Lawrence.com

Robert Reich has a question:

"[GM's labor problem is] an almost impossible dilemma," said former labor secretary Robert B. Reich, now a professor at the University of California-Berkeley. "GM is a global company -- so for that matter is AIG and the biggest Wall Street banks. That means that bailing them out doesn't necessarily redound to the benefit of the U.S. or American workers.

"More significantly, it raises fundamental questions about the purpose of bailing out these big companies. If GM is going to do more of its production overseas, then why exactly are we saving GM?"

I love how all these super duper smart former government people never bother to ask the question until they are former government people. When they are in government, they insist on bringing home every mangy kitten they find because, good golly, if these companies go out of business well that would be bad. And so without considering any possible adverse consequences, they spend all manner of taxpayer money to allow the company to keep doing the kinds of things that got it in trouble in the first place.

Like this:

"While paying a U.S. autoworker with benefits costs about $54 an hour, a South Korean worker earns about $22 an hour, a Mexican worker earns less than $10 an hour and some Chinese workers can earn as little as $3 an hour, industry sources said. "

If US autoworkers demand more than $100,000 a year to do the same job a Mexican will do for a fifth of that, then they will lose those jobs, sooner or later, because the consumers have neither the responsibility nor the desire to support that wage differential(1). You want to keep jobs here? Immediately halve the salary of US auto workers. They'll still be making more than the average accountant, and for a job that's a lot easier.

But be that as it may, Reich has finally stumbled onto the truth: there is almost no such thing as a national company anymore, at least not a company of any size. That means that any bailout coming from the government is guaranteed to hurt the people under that specific government without any guarantee that they will receive any benefit from it at all.

Then again, I suspect the people who are supposed to benefit are those who run the bailouts and their friends, anyway.

(1) Which is precisely why, in addition to being economically stupid, it's morally wrong to use tax dollars to "save" them. What the government is saying is that since you won't voluntarily pay that extra money for a car, we are going to take your money and give it to the carmaker anyway. Oh, and not give you a car.

How to burn $7 Billion without breaking a sweat:

NEW YORK (CNNMoney.com) -- Chrysler LLC will not repay U.S. taxpayers more than $7 billion in bailout money it received earlier this year and as part of its bankruptcy filing.

This revelation was buried within Chrysler's bankruptcy filings last week and confirmed by the Obama administration Tuesday...

"While we do not expect a recovery of these funds, we are comfortable that in the totality of the arrangement, the Treasury and the American taxpayer are being fairly compensated," said the official.

It's a good thing the American auto industry was saved back in December, that's all I can say. Because if it wasn't, Chrysler might be in bankruptcy and GM might be implementing a plan to wipe out their shareholders and turn the company over to its debtors, the UAW, and Uncle Sam. And we know from sworn congressional testimony(1) that these things would result in the end of America as we knew it. Or something. In fact, all $7 billion bought was 4 months for Chrysler at a cost to the taxpayers of almost two thousand million dollars a month. I wouldn't call that "fairly compensated," but hey, government guys are smarter than me and are expected to know these things.

But there is plenty of good news, though as is the press' habit they are making it out as a net negative. Chrysler is bankrupt, Chapter 11, but the only way out of their current troubles is bankruptcy, and so the sooner they get into it the sooner they can get through it. If they should manage to lose their current piratical management class in that process, they just might get back to profitably making cars people wish to buy.

GM is issuing so many shares (and reverse-splitting 1-100) that their current shareholders will be wiped out. But their shareholders deserve to be wiped out, and the company could do far worse than being owned and run by its employees. Hell, they already have done far worse, which is why it is functionally bankrupt in the first place.

It's even good news that Obama saw where this whole process was going and put the kabosh to it rather than stringing it along with more taxpayer money. Even he realizes that the taxpayers can take only so much such compensation. And there will be no similar newspaper "bailout."

It would be nice if Obama's willingness to cut off the life support meant that he learned a lesson that his predecessor never seemed to grasp(2) and which needs to be applied all across government: you do not avoid pain by putting it off, all you do it raise its price. If we had allowed Chrysler to go through bankruptcy in December, they would probably already be through the process. Instead, it still lies ahead of us and our children get to pay compound interest on $7 billion dollars in perpetuity.

Now if we could apply that lesson to the banks, we just might be able to avoid a Japanese-style, decades-long depression.

(1) Dominated by the critical issue of private jets.

(2) Or maybe he grasped it but was content to make the whole thing someone else's problem.

The Mayan Templo de los Siete Muñecos is cool, but of less than maximum potential coolness when you get there after sunrise two days before the equinox.

When your Mexican guide jokes about the "chicken tacos" really being iguana tacos, he's probably not joking.

There was no way I was going to pay .70 a minute to websurf via satellite from the middle of the Gulf of Mexico. I only watched the news once, it was in Spanish, and I still don't know what Obama said nor the actress that died.

Black people really do have more rhythm than white people. There is a reason for the stereotype. And it's not just American white people or American black people.

There is no point in getting off the boat in Cozumel. Everything there is available in Puerto Progresso for 1/3 the price.

Any American who pays $75 for a "Segway Adventure" on the beach needs to be left behind as a matter of principle.

I could listen to a gray-headed Jamaican bartender all day, mon.

I'm back on my diet. Not that I gained any weight on the cruise - eating seafood and veggies two meals a day will not pack on the pounds. But I was amazed at how fat Americans, including myself, are compared to the rest of the world.

If you bring homework on vacation, you will do it, but it will not seem a chore.

Contraband Cuban cigars fit very well in the slide of a trombone.

Never try to throw books away on a cruise ship. On Tuesday I finished "War to the Knife," which had a broken spine when I received it via Amazon. I brought it on the cruise fully intending to throw it away, and I did, in my room. The cleaning guy took it out of the trash. On Wednesday, I threw it away again, and the cleaning guy took it out of the trash again. So on Thursday, I put it in a bag with a bunch of trash paper and threw it in the trash. The cleaning guy took it out of the trash a third time. So on Friday, I took it five floors up to one of the dining rooms, still in the bag, and threw it in the trash there. But I quickly discovered what looked like the trash was only a bin for napkins. No worries, maybe they'll get the hint and dispose of it. This morning at breakfast, Rogue sees the book sitting out on one of the tables. Apparently they pulled it out of the not-trash thinking someone threw it away by mistake. Next time, any book I no longer want I'll just leave in the ship's library, where it is guaranteed to never be read again.

There's no place like home.

JR Nyquist fails to account for a few:

A former KGB officer, Panarin made a splash by predicting that America will probably come under martial law by the end of 2009, and may fracture into several states by 2011...

If this should happen, foreign powers would intervene and the country would be split along geographical lines: California and the West would fall under Chinese control, Texas and the south would go to Mexico, and Russia would lay claim to Alaska...

Without the United States in the picture, Russia and China would be the dominant powers. They would dictate terms to the world. No country or group of countries could possibly stand against them. This is because Russia and China possess thousands of nuclear weapons...

Since I first read Joel Garreau's 1981 book, The Nine Nations of North America, I've been fascinated with its premise: North America may be three nations politically, but it is really at least nine economically and culturally. There's French-speaking Quebec in the north, Spanish-speaking MexAmerica al sur, tree-hugging Ecotopia on the West Coast. It does not take a genius to posit(1) that if America ever did break up, it would likely be along those lines.

That said, there seem to be a few things missing from the analyses of both Mr. Panarin and Mr. Nyquist. The easy ones are, well, easy: if China cannot control Taiwan, and if China cannot move millions of men quickly by ship, it has less chance of controlling California than does Costa Rica. In fact, the problems that would lead America to this manner of breakup flash double for China: they have dozens of ethnic groups and languages, none of whom would have anything constructive to do if their major customer disappeared. They share borders with nuclear Russia and India, and Japan is still in their way. Perhaps China can control North Korea. California is out of the question.

The same story in the south. Texas would hardly "go to Mexico." If Mexico lasts as a single nation for the next decade I'll be surprised. In fact, if Mexico was smart, they'd try to figure out a way to get Texas to conquer them. Any proposed North American Union is not Canada and Mexico taking over the US.

The analysis also fails to account for four smaller issues that I shan't expound upon: Russia's horrible demographics, its less-than-half-the-US population, Russia and China's underdeveloped economies, and whether Russia and China could get along if the US was not around. I'll just say I seem to remember there was a time when the USSR and the US were allies, and no one could stand against them...

But the idea that Russia could control Alaska - plausible on the surface because Russia could conceivably march troops across the Bering Strait - requires even more fanciful thinking. Russia and China, we are told, would dictate terms to the world because they possess thousands of nuclear weapons. I for one would opine that if Alaska ever broke from the US, it would immediately become the third nuclear power in North America. Texas might be the fourth. Even tiny Hawaii(2) might be able to offer some jet-fuel powered deterrent. Even after a breakup, some power called The United States - even if it was only made up of 20-some disunited ones - would be a nuclear power as well. If the United States ceased to exist, our nuclear arsenal would not, just like the USSR's did not when they became Russia and Ukraine and the Baltics and a whole handful of -istans. Russia quickly got control of the nukes, and foreign powers have wisely not tried to take over the parts spun off by the centrifugal collapse of communism(3) for that reason.

The devolution of the US(4) would leave a handful of angry, hungry nuclear powers on this continent. Perhaps we would nuke each other before anyone else tried to get involved, in which case, the Russians would be welcome to the smoldering ruins. But until that happens, any thoughts that the Russians and the Chinese might be able to expand their real estate markets in the wake of an American collapse have about 10,000 uranium-based arguments against them.

(1) Well, it does not take one to understand it, because I did.

(2) Though it's not really in North America.

(3) We have unwisely tried to do so after a fashion, an effort that probably died last year when Russian tanks rolled into Georgia. Territory is held by boots on the ground.

(4) Before anyone asks, I lay the odds at about 2% per decade going forward. Not very likely, but not out of the realm of imaginable possibility over the long term. Hey, things change.

See if you can find today's meme:

Obama says U.S. not winning Afghanistan War

Biden says West "not winning" in Afghanistan

McCain: 'We Are Not Winning' War in Afghanistan

US general says troops "not winning" in Afghanistan

So we started the war in Afghanistan in what? 2002? If we have not won by now, we have lost, and it's time to come home. It is a simple reality of history and of politics, and not unlike our own history, though sometimes we lose valuable insight by trying to make a morality play out of everything.

In 1776, the American population was not at all unanimous on breaking away from Britain. It was not even a majority view, though it was a large plurality. The rest of the people were either doggedly anti-independence (maybe 1 in 5) or completely apolitical. That was at the beginning, and if there was ever a chance to "settle" the Americans it was while the majority of them either supported Britain or didn't care.

However, as the war dragged on, as it affected more and more people in more and more ways, and as it became harder to stay out, more people chose sides, and once they chose, that was permanent. From the time a solid majority of armed, male Americans wanted independence, it did not matter what the British did short of killing them all, which was out of their power. Britain was going to lose America, and if not in 1776 or 81, then in 1812 or whenever they turned their heads to look at something else. Because the outcome was not in doubt, the faster they lost, the better for them in the long run.

Americans in 2009 are the Brits of 1781. We have years of war behind us. We have years of people choosing sides, of dead relatives, of passions whipped up by partisans. We have a generation of boys grown up whose sole purpose in life is to kill the Americans. The sides are drawn up, and there are no more hearts and minds to be won. Short of oppressing and driving millions from the country, we can no longer win in Afghanistan.

So why don't politicians see it that way? Because it's not a matter of history. Afghanistan to Washington is a puzzle, a challenge, a chance to show how clever they are and what great leaders they are. They truly believe that victory there is a matter of strategy rather than a matter of several million men with guns who do not want you. Surely a few more tweaks to our strategy will convince them that they were wrong to fight us, right?

"When you aren't winning in this kind of war," McCain says, "you are losing." I would say that if after billions of dollars and eight years, if you have not already won, you have already lost.

The make-believe Macho Man hath a plan:

Got a call this morning from [Randy Savage impersonator] J.R. Moore of St. Louis who told me that he had an idea better than President Barack Obama's economic stimulus plan...

Here's how Moore's plan works: Buy lottery tickets...

Unlike other lottery games, Moore says the Pick 4 has relatively good odds for a cheap price. If you play the numbers in exact order (in Moore's case 4-0-2-0) your chance of winning is 1 in 10,000. And a 50 cent lottery ticket can net you $3,000. Spend a buck and you'll make $6,000...

If everyone in St. Louis plays their home address in the Pick 4, Moore believes several local people each day will win -- especially considering that the Pick 4 has two daily drawings...

"That's a dozen or so people in St. Louis who could have $3,000 or $6,000 in their pocket each day," says Moore. "And what are they going to do with that cash? They're going to spend it!"

The press snickers at a wrestling impersonator's magic plan to save the St. Louis economy(1), but not only is it no stupider than Obama's stimulus plan, it is based on exactly the same faulty premise.

The bad premise is easy to see: no matter how the money is divided up, no matter what the odds, there is no money coming out of the lottery that did not first go into it. For every person who wins $10,000, there are 10,000 who lose $1. While there is economic activity - we have moved $10,000 around - there is no more value in the economy for it having been moved.

Obama's stimulus package is based on the same fallacy. Obama is going to spend, say a trillion dollars, which we are assured will create so many jobs that every American will be able to have 2 or 3 of them. Where is the money coming from? It is being borrowed from investors - investors who are therefore withholding that same money from some other borrower. Obama is simply borrowing a trillion dollars out of the economy, spending it back into the economy, and pronouncing the jobs thereby gathered into one place as "created."

The make-believe Macho Man's plan is silly, because all it does is move money around, celebrating the end result while ignoring the equal and offsetting costs. Obama's plan is the darling of politicians and economists all along the Potomac. The difference?

With Obama's plan, politicians and economists get to spend the money.

(1) And rightly so. It's actually worse than I let on above, as anyone who takes 1-10,000 odds for a 6,000-1 payoff is on the way to the poorhouse, especially if done en masse as 'the plan' posits. The Lottery is a voluntary tax on innumeracy disguised as a retirement plan.

Standard and Poor's warns we've only just begun:

SAN FRANCISCO (MarketWatch) -- The credit crunch may only be in its early stages and a bigger contraction in lending in coming months could have "serious implications" for the U.S. economy, Standard & Poor's Rating Services said Friday.

While politicians and others have complained that banks aren't lending, the data on outstanding credit in the U.S. only tenuously supports this idea, the rating agency said.

"What's behind the apparent difference between perception and reality?" Standard & Poor's credit analyst Tanya Azarchs said. "It may be that, while growth in overall credit was positive through at least third-quarter 2008, it has risen at a slower pace than at any time since 1945 -- far below the 8%-10% rate in most years."

Reading the third paragraph in conjunction with the first is enough to give one Orwellian fits(1); one cannot possibly have a "bigger contraction in lending" when lending has not yet contracted. That's like reducing your debt by refinancing your house to pay your credit cards and taking a vacation to Tahoe on all the money you will save in the future(2).

Assuming that credit is still expanding, then we are still doing nothing to deal with the underlying cause of our financial troubles: that people already have more debt than their incomes can support. Put into that light, one can see easily the absolute insanity of credit needing to grow at an 8-10% rate, year after year. Are there 8-10% more Americans each year? Of course not. Therefore each existing American is expected to take on 8 or 10% more debt every year in order to keep our economy healthy(3).

Perhaps that is why S&P is right for the wrong reasons. Americans cannot take on more debt, therefore they will take on less. When "the numbers" start to show an actual decrease in debt vis-a-vis incomes - and when our cultural expectations reflect an abhorrence of debt equal to our late love of it - then we will be ripe for a generation-long recovery.

In the meantime, I expect we shall see our waves of "contraction" and market panic, currently coming at quarterly iterations, becoming worse and worse and closer and closer, until the market our government is fighting so hard finally reduces our debt burden - our demand on future production - to a reasonable and manageable level.

I'm reminded of the words of Paul, given in another context: "When they say, 'There is peace and safety,' then sudden destruction will come on them, like labor pains on a pregnant woman; and they will not escape it." At least not until they can pay their bills without going further into hock to do so.

(1) Or to qualify one as an Obama budget whiz, assuming one has paid his taxes.

(2) still, it comes as no surprise to discover that something taken as axiomatic in Washington is only "tenuously" supported by facts.

(3) And they are expected to pay interest to their bankers on that amount, of course.