The NewGround Blog

Nanny State Stupidity from DC

See this Wall Street Journal article for details, How Washington Ruined Your Washing Machine, including why you can no longer buy a top loading washer rated better than “mediocre or worse” by Consumer Reports.  Note that in 1995, 13 out of 18 tested by CR were rated “excellent” and the other 5 were rated “very good”.  So, we progress from desktop computers to laptops to smartphones, with growing functionality in shrinking devices available at ever lower costs.  Meanwhile, thanks ONLY to government bureaucrats/over-regulators, those mechanical wonders comprising 75 year old technologies such as electrical motors, spinning tubs and rubber belts have degraded in performance and increased in price.

Ditto light bulbs, dishwater detergent, toilets, shower heads, ethanol-diluted gasoline, etc., etc.  See the 500 comments for some entertaining insights (and a few useful ones)!

Clayton Christensen: The Survivor

Superbly written and inspiring article at Forbes about the health challenges faced by highly regarded author and Harvard professor Clayton Christensen. Christensen’s influential book, The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail, is a must read for every business person, as it captures and explains the essence of the process of innovation, as well as its impact on competition. (I found this book to be far more useful in the context of developing and/or evaluating business strategies and investment opportunities than Michael Porter’s Competitive Strategy, a standard text for many business/competitive strategy courses.) The article speaks through the words of Christensen, his wife, his three highly accomplished adult children, his doctors and his colleagues and paints the picture of a person who not only has accomplished much, but also served as a model for how to live life by always striving to serve others. Don’t miss this article!


Bad News/Good News

From Zero Hedge regarding QEII – an unmitigated disaster.  Also, see banks face new headwinds.  Big trouble brewing, however the good news is that the bad news has to come before the good news, although there’s probably significant lead time involved.  The economy cannot really turn around until it clears the toxic assets (and in this case, many of the institutions holding those assets) that are currently blocking the normal recessionary drainage of economic waste.

Amazing Coincidence?

Or simply a reflection of endemic institutional fraud throughout America? The three articles referenced below appeared in My Google Reader inbox today, prompting these thoughts.

First, we have the AJC reporting that Fulton County has inflated housing values for tax collection.

“Morris filed suit against the Fulton County Board of Tax Assessors, alleging the county inflated values in scores of neighborhoods by using foreclosures seizures as comparable sales. The seizures, termed credit-bid sales, represent not money changing hands, but unpaid mortgages when a bank takes over a house. He also says appraisers are disregarding valid sales and arbitrarily setting neighborhoods’ average prices.”


Emory University law professor Richard Freer, an expert in civil procedure, said the argument for class-action status seems reasonable in this case, so long as Morris’ circumstances are common to every other overtaxed homeowner. There’s likely to be enormous political pressure on the judge not to make a decision that could devastate the county’s finances, but it’s his job to uphold the law, Freer said.

"If the county’s cheating, the county ought to be held liable," he said. "My guess is that if the class is certified, they’re going to get out the checkbook and try to settle."

Banks (SunTrust, BofA, Regions, Wells, etc.) use deceptive transactional structures to avoid the hits to their income statements AND balance sheets that would come from marking to market. Fulton County exploits the resulting overstated housing values established by non-monetary transactions to reap inflated tax revenues.  Why is there only a civil suit over this?

At the national/federal level, we have more evidence of corrupt CEO’s making fortunes at the expense of shareholders, but with their risks underwritten by taxpayers. (The paper he references documents that the CEO’s at the 14 Too Big to Fail banks pocketed – in hard cash terms – over $2.6 billion during 2000-08. Meanwhile, their companies’ shareholders collectively lost over $400 billion in market capitalization during the same time period. We taxpayers have ponied up multiple trillions to bail out their companies via TARP, Stimulus and Federal Reserve purchases of/loans against toxic assets. Add QE I and II to that and you’ve got some real money! We also know from numerous other sources that these CEO’s knew EXACTLY what they were doing in all respects, including their procedural documentation failures that may eventually and hopefully lead to some of them being put in jail.

To top it all, $1.3 trillion dollar investment manager Bill Gross opines today on the endemic corruption infecting DC. Key quotes:

“We need a President who does more than propose “Win The Future” at annual State of the Union addresses without policy follow-up. America requires more than a makeover or a facelift. It needs a heart transplant absent the contagious antibodies of money and finance filtering through the system. It needs a Congress that cannot be bought and sold by lobbyists on K Street, whose pockets in turn are stuffed with corporate and special interest group payola. Are record corporate profits a fair price for America’s soul? A devil’s bargain more than likely.”

“To rebalance debt loads and re-equitize financial institutions that should have known better, central banks and policymakers are taking money from one class of asset holders and giving it to another. A low or negative real interest rate for an “extended period of time” is the most devilish of all policy tools. And the asset class holder that it affects, or better yet, “infects,” is the small saver and institutions such as insurance companies and pension funds that hold long-term fixed income assets. It is anyone who holds bonds with coupons that cannot keep up with inflation or the depositor in a local bank who cumulatively holds trillions of dollars in time deposits that don’t earn a real rate of interest. This is the framework that has been created by modern-day policymakers who have innovated far beyond their biblical counterparts. To put it bluntly, they are robbing savers and taking money surreptitiously from longer-term asset holders who are incorrectly measuring future inflation.”

Pervasive fraud. Until Americans demand and/or respond to leadership that takes a principled stand against this corrosive corruption, the real estate markets cannot clear the toxic assets that poison them, and the economy cannot begin to heal. We need a Chris Christie in every governor’s office, Jim DeMint and Paul Ryan disciples throughout Congress and Rudy Giuliani-like federal prosecutors in every US district attorney’s office. Meanwhile, the Barack and Michelle tragedy continues its performance at 1600 Pennsylvania.

McChrystal Legacy – a case study for war college?

Stanley McChrystal is a liberal who voted for Obama and banned Fox News from his HQ TV. Which may at least partly explain how he became the first U.S. general to be lost in combat while giving an interview to Rolling Stone: They’ll be studying that one in war colleges around the world for decades.

From the incomparable Mark Steyn – Learning the rules of an unengaged president

One of those pictures worth several thousand words?

Each additional dollar borrowed is now generating a REDUCTION in GDP of almost $.50.   For more background and details, visit Nathan’s Economic Edge (h/t to Business Insider).

Dems Eat Their Own?

The Democrats are considering a parliamentary maneuver to brazenly and arrogantly avoid the “up or down vote” that Obama has demanded for Obamacare.  Should they decide to  do so, they will “slaughter” and “eat their own”, as the Wall Street Journal says more eloquently below, all for the sake of power.  Move over Jim Jones, let Harry and Nancy take over…and start passing out that kool-aid.

We have entered a political wonderland, where the rules are whatever Democrats say they are. Mrs. Pelosi and the White House are resorting to these abuses because their bill is so unpopular that a majority even of their own party doesn’t want to vote for it. Fence-sitting Members are being threatened with primary challengers, a withdrawal of union support and of course ostracism. Michigan’s Bart Stupak is being pounded nightly by MSNBC for the high crime of refusing to vote for a bill that he believes will subsidize insurance for abortions.

Democrats are, literally, consuming their own majority for the sake of imposing new taxes, regulations and entitlements that the public has roundly rejected but that they believe will be the crowning achievement of the welfare state. They are also leaving behind a procedural bloody trail that will fuel public fury and make such a vast change of law seem illegitimate to millions of Americans.

The concoction has become so toxic that even Mrs. Pelosi isn’t bothering to defend the merits anymore, saying instead last week that “we have to pass the bill so that you can find out what is in it.” Or rather, “deeming” to have passed it.

Why Government Needs Downsizing – Example #1 (many more expected!)

With nonsense like this going on, it won’t be long before even liberals begin demanding the downsizing of government – that’s the only effective way to limit it’s intrusion into our lives.

Troopers raid popular bars for unlicensed beers | Philadelphia Daily News | 03/08/2010

IT WAS ELIOT NESS and the Untouchables, as played by the Keystone Kops.

The alleged offense: Although the bar owners had bought the beer legally from licensed Pennsylvania distributors and had paid all the necessary taxes, the police claimed that nobody had registered the precise names of the beers with the state Liquor Control Board – a process that requires the brewers or their importers to pay a $75 registration fee for each product they want to sell in Pennsylvania.

Based on a complaint from someone the State Police refuse to identify, three teams of officers converged last Thursday on the three bars, run by Leigh Maida and her husband, Brendan Hartranft. Checking their inventories against the state’s official list of more than 2,800 brands, the cops seized four kegs and 317 bottles, totaling 60.9 gallons of beer, according to police calculations.

In fact, according to Maida, more than half the beer removed by the State Police was properly registered – but the cops couldn’t find it on their lists because of "clerical errors" or "blatant ineptitude" between the police and the Liquor Control Board, with whom the officers were conferring by telephone.

She estimated the total value of the confiscated stock at $7,200, representing about 20 brands, some of which go by multiple names.

For instance, the cops grabbed Monk’s Cafe Sour Flemish Red Ale.

The beer has been sold throughout the state at dozens of restaurants and distributors for the last seven years. The brand appears on the state’s online list as "Monk’s Café Ale." It’s on tap seven days a week at the Center City bar after which it was named: Monk’s Cafe, at 16th and Spruce streets.

But that wasn’t enough to keep the State Police from confiscating 20 bottles and three kegs of the supposedly illegal ale at the three bars run by Maida and Hartranft – Resurrection Ale House, at 2425 Grays Ferry Ave.; Local 44, at 44th and Spruce streets, in West Philadelphia; and Memphis Taproom, 2331 E. Cumberland St., Port Richmond.

Maida said that the State Police also confiscated bottles of Duvel, a popular ale imported from Belgium that is widely advertised and available in at least 200 bars throughout the city and suburbs. The beer appears on the PLCB list as "Duvel Beer," while its label reads "Duvel Belgian Golden Ale."

…She added: "It’s McCarthy-like. They swarm in here and confiscate this product because they don’t know what the product is."

Industry sources complain that brand registration is typical of the onerous regulations that make selling beer in Pennsylvania difficult. For example, while it is the responsibility of the brewer or importer to submit the necessary paperwork and registration fee, it is the tavern or restaurant licensee who may be liable for selling unregistered brands, they said.

How many lessons here?  Excessive regulation.  Small businesses screwed once again.  Government seizes private property due to the ineptitude of public servants who nevertheless demand that the rest of us pay their above market, exorbitant pensions for life.  And so on…