of public service, rather than a febrile, insatiable desire for self-aggrandizement, is a rare bird indeed.
Second, of the preening popinjay class that comprises our modern crop of politicians, Rahm Emanuel is among those most exposed to charges that his career in “public service” has achieved far more for him than for any of his constituents, however defined. He has made millions in his “investment banking” job that consisted of no more than selling his influence and in his high level patronage “job” on the board of Freddie Mac. That a guy who has made millions in the pursuit of “public service” should be telling the typical cop, fireman, garbage man, or snow plow driver that s/he should be mindful that s/he should be serving the public displays a degree of hypocrisy that is shocking even by standards of the typical Washington politician, the class into which Mr. Emanuel falls.
Third, the timing of Mr. Emanuel’s homily on public service was outrageously poor, coming right after what has been labeled the Blizzard of 2011. No one saw Mr. Emanuel responding to fires, or answering other 911 calls, down impassable streets, digging through the snow to get to garbage cans (which killed Streets and San man Mr. William King yesterday), or plowing snow encrusted streets morning, noon, and night. His job consists of feigning fawning concern in neighborhoods he had never heard of before moving back here to run for mayor and convincing us that he is a “real Chicagoan” while tallying up money flowing in from Hollywood, Washington, and New York. As Fraternal Order of Police President Mark Donahue put it,
“None of these public servants need a lecture from Rahm Emanuel on the meaning of public service."
If the obtuseness, hypocrisy, and tin-eared timing Mr. Emanuel displayed with this ad are indicative of his judgment and ability, perhaps he is not the political and administrative Superman that his sui generis cheerleaders in the city’s media are trying to convince us he is.
Thursday, February 3, 2011
YOU PARK IN THIS SPACE AND I’LL TURN YOUR CAR INTO A POPSICLE
2/3/11
There is a proud tradition in Chicago, and in other parts of the country, which some refer to as “dibs.” According to this tradition, someone who digs a parking spot out of the snow, sometimes, but not always, directly in front of his or her house, is entitled, by virtue of his or her effort, to exclusive use of that space for a limited period of time, usually a few days or until the snow melts to the point at which parking is no longer inhibited by the depth of the snow. The digger may claim those legitimate rights by placing lawn chairs, saw horses, old mops or brooms, or other bits of household detritus in that spot.
People are quite serious about defending their dibsian rights. Tales, perhaps, but probably not, apocryphal, tell of people who have removed the claims staking geegaws and parked in a space that someone else spent hours digging out returning to their cars to find them keyed, more seriously damaged, or frozen and rendered inaccessible by fulsome application of a garden hose to their vehicle in sub-freezing weather. Thus justice is served.
Some argue that the tradition of dibs is outrageous. This small and generally shy (especially at this time of the year) minority, many of whom live in high rise condos with parking garages, argue that no one owns the public streets and that therefore no one can claim a space. These self-styled arbiters of justice see no problem, apparently, with their parking their BMWs and Volvos in spaces someone else cleared for his or her own Chevy. So much for such self-proclaimed guardians’ of public virtue protestations of their sympathy for the “working person;” such sympathy apparently ends when it conflicts when their comforts or sense of entitlement, but I digress.
Not only do the proponents of dibs have the better of the moral end of this argument; they also can turn the dazzling urbanites’ high falutin’ property rights against them. I think it was Art Laffer who came up with the free market property rights argument in favor of dibs. I’m not sure it was Laffer, but I am sure it wasn’t I, but I wish I had come up with this argument because it is so beautiful in its simplicity, so clearly logical, and so in line with the free market philosophy to which I have adhered most of my life, as has, obviously, Art Laffer. This argument says that if a city (say, Chicago) wants to get the streets cleared quickly, the city ought to encourage and even enforce dibs. If one can claim a cleared space, then one would have an incentive to clear the space, thus spaces, and, collectively (bad adverb in this case, I know), the street get cleared. But if dibs are routinely ignored, then no one has an incentive to clear spaces, spaces don’t get cleared, and the streets remain snowbound. Note that, with encouraged or enforced dibs, the spaces get cleared not by the government but by private citizens acting in their own self-interest. Thus, encouragement or enforcement of dibs is an elegant free market way of resurrecting parking spaces after a heavy snow eliminates them with minimal expenditure of public funds.
Yes, it is a wonderful thing when neighbors help neighbors during snowfalls. Despite straining my back to the points of rather intense pain, I thoroughly enjoyed digging out from yesterday’s snowfall because it gave all of us neighbors a chance to help each other out, to dig out each other’s driveways and walkways, and to foster a sense of camaraderie and community spirit that some think doesn’t exist in the suburbs, where I now live. Not only did we have a good time, but the whole subdivision was up and operational by mid-afternoon because neighbors helped neighbors. And I am sure that many of the dibsters in the city were also out there helping their neighbors clear walks, alleys, and parking spaces to which those neighbors could stake a claim. But if we have to rely exclusively on the goodwill of others to get things done, few things will get done. Better to have a system, like dibs, which helps the process along by marrying private self-interest with the public good.
There is a proud tradition in Chicago, and in other parts of the country, which some refer to as “dibs.” According to this tradition, someone who digs a parking spot out of the snow, sometimes, but not always, directly in front of his or her house, is entitled, by virtue of his or her effort, to exclusive use of that space for a limited period of time, usually a few days or until the snow melts to the point at which parking is no longer inhibited by the depth of the snow. The digger may claim those legitimate rights by placing lawn chairs, saw horses, old mops or brooms, or other bits of household detritus in that spot.
People are quite serious about defending their dibsian rights. Tales, perhaps, but probably not, apocryphal, tell of people who have removed the claims staking geegaws and parked in a space that someone else spent hours digging out returning to their cars to find them keyed, more seriously damaged, or frozen and rendered inaccessible by fulsome application of a garden hose to their vehicle in sub-freezing weather. Thus justice is served.
Some argue that the tradition of dibs is outrageous. This small and generally shy (especially at this time of the year) minority, many of whom live in high rise condos with parking garages, argue that no one owns the public streets and that therefore no one can claim a space. These self-styled arbiters of justice see no problem, apparently, with their parking their BMWs and Volvos in spaces someone else cleared for his or her own Chevy. So much for such self-proclaimed guardians’ of public virtue protestations of their sympathy for the “working person;” such sympathy apparently ends when it conflicts when their comforts or sense of entitlement, but I digress.
Not only do the proponents of dibs have the better of the moral end of this argument; they also can turn the dazzling urbanites’ high falutin’ property rights against them. I think it was Art Laffer who came up with the free market property rights argument in favor of dibs. I’m not sure it was Laffer, but I am sure it wasn’t I, but I wish I had come up with this argument because it is so beautiful in its simplicity, so clearly logical, and so in line with the free market philosophy to which I have adhered most of my life, as has, obviously, Art Laffer. This argument says that if a city (say, Chicago) wants to get the streets cleared quickly, the city ought to encourage and even enforce dibs. If one can claim a cleared space, then one would have an incentive to clear the space, thus spaces, and, collectively (bad adverb in this case, I know), the street get cleared. But if dibs are routinely ignored, then no one has an incentive to clear spaces, spaces don’t get cleared, and the streets remain snowbound. Note that, with encouraged or enforced dibs, the spaces get cleared not by the government but by private citizens acting in their own self-interest. Thus, encouragement or enforcement of dibs is an elegant free market way of resurrecting parking spaces after a heavy snow eliminates them with minimal expenditure of public funds.
Yes, it is a wonderful thing when neighbors help neighbors during snowfalls. Despite straining my back to the points of rather intense pain, I thoroughly enjoyed digging out from yesterday’s snowfall because it gave all of us neighbors a chance to help each other out, to dig out each other’s driveways and walkways, and to foster a sense of camaraderie and community spirit that some think doesn’t exist in the suburbs, where I now live. Not only did we have a good time, but the whole subdivision was up and operational by mid-afternoon because neighbors helped neighbors. And I am sure that many of the dibsters in the city were also out there helping their neighbors clear walks, alleys, and parking spaces to which those neighbors could stake a claim. But if we have to rely exclusively on the goodwill of others to get things done, few things will get done. Better to have a system, like dibs, which helps the process along by marrying private self-interest with the public good.
AFTER ALL THESE CENTURIES, THE EGYPTIANS STILL HAVE SOMETHING TO TEACH US, PART II
2/3/11
One fears that the media and the Bush/Obama Administration, comprised of so many young people who are so far removed from the lives of not only the average Egyptian but also the average American, are making a mistake that has been repeated throughout our history by isolated policymakers and even more isolated press corps: They are confusing the opinions and actions of those who have enough time to demonstrate in the streets with the opinions and thoughts of those who are too busy working for a living to get the attention of the cameras.
Doubtless the anti-Mubarak demonstrators have legitimate grievances. And doubtless many, if not most, of the counter-demonstrators are thugs hired by Mubarak and his henchmen. But the average Egyptian has other things on his mind, like survival. (See today’s other post on Egypt, AFTER ALL THESE CENTURIES, THE EGYPTIANS STILL HAVE SOMETHING TO TEACH US.) Today’s Wall Street Journal quotes numerous typical Egyptians who, while no friends of Mubarak, are satisfied with his offer not to stand for reelection and who fear that the demonstrators are going too far:
--Ahmed Sharif, a 47 year old engineer, marching with his wife and twenty year old daughter: “If the protestors in Tahir Square don’t leave, we will drive them out. He (President Hosni Mubarak) has made some mistakes but I respect him.”
--Mr. Sharif’s daughter, Noha: “He (Mubarak) has said he is open to discussion, so why should we not meet with him? He wants a peaceful transition.”
--Tamer Sadek, a 51 year old owner of a real estate and hotel firm: “He agreed to all of their demands, so what right does anyone have to tell him to leave?”
--Giehan Shoukry, a 38 year old public relations worker for a construction company: “We appreciate what the youth have done to bring this about, but enough is enough.”
--Mohammed Sayed, a 37 year old “supporter of Mr. Mubarak”: “The situation is unacceptable. The majority of protestors are young people and aren’t aware of their actions and consequences.”
Too bad we didn’t have people like Mr. Sayed around in this country in the ‘60s when my generation was in college and knew everything.
One fears that the media and the Bush/Obama Administration, comprised of so many young people who are so far removed from the lives of not only the average Egyptian but also the average American, are making a mistake that has been repeated throughout our history by isolated policymakers and even more isolated press corps: They are confusing the opinions and actions of those who have enough time to demonstrate in the streets with the opinions and thoughts of those who are too busy working for a living to get the attention of the cameras.
Doubtless the anti-Mubarak demonstrators have legitimate grievances. And doubtless many, if not most, of the counter-demonstrators are thugs hired by Mubarak and his henchmen. But the average Egyptian has other things on his mind, like survival. (See today’s other post on Egypt, AFTER ALL THESE CENTURIES, THE EGYPTIANS STILL HAVE SOMETHING TO TEACH US.) Today’s Wall Street Journal quotes numerous typical Egyptians who, while no friends of Mubarak, are satisfied with his offer not to stand for reelection and who fear that the demonstrators are going too far:
--Ahmed Sharif, a 47 year old engineer, marching with his wife and twenty year old daughter: “If the protestors in Tahir Square don’t leave, we will drive them out. He (President Hosni Mubarak) has made some mistakes but I respect him.”
--Mr. Sharif’s daughter, Noha: “He (Mubarak) has said he is open to discussion, so why should we not meet with him? He wants a peaceful transition.”
--Tamer Sadek, a 51 year old owner of a real estate and hotel firm: “He agreed to all of their demands, so what right does anyone have to tell him to leave?”
--Giehan Shoukry, a 38 year old public relations worker for a construction company: “We appreciate what the youth have done to bring this about, but enough is enough.”
--Mohammed Sayed, a 37 year old “supporter of Mr. Mubarak”: “The situation is unacceptable. The majority of protestors are young people and aren’t aware of their actions and consequences.”
Too bad we didn’t have people like Mr. Sayed around in this country in the ‘60s when my generation was in college and knew everything.
AFTER ALL THESE CENTURIES, THE EGYPTIANS STILL HAVE SOMETHING TO TEACH US
2/3/11
One has to be very careful when considering the events currently taking place in Egypt and should scrutinize them for clues regarding ramifications for our economy beyond the obvious.
The press would have you believe that the current bout of upheaval in the street in Egypt has its origins in discontent with President Hosni Mubarak’s trampling on the fundamental rights of the people, denying them the democracy they so ardently desire (See today’ other post on Egypt, AFTER ALL THESE CENTURIES, THE EGYPTIANS STILL HAVE SOMETHING TO TEACH US, PART II) with a little bit of economic discontent thrown in for good measure. But since when has Hosni Mubarak ever been respectful of people’s rights? When was he ever, since taking power, NOT been a dictator? And when have economic conditions ever been good for the typical Egyptian, who works, if he has a job, for slave wages?
The above questions are, of course, rhetorical. Something must be different today in Egypt to have sparked the demonstrations and counter-demonstrations that will lead to Mr. Mubarak’s ouster, one way or the other. What is different?
It seems to me that the skyrocketing prices of basic food commodities were the trigger in this case. Note that Egypt is both a poor country and the world’s largest importer of wheat. When the price of wheat goes up, the price of bread goes up. In a country like the United States, we hardly notice the change in the price of wheat because most of our foods, including bread, are highly processed and thus the prices of the underlying commodities are negligible in the retail price of the product. Further, in any advanced country, food is a relatively small portion of our household budgets. But in Egypt, where many, if not most, people buy their bread from local bakeries every day soon after it emerges from the oven, food comprises the majority of a household’s expenditures, and people are barely scraping by, an increase in the price of wheat is a BIG deal. It makes a tough life nearly unsustainable and obviously fosters discontent. From the comfort of the West, we can tut-tut about abuse of rights all we want, but for poor people just scraping by, the price of their daily bread is a far higher priority, as Mr. Maslow argued some time ago in his hierarchy of needs.
So what does this have to do with us, other than its obvious humanitarian implications? Perhaps we shouldn’t be so smug in our confidence that the skyrocketing prices of commodities are inconsequential because they have nothing to do with “core” inflation. Not only do increasing commodity prices have geopolitical ramifications, but they don’t always stay limited to commodity prices. Note two articles in today’s (i.e., Thursday, 2/3’s) Wall Street Journal: “Fearing Inflation, Firms Stocking Up,” page C1, and “Steel-Price (sic) Rises Pressure Supply Chain,” page B1.
One has to be very careful when considering the events currently taking place in Egypt and should scrutinize them for clues regarding ramifications for our economy beyond the obvious.
The press would have you believe that the current bout of upheaval in the street in Egypt has its origins in discontent with President Hosni Mubarak’s trampling on the fundamental rights of the people, denying them the democracy they so ardently desire (See today’ other post on Egypt, AFTER ALL THESE CENTURIES, THE EGYPTIANS STILL HAVE SOMETHING TO TEACH US, PART II) with a little bit of economic discontent thrown in for good measure. But since when has Hosni Mubarak ever been respectful of people’s rights? When was he ever, since taking power, NOT been a dictator? And when have economic conditions ever been good for the typical Egyptian, who works, if he has a job, for slave wages?
The above questions are, of course, rhetorical. Something must be different today in Egypt to have sparked the demonstrations and counter-demonstrations that will lead to Mr. Mubarak’s ouster, one way or the other. What is different?
It seems to me that the skyrocketing prices of basic food commodities were the trigger in this case. Note that Egypt is both a poor country and the world’s largest importer of wheat. When the price of wheat goes up, the price of bread goes up. In a country like the United States, we hardly notice the change in the price of wheat because most of our foods, including bread, are highly processed and thus the prices of the underlying commodities are negligible in the retail price of the product. Further, in any advanced country, food is a relatively small portion of our household budgets. But in Egypt, where many, if not most, people buy their bread from local bakeries every day soon after it emerges from the oven, food comprises the majority of a household’s expenditures, and people are barely scraping by, an increase in the price of wheat is a BIG deal. It makes a tough life nearly unsustainable and obviously fosters discontent. From the comfort of the West, we can tut-tut about abuse of rights all we want, but for poor people just scraping by, the price of their daily bread is a far higher priority, as Mr. Maslow argued some time ago in his hierarchy of needs.
So what does this have to do with us, other than its obvious humanitarian implications? Perhaps we shouldn’t be so smug in our confidence that the skyrocketing prices of commodities are inconsequential because they have nothing to do with “core” inflation. Not only do increasing commodity prices have geopolitical ramifications, but they don’t always stay limited to commodity prices. Note two articles in today’s (i.e., Thursday, 2/3’s) Wall Street Journal: “Fearing Inflation, Firms Stocking Up,” page C1, and “Steel-Price (sic) Rises Pressure Supply Chain,” page B1.
ASK NOT WHAT YOU CAN DO FOR YOUR COUNTRY; ASK WHAT YOUR COUNTRY CAN DO FOR YOU
2/3/11
Today’s Wall Street Journal (Thursday, 2/3/11, page C1) reports that a panel of Wall Street experts is urging the Treasury to take advantage of current low interest rates by issuing plenty of long term debt and even to consider extending the 30 year limit on maturities of new treasury debt, perhaps extending maturities to 100 years.
This idea makes all the financial sense in the world. Why not save the taxpayers money by locking in today’s low rates for a century? But it won’t happen. Why? Because the typical politicians’ time frame is not a century or 30 years or 10 years, but, rather, the time until the next election. As I write this, the yield curve, with the 2 year to 10 year spread at 284 basis points and the 2 year to 30 year spread at 396 basis points, is at near historic steepness. So it will cost the Treasury 3%, 4%, or more to lock in low rates. While this will save billions upon billions of dollars over the life of the bonds, it will cost the treasury billions, albeit far fewer billions, over the typical politician’s preferred time frame; i.e., the few years to the next election. With political pressure on the politicians to save money, why should they risk the wrath of the voters, and their reelection prospects, for something so ephemeral to them as the good of the taxpayers, the public purse, and the Republic? Does anyone think these poltroons went into public life to serve anyone other than themselves?
No wonder the idea was shot down by the Bush/Obama Treasury.
Today’s Wall Street Journal (Thursday, 2/3/11, page C1) reports that a panel of Wall Street experts is urging the Treasury to take advantage of current low interest rates by issuing plenty of long term debt and even to consider extending the 30 year limit on maturities of new treasury debt, perhaps extending maturities to 100 years.
This idea makes all the financial sense in the world. Why not save the taxpayers money by locking in today’s low rates for a century? But it won’t happen. Why? Because the typical politicians’ time frame is not a century or 30 years or 10 years, but, rather, the time until the next election. As I write this, the yield curve, with the 2 year to 10 year spread at 284 basis points and the 2 year to 30 year spread at 396 basis points, is at near historic steepness. So it will cost the Treasury 3%, 4%, or more to lock in low rates. While this will save billions upon billions of dollars over the life of the bonds, it will cost the treasury billions, albeit far fewer billions, over the typical politician’s preferred time frame; i.e., the few years to the next election. With political pressure on the politicians to save money, why should they risk the wrath of the voters, and their reelection prospects, for something so ephemeral to them as the good of the taxpayers, the public purse, and the Republic? Does anyone think these poltroons went into public life to serve anyone other than themselves?
No wonder the idea was shot down by the Bush/Obama Treasury.
MAYBE THEY’LL BE TOO BUSY KEEPING UP WITH “DANCING WITH THE STARS” TO NOTICE
2/3/11
European leaders are meeting in Brussels on Friday to consider further approaches to the fiscal and financial contagion that is spreading on the geographic and economic fringes of the eurozone. One of the approaches they will consider has been bandied about for the last few weeks or so: having the European Financial Stability Facility (“EFSF”) lend money to Greece so the Greeks can buy back their government bonds at, as the Wall Street Journal calls it (page A8, Thursday, 2/3/11), “current, depressed prices.”
Okay, maybe I, the EFSF luminaries, or Wall Street Journal reporters were absent for at least a few classes in Econ 101, but I have to ask a question: If it is announced that the EFSF is lending money to Greece to buy its bonds at “current, depressed prices,” how long with those prices remain “depressed”? Won’t potential sellers, knowing that the EFSF is insistent on throwing good money after bad, hold out for higher prices, perhaps even par?
Perhaps a more political, rather than economic, question: Just how will the typical German taxpayer feel about this latest episode of making speculators in Greek debt whole, or better, at the expense of the frugal German?
Just asking.
European leaders are meeting in Brussels on Friday to consider further approaches to the fiscal and financial contagion that is spreading on the geographic and economic fringes of the eurozone. One of the approaches they will consider has been bandied about for the last few weeks or so: having the European Financial Stability Facility (“EFSF”) lend money to Greece so the Greeks can buy back their government bonds at, as the Wall Street Journal calls it (page A8, Thursday, 2/3/11), “current, depressed prices.”
Okay, maybe I, the EFSF luminaries, or Wall Street Journal reporters were absent for at least a few classes in Econ 101, but I have to ask a question: If it is announced that the EFSF is lending money to Greece to buy its bonds at “current, depressed prices,” how long with those prices remain “depressed”? Won’t potential sellers, knowing that the EFSF is insistent on throwing good money after bad, hold out for higher prices, perhaps even par?
Perhaps a more political, rather than economic, question: Just how will the typical German taxpayer feel about this latest episode of making speculators in Greek debt whole, or better, at the expense of the frugal German?
Just asking.
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