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Monthly Archives: October 2011

NBC Spells Ambien

October 31st, 2011 - 4:17 pm

Hair of the Dog: It was an extravaganza of disdain as Bob Schieffer treated Herman Cain with serious disrespect, Rick Perry relaunched his campaign and Ron Brownstein had a dire warning for Republicans — even if he doesn’t realize it.

Bonus: Meet David Gregory, cheerleader.

Dood-Frank Claims Another Victim

October 31st, 2011 - 11:36 am

Red Box customers are getting socked with a 20% price increase for movie rentals, all thanks to “an increase in operating costs, including higher debit card fees that went into effect October 1.”

Shut up, prole — Wall Street reform is good for you.

Cristina Romer details exactly what’s wrong with… maybe everything in Washington today. But that’s not what she thinks she’s detailing. Here’s her advice to Fed Chairman Ben Bernanke, thoughtfully published by the New York Times:

HOW would this help to heal the economy? Like the Volcker money target, it would be a powerful communication tool. By pledging to do whatever it takes to return nominal G.D.P. to its pre-crisis trajectory, the Fed could improve confidence and expectations of future growth.

Such expectations could increase spending and growth today: Consumers who are more certain that they’ll have a job next year would be less hesitant to spend, and companies that believe sales will be rising would be more likely to invest.

Another possible effect is a temporary climb in inflation expectations. Ordinarily, this would be undesirable. But in the current situation, where nominal interest rates are constrained because they can’t go below zero, a small increase in expected inflation could be helpful. It would lower real borrowing costs, and encourage spending on big-ticket items like cars, homes and business equipment.

Even if we went through a time of slightly elevated inflation, the Fed shouldn’t lose credibility as a guardian of price stability. That’s because once the economy returned to the target path, Fed policy — a commitment to ensuring nominal G.D.P. growth of 4 1/2 percent — would restrain inflation. Assuming normal real growth, the implied inflation target would be 2 percent — just what it is today.

Though announcing the new framework would help, it probably wouldn’t be enough to close the nominal G.D.P. gap anytime soon. The Fed would need to take additional steps. These might include further quantitative easing, more forceful promises about short-term interest rates, and perhaps moves to lower the exchange rate. Such actions wouldn’t just affect expectations; they would also be directly helpful. For example, a weaker dollar would stimulate exports.

You might look at Romer’s plan and think, “Brilliant!” Or maybe you swing the other way and shout, “Idiot!” I read it and I say: Hubris.

Romer assumes — and Bernanke is no better — that the Fed can wave its magic policy wand and get just the right amount of growth with just the right amount of inflation and then it will be able to switch off the inflation just before it gets too big.

Is there anything in the Fed’s 80 year history that should give Romer/Bernanke/et al. that kind of confidence? This is hubris, and it’s not just at the Fed. We have a powerful and overgrown capital city filled with men and women who are just sure they know better than you how to live your life, spend your money and run your business.

And Romer’s piece is evidence that the last three years haven’t humbled them one whit. They’ll have to be humbled at the ballot box.

President Obama morphs into a supervillian, trying to levitate the Georgia Pacific building, and the scariest thing in the world — all on another exciting episode of… The Week in Blogs!

Bonus: Coolest Star Wars photography evah.

Programing Note

October 28th, 2011 - 3:10 pm

I’ll be on the Tony Katz Radio Show at 6PM Eastern to talk OWS and filthy commies. Should be fun.

It’s Why We Buy Apple

October 28th, 2011 - 10:43 am

Now that is attention to detail.

Will They Won’t They?

October 28th, 2011 - 10:27 am

So now it turns out HP won’t sell off its PC business.

Whitman can stay. But the board has got to go.

Yet Another Obituary for Nintendo

October 28th, 2011 - 9:41 am

Every three or four years — coincidentally about 12 months out from the next console game upgrade cycle — it’s time to pronounce Nintendo dead. Well, it’s that time of year again, folks. The last six months were big trouble for the Japanese gamemaker:

Japanese gaming giant Nintendo revealed on Thursday that it lost $925 million over the six months ending in September due to a sharp drop off of game and console sales, even as healthy sales of Apple’s iPhone and iPad continue to establish iOS as an alternative gaming platform.

The company had previously warned in July that it would lose money during the first half of its fiscal year, but Thursday’s results were even worse than it had expected. Net sales for the period were 215.7 billion yen ($2.84 billion), down from 363.2 billion yen ($4.78 billion) in 2010. Net income fell to a loss of 70 billion yen ($925.4 million), much worse than the 35 billion yen loss Nintendo had originally forecast.

“Weaker than expected” sales of Nintendo DS and 3DS software and yen appreciation were cited as the main reasons for the variance.

What’s to blame for such bad numbers? Apple’s iOS devices are taking over casual gaming and Nintendo’s Wii and DS units are at end-of-life. Disruptive competition and bored customers is a deadly combination.

Previously, Nintendo had always found a way back — most spectacularly with the Wii. PS2 and XBOX nearly killed Nintendo a few years ago. So the company just didn’t have the resources to mount a high-tech competitor to the XBOX 360 and the PS3. Instead, Nintendo forged a different path: An easy-to-use, low-tech console. Best of all, the Wii was cheap enough to make that Nintendo made money on each one from the very first sale. Microsoft and Sony sell their consoles, at least initially, at a loss. They make it up on game sales and, eventually, lower manufacturing costs.

So what trick does Nintendo have up its sleeve for next year? It’s called Wii U. Rhymes, I think, with p-yew. It’s a console with cheap-looking iPad knockoffs for controllers. It has a touch screen! And lots of buttons! Two circle pads! A thumb pad! And a stylus!

Really? A stylus?

Everything that Wii was — simple, intuitive — Wii U looks to be something else. Do XBOX and PS3 controllers scare you, with their size and all those buttons? Wii U controllers are bigger and more buttony. Which screen do you look at — the one in your hands or the one on the wall? Why the hell do I need a stylus?

I just don’t get it. That controller is such a huge slab of a thing, my first reaction was, “My God, it’s full of stars.”

Now, maybe I’m wrong. I didn’t “get” the Wii when Nintendo first showed it off. Then I saw how anyone could just wave the motion-controller around and start playing games, and it clicked. The Wii U seems to have none of that charm. The U looks like a desperate Hail Mary pass. Maybe it will work, but…

I’m not saying Nintendo is done, but I am browsing forks.

Bad Lip Reading: The Mitt Romney Edition

October 28th, 2011 - 8:39 am
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Thank you for the bench.

Programing Note

October 28th, 2011 - 7:56 am

I’ll be on the Lincoln Brown Show at 10:20 Eastern/7:20 Mountain to talk politics and maybe drunkblogging.

No, that doesn’t mean I’ve started in already today.

Thanks. We Know.

October 27th, 2011 - 12:51 pm

Forrester to IT departments: Mac users are your company’s best employees.

That’s quite a turnaround from 2008, when Forrester said Macs had no place at all in the corporate world.

Silencing the Little Guy

October 27th, 2011 - 12:36 pm

Trifecta: How our primary system gives to the rich and takes from the poor.

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Videos at the link — well worth your time.

Euro Disunification

October 26th, 2011 - 10:56 am

It’s not exactly the lights going out all over Europe, but it is a stern warning from Angela Merkel:The Eurozone

In a dark blue jacket reflecting the mood in and about the eurozone, Merkel abandoned her usual cautious rhetoric warned outright of a war.

“Nobody should take for granted another 50 years of peace and prosperity in Europe. They are not for granted. That’s why I say: If the euro fails, Europe fails,” Merkel said, followed by a long applause from all political groups.

“We have a historical obligation: To protect by all means Europe’s unification process begun by our forefathers after centuries of hatred and blood spill. None of us can foresee what the consequences would be if we were to fail.”

Don’t get too worried. Merkel isn’t talking about sending the Wehrmacht — I mean the Bundeswehr — into Belgium. Rather, I’m sure she’s warning more generically about some future conflict like the one in the mid-’90s in the Balkans. Only this one would be in the mid-Teens. In the Balkans.

But that’s not to say that Germany isn’t taking any preemptive defensive actions:

Dr. Pippa Malmgren, a former economic advisor to George W. Bush and a former advisor to Deutsche Bank (DB). According to Malmgren, Germany has already ordered the printing of Deutsche Marks in anticipation of a possible withdrawal from the EU.

I was about to say Germany just got caught with its hand in the piggy bank — only it’s Germany’s piggy bank, isn’t it?

Very drunk at a party at Perry de Haviland’s Chelsea flat several years ago, I made a surprisingly cogent argument about why the euro was doomed to fail. Put short: A currency can be only as extensive as labor is mobile.

Put longer: Our fifty-seven states do just fine with one currency and one monetary policy, because when California is in the dumpster, people can and do move to where the jobs are, in Texas. But the 17 members of the eurozone can’t use a single currency and a single monetary policy. Because if France goes into recession while Germany is enjoying boom times, a million Frenchmen aren’t going to pack up and head east across the Rhine.

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We Never Even Used the Word “Ronulan”

October 26th, 2011 - 9:22 am

Trifecta: In which we treat Ron Paul seriously and respectfully.

Really.

The Germans will pay up! Europe is saved! Hooray:

Germany’s Bundestag lower house of parliament approved a motion to strengthen the euro zone rescue fund via leveraging on Wednesday, providing Chancellor Angela Merkel with the mandate she needs to negotiate at a key euro summit later in Brussels.

That’s why the markets are happy this morning. But look past the lede:

The vote is largely a symbolic measure that was widely expected to pass. The motion, introduced by Merkel in order to give German lawmakers the opportunity to review the proposals being discussed in Brussels, had the clear backing of most of her coalition.

As a rule, when there’s this much euphoria over a symbolic vote, that means you aren’t yet out of the woods. Not by a longshot. And remember, Greece is a big problem — but not nearly as big a problem as is Italy. And what’s going on in everyone’s favorite boot-shaped nation? Chaos:

The deepening divisions in Prime Minister Silvio Berlusconi’s coalition over how to meet European Union demands for more robust efforts to tame a $2 trillion debt are fueling calls for early elections.

Berlusconi reached an agreement late yesterday with Umberto Bossi, leader of the Northern League party and his key coalition ally, over raising the retirement age. To secure Bossi’s support, Berlusconi agreed to resign in January and hold early elections, newspaper la Repubblica reported today.

“Either this government is able to take structural reforms or we need another government,” Mario Baldassarri, chairman of the Senate Finance Committee and a former Berlusconi ally, said in an interview in Rome today. “We will see in the next few days or week” whether Berlusconi resigns.

I’m not sure the EU could afford to bail out its third-largest member, even if Rome were to straighten up and fly right for a change.

Earlier this morning on Twitter, Jim Pethokoukis wrote, “One bank predicted a disorderly Greek default would add 3pts to US unemployment.” Keep in mind, please, that an orderly Greek default, backed and blessed by the EU, would still mean a 40%-60% haircut for holders of Greek debt. And we still haven’t gotten around to taking haircuts for Spain, Ireland, Italy, Belgium, perhaps Hungary. Maybe France. Etc.

Meanwhile, on the other side of the world

We all know by now the standard-issue worry about China — too much debt-fueled building too fast, raising the risk of a hard landing. There’s an additional wrinkle to the story, too, one that might be more worrying, as it has a bit of the feel of the subprime mortgage debacle that took down the global economy just a few years ago.

We’re talking about a large, off-balance-sheet world of debt, China’s “shadow banking” system, which has grown to make up about 22% of all new financing in China, Barclays Capital reports.

The system is made up partly of bank loans, trust companies that “sell wealth-management products to the public,” Barclays writes, while also doing some lending on the side, along with similar loans using banks as intermediaries. This lending helps finance infrastructure, industrial and commercial projects and real estate.

This corner of the market is poorly regulated and opaque, raising worries about what dangers lurk within.

That’s Mark Gongloff at the WSJ, hardly a panic-monger. If a Greek default could boost unemployment up to 12%, what happens if China has a hard landing?

Closer to home, in California — where unemployment already is over 12% — the “Air Resources Board” is instituting the nation’s first cap-and-trade program. California already has some of the highest energy costs in the nation, and they’ll be going even higher.

Back east, the Fed is considering yet another form of stimulus. This time, Fed leaders want to find ways to reduce interest rates for home buyers. Never mind that interest rates are already at historic lows, that banks won’t make loans, and that potential homebuyers are either unemployed or already stuck with underwater mortgages. Ben Bernanke is going to keep pushing on that string, dammit, even as his policies are killing your parents’ retirement savings.

At least we aren’t Argentina. There, the just re-elected Peronist president Cristina Fernandez de Kirchner has gone to war against private enterprise. Hugo Chavez must be bursting with a mix of with pride and envy:

President Cristina Fernandez de Kirchner, in her first move since winning re-election on Oct. 23, changed a 2002 decree requiring companies such as Repsol YPF SA and Pan American Energy LLC to keep at least 30 percent of their export revenue in the country. Today’s decree, published in the official gazette, applies to future sales.

The decision by Fernandez, who nationalized the $24 billion pension fund industry and called for a limit on purchases of farmland by foreigners, is part of an effort to slow capital flight estimated at $3 billion per month that is draining central banks reserves. The policy may make it harder to attract foreign direct investment to Argentina that the United Nations estimates fell 30 percent in the first half of the year.

“These types of controls only discourage investment and thus hurt exports,” said Juan Pablo Fuentes, a Latin America economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. “The oil sector is already hampered by controls and regulations. This will only add to those problems.”

Here in the US, we’d never cripple our energy sector — unless, you know, we would:

• Shell recently announced it would scrap efforts to drill off the coast of northern Alaska; the EPA withheld critical air permits.

• A proposed EPA regulation would force the coal industry to install special materials inside smokestacks to clean carbon particles. It’s estimated this requirement would cost the industry $180 billion, causing the closure of coal energy producing plants resulting in the loss of hundreds of thousands of jobs.

• The Interior Department recently blocked plans for Mountain West oil shale development because it needed to study its effect on water, power and land-use issues.

It’s so bad, that even a slumping economy and a prolonged employment crisis can’t keep gasoline prices from near-record highs. Think about this: Demand is in the toilet while prices are in the stratosphere. Go on and blame the free market for that, twinkles.

Can’t anyone, anywhere, do just one damn thing right in this global crisis?

Programing Note

October 25th, 2011 - 5:29 pm

I’ll be on the RINO Hour of Power at 8PM Eastern with lovely cohosts Rick Moran and Jazz Shaw.

Who Lost Iraq?

October 25th, 2011 - 4:31 pm

Trifecta: Did the White House totally botch the Iraq exit?

Shop Talk — The OWS Edition

October 25th, 2011 - 2:19 pm

It’s not Gerald Ford claiming that “There is no Soviet dominance of Eastern Europe.” It isn’t nearly as bad as John McCain “suspending” his presidential campaign so that he could be seen sitting at a table with other famous people, getting rolled by Harry Reid. But it ain’t good, either. Here it is:

In a new interview, Democratic Senate candidate Elizabeth Warren claims much of the credit for the Occupy Wall Street protests sweeping the nation.

“I created much of the intellectual foundation for what they do,” the Harvard Law School professor and former Obama administration consumer advocate told Samuel P. Jacobs of The Daily Beast. “I support what they do.”

The National Republican Senatorial Committee, charged with helped Senator Scott Brown win reelection, jumped on the comment.

So I guess I have to take back my comment that the NRSC is totally useless — not that it takes a genius to hop on Warren for that one. But there’s something important here, and not one of the GOP candidates has shown the brains or savvy to see it.

The riots of 1968 gave us Richard Nixon. The Vietnam War had already claimed LBJ, and Nixon was never going to get to the left of Hubert Humphrey on that issue. So who was going to elect Nixon? “The Silent Majority,” by his own estimation — and he was right.

The Silent Majority was those great numbers of Americans who didn’t grow their hair long and make a pisshole out of White Lake or try to burn down Washington, Baltimore, Chicago and Louisville.

Most Americans aren’t like that.

Most Americans still aren’t.

As Occupy Wall Street/Detroit/Los Angeles/Mandalay wears on, it becomes uglier, more criminal, and less sympathetic. But President Obama has already sided, somewhat, kinda, with OWS. He can’t on the one hand, say “we are on their side,” and other the other brush them off as “just some kids in my neighborhood.” The President has taken his side, and it’s not with the Silent Majority.

What the GOP needs — and I think this is the person who will win the nomination — is a “law and order” candidate. Oh, the term is clichéd and self-defeating, but the sentiment is neither. If this incoherent mass temper tantrum goes on much longer, Americans are going to demand an end to it.

Of all the GOP contenders, Herman Cain has come the closest to taking on OWS, but “blame yourself” is hardly a winning campaign theme. The post-modern law and order mantle is still up grabs.

Will anyone take it?

PS I think Warren has just sealed her fate as the second Democrat to lose to Scott Brown in Massachusetts for the US Senate.

Tom Clancy Drool-Fest

October 25th, 2011 - 9:41 am

The F-15SE “Silent Eagle” is a hot little number from Boeing. Call it a “Generation 4.5″ fighter. It’s not super-stealthy like the F-22, but it does make use of radar-absorbing materials and internal weapons bays — resulting in a fighter much more stealthy than a standard F-15. It also doesn’t have the F-22s ability to supercruise, but it’s plenty fast. The Silent Eagle is meant for export to countries that don’t want to spend the money on the F-35. Countries like South Korea.

Here’s a promotional video made for our friends in Seoul.

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We Also Caught Cristiane Amanpour Napping

October 24th, 2011 - 5:58 pm

Hair of the Dog: Frank Luntz defines the impossible, Hillary threepeats, CBS shows you how to take the “news” out of “news program.”

Bonus: Meet the real Master of Disdain.

It’s Certainly the Talk of the Town

October 24th, 2011 - 2:32 pm

Trifecta: 9-9-9 — a great tax plan or the work of the devil?

We’re Big in Japan!

October 24th, 2011 - 10:08 am

Probably not even there anymore — Obama now has the worst approval numbers since Carter.

A Little Something for the Apple Haters

October 24th, 2011 - 9:29 am
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Thieves take POTUS TOTUS, Martini Mondays, and the totally lame return of Carnac the Magnificent — all on another exciting episode of… The Week in Blogs!

Bonus: Learn what it takes to support Obamanomics.

Friday Night Videos

October 21st, 2011 - 7:22 pm
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Someday, I will write the definitive essay about how New Wave saved rock’n'roll from its own excesses — shortly before choking to death on its own excesses. Meanwhile, in the next three minutes, enjoy everything right with it.

A Public Service Announcement

October 21st, 2011 - 1:08 pm

Hey, Paul Krugman? The rest of us have been talking about jobs for three years now already.

A Fistful of Meh

October 21st, 2011 - 12:19 pm

Marek Fuchs listened in to Microsoft’s earning call, and liked what he heard:

Here’s the deal: Microsoft’s business division saw an 8% increase in revenues. That’s not chicken feed. But it was–and this is key–especially gratifying to the company, considering the difficult year-over-year comparisons. In last year’s first quarter, Microsoft introduced a new version of Microsoft Office. Many business customers waited to buy in that first quarter, pumping up the numbers. This year, Microsoft beat those pumped up numbers by a nice length.

That is nice. And this Apple fanboy can tell you that Microsoft isn’t going away any time soon. Windows and Office are fully entrenched in IT departments around the world, and that’s not going to change. They’re also MS’s biggest profit centers. Apple isn’t going to encroach on that… maybe ever.

Explosive growth is where MS stumbles, and will stumble. Mobile and tablets are the big growth areas, and MS just refuses to compete. Windows Phone 7.5 Mango Human Hand and Ear Edition for Home is late to the party and struggling to get noticed. And then there’s Steve Ballmer’s insistence that a Windows tablet run full-fledged Windows 8. On a tablet! iPad 3 will be halfway through its lifecycle before MS gets out its first competitor.

And that competitor will prove to be something the market desperately unwants.

Microsoft is a nice, safe stock. A utility stock for the 21st Century. But the glory days are over.

Wars Not Make One Great

October 21st, 2011 - 8:54 am

Here’s your most misleading headline of the day: “Will Stunning Success in Libya Help Obama?” The headline is at RealClearPolitics, leading to David Remnick’s New Yorker column. And it’s not even really a question. Remnick comes right out and explains:

If, in 1992, George H. W. Bush could not rely on a successful hundred-hour war in Iraq––an operation carried out with military and diplomatic precision––to trump a relatively slight recession, Obama will have an infinitely more difficult time touting his résumé as Commander-in-Chief when millions are out of work and the signs of economic decline, gross disparity, and daily suffering are everywhere.

Nowhere did NY or Remnick ever use the word “stunning.” Hell, he never even wrote “victory.” That’s as bad a headline as you’re ever likely to see, and I expect better from the folks at Real Clear.

But let’s talk about why Obama’s leading-from-his-behind “victory” was anything but “stunning.” (I got so excited with the scare quotes, I almost put some around the word “was.”)

Back in 1911, Italy took Tripoli with 1,500 sailors. Italy, not Rome. And they did it in a few days, not months. They did it against the Turks, not just against the local Arabs who had a well-deserved reputation for fighting no better than… well, fighting no better than Italians. Yet the whole of Libya was in Italian hands in about seven months.

We needed eight months to beat Gaddafi? My friends, George W. Bush used to beat much tougher opponents in three-to-six weeks, tops. Three weeks, if he had access to the sea. Six weeks, if he needed to go all the way to Central Freaking Asia to kick some ass.

Obama needed two whole college semesters, minus Christmas break, to kill a guy who looked like Phyllis Diller in drag, but with more outrageous muumuus.

I’m glad Gaddafi is dead. So are millions of Libyans. Somewhere, Reagan is smiling.

But if this is a stunning victory, then I’m the Pope of Siam.