How about a weekend news chat show that won’t put you to sleep? It’s an all-star cast on this week’s “Meet the Blogs,” with Bill Whittle, Rick Moran, Andrew Ian Dodge, and yours truly. We cover Sonia Sotomayor, cars, and… something else. There’s a chance I need more coffee this morning.
You know what Saturday means — an all-new edition of PJM Political on Sirius/XM Satellite Radio. Or, just stream it from the PJ Media home page. On this week’s show:
Glenn Reynolds’ insta-take on Judge Sonia Sotomayor.
PJTV’s Bill Whittle interviews P.W. Singer, Senior Fellow at the Brookings Institution, on his new book, Wired For War: The Robotics Revolution and 21st Century Conflict.
Joe Hicks of PJTV interviews Kevin Roose, author of The Unlikely Disciple: A Sinner’s Semester at America’s Holiest University, which describes his semester embedded undercover at Jerry Falwell’s Liberty University.
And Ed Driscoll and I take on hyperinflation, weirdness at Chrysler, and Joe Biden.
We’ve also started a new feature called, creatively, “Five Questions for James Lileks.” Lileks gets no prep time, no hints, and no edit — and we throw five totally-random questions at him. It’s the sweatiest segment in radio history. Check it out.
On the new Week in Blogs:
Tucker Freaking Carlson?
You’d be surprised what kind of man doesn’t read Playboy.
The Taliban slinks away.
Plus, Andrew Sullivan drops to third place? Hey, anything can happen in the blogosphere. So take three minutes and enjoy. And give me a nice star rating, won’t you?
That’s my favorite headline above. Stole it from Dr. Johnson, an econ professor at Mizzou way back when. He worked in the Johnson (no relation) Administration and was a dyed-in-the-wool liberal, but he was always saying, “Money, money, money — I love it!” Great teacher, too.
I bring him up because one of my regular readers – and a smart guy, too – had this to say about GM’s bondholders getting screwed by the President:
Someone is going to get screwed, but I have a hard time coming up with a whole lot of sympathy for those bondholders. All those years of hearing about how they shouldn’t be taxed for capital gains at the same rate as people who work for a living has made me realize that it’s about fucking time that that “risk” they used to justify that difference probably should bite them on the ass in this instance. GM was a bad investment, and the government is being told that millions of jobs are less important than bond portfolios?
I’m empathetic to their plight, but I’m not sympathetic. Yeah, yeah, I’ll hear about confidence in the markets. But I think saving literally millions of jobs is a bigger confidence-builder than bailing out billionaires. It would be nice if we could do both, but it was the billionaires that got themselves into this mess. Bad investments have consequences.
Evil speculators, blah blah blah. Actually, most GM bondholders (or anyone’s) aren’t billionaires, they’re regular folks looking to save and make a buck. Although even if they were all billionaires, the point would remain the same. And I’ll make that point right now. Two points, actually, but they’re related.
1. All investment is speculation.
2. The secondary market makes the primary market possible.
The first point is easy. You invest, but there’s risk. The higher the risk, the higher the reward sought. Everybody knows that one. You also should bear in mind that no matter how risky (or safe) an investment might be, you always always always seek to minimize that risk. That’s not just the invisible hand or whatever, that’s human nature. And it’s a good thing.
The second point is a little more subtle, but nothing difficult to understand. And it applies to both stocks and bonds. When you buy a newly-issued bond from GM, you’re the primary market. If I buy that bond from you, I’m the secondary market. And if I didn’t exist, you would never buy bonds from anyone.
When you buy a bond in the primary market, whether it’s AAA stuff from the US Treasury or junk from GM, you seek to minimize your risk. You want the best price and return you can get, but just as importantly, you want to know that if you ever need or want to sell that bond, there will be a market for it. That’s the secondary market. In other words, if you change your mind and decide that GM’s (or Washington’s) management sucks, you’ll be able to find someone to give you cash for your bonds. Maybe at a discount, maybe at a profit.
But, and let me reiterate here, you wouldn’t have been a primary buyer unless there was at least the potential for a secondary buyer. You can call the secondary market a bunch of predators or speculators or greedy Jews, but remember Point One — all investment is speculative. And the presence of those evil “parasites” makes your “noble” investment both desirable and possible.
(Why some folks think that the primary market is all nice people and the secondary market is all pond scum is beyond me. Remember that with the exception of the occasional IPO or new stock issue, the entire stock market is a secondary market.)
And another thing…
During bankruptcy, bondholders get paid first for very good reason — they traded power for security. When you buy a bond, you get no say in how a company is run. Instead, your investment is secured by real assets. So your risk is less, but so is your reward — bondholders typically make less than stockholders when a company does well. Stockholders not only get a say in how a company is run, but they also can make some really wild profits. Of course, not being secured assets, stockholders typically fare worst when times are tough. That’s their higher risk.
So. If bondholders discover that their assets aren’t actually secured, or that the bond market has been corrupted, they will disappear. There are no fixed entities called “Bond Buyers” who buy and sell bonds because that’s what they do. No, if the bond market sucks, or appears to be rigged, those people will disappear. And they will take corporate (and public) finance down with them.
If no one buys corporate debt, then say goodbye to economic growth. And if no one buys public debt, then say hello to hyperinflation. And then you really will be looking at millions of lost jobs.
And yet another thing…
If GM goes belly up (which it’s going to do anyway, duh – they’ll file C11 on Monday), millions of jobs will not be lost. Let me repeat: GM could disappear tomorrow, and not much would change. GM barely employs 50,000 people anymore. And the people they do employ destroy wealth, they don’t create it — that’s the definition of a money-losing operation.
Bankruptcy allows GM’s assets to go to people who will, it is hoped, use them to create wealth — that’s the definition of a money-making operation. And if GM’s new owners can’t make a go of it, then the company will go away and, at the very least, stop losing money. Workers will find new jobs, because the economy will improve once we stop propping up wealth-destroying outfits like GM.
If Old GM goes away, in other words, we’ll all be richer. But we’ll all be poorer — like, Zimbabwe poorer — if we destroy or corrupt the bond market.
President Obama on health care:
President Barack Obama warned Thursday that if Congress doesn’t deliver health care legislation by the end of the year, the opportunity will be lost, a plea to political supporters to pressure lawmakers to act. “If we don’t get it done this year, we’re not going to get it done,” Obama told supporters by phone as he flew home on Air Force One from a West Coast fundraising trip.
Politics of fear, anyone?
Back in my old hometown, Left Bank Books has been an institution in St. Louis’ Central West End for… as long as I have, actually. We both showed up in 1969.
So when I heard about Jules Crittenden’s new Right-Wing Warmonger Bookshop & General Store, my first thought was, “He should have called it Right Bank Books.” Whatever you call it, it’s pretty damn cool. Check it out.
The Obama Administration continues to go after those evil corporate speculators:
Individual investors holding General Motors Corp. bonds won’t get a vote on the revised debt-swap offer unveiled by the Obama administration today, and would have to wait for bankruptcy to pursue any objections.
About one-fifth of the $27.2 billion in unsecured GM bonds that the government wants to cancel were sold to thousands of individual investors. A group representing some of those investors rejected today’s offer and vowed to fight it in court, saying it still gave the UAW a far better deal than other creditors.
Well, if by “speculators” you mean small, individual investors. But it’s not like the President has a choice:
“Once you get past the top 25 or so bondholders, the size of the holding drops off dramatically,” said a senior administration official speaking on condition of anonymity. “There are many, many, many small bondholders here, and they have to simply rely on contacting steering committee members or other sources for their information. It’s not practical for us to deal with them individually.
Indeed. Best then to screw them collectively.
We must be in the summer TV doldrums. Cruising through the new shows TiVo caught for us over the last few days, the two most promising were “America’s Got Socks” and “Quilt Whisperer.”
The White House is spewing BS on Porkulus:
“Using $27 million of Recovery Act funding, a public housing development in Washington, D.C., the Regency House, has undergone a green retrofit. As part of this upgrade, the building installed solar panels, a ‘green’ roof, a rainwater collection system, energy-efficient lighting as well as water conserving toilets, showerheads, and faucets. The greening of this building will allow the Regency House to save money in energy costs, while lessening their impact on the environment.”
In reality, the work done on the Regency House that was funded by the stimulus package amounted to $59,000 in parts and labor, according to Dena Michaelson, director of public affairs for the Washington DC Housing Authority.
The $27 million is the total amount given by the stimulus act to the Washington DC Housing Authority, the vast majority of which hasn’t been spent.
Russia is selling out its Syrian patrons to get their hands on some nifty Israeli technology:
Israel has agreed to speed up delivery of the UAVs Russia recently ordered. This is apparently in response to Russian willingness to cancel an agreement to sell seven MiG-31 reconnaissance jets to Syria. Russia refuses to comment, but it was also reported that the deal was in trouble because Syria was unable to pay for the aircraft, and Russian upgrades to other Syrian warplanes. But the Israelis are apparently willing to push the Russian UAV orders to the head of the queue, if they can be a little more certain that the Syrian air force stays obsolete.
There’s an important lesson in this — don’t count on Russia. Or, more broadly, choose your allies wisely, but stand by even the ones you chose poorly. Else you might find yourself without any allies at all.
ALSO: Russia is going to come out way ahead on this deal. The MiG-31 is a piece of crap, really, and by all accounts Israel UAVs are wicked dangerous.
It’s an all new episode of “Hair of the Dog,” the Monday morning quarterback for the Sunday morning chat shows. This week:
Sotomayor’s pre-spin cycle.
Hope and change and nukes in North Korea.
Hot senator-on-senator action.
Plus, the hush-hush secret the MSM doesn’t want you to know. Free, no registration required.
Healthier pizza? A suggestion:
Two words: “Less cheese.” As I’ve noted before, the modern trend of omitting sauce in favor of an inch of cheese is both bad for you, and bad pizza. If I wanted cheese toast, I’d order cheese toast.
The finest, maybe purest, pizza I know of is the classic Margherita. A razor thin crust with nothing on top but a drizzle of olive oil, tomato slices, a few chunks of fresh mozzarella, and whole leaves of just-picked basil.
Rocks ahead for Sotomayor’s confirmation? Read:
On top of that, Democratic Sens. Edward Kennedy and Robert Byrd are both ill and out of town a lot. Their absences have been noted already on other votes.
Plus, Sen. Arlen Specter, who recently switched from Republican to Democrat, said when he switched that he would not “be an automatic 60th vote.”
That said, a senior Democratic Senate aide told FOX News: “She’s going to be confirmed with more than 60 votes.”
The aide said Senate Republicans appear to be less critical of Sotomayor than some conservative groups.
“Groups will hit this hard. It helps with fundraising, but Senate Republicans don’t really appear to have the appetite right now,” the aide said.
That sounds about right — lots of sound and fury, signifying nothing.
Sotomayor is Obama’s first pick, plus she won’t really change the balance of the court. She’ll be confirmed, and probably pretty easily. So, if the President was looking to put a Silly Putty Constructionist on the court, he picked the right time to do it.
Of course, Sotomayor is still a lousy judge, and I don’t expect her to do much quality work, other than conclusively demonstrate that the Peter Principle is overly optimistic.
China’s dollar trap:
China’s official foreign exchange manager is still buying record amounts of US government bonds, despite Beijing’s increasingly vocal fear of a dollar collapse, according to officials and analysts.
In recent months, senior Chinese officials, including Premier Wen Jiabao, have repeatedly signalled their concern that US policies could lead to a collapse in the dollar and global inflation.
But Chinese and western officials in Beijing say China is caught in a “dollar trap” and has little choice but to keep pouring the bulk of its growing reserves into the US Treasury, which remains the only market big enough and liquid enough to support its huge purchases.
And therein lies the danger of an export-led economy — especially when your exports depend on the health of a single, large buyer. Doubly especially when your exports depend on the sense of that single, large buyer.
Japan got knocked around the same way, back in the ’80s and ’90s. They loaned us money (by buying our debt in great big numbers), with the expectation that we’d invest in education and infrastructure. That way, we’d keep growing enough to keep buying their stuff. Instead, we devalued the dollar so that we could keep buying their stuff. And Japan, Inc found itself on the wrong end of a very royal screwing.
But what was Japan to do? Something like one-fifth of their national economy was (is!) dedicated to serving American consumers.
Now it’s China’s turn.
So, it’s Sonia Sotomayor for David Souter’s old seat on the court. Quite possibly the worst pick the President could have made — if you believe in little things like the rule of law. Not a big surprise, however. I’ll have more on Sotomayor later today on PJTV‘s Hair of the Dog.
OOPS: Now this is no way to fight a lousy appointment.
Closing Gitmo might make President Obama popular in Europe, but less so here at home:
Forty-nine percent (49%) of voters nationwide now disagree with President Barack Obama’s decision to close the prison camp for suspected terrorists at the Guantanamo Naval Base in Cuba. The latest Rasmussen Reports national telephone survey, conducted after the President’s speech on Guantanamo last week, shows that 38% agree with his decision.
Just 25% share the President’s view that the Guantanamo camp weakened national security. Fifty-one percent (51%) disagree with that perspective.
Can anyone remember the last time Dick Cheney was on the popular side of anything?
It’s Meet the Blogs — the Sunday morning chat show so far ahead of the curve that it airs on Saturday. This week, host Bill Whittle keeps herd on Andrew Ian Dodge, National Review’s Mark Hemingway, and yours truly, all without getting a hair out of place.
Yes, Bill is just that good.
On this week’s show: Obama’s bromance with Bush, we want our OTV, and cheerleading Cheney. Free, no registration required.
How does PJM Political producer Ed Driscoll keep making the show bigger and better? Two words: Steroid injections. Here’s what’s on the show this week:
Fred Siegel of the Manhattan Institute on his new article at City Journal magazine, “H.G. Wells: The Godfather of American Liberalism.”
An all-new segment, Five Questions for James Lileks, where I try and stump the Real King of All Media.
From PJTV’s weekly National Security Review, Bill Whittle interviews syndicated columnist Austin Bay, along with Megan Ortagus and Cliff May, each with the Foundation for Defense of Democracies discuss Israeli Prime Minister Benjamin Netanyahu’s Monday meeting with President Obama at the White House, and Iran’s missile test on Wednesday.
Jim Geraghty of National Review’s Campaign Spot explores the ramifications of Tuesday’s special election in California.
Plus, Ed and I tackle the new CAFE standards and pick on mental cripple Joe Klein. Check it out.