Big 3 Bankruptcy

Bankruptcy law professor, Todd Zwicki, explains that Chapter 11 is a very good option for Detroit here. Unfotunately, Congress (and, for some unknown reason, the Bush White House) is unlikely to let it happen because:

Washington politicians who repeat the mantra that "bankruptcy is not an option" probably do so because they want to use free taxpayer money to bribe Detroit into manufacturing the green cars favored by Nancy Pelosi and Harry Reid, rather than those cars American consumers want to buy. A Chapter 11 filing would remove these politicians' leverage, thus explaining their desperation to avoid a bankruptcy.

Family Traditions

Can we please purge all persons named Bush, Clinton and Kennedy from our country's political consciousness? This is disgusting. Seriously, there are approximately 300M people in this country. Whataya say we try out some new folks? Side note: what are the chances that the anti-Palin crowd challenges "Princess" Caroline's resume?

The Economic Trojan Horse

It seems that most economists now agree that Keynsian policy (i.e., the use of fiscal stimulus to "jump start" the economy) is a load of horse squeeze. To quote the more refined Tyler Cowen, "The science isn't there." Ok, so why is it that everyone I hear from on the subject lately, from Obama to Krugman to the monotone bores at Market Watch, tend to step all over themselves in praise of Keynesian economics, while insisting that all we really need is a big, old-fashioned federal spending program that will "get us going" and "put us back on track..."?

The Aristocracy of Pull

Here is a great post from economist David Henderson. Like the saying goes, "it's not what you know..."

(Tip to Mike Rappaport at RightCoast)

Economics of Bubbles

Virginia Postrel explains:

First, beware of markets with too much cash chasing too few good deals. When the Federal Reserve cuts interest rates, it effectively frees up more cash to buy financial instruments. When lenders lower down-payment requirements, they do the same for the housing market. All that cash encourages investment mistakes.

Second, big changes can turn even experienced traders into ignorant novices. Those changes could be the rise of new industries like the dot-coms of the 1990s or new derivative securities created by slicing up and repackaging mortgages. I asked the Caltech economist Charles Plott, one of the pioneers of experimental economics, whether the recent financial crisis might have come from this kind of inexperience. “I think that’s a good thesis,” he said. With so many new instruments, “it could be that the inexperienced heads are not people but the organizations themselves. The organizations haven’t learned how to deal with the risk or identify the risk or understand the risk.”

And in related news, the Fed is expected to lower rates to "near zero..." Lovely.

If They Freed Me From This Prison, If That Railroad Train Were Mine...

The US prison population continues to grow. According to the report, 2.3 million Americans were behind bars in 2007, 1.5 percent more than in 2006 and a new record. The number includes about 780,000 people in local jails, 1.4 million in state prisons, and 200,000 in federal prison. Roughly one in five state prisoners and more than half of federal prisoners were serving time for drug offenses. Do you feel safer now? According to Jacon Sullum, we continue incarcerate our own at a much, much higher rate than any other western democracy. Uncle Joe Stalin would be, oh, so proud.

What is a Senate Seat Worth?

$6.2 Million.

Friday Funny

Like only Nick Gillespie can deliver:

The bad news for those of us who are alive in the post-American Century century is that we're witnessing a seemingly endless series of what I've come to call "national pants-shitting moments." By this term of art, I mean situations that are simply too terrifying and unbelievable to take at face value. To do so is to admit that things are just so existentially fucked that you almost literally lose control of your most basic bodily functions. Which is, I'm told by people who are supposed to know, what happens to you when you know you are going to die. I don't include horror shows like the Oklahoma City bombing or the 9/11 attacks in this category because they are plain evil, pure and simple. What's integral to a national pants-shitting moment (NPSM) is that as it unfolds, you're being told that what is plainly true is not in fact what's happening. And you really don't want to believe what you know to be true.

Whole thing well worth the read.

Che Chic