Saturday, June 13, 2009

Order or Anarchy?

We tax all the others and pass the revenue on to you

Nicholas Confessore wrote a great article in the NYTimes. Ostensibly about the political chaos in NY, it extends to the chaos and seeming political hopelessness in NYC and major states like CA and IL. This article deserves your attention.

When does a gifted orator become just another political blowhard? We feel leaderless and adrift, with no one charting a meaningful political course for us. The Dems don't know how to do anything but spend and orate. The Repubs, well, they don't know how to do much of anything.

Where are we going? NY, CA and IL are symptoms of a national malaise. Who do you see that might pull us oput of it and give us some direction? There's a lot at risk and very little to reward political risk-takers. The Repubs have been no help at all. That leaves the Dems, some new third party, continuing the status quo or anarchy?

We all have to make a choice and back the people who most closely represent our political philophies. We can NOT allow ourselves to simply go along with those who promise to give us more for less or those who will lead us in return for our support of narrow issues.

Who's got a political package that you can support? Choose, then do something about it.

* * * * *

Dean Zerbe has an excellent article in Forbes about a new proposal for small businesses that make payments in excess of $600. If that's you, read it and think about contacting IRS for everyone you pay more than $600. Essentially, this transfers the burden of TIN verification to the small businessperson, not that IRS was really doing it anyway. It's an accountant's full employment measure at your expense.

There is zero chance that IRS will make any meaningful use of these reports but if it passes you'll probably get fined for not making them.

* * * * *

NY Atty. Gen. Andrew Cuomo keeps making news and looking good. NYTimes has an article about him cracking down on "pay-to-play" schemes that placed NY pension money in return for large "placement agent" fees. Cuomo recovered $30 mil of public money. Good onya, Andy. Watch his work launch him into presdential consideration.

* * * * *

TimmyG just finished a meeting of G8 finance ministers. The IMF warned "...there is an urgent need for governments to clarify their exit strategy to ensure that solvency is not at risk." Timmy G said Economic and financial recovery "will be stronger and more sustainable if we make clear today how we get back to fiscal sustainability when the storm has fully passed...". (Thank you, WSJ)

Those two statements are incompatible unless you think TimmyG actually has an economic crisis exit strategy. He doesn't.

* * * * *

At the Chrysler bankruptcy, creditors who thought they were secured - and that being a secured creditor meant something - aren't, and unsecured creditors are ahead of them. This portends big things for those considering bankruptcy and their creditors. Creditor priority is a fundamental part of secured lending and all of a sudden it doesn't mean what we always thought. Stay tuned.

Wednesday, June 10, 2009

American Tsars

We tax all the others and pass the revenue on to you

Why do we have American tsars? We call 'em czars for some reason but you know what I'm talking about. Rateitall identifies 18 of the odd political creatures. 18! What do they do and why do we need them? A couple of things for sure: They're not working alone (18 new staffs, offices, equipment, supplies, cars, expense accounts etc.) and they're not working for free (18 new staffs' pay and perks). For what?

We've had czars before. Are they redundant to their respective cabinet members? HHS v. Health Czar, that sort of thing. Can they make decisions without cabinet input or Congressional oversight? Do they? Yeah, likely they do.

William Manchester wrote American Caesar, the story of Douglas MacArthur and his usurpation of power from an uncooperative civilian American government. Is that something like what we have now, or is this a group of neo-governmental ministers who are taking power away from an uncooperative American populous and a timid Congress? Seven Days in May with Ivy League educations? I'm not warning of a neo-lib conspiracy, but I am beginning to wonder about it. Aren't you? Aren't our overblown cabinet departments enough for the prez? Why aren't they?

Who vets the czars? TommyD was the prez' Health Czar while he was waiting to be confirmed as SecHHS. Using him as an example, no one does very well and now we've got 18 of em.

Of what significance are a czar's decisions? To whom does the prez turn for critical advice and direction, his cabinet member or his czar, and why? Stay with HHS for a moment. It is a HUGE agency. Are they so short of talent that they have to sluff off decisions and recommendations to a czar and his staff? How is that possible?

Czars don't have Congressional oversight and they aren't subject to Congress' advise and consent role. They don't have to tell the public anything, file out more than pro forma reports or in any way justify their existence. They exist by executive fiat (no pun intended). Ask why.

* * * * *

Talk about fine print. Bailed-out banks are trying to pay back the bailouts so that they can start paying out big bonuses to their top people. That's what the bailouts did, preserved the earning capacity of mega-bankers at your expense. Don't be expecting your share any time soon. Or a thank-you.

Here's the thing: TimmyG tells Congress that even after they pay back the bailout money those banks will still have to follow government pay guidelines. Think about it. A publicly-owned private company will have to follow gummint pay rules because they took bailout money.

I'm no fan of big-money bankers. Far from it. But where/when did TimmyG and his Pay Czar Ken Feinberg get the expertise or the right to do this? Where did this self-annointed oversight come from? Want to know why? So that the successful banks won't be able to recruit talent from the unsuccessful banks by offering... bigger salaries.

Don't worry. The pay czar will fix things. After all, he's 31 and has no experience. He'll fit right in.

* * * * *

Need another reason to stay away from GM cars? How about this statement from the new CEO of GM, Ed Whitacre, Jr. (but from now on Mr. Ed here):

“I don’t know anything about cars,” Whitacre, 67, said yesterday in an interview after his appointment. “A business is a business, and I think I can learn about cars. I’m not that old, and I think the business principles are the same.”

Well no WONDER the prez picked him. He's not too old to learn about cars. I'm hearing the words to Mr. Ed right now (thanks to

A horse is a horse, of course, of course,
And no one can talk to a horse of course
That is, of course, unless the horse is the famous Mister Ed.
Go right to the source and ask the horse
He'll give you the answer that you'll endorse.
He's always on a steady course.
Talk to Mister Ed. 

People yakkity yak a streak and waste your time of day
But Mr. Ed will never speak unless he has something to say 

A horse is a horse, of course, of course,
And this one'll talk 'til his voice is hoarse.
You never heard of a talking horse?
Well listen to this: "I'm Mister Ed." 

I normally wouldn't care all that much but this Mr. Ed is running a business that we've just spent $50 bil on and it happens to be failing and taking our money with it. Is this the time for learn by doing? 

Interchangable managers regardless of experience is a government experiment that has failed over and over. I remember the "Blue Ribbon Plan" under which thousands of new inexperienced managers were hired in the 1970s. It was a predictable failure because... are you ready?... no one knew what they were supposed to be doing!!!

Mr. Ed is running GM. Roger Penske has raced and sold cars at the very pinnacle of his industry for decades, made scads of money and is looking for new challenges. He's had a lot of other automotive success. You see his yellow Penske Trucking vans and long-haulers everywhere on the highways and there is lots more. Penske is buying Saturn.

Penske and Saturn or Mr. Ed and GM: Which do you pick for long-term success and which to be continually bailed out with taxpayer money until we run out?

Penske. Mr. Ed. Who's going to get your business?

What was that, Mr. Ed?

“I don’t know anything about cars”

Follow up with

"Go right to the source and ask the horse"

Are you feeling stimulated yet?

* * * * *

Stop gabbin' and get me some oats. -- Mr. Ed
(Thank you,

Monday, June 8, 2009

Voting With Your Feet

We tax all the others and pass the revenue on to you

Microsoft, Symantec and others don't like the idea of repatriating and taxing corporate income earned abroad. They're threatening to vote with their feet and move more of their businesses overseas. You can read more about it at The prez wants to remove $190 bil in corporate overseas tax breaks.

This is the mega-corp version of Rush Limbaugh and others leaving New York for the tax-friendlier shores of Florida. When taxes are oppressive, those who can leave, do. Those who remain, with far fewer resources, are left to fill the revenue gap. The remaining economy enters its death spiral. Hello, New York and California.

Did you read that New York is shocked that its income tax revenue is down 49%? Wow, who could have seen that coming? Hint: It's not entirely the economy and it's not entirely Limbaugh's fault. There's no one at the helm and that's an iceberg up ahead, Gov. Patterson. It's too late to miss it. All you can do is try to mitigate the damage.

Rush isn't the only bigshot to leave. Super-rich ex-Dem major contributor Tom Golisano is also outta there. Same reason: Taxes are too high and government is out of control.

Meanwhile, there was a coup in the NY Senate today, with the Repubs taking over the majority with the help of two Dems (who are under some serious investigation, BTW). Don't look for any meaningful legislation in NY any time soon. Patterson will veto. The legislators will continue cashing their paychecks.

Did I mention The Taxblog Alternative? Things are going to get worse. Let me know when you get it.

* * * * *

I finally got a look at the Kerry campaign's tax lien. Not exactly as advertised, employment taxes, but for failure to file information returns, IRC 6721. Makes the "clerical error" defense a little more credible. I'll wait for more but in the meantime this needed to be said.

The tax was assessed (and the first bill went out) 01-07-08 and IRS' ACS finally filed the notice of lien 2-5-09, giving the campaign time to close up without regard to the debt.

* * * * *

Can you withhold welfare payments? CA is doing it. Has to, Arnie says. Sure, some people get hurt but taxpayers are already getting hurt.

Ask yourself, why can't governments stop giving away money? Just... stop.

Arizona just passed a drastically scaled-back budget after all but one of the Dems walked out. State agency spending would be cut by 6.4%. They would swoon at 25%. Doesn't matter much since the Dem governor will veto. Somewhere the concept of "the will of the people" is dying an agonizing death.

* * * * *

The Supremes just delayed the sale of Chrysler assets to Fiat. They want to see whether creditors' rights have been violated, as asserted by some Indiana pension funds who stand to lose everything if the sale goes through. They say, understandably, that they are being disadvantaged as the government ignores creditors' priorities in its haste to sell Chrysler and give the money to the UAW and other favored non-priority creditors. Makes sense to me. Everyone is supposed to play by the same rules. This will be interesting.

* * * * *

New Jersey has collected $64.4 mil to date through their income tax amnesty. Not yet the $200 mil they promised but they shouldn't have predicted the results in the first place.

As much as I hate tax amnesties -- they generally lead to expectations of further amnesties, thus becoming deterrents to tax compliance; see multiple tax amnesties and the 1986 immigration reform act for examples -- NJ has been modestly successful. It's hard to quantify the amount they might lose in foregone future compliance so there is no ready measure of success v. cost but at least they did something

Don't believe the part about deterring future compliance? Mass. has had three tax amnesties since 2002. Do you think Mass. taxpayers think there might be another? Of course they do, so why pay now?

France, seldom an illustration of sound fiscal policy, is adamantly refusing an amnesty for the massive amount of repatriated money coming back as the result of the recent crackdown in bank secrecy and tax havens (see . Why shouldn't they? France is in its own revenue crisis caused in part by these very same tax cheats. This is NOT a no harm, no foul offense.

* * * * *

A democratic government is the only one in which those who vote for a tax can escape the obligation to pay it. -- Alexis de Toqueville

Sunday, June 7, 2009

The TaxBlog Alternative

We tax all the others and pass the revenue on to you

I considered titling this "Who The Heck Is Brian Deese?" but no one knows so it wouldn't be very catching, would it? Brian Deese is the guy running the auto industry for the administration. No business experience or degree, no law degree, no auto industry experience, nothing. Nice pick.

Glenn Beck may or may not be to your taste. Doesn't matter to me one way or the other. Beck put a clip up on YouTube -- but it loads a lot faster on AOLVideo HERE -- his quick take on Deese. Bottom line, your goofy cousin Elmo, the lot boy at your local Chevy dealer, has more auto resume than Deese. He (Deese, not Elmo) was Hilary's "top economic policy staffer", according to Beck, and an economic adviser to the prez. Watch it and decide for yourself if he's a good choice.

Hey Brian! See that bus a-comin'? That's the one they're going to throw you under. Elmo, warm up. You're going in for Brian.

* * * * *

Clerical error. That's what they're calling it. The Kerry presidential campaign owes $800k for federal employment taxes for 2004. IRS liens filed, the whole thing. Problem is, the campaign closed its doors and there's nothing left. This is not unlike the states using tax refunds to pay general admin costs, then saying "Sorry, there's no money left."

The feds are better off than those state taxpayers. IRC 6672 lets IRS go after responsible persons who failed to see that withheld taxes didn't get paid. Look for an angel to step forward to "voluntarily" pay the withheld portions while Kerry stiffs the gummint for the rest. You heard it here first.

* * * * *

Expedia, meanwhile, charges you a service fee for paying the taxes they bill you for, You didn't know that? ExP just lost a $184.5 mil suit for damages pertaining to that practice and they're looking at another one for $45 mil.

Hey, at least the taxes got paid. Note to Kerry: 1) I'm not a war criminal and you are by admission, and 2) you're also a tax cheat.

What is it about Mass. voters?

* * * * *

Hard to find anyone with good ideas about balancing any budgets - fed, state, county, city or family. Cut waste? Sounds good. Cut pork? That does too. But nobody wants to "cause" fiscal/personal pain (as though we're not already feeling it) - or risk not being re-elected - by actually doing something.

Here's a plan; call it "The TaxBlog Alternative". Starting August 1 available funding is cut 25%. Between now and July 1 all managers (of whatever public entity is at issue) with responsibility for more than $1 mil of spending must come up with a written plan for saving 25% of their budget. They can cut staffing, pay, waste, rent, travel & entertainment, energy, human resources, work in progress, continuing education, professional training, sensitivity training, anything they want. Anymanager who can't or won't gets fired for failing to obey an order. If they choose to quit instead, fine, that counts towards the 25% and the next person in line can step up.

Agency heads have the first three weeks of July to implement the cuts and pass along the results, consequences and costs to the legislature. The appropriate legislative body has one week to confirm the cuts. All cuts take effect on August 1.

Drastic? Sure. What other plans do you see on the table that merit your attention? If there's a better one, go for it. If there isn't, choose The TaxBlog Alternative. Either way, show some results by August 1 or close government down until they do. Government shutdowns have lots of precedence.

* * * * *

I lived in CA when Prop 13 passed, essentially freezing property values, and thus property taxes, at the value of the property when it was purchased. It created two classes of property taxpayers and disproportionately favored the haves over the wannahaves. If I bought a house worth $1 mil in 1976 and you bought one for a mil in 2006 then our taxes are about the same now, except that my house may now be worth $10 mil and yours might be worth $600k.

The haves still don't want to pay for the wannahaves (i.e., they don't want to share the pain) but Californians are facing some tough choices and some very angry wannnahaves. Prop 13 is one of the last bastions of "I got mine, screw you." California is broke. Really, no kidding, yet still the old Prop 13 beneficiaries cling to Mssrs. Jarvis and Gann's initiative like it is a birthright. It isn't. It was a tax gimmick in response to a Carter administration-caused economic disaster and it has contributed to (though not caused) the current fiscal calamity.

If you really, really want some semblance of an egalitarian society, surely the similarly situated should pay similar taxes.

Hey CA! Repeal Prop 13 and adopt The TaxBlog Alternative. It will hurt (sorry, someone needs to tell you the truth about that) but it will get you closer to where you want to be - solvency - and your property tax elites will finally start feeling the pain the rest of you are suffering. No pain, no gain. Really.

Think of it as a re-set.

* * * * *

The nation should have a tax system that looks like someone designed it on purpose. -- H. L. Mencken.

Thursday, June 4, 2009

Tax Refunds Are YOUR Money

We tax all the others and pass the revenue on to you

Missouri is using $250 mil of its stim funds to pay state tax refunds. I have mixed feelings about that, trending to approval. MO wasn't supposed to use their taxpayers' money for something else, then say "It's gone now" when the refunds came due. OTOH, it honors its commitment to repay (California, how you doin?) and gets the money into hands that will spend it, the desired result of the stim in the first place. Still, it's quite a leap from "shovel-ready projects" to "here's your refund check" and thanks for the free money.

* * * * *

Daniel Ikenburg at the LATimes checks in with more accurate numbers and predictions than my own:

"(T)o merely break even on taxpayers' 60% stake, GM will have to be worth $83 billion (60% of $83 billion is $50 billion). How and when will that ever happen? At its peak in 2000, GM's value (based on its market capitalization) stood at $60 billion. Thus, the minimum benchmark for "success" will require a 38% increase in GM's value from where it was in the heady days of 2000, when Americans were purchasing 16 million vehicles per year. U.S. demand projections for the next few years come in at around 10 million vehicles. Taxpayer ownership of GM is something we should all get used to, and the "investment" is only going to grow larger. Think Amtrak."

Wednesday, June 3, 2009

And On Your Left, The Working Girls Of...

We tax all the others and pass the revenue on to you

Ben Bernacke (BennieB) told the House that rising deficits are a serious problem. Still, he likes TARP and thinks the economy will turn around later this year. In the next seven months, that is. The deficit has grown out of control in the last six months and he is an author of that policy. Which is it, Ben, deficit bad or TARP good? Can't have it both ways.

* * * * *

Harry Reid brought $60 mil in stimulus pork to northern Nevada for a tourist train to compete with the existing non-subsidized tourist train. Think about it for a moment. You have a successful business, never took a dime of gummint money, and now the gummint is going to fund a new competitor with your tax money.

The new train has a different route, though. It's going to go by some of the famous northern Nevada brothels. You could NOT make this stuff up. I guess it's safer than driving out there drunk. That must be how they dressed up the fact that this is supposed to be from the highway fund.

At the same time we learn that the highway fund is nearly broke. Reuters reports Oklahoma's Senator Imhofe saying the following:

We recently learned that the Highway Trust Fund will run out of money some time before August of this year, and will require an infusion of $5 to $7 billion to get through the rest of fiscal year 2009," said Oklahoma's James Inhofe at a confirmation hearing for the next federal highway administrator.

But there's always money for a quick train trip to see the girls. I bet the existing train owner never thought he'd see the day.

This kind of spending makes no fiscal sense. None. It is thievery. But it buys votes and at the end of the day that's all our pols care about. It puts Harry Reid and his ilk in the same class as the working girls the train will visit except that the girls are more honest about it.

* * * * *

For a sobering and realistic l0ok at the future of GM under the gummint's thumb, you really need to read David Brooks' NYTimes column today. His concluding paragraph is compelling and chilling:

The end result is that G.M. will not become more like successful car companies. It will become less like them. The federal merger will not accelerate the company’s viability. It will impede it. We’ve seen this before, albeit in different context: An overconfident government throws itself into a dysfunctional culture it doesn’t really understand. The result is quagmire. The costs escalate. There is no exit strategy.

GM as Vietnam or Iraq? I hate that his comparison makes sense.

* * * * *

New Chrysler gets away with it after all. The gummint's position is that New Chrysler has to repair faulty vehicles but has no liability to people who were killed or injured by vehicles built by Old Chrysler. Sweet.

I will never, ever again buy a GM or Chrysler product.

Your mileage may vary, but why would it?

* * * * *

Sorry Fiat, not quite yet. The sale of Chrysler has been put on hold to examine a complaint that some pension plans are being gravely disadvantaged by the sale, to the advantage of the UAW. There is a set of bankruptcy rules/laws that govern how creditors are treated in bankruptcy. The car czars have simply ignored them. Sorry, you can't do that. If the UAW is a creditor then it takes its chances along with all the rest of the creditors.

* * * * *

Have you been postponing your death until 2010 to take advantage of the estate tax exemption for that year? You didn't really think it was going to happen, did you? It isn't. The gummint lied. 2010 will have the same estate tax rates as 2009, so go ahead and plan your death accordingly.

* * * * *

In my home state of Oregon the legislature wants to increase the highest marginal tax rate to 11%. Only nailing the rich folks, don'cha know? Trouble is, Oregon has an active ballot initiative system. It can be problematic at times but it lets Oregon citizens directly affect the actions of their legislature. It is very, very unlikely that a tax raise could survive such a ballot box challenge.

In Eugene, the nearest city of any size to where I live, the county commissioners recently turned down a proposal to use allocated funds to re-open 84 jail beds. They did, however, vote themselves new assistants and furniture. 3-4 days later a convicted sex offender was released after doing three hours of his sentence because there was no place to put him. Three hours! A few hours later he kidnapped and raped again. Where's the outrage?

Now imagine asking for higher taxes after ignoring the safety of citizens while pols feather their own nests. Sure, the legislature is crass enough to do it -- being just pols who have oozed up from the city/county level -- but the people cansuccessfully oppose it via the ballot box.

This is another in a long line of examples of why the secret ballot is, or should be, sacred to all Americans... and why there is a movement to take it away from us.

* * * * *

I'm proud to pay taxes in the United States; the only thing is, I could be just as proud for half the money. -- Arthur Godfrey

Monday, June 1, 2009


We tax all the others and pass the revenue on to you

Oops #1: Remember how the administration was going to repatriate all those companies that are hiding income in tax havens and get them on US tax rolls? Well, um... turns out that the list includes bailed-out companies like GM and GMAC and the big banks like BofA. According to Elizabeth Macdonald at Fox Business News, BofA (bailout sum = $142 bil) has 101 off-shore tax havens, Citigroup 411. Read it, it's a good article. So, repatriate them and make them pay higher taxes or leave them alone to help them regain some semblance of profitability and maaaybe someday get some of our money back? Hey, it's only money, but it's your money. Don't bet on getting your money back any time soon.

Oops #2: According to WebCPA. The IRS invested two years of effort and $19.5 mil of your bucks - half of it on new hardware and upgrades - on a new internet portal with all the bells and whistles. It had lots of cool stuff, too, like "My IRS Account" and the like. Didn't work, though. No one had first asked what they needed or tried to make it compatible with current or projected equipment. Don't believe me, read the article and then get mad.
It's only money.

Oops #3: We're up to eyebrows in GM but we're told we're saving jobs, right? After filing Ch. 11 today GM announced the closing of 17 plants and parts centers with the loss of 20,000 more jobs. Will someone PLEEEASE tell me again why we're bailing out anyone, much less GM and BofA?

The prez said that the we are "reluctant shareholders" of GM. And I'm really reluctant. Note: Assets = $82 bil, liabilities = $172 bil, our investment = $49.4 bil and going up. Want to bet on which of the first two numbers is over-stated and which under-stated? Look for the correction somewhere in the back pages. Why bother telling us the truth now?

Would YOU buy a GM product? Chrysler? How about a Ford? Not likely. The Japanese and Korean cars (and just forget Europe) may not be perfect but they are known quantities. You can compare the brands at Consumer Reports and places like that. With American brands, you simply don't know where the bottom is and how bad they're going to get before that blessed day when things turn around. Yeah, that day.

Me? I just bought a 9-year-old Acura with 57k on the odometer. Bought it from a friend who bought it new. He has a newer one. One of the best favors anyone ever did for me.

GM and Chapter 11

We tax all the others and pass the revenue on to you

So GM finally filed for a Ch. 11 reorg. Who could have seen that coming? And only the night before the head of its 60% ownership group - the American people - took his wife out to dinner and a Broadway play... on your tax money. Just ask Mel Brooks: "It's good to be king."

* * * * *

There are around 610.5 million outstanding shares of GM stock. It closed up a nickle today, at $0.80/share on the penny sheets. We - you, me and the rest of America - own 60% of GM after loaning/investing/giving them 19.4 bil. Do the math: We paid 19.4 bil for an interest worth $342 million, an overpayment of 56 times its value. The administration just committed to propping up GM with another 30 bil. Total "investment" to date: $49.4 bil, an overpayment of 144 times its value.

There are 235,000 GM employees. If we had, instead, allowed GM to fail, locked the plants and given each of those employees $100,000 in tax-free cash to use to start their lives over our investment would have been $23.5 bil and this nightmare would be over.

But noooo. (Thank you, John Belushi.) We're in for $49.4 bil and counting and what did we get in return? An interest in a company that lost $6 bil in the first quarter, despite our initial $19.4 bailout. Who does this make sense to?

Let's review: We bailed out Chrysler which will be taken over by Fiat. Fiat isn't much of a car company but at least they're in the same industry. There is at least some tiny chance that the new owners will do a better job than the old owners or the owners before them, the Daimler Group. Fiat might succeed where Mercedes failed. Maybe.

We bailed out GM and WE'RE the new owners. The prez, TimmyG, Barney, Nancy, Harry, Chris and the whole Capitol Hill gang are our front men. Do you see anyone... any single one of this gang of blank idlers... who knows what to do NOW? Someone who might know how to design and market a new car and make a buck at it when the presumably world's best have just failed? No, me neither.

* * * * *

Whole new sections of the tax and bankruptcy codes are being re-written to make this bankruptcy seem to make sense. Of course, they will have narrow application, mostly to companies the government bails out. Doesn't matter that similarly-situated but not as favored debtors won't get that kind of protection.

That's a giant "WTF?" you just heard from Fiat. Seems that the enormous tax breaks that Congress is creating for GM won't be available to companies taken over by other private companies. Look for that to change or for Fiat to back out. You heard it here first.

The prez's only campaign issue at first was the Iraq War. Heck, he didn't even have much to say about Afghanistan, just Iraq, Iraq, Iraq. Remember?

Now that he's won the Iraq War all by himself he needs the war in Afghanistan to divert our attention from the ongoing economic calamity that he and his minions have engineered. (No offense to real engineers, none of whom have much influence on current events.)

So our "investment" (and would you knowingly invest in a company that is losing $2 bil a month at last count?) and the Ch. 11 are faits accompli. Now what? Who is looking after our investment now that we've made it? Congress, TimmyG, the car czar committee? Merrill Lynch, maybe? You know better than that.

Here's a useful rule for you: It's not an investment if you can't sell it.

Today's spin is that this will be a quick and painless bankruptcy and GM will emerge as a leaner, meaner car maker able to adapt to the new market realities. No, it won't. These are the same people who said they could deal with GM's bondholders and avoid a bankruptcy in the first place. The bankruptcy is a measure of their performance as much as of GM's.

We have squandered our descendant's fortunes and the money won't be coming back. To believe otherwise would be to believe that a bigger fool than the US government will come along and pay 144 times more than an asset is worth. Sorry, kids.

* * * * *

Capitalism without bankruptcy is like Christianity without hell. -- Frank Borman