Trifecta: Is the Obama Administration drumming good troops out of the military to save money?

Also, is there a Reardon Steel connection?

Less than two years after splitting with Steely Dan hetero life-partner Walter Becker, Donald Fagen made one of the all-time great concept albums, 1982′s The Nightfly. If you don’t own it, do yourself a favor and pick up a copy at once. And maybe a pair of absurdly expensive headphones to do it justice. Fagen created a masterpiece, and in almost nothing flat.

After that… nothing. For several years. Writer’s block.

All we got out of him between then and Kamakiriad in ’93 was a single from the soundtrack to Michael J. Fox’s Bright Lights, Big City. I haven’t watched that one in over 20 years, and just added it to the Netflix queue to see how it’s aged.

The song is called “Century’s End,” and if you were in your late teens to mid-twenties when it came out, it described exactly how we feared love and sex would look at the end of the century. A sample:

Scratch the cab
We can grab the local
Let’s get to the love scene, my friend
Which means look, maybe touch
But beyond that not too much
Dumb love in the city at century’s end

But then we didn’t all die of AIDS or cocaine and the ’90s turned out to be even more big fun than the ’80s were. But when the song came out, things sure didn’t feel like they’d turn out that way.

Typical studio perfection from Fagen, along with a sly lyric and a surreptitious little hook. The worldview might be dated, but the pangs of youth are still as real as ever.

Here’s today’s gotta-have-it-gadget… for astronauts:

NASA has doled out a research grant to develop a prototype 3D printer for food, so astronauts may one day enjoy 3D-printed pizza on Mars.

Anjan Contractor, a senior mechanical engineer at Systems and Materials Research Corporation (SMRC), based in Austin, Texas, received a $125,000 grant from the space agency to build a prototype of his food synthesizer, as was first reported by Quartz.

NASA hopes the technology may one day be used to feed astronauts on longer space missions, such as the roughly 520 days required for a manned flight to Mars. Manned missions to destinations deeper in the solar system would require food that can last an even longer amount of time.

“Long distance space travel requires 15-plus years of shelf life,” Contractor told Quartz. “The way we are working on it is, all the carbs, proteins and macro and micro nutrients are in powder form. We take moisture out, and in that form it will last maybe 30 years.”

Pizza Hut toppings last that long even without any special treatment.

Krauthammer:

wo IRS chiefs (Steven Miller and Douglas Shulman) insisted that the singling-out of groups according to politics was in no way politically motivated. More hilarity. It’s definitional: If you discriminate according to politics, your discrimination is political. It’s a tautology, for God’s sake.

The IRS responds that this classification was for efficiency, to cut down on overwork. Ridiculous. How does demanding answers to endless intrusive and irrelevant questions, creating mountains of unnecessary paperwork for both applicant and IRS, reduce workload?

We are further asked to believe that a cadre of Cincinnati GS-11s is a hotbed of radical-left activism in America. Is anyone stupid enough to believe that?

That’s why the IRS scandal has legs. And because pulling the myriad loose ends of this improbable tale will be the Senate Finance Committee, chaired by Democrat Max Baucus. So much for any reflexive administration charge of a partisan witch hunt.

You have to wonder if Baucus recognizes what kind of a train wreck he could be heading into. Or if he sees his job as providing bipartisan cover, or partisan gloss? And if Mike Lee can wrangle a seat at that table, I’ll DVR every minute of it.

Trifecta: What would you do with $590,000,000?

Tim Carney:

Senators are angry that tech giant Apple isn’t paying its fair share.

I’m not talking about taxes. This is about campaign contributions and lobbying fees.

An investigation by Sen. Carl Levin and a grilling of Apple CEO Tim Cook on Tuesday by the Senate’s Permanent Subcommittee on Investigations were ostensibly about Apple’s low tax bill. But nobody accused Apple of breaking the law. The company moved money around to minimize the tax it owed and then paid the amount the law required. Apple didn’t write the tax law or even lobby very hard to shape it.

And that’s just the problem. The grilling of Apple is best understood as a shakedown by politicians upset with Apple for not playing the Washington game that yields contributions, power, and personal wealth for congressmen and their aides.

Indeed.

I came by this article from John Gruber, who despite his otherwise doctrinaire liberalism starts sounding quite libertarian where Apple is concerned. There’s hope!

Get your “Moore Love” gear at Cafe Press, and all proceeds go to victims of this week’s deadly tornadoes.

Via TcotAudrey, whom I’m now pretty much required to start following.

Speaking of East Asian bubbles…

China’s manufacturing is contracting in May for the first time in seven months, adding to signs that economic growth is losing steam for a second quarter.

The preliminary reading of 49.6 for a Purchasing Managers’ Index (EC11FLAS) released today by HSBC Holdings Plc and Markit Economics compares with a final 50.4 for April and the 50.4 median estimate in a Bloomberg News survey. A reading above 50 indicates expansion. A separate Markit index (SHCOMP) for euro-area services and factory output increased more than forecast.

China needs to generate about 25 million jobs a year just to stay even, and to keep the Party popular enough to maintain a peaceful rule.

Nowhere to go but down:

While central bank policy is supposed to be focused solely on maintaining full employment and price stability, boosting the equity market has been a furtive goal of monetary policy—generally not part of Open Market Committee discussions but never far from mind.

That surreptitious relationship came further into the open at the April 30-May 1 meeting, when Fed members discussed Wall Street expectations for the historically high level of central bank easing.

“A few members expressed concerns that investor expectations of the cumulative size of the asset purchase program appeared to have increased somewhat,” the meeting minutes stated, noting further that those expectations have come even though the unemployment has dropped.

In other words, this big rally we’ve been enjoying isn’t due to any expectation of real growth. Wall Street is hooked on stimulus, and needs ever-increasing doses to keep going.

Reminds me of what a friend told me cocaine is like. (I’ve honestly never touched the stuff; scares the crap out of me.)

Imagine your baseline of ordinary happiness. On an average day, you feel X amount of happy. We’ll baseline that at zero. You snort some coke, and you shoot up to ten points above the baseline. Nice. When you come down, however, you drop two points below your baseline. So you do a little more blow. This time it only boosts you up nine points — but, hey, that’s still seven above the zero mark. Then you drop down to negative three, and the next snort only takes you up eight, to plus five. It’s not long before you need to do massive amounts of coke just to try and reach up to zero.

Wall Street is on that third snort — still above water, and not likely to drop too far down. But it’s counting on an endless supply of cocaine from Ben Bernanke.

Oops. I mean money.

No, I mean cocaine.

Lego want:

Before us is an X-wing fighter — full-size, an 11-foot-tall and 43-foot-long replica, 42 times the size of the LEGO X-wing you can find in the store (Star Wars set #9493, if you must know). We meet Eric, one of a select few “master builders” who work full-time for LEGO creating large models like this one for store displays and media events. Eric leads Nate under and around the model, explaining that the X-wing took 32 master builders more than 17,000 hours to complete, using 5,335,200 LEGO bricks. The result is nearly 46,000 pounds, with a wingspan of 44 feet.

Not the X-Wing. I mean, I want that, too — sort of. But mostly I want that Master Builder gig. And 5,335,200 Lego bricks.

Don’t you?

The Tax Policy Center has a gentle reminder for you after the Senate’s little anti-Apple tax circus the other day:

Because Apple is so profitable, the dollars involved will certainly attract attention (this is a Senate committee after all, so that is the point). The report alleges Apple reduced its U.S. corporate income tax by an average of $10 billion-a-year for the past four years. Since the corporate levy generated only about $240 billion in 2012, $10 billion foregone from one company is a very big number indeed.

But while it added a few interesting twists, Apple cut its taxes with the same tools multinationals have been using for years to minimize their worldwide tax liability. And if there is a scandal, I suppose it is the very ordinariness of these transactions. Apple’s tax avoidance shop, it seems, is a lot less innovative than its phone designers.

Again, this goes to something we’ve talked about a time or two in the last few weeks, and that’s the undue attention given to finance. Tax avoidance is a part of that.

Apple is a smart company, devoting its best brains to producing insanely great products — not to complicated tax avoidance schemes. How many more great brains could how many more great companies hire to create great products, if so many of those great brains weren’t being half-squandered on things like gaming the tax code and credit default swaps?

This is a real problem, and it’s a natural outgrowth of many bad public policy decisions. Good on Apple for doing the right thing, and bad on government for making Apple the exception.

Is Japan 2013 just a rerun of America 2007? Hmm:

Japanese equities were basically the hottest major asset class in the entire world before today’s bloodbath, posting 20.9% cumulative gains over the past three months alone.

Last night, though, sparked by the first notable sell-off in three weeks in American stock markets – and really driven home by new data overnight that revealed the Chinese manufacturing sector has unexpectedly dipped into contraction – the Nikkei 225 plummeted 7.3%, marking its biggest single-day drop since the earthquake that ravaged Japan two years ago.

That takes the Nikkei back to levels not seen since May 9 (it’s been moving quickly on the way up).

At least one analyst finds the drop-off in Japan reminiscent of the Lehman Brothers collapse in 2008 that unleashed turmoil on markets.

“Lehman-like in Japan,” writes Société Générale foreign exchange strategist Sebastien Galy in an email this morning.

We’ve been assured for months now that BOJ’s massive fiscal stimulus is just the thing to generate “real” growth in Japan’s long-moribund economy. Instead — pop goes yet another bubble.

If Japan wants robust growth again, it needs to end the cozy relationships between Tokyo and the keiretsu, do something about its rapidly aging population and shrinking workforce, and let the yen take care of itself.

Look, finance is important. But national governments around the world treat it as if it were the only thing. But finance is just one tool needed in the beginning of creating real wealth, which must still either be manufactured, mined, or farmed. Governments hinder all three methods, while juicing the finance side and wondering why nothing happens.

Huh. It’s almost as if this “recovery” had just been a series of giant, overblown bubbles. Our market open in less than two hours, and I wonder what Helicopter Ben might do between now and then.

Also, keep an eye out today on Jesse Colombo. He’s been calling this stuff for years.

Linda Feldman details four reasons Anthony Weiner is “no Mark Sanford.” Here they are:

• Weiner is trying to come back much sooner than Sanford did, two years versus four years.

• Weiner is aiming for a more prestigious job – mayor of the biggest city in the United States, currently held by Michael Bloomberg. Sanford had the good fortune of seeing his old congressional seat open up, allowing him to show a little humility as he ran for a job less prestigious than the governorship.

• Sanford had less difficult competition than Weiner does – not that Sanford’s political resurrection was a sure thing. Plenty of voters in South Carolina’s First Congressional District weren’t ready to forgive and forget. He had to compete in a runoff for the Republican nomination. Then in the general, he faced a well-funded Elizabeth Colbert Busch, sister of satirist Stephen Colbert. Toward the end of the campaign, Sanford’s ex-wife accused him of trespassing on her property, and the National Republican Congressional Committee stopped investing in the race. But the district was heavily Republican, and Ms. Colbert Busch was a political novice. Sanford won by nine percentage points.

• Perhaps the biggest issue weighing against Weiner is the “ick” factor. The “weiner” jokes are back, as voters are treated to rehashes of Weiner’s lewd texts and tweets sent to women he had met online. Back in 2011, when confronted, Weiner lied about his actions before admitting to them.

Those are all pretty compelling reasons, but I still get this feeling Weiner is going to pull this out.

Oopsies:

House Oversight and Government Reform Committee Chairman Darrell Issa said embattled IRS official Lois Lerner waived her Fifth Amendment rights and will be hauled back to appear before his panel again.

The California Republican said Lerner’s Fifth Amendment right to avoid self-incrimination was voided when she gave an opening statement this morning denying any wrongdoing and professing pride in her government service.

This is gonna get gooooooooood.

Longtime VP reader Toadold sent a link an an Austin Bay piece I somehow missed over at StrategyPage yesterday. It’s column-length, and as always Read the Whole Thing™, but here’s a little something on “System D” and the underground economy to get you started:

Apparently Greece’s government still doesn’t understand that spurring entrepreneurial creativity is absolutely essential to economic recovery. In a recent Bloomberg View economics column, Megan Greene dismissed headlines touting a Greek turnaround. Greece’s business operating environment “remains unattractive because of high levels of red tape, an unstable regulatory environment, an opaque legal system” and judicial corruption.

Greene’s list of Greek business afflictions would resonate with Neuwirth’s System D entrepreneurs. Rejecting poverty, they operate beyond the reach of crooked politicians levying confiscatory taxes. Rejecting poverty, they sidestep expensive legal business registration costs.

Fair bet The Great Recession and our onerous “authorized regulatory administrations” have vexed American debrouillards. Indeed, our System D has grown. In a recent New Yorker column, James Surowiecki asked why Americans didn’t report $2 trillion in income to the IRS. Economist Edgar Feige mentioned red tape and distrust of government. Irked Americans want to avoid regulators’ “elaborate hoops.”

This dovetails perfectly with something Glenn linked to a few years ago, but I can’t find the link. But I do remember the author’s main thrust, which is that when the middle class gives up on lawfulness, then it’s really all over for a country.

What Bay has written is yet another clear sign that that’s exactly where the middle class is headed.

Wired has an excellent writeup of the new Xbox One. It was just revealed to the public yesterday, but Peter Rubin got to spend some quality time with one over the last few weeks — the lucky bastard. It’s an impressive piece of hardware, like any new console should be. But here’s what I think makes it a winner:

When the 360 launched, smartphones hadn’t yet trickled out of the corporate world; Netflix was strictly a DVD delivery service; the “cloud” was something that got in the way of a suntan. (Hell, in 2005, people suntanned.) And a big part of the 360’s longevity was Microsoft’s ability not only to develop games but also to forge partnerships that took advantage of these new staples of online life. So as those deals proliferated, so did the things the Xbox 360 could do. People played Halo 3 on their Xbox, but they also watched Netflix. They bought Kinect sensors for controller-free experiences, but they also burned through seasons of Deadwood on HBO Go and caught sports highlights on an ESPN app. But all of this new functionality was built on patches and firmware updates. The 360 simply wasn’t constructed that way, so when the Xbox One was greenlit in the fall of 2011, “the decision wasn’t, ‘We need a gamebox,’” Whitten says. “It was, ‘We need a living-room experience.’” Built that way from the ground up.

This is Microsoft playing at the absolute top of its game (no pun intended). They’ve leveraged everything they’ve learned about gaming, consoles, services, and streaming, and worked them together into a single system. To call the Xbox One a mere “console” is to undersell what it is and what it does. This is an entertainment system-in-a-box, all for a few hundred dollars.

How was Microsoft able to do this, when they’ve pretty much flubbed every single other consumer device they’ve tried to build in the last few years? How did the company that build the ill-fated Zune with its infamous “Squirt” feature manage to get something so spectacularly right?

Trifecta: It’s the end of the Fourth Estate as we know it.

It’s the Absurdity Blogger Full Employment Act of 2013:

Former Rep. Anthony Weiner, whose career in public life came to an abrupt end when he sent lewd pictures to a college student on Twitter, jumped back into politics on Wednesday by announcing a bid for mayor of New York City.

“Look, I’ve made some big mistakes and I know I’ve let a lot of people down,” the Democrat said in a two-minute video announcing his bid. “But I’ve also learned some tough lessons. I’m running for mayor because I’ve been fighting for the middle class and those struggling to make it for my entire life. And I hope I get a second chance to work for you.”

I can’t wait.

That “American manufacturing renaissance?” Not so fast:

The anecdotes are nice, but the broader data just don’t bear it out. Manufacturing employment over the last 12 months has essentially been flat, stuck at around 11.9 million workers since April 2012. The industry has added around 500,000 jobs since the recession ended, but that’s a drop in the bucket compared with the 1.8 million manufacturing jobs lost from November 2007 through the end of 2010.

It’s not just employment that’s been sagging. Industrial production shrank 0.5 percent in April, according to new data from the Federal Reserve. Overall, the country is using about 77 percent of its total industrial capacity, nearly 3 percentage points below the 40-year average.

The latest bad news comes from the Philadelphia Fed’s report on regional manufacturing activity, which plummeted to a -5.2 reading this month. The average estimate of economists surveyed by Bloomberg called for a gain of 2. Anything below zero indicates contraction.

With the jokers we have in charge, never, ever believe the hype.

Full story with video here.

On the heels of EA’s announcement that it has zero, zilch, nada in development for the Wii U, the UK’s Matt Martin writes:

The Wii U has been defeated by the most humbling of challengers – consumer apathy. When the inevitable “Nintendo halts Wii U production” stories hit, the majority of those that bought the original Wii won’t even notice. The mainstream bought the Wii because it was a fun novelty, they didn’t buy it for a new Zelda game. What’s the Wii U’s novelty? That it does everything a current-gen console does but a little bit slower and with a Fisher Price tablet attached?

Retailers have given up on the Wii U. It’s not discounted at the supermarkets because they want to sell more, it’s been cut in price so they can get rid of it quickly. Software drives hardware sales. But there are no credible software sales because there are no games being released. Retail is desperate to sell anything, that’s why GAME is now selling sci-fi and fantasy books and HMV has cans of Coke and sweets at the till – anything to squeeze a penny out. They aren’t going to sit around and make space for a handful of Wii U games near the end of the year. They’ll be pushing the Wii U to one side to make more space for the Xbox 360, the PlayStation 3 and hopefully the PS4 and next Xbox.

One reason Windows Phones have fared so poorly is that consumers want iPhones, and retailers are paid handsomely by Samsung to push Samsung phones. That leaves Microsoft without consumer mind-presence, and without retail allies. Try it sometime: Go into a Verizon store and tell the salesman you want a smartphone, but you’re not sure which one. Odds are he won’t let you anywhere near a Windows Phone. Samsung’s spiffs are just too good.

If Nintendo finds itself in a similar fix, then it’s game over, man — game over.

Ralph Peters has today’s message of hope and change:

We don’t even know how many new states will emerge from the old order’s wreckage. But the Scramble for the Sand is on, with Iran, Turkey, treacherous Arab oil sheikdoms and terrorists Sunni and Shia alike all determined to dictate the future, no matter the cost in other people’s blood.

We had our chance to extend the peace and keep both Iran and Wahhabi crazies at bay after we defeated Iraq’s insurgencies. But a new American president, elevating politics over strategy, walked away from Baghdad, handing Iraq to Iran. Now it’s too late. If George W. Bush helped trigger the Arab Spring, Barack Obama made this Arab Winter inevitable.

He’s calling it “The Arab Collapse,” which is about as accurate a shorthand as anyone could manage.

My wife and I were watching Anthony Bourdain’s new CNN show last night, the episode on Libya. Even though we’re fans of the show, we ended up skimming through much of it. There wasn’t a whole lot of food to see, and the politics and the history were just so incomplete. The story seemed to be: Gaddafi is dead and everyone is happy. Maybe the country wasn’t as safe as it could be, what with all those guns and rockets left over from the Civil War — but that was about it.

If there was any talk of Benghazi or how the Islamists are steadily working to control whatever they can (or to fester in areas no one controls), we missed it. I’m afraid most of us in the West are missing it.