Attacking an Elephant with a Fly Swatter

According to CNN's latest summary of leaks, speculation and spin respecting the negotiations between House Republicans and the President over raising the debt limit:

It's time to "pull off the Band-Aid" and "eat our peas," Obama told reporters of the need for both sides to make difficult choices to address the nation's mounting federal deficits and debt. "Let's step up. Let's do it."

Noting that Republicans have pushed for decisive action on debt reduction, Obama urged them to compromise from their blanket refusal to end Bush-era tax cuts for wealthy Americans. The president said he'd be willing to push Democrats to do something they don't like -- reform Medicare and other entitlement programs that are the party's political legacy -- in an effort to reach his goal of trimming the deficit by $4 trillion over the next 10-12 years.

Of course, much of that "saving" occurs disproportionately in later years, with respect to which it's easier to get the numbers to say whatever you'd like.

Most importantly, it presently appears that such a grand deal -- saving $4 trillion over 12 years -- is too much for too many politicians to swallow, and is likely to fail.

But lack of agreement is not the most depressing aspect of this ritual. Keep in mind that experience and well-justified skepticism suggests that many of these savings will never materialize. But, even if they do, the grand, impossible deal would save only $333 billion per year.

Now ponder this: According to the Congressional Budget Office, the Federal Government is projected to run a deficit of $1.5 trillion for the current fiscal year, which ends with September. That is to say, a budget deal too radical and controversial to pass would amount to less than one-quarter of the Federal Government's deficit for 2011.

The CBO also has an estimate for the sum of the annual deficits for the next 10 years, 2012 through 2021. That number is just shy of $7.8 trillion. And CBO itself has little confidence that the deficits will be that small:

Those projections, however, are based on the assumption that tax and spending policies unfold as specified in current law. Consequently, they understate the budget deficits that would occur if many policies currently in place were continued, rather than allowed to expire as scheduled under current law.

Which is to say that if present practices continue, and promised spending reductions and tax increases never materialize, the 10-year deficit will be even higher.

So as you listen to the faux statesmanlike pronouncements from our leaders, consider that their most ambitious plan, now admittedly politically impossible, would do no more than cut in half the amount of additional debt that will accumulate over the next 10 years.

But the situation is actually far worse than these frightening numbers would suggest. Today, the average cost to the Treasury for borrowing is 2.5%. The average cost of the Treasury borrowing over the last twenty years is . . . 5.7%. If interest rates were to rise from their current historically low rates to the more reasonable 20-year average, then over the next 10 years interest costs to service the national debt would increase by about $4.9 trillion. That is, if interest rates return to more normal levels, the politically impossible 10-year deficit reduction "savings" of $4 trillion would be more than wiped out.

Have a wonderful day.

Be Afraid. Be Very Afraid.

You would do well to view the related videos.

It's obvious that the person being interviewed -- who's in a position to know -- knows that radiological weapons have been intercepted.

Unconnected to this specific story, in commenting on a New York Times article titled "A Legal Manual for an Apocalyptic New York," Professor Reynolds observes and asks:

Hmm. I’m all for preparedness, but I do wonder what’s spurring this flowering of interest among the authorities. If there were a Republican in the White House it would all be put down to paranoia. So if it’s not paranoia, then what is it?

Biggest Holder of Treasury Debt? The Gnomes of Constitution Avenue

The biggest holder of debt issued by the Treasury of the United States is no longer China, Goldman Sachs, or your 401(k) plan; it's the Federal Reserve.

Nothing to see here. Move along. Mumble monetary mantras: uncommitted bank reserves; banks aren't "reserve constrained"; quantitative easing.

Please keep in mind that the Fed also holds a bit over $1 Trillion in mortgage-backed securities nobody else wanted.

Lots of very bright fellows in expensive suits -- well-credentialed fellows anointed with the holy chrism of Wharton, Sloan, Kellogg, Tuck -- will tell you that this is just a liquidity adjustment, the exercise of another tool of monetary policy.  But there is a fundamental difference between selling debt to you and me and China, and selling debt to the Federal Reserve.  You and China have in common the fact that to purchase the debt, you must pay the Treasury in dollars, which you have to get from somewhere.  The Federal Reserve Bank, on the other hand,  intones "fiat denarii," and the "money" is created from nothing.  It comes into being because the Fed says so.

Fed holdings data is HERE, recent purchases (11/4 - yesterday) are HERE.  We confess that coffee came out of our nose when we saw that yesterday's Fed purchase was $1.6 Billion in TIPS, Treasury Bonds indexed so as to protect the holder against inflation.  A wise move.

In 2009 the entire world produced something like $70 Trillion worth of stuff.  Between yesterday morning and yesterday afternoon, $1.6 Billion new dollars were created to chase that stuff around.

If monetary policy gives you a headache, then you might prefer to ponder the fiscal situation.  Using Congressional Budget Office data and forecasts, here's a representation of the composition of the Federal budget over the next 60 years or so:

Have a great day!

It All Makes Sense Now

". . . guys want to be princesses sometimes."

OF COURSE they do.

Buy Gold

What happens if you send a trillion dollars or so chasing after reasonably-priced assets?

OOPS:

The analysis of this paper suggests that recent credit market prices are actually highly consistent with fundamentals. A structural framework confirms that bonds and credit derivatives should have experienced a significant repricing in 2008 as the economic outlook darkened and volatility increased. The analysis also confirms that severe mispricing existed in the structured credit tranches prior to the crisis and that a large part of the dramatic rise in spreads has been the elimination of this mispricing.

Nobody Expects the Mormon Inquisition

This is pretty inflammatory even for Californistan:

G&S Hires Girls

Hiring tips (from 1943) respecting employment of women. Our favorites:

Give every girl an adequate number of rest periods during the day. You have to make some allowances for feminine psychology. A girl has more confidence and is more efficient if she can keep her hair tidied, apply fresh lipstick and wash her hands several times a day.

Be tactful when issuing instructions or in making criticisms. Women are often sensitive; they can't shrug off harsh words the way men do. Never ridicule a woman -- it breaks her spirit and cuts off her efficiency.

"Thinking . . .

. . . the Unthinkable" is what this sort of analysis used to be called:

It is theoretically possible that the Israeli state, economy and organized society might just survive such an almost-mortal blow. Iran would not survive as an organized society. "Iranian recovery is not possible in the normal sense of the term."

The analysis of a nuclear conflict in the Middle East is from Anthony Cordesman of the Center for Strategic & International Studies. His conclusion is: "The only way to win is not to play." Lest that seem obvious, recall that it conflicts with the conclusion of Iranian "moderate" Ali Akbar Hashemi-Rafsanjani who has explained:

When the Islamic world acquires atomic weapons, the strategy of the West will hit a dead-end -- since the use of a single atomic bomb has the power to destroy Israel completely, while it will only cause partial damage to the Islamic world.

At Last: Inspiration Not Just for Episcopalians Anymore

More HERE. And we freely give credit where credit is due. You know who you are.

Let's Pretend It's Not Amnesty!

Source, via NRO.

Cheese-filled, bacon-wrapped, batter-dipped, deep-fried Hot Dogs

Just as you fear, and the whole darned recipe is HERE.

I desperately want some of these babies:



But that's only the beginning of the nasty goodness available at SUPERSIZEDMEALS.COM.

Neither children nor spouse should catch you surfing over there, and we'll just keep it between ourselves.

Better Living Through Advertising

You've probably already seen the news story about the morons in Boston who, to promote a cartoon series on Adult Swim, put light boards up all over the city. As CNN reported it:

BOSTON, Massachusetts (CNN) -- Authorities have arrested two men in connection with electronic light boards depicting a middle-finger-waving moon man that triggered repeated bomb scares around Boston on Wednesday and prompted the closure of bridges and a stretch of the Charles River.

Meanwhile, police and prosecutors vented their anger at Turner Broadcasting System Inc., the parent company of CNN, which said the battery-operated light boards were aimed at promoting the late-night Adult Swim cartoon "Aqua Teen Hunger Force."

Well, it turns out that Turner Broadcasting is not so easily intimidated. As reported by Scott Ott, the same fellows have come up with these clever ad gimmicks:

– Renting a 747 painted with the show’s name and flying it past skyscrapers in major cities

– Hiring young men to show up in malls, on buses and other heavily-trafficked areas who would suddenly whip open their coats to reveal a special vest with blinking lights, and begin shouting the theme song of the show.

– “Abducting” strangers, blindfolding them, forcing them to their knees and then broadcasting their videotaped “confessions” that they love the cartoon.

– Hiring young men to suddenly stand up on buses and airliners and loudly declare that the new cartoon is “da bomb.”

– Planting hundreds of improvised advertising devices (IAD) that would suddenly flash, make a loud noise and scatter thousands of promotional fliers all over the road or sidewalk.

– Mounting a “viral” marketing campaign in which dozens of journalists would each receive an envelope containing a white powder along with a note daring the recipient to hold his breath until the debut of the new cartoon.

–Calling the White House, Pentagon, Supreme Court and other famous places and claiming to have planted a “dirty bomb” on the front steps, which turns out to be a paper bag full of dog droppings with the show’s logo stamped on the bag.

Muslim is the new Gay

Mark Steyn opines:

This month, the CBC launches a new sitcom, Little Mosque On The Prairie. That’s a hit title, but I kinda wonder if the show itself will be quite as funny. I’m all for “edgy” “dangerous” comedy that “explores” “controversial” territory, and the interaction of Islam and small-town Canada would appear to offer rich and highly topical possibilities. But I wonder if in practice the joke won’t – nine times out of ten – be on the “irrational” fears and woeful ignorance of the white-bread hicks while the Muslims are droll and amusing about the deplorably provincial prejudices. In other words, if the mullahs will forgive me, Muslim is the new gay. A decade or so back, sitcoms began introducing gay characters who get all the sharpest wittiest lines. They’re curiously desexed gays (butter wouldn’t melt in their mouths, never mind anywhere else), just as these will, I’d wager, prove to be curiously deIslamized Muslims. But the intended impact is the same: to make Islam something only uptight squares fret about.