Mercury Rising 鳯女

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Archive for March 2nd, 2007

Leadership? What’s That?

Posted by Phoenix Woman on March 2, 2007

Most of you have heard by now that Francis J. Harvey, the current Secretary of the Army, has just lost his job as a result of the Walter Reed scandal. 

Now, note this passage of the AP story on Harvey’s forced resignation:

Harvey has been Army secretary since November 2004.

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He is the second consecutive Army secretary to be removed abruptly from office. In April 2003, then-Defense Secretary Donald H. Rumsfeld fired Thomas White, who had engaged in public disputes with Rumsfeld.

Got that?

From April of 2003, when Thomas “Enron” White was removed, to November of 2004 — during the first nineteen months of our invasion and occupation of Iraq — there was no one serving as Secretary of the Army.  

Then again, Donald Rumsfeld — the PNAC Platoon goon who was SecDef until recently — has always favored eliminating the separate branches of the US armed forces and putting them all into one conglomerate, so it shouldn’t surprise me that he didn’t think the Army Secretary’s job rated immediate filling even during wartime.

Oh, and by the way: 

The reason White was removed was that he opposed Bush and the PNAC Platoon on the question of Iraq.  He may have been corrupt as the day was long — he came to Rumsfeld’s Pentagon straight from Enron, where he ran a division of the company that specialized in “illusory” profits — but he drew the line at Iraq.

Posted in BushCo malfeasance, corruption, Iraq war, supporting the troops | Comments Off on Leadership? What’s That?

Friday Cat Blogging

Posted by MEC on March 2, 2007

Cats doing what cats do.

Friday Cat Blogging 03/02/07 - Alex

Friday Cat Blogging 3/2/07 - Lightfoot

Posted in Alexander the Great, Friday Cat Blogging, Good Things, Just for fun, Lady Lightfoot | 4 Comments »

He should go back to stalking Krugman

Posted by Charles II on March 2, 2007

I think it was SJ Perelman who said that whenever he asked his uncle for investment advice, his uncle said “Plastics!”  In fact, if one asked the uncle about the weather or what he would like for lunch, or whether war in Europe was likely, he’d say “Plastics.”

“We had to put a chain around his neck and tie him to the floor,” Perelman explained.

Now The World’s Stupidest Man(TM) has told us why the stock market went down a couple of percent earlier this week:

HERE’S THE REASON why world markets dropped so dramatically this week… Al Gore won an Oscar for his film “An Inconvenient Truth,” the documentary purporting the threat of global warming….

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On Monday morning, TXU (TXU: 66.46, -0.04, -0.1%), the Texas-based electric power utility, announced it would be taken private in a record-breaking $45 billion deal. Normally that kind of blockbuster would be bullish — it demonstrates that stocks are cheap and that money to buy them is plentiful. But by the end of the day the happy news flow about TXU had started to focus on an inconvenient truth. The company announced it was scrapping plans to build 11 coal-fired power generating plants, to head off lawsuits from environmental groups that would interfere with the $45 billion deal getting completed.

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One such group, the National Resources Defense Council, bragged that TXU’s decision proved “the business community…can’t simply ignore global warming and come up with sound business strategies.” Yes, God forbid that business should come up with sound strategies. Better to come up with unsound ones, such as scrapping 11 coal plants. Never mind that those coal plants could actually have been run as cleanly as any other kind, and a lot more cheaply…

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In China they’re worried about a different kind of warming — economic “overheating,” the silly idea that there can be too much growth, too rapidly, for a nation’s own good. The government agencies that try to shape China’s economy are constantly talking about various measures to slow things down there a bit. On Tuesday there were rumors about some new measures along those lines. In the past, such measures have always been just symbolic. But this time, the talk was of something very real: the imposition of a 20% capital gains tax…

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If you do the arithmetic, you’ll find that if investors still need to earn a 100% profit after taxes to make it worth the risk, they’ll only pay 89 yuan for that stock — not 100. That’s an 11% difference, which is pretty close to the 9% loss that Shanghai stocks took on Tuesday.

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Leadership of the new Democrat-controlled Congress has said over and over that it would like to repeal today’s low tax rates right now, and not even wait until 2011. Why? Because the Democrats want to raise extra tax revenues to fund all kinds of new government spending initiatives, which will take the place of the “sound business decisions” that the environmentalists so disdain. The irony is that hiking taxes won’t even raise revenues. The 1992 tax hikes didn’t.  (Luskin, Smartmoney, 3/2/07. No link available).

Keith Olbermann counted the number of errors in a Condoleeza Rice analogy of the end of World War II and the war to end all Saddams, Desert Schmaltz. Can you count the number of errors here?

Let’s start with the fact that the Clinton tax rise was imposed in 1993. Presidents are elected in even years, but inaugurated in odd years. The deficit of course dropped steadily after imposition of tax cuts until it became a surplus just before Dubya cut taxes. At which point, deficits reappeared. The CBO says they are largely due to tax policy, with much less due to the upfront costs of war and the very mild recession of 2001.

Is there any need to review the issue of how clean coal plants are?  Or that TXU doubtless had reached the decision to scrap construction of them– and so informed their purchaser– long before the merger? 

Next, no change in Chinese tax policy has been announced. It’s all rumor. But Luskin’s explanation of how rumored tax rates affect valuations was a one for the record books. Suppose you have a stock costing $100 and want it to rise to $200. Now a 20% capital gains tax is imposed.  Now the stock is only worth $89 to you. Why? Well, the math to explain this claim has not been invented, but as soon as it is, Donald Luskin will be proven right.

Then, finally, there is the claim that the Democrats want to raise taxes by an amount identical to the rumor that swept China, and the implication that will cause an 11% drop in the market. This is false on at least two levels. First, Democrats want to lower some taxes and raise others. They want to fix the AMT, amounting to a tax reduction. They want to raise the upper marginal rate on ordinary income and re-instate the estate tax, neither of which have anything directly to do with the capital gains taxes. And they wouldn’t be raising taxes from zero to 20%, but from typically 15%. But whatever they do has to get past a president’s veto pen, so tax hikes are not very likely over the next two years.

And finally, whatever they do with cap gains, Luskin has to explain why the stock market has outperformed under Democrats and, at least from January 2001 to mid-2005, done terribly under George W. Bush.

If there’s a crash, Luskin has all of his excuses lined up by rank and ready to march: a rumor in China, changes in tax policy that can’t happen for two years and may never happen, environmental pushback that time travels. The horror is that for many Republicans, this is the kind of brainless stupidity that gets their pulses pounding and their hearts inspired to prevent anyone from fixing the enormous messes they are creating.

God help us all.

Update: Here’s another reason TXU’s plans may have changed. The SEC alleges insider trading or, as its otherwise known, big shareholders defrauding little shareholders. That’s what The World’s Stupidest Man(TM) wants to save us from.

Posted in economy, GOP/Media Complex, Silly Republicans | Comments Off on He should go back to stalking Krugman

 
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