Issues & Opinions

Where to start?

The short-selling ban that is in place from yesterday through October 2 (or later) is an abomination. Not only is it bad policy in an absolute sense, it’s made worse by the cynical hypocrisy of those who begged for it to be put into place.

It’s one thing for an amiable boob like Patrick Byrne to whine about short-sellers and how they’re killing his company. I’m willing to give Byrne some small measure of benefit of the doubt, since finance isn’t his claim to fame. But when the chairmen of the Federal Reserve and the SEC, along with the former CEO of Goldman Sachs, now Treasury Secretary, start whining out of the same hymn book, they’re not serious, not believable, and are clearly playing to the idiots in the audience.

Short selling, the act of selling shares you don’t own, with the expectation that you’ll be able to buy them back later at a price equal to or lower than the price at which you sold the. Simple, really. And it’s got nothing to do with wanting to harm the company whose shares you’ve sold short. It’s simply an expression of opinion that the shares are overvalued, for one reason or another.

Selling short, then spreading false rumors against a company is an offense for which one can be pursued in a court of law. Funny thing, though - not selling short, then spreading false rumors against a company is also an offense for which one can be pursued in a court of law. If you do the verbal algebra, it becomes clear that selling short has nothing to do with the illegality of false rumors. And the law recognizes this - selling short is, in anything approaching sane regulatory times, not illegal at all.

Selling short can occur for many reasons, in many different contexts. Everyone I’ve read focuses on bets that a stock might or should go down. I’ll go you one better. For instance, to take a random example, let’s just say that the Investment Banking group in Goldman Sachs’ Chicago office were doing a public offering of stock for a client.

Such offerings typically include an underwriter’s option for an additional 15% of the shares being offered as “the green shoe”, to cover overallocations. Since an investment bank typically has no interest, and certainly has no requirement, to be an owner of stock in the companies for which it provides underwriting, if an offering looks successful, and the demand is high enough to make exercising their option for the “green shoe”, the normal action an investment bank takes is to sell short a number of shares equal to the amount of the green shoe, knowing that they’ll be able to replace those shares with the additional 15% for overallocation. If the stock has run up in the aftermath of the offering, better still - they can sell stock that’s more expensive than the offering price, knowing full well that they can replace it at the offering price. But at a minimum, they already know the price at which they can buy the stock in the future, so this isn’t a bet that the stock will go down.

Treasury Secretary Hank Paulson, having been the head of investment banking for Goldman Sachs’ Midwest Region (1983-1988), then managing partner of the Chicago office, followed by co-head of IB for the entire firm, can safely be presumed to know all of this.

Neither SEC Chairman Cox and Fed Chairman Bernanke has any experience in capital markets, but neither of them can assert ignorance of the role that short selling plays in the market.

And who’s been calling loudest for limitations on short selling? The investment banks, solvent and formerly-solvent:

Lehman:

Lehman executives complain that they have been singled out by hedge fund investors that are short selling — or betting against — their stock, and Mr. Fuld has called senior executives at competitor banks demanding that their employees stop criticizing Lehman.

Morgan Stanley:

The mood was far different at Morgan Stanley, which lobbied vigorously for the ban on short selling. The bank’s shares shot up 21 percent, to $27.21, on Friday. Analysts said the reprieve might be only temporary, though, because the firm’s business model still requires a big balance sheet and core base of deposits for financing.

Goldman Sachs:

…the SEC is this afternoon holding a meeting to “determine if they need to take further steps to curtail what both Mac and [Goldman Sachs CEO Lloyd] Blankfein characterize as improper short selling that is really causing damage to the share price of Morgan Stanley and Goldman Sachs.” Blankfein also spoke with Cox to complain of short selling of their stock, as did New York senators Chuck Schumer and Hillary Clinton, according to Gasparino’s sources.

And so on. Fannie Mae, Freddie Mac, Bear Stearns, AIG, and a host of others, all now functionally dead as public companies, claimed loudly, with much gesticulation, that short sellers, not their crappy business models or abysmal risk management, were the reason for the drops in their stock prices.

New York’s AG Andrew Cuomo:

Likening such traders to “looters after a hurricane,” New York Attorney General Andrew Cuomo Thursday said his office is investigating “a significant number” of complaints about improper short selling in shares of Lehman Bros., AIG, Morgan Stanley, Goldman Sachs and other financial stocks.

Cuomo said his investigation would use the New York state Martin Act, which subjects violators to criminal as well as civil penalties, to combat the illegal practices.

“The markets need to be stabilized,” Cuomo said. “And one way to bring about such stability is to root out and deter short-selling that is based on the spread of false information.”

Sorry, Spanky - you left one class of people out: Weather forecasters before a hurricane. Deter short selling based on the spread of false information? Sure - go ahead, although there are already laws in place to do that, so knock yourself out enforcing them, with my blessing and encouragement. Disallow short selling itself, as though there’s no valid reason for a non-rumor-spreading trader to do? Utterly stupid. And impressive only to the self interested (the banks) or ill-educated (all other non-bankers who’ve complained about short selling).

Applauded only by the greedy & ignorant? Must be a great plan, then. I’ll take all this addle-pated nonsense about “gangs of people getting together to sell shares of a stock” seriously when several things also happen:

• The same idiots decide to go after “gangs of people getting together to buy shares of a stock” (Cramer - I’m looking at you and everyone like you).
• Someone explains to me the difference between a short seller selling a share of stock and an actual holder of the stock selling a share of stock. The market neither knows nor cares.
• Which raises the question of what’s next? Disallowing down-ticks entirely? Disallowing any sale of the stocks of the protected 799 alleged-financial companies? Even by widows and orphans who actually hold shares? What is this, the Hotel California?

“Issue Two” (please read that to yourself in John McGlaughlin’s voice, for best effect)
Read the rest of this story »

Or, to be more correct, at least part of the system. Some of the time.

First, there was the Emperor AG and Premier Governor of New York, Eliot Spitzer, getting his, and a reasonable person could hope he’s got still more coming to him, given the pompous hypocrisy of the crusades on which he embarked before his fall.

Today’s news, however, on Alaska’s Ted Stevens, is equally satisfying to read. Charged with public corruption, and seemingly certain to be found guilty given the brazen and entitled nature with which he sought the spoils of his office, the only shame here might be that, at 86 years old, he’s unlikely to be incarcerated for the term he deserves, if at all. He’s been a national joke, most recently at least, for the Bridge to Nowhere pork fiasco, and his indictment cements his status as an embarrassment to Alaskans, Republicans, the Senate, and Americans.

Most people think that there’s a general presumption of innocence in America, but that’s only true within the court system, and in the issues that surround the court. I’m happy to report that my odds of serving on any jury of Mr. Stevens’ peers are zero, and I’m neither the judge nor the prosecutor in his case, so I owe him no such presumption.

He’s dirty, and the only thing better than having him indicted and removed from office would be to step back forty years, and take he and all other grandees of his sort out of the political process entirely. Glad-handing thieves, selling the citizens’ best interests for their personal aggrandizement, are among the lowest forms of life in America.

From the Los Angeles Times, via a WSJ email snippet this morning:

Los Angeles Times: While in private business, Mitt Romney — whose presidential campaign cites his record of closing state tax loopholes as Massachusetts governor — used shell companies in two offshore tax havens to help eligible investors avoid paying U.S. taxes, federal and state records show. Mr. Romney gained no personal tax benefit from the legal operations in Bermuda and the Cayman Islands, but his aides and former colleagues acknowledged that the tax-friendly jurisdictions helped attract billions of additional investment dollars to Mr. Romney’s former company, Bain Capital, and thus boosted profits for Romney and his partners.

Sadly, this tells me nothing I didn’t already know about Mitt Romney - he’s clearly a smart guy, and he’s clearly a competent businessman. Whether either of those makes him the best suited presidential candidate is both another thing completely and a matter which doesn’t concern me at all right now.

However, the intimation that there’s some undercurrent of hypocrisy here strikes me as overbaked by half - he used the system, properly & as designed, to benefit those to whom he had a fiduciary duty. The fact that he and his partners boosted their profits from having satisfied their clients strikes me as precisely the result he expected, and deserved.

Surely there are other crucial things about him we need to know, but this ain’t on that list.

Gad, I hate to seem to mimic the style of the “lovely and talented” John Edwards’ campaign, but my reaction to this morning’s news that Alberto Gonzales is resigning was, roughly, “What took so long?”.

No shock, but he’s being run out of town on a rail. Not alone among those with an opinion on the matter, I only think it’s a shame that he’s being run out for all the wrong reasons. The US Attorney firings? Pfft. Not a big deal - he, and the White House, have been well within bounds on the firings themselves, as previously discussed. Severe missteps, such as the McNulty Memorandum, should be considered embarrassments to him and the department, but are just horrifically bad administration, not criminal acts. As also previously discussed, his timid, goofy, and cackhanded defense of his boss, his office, and himself has been so inept that it’s been embarrassing to watch.

Never one to favor viewing people humiliating themselves (and thus, my aversion to most forms of reality TV), it’s been a cringeworthy handful of months, and the ordeal will soon be over.

Based on the WSJ story linked above and other sources, it seems there’s a race to the bottom of the barrel in search of his replacement. Homeland Security Secretary Michael Chertoff? What an awful choice he’d be, and not just because he looks like a character who could have played alongside Michael Keaton in Beetlejuice. He’s not obviously competent, and while that would make him a perfect stand-in for Gonzales, it would seem that now, in the last 17 months of the Bush administration, they ought to attempt to at least raise their game at the Justice Department.

Chertoff, far more so than the other choices mentioned in the WSJ article (Mueller, Johnson), strikes me a choice only slightly better than dragging Harriet Miers back out of mothballs and propping her up for yet another position beyond her scope.

Also odd, there were several names in the version of the WSJ story made available this morning (the link above is to a front-page version in tomorrow’s print edition, but earlier today it was the breaking news version). Louis Freeh and Ted Olson were both mentioned, and either of them strikes me as a potentially apt choice, so it comes as no shock to find them no longer on the list, as reported by the WSJ. The IHT version of the story, available here, retains mention of Olson, but also omits Freeh.

Like Rove’s resignation, the Democrats seem to have plans to continue their chase, harrying him as best they can in search of crimes not committed. Life would, I think, be far easier for the Dems if they just took what Bushies hand them on a silver platter (incompetence, ham-fistedness, PR stone-deafness) and ran with it, rather than inventing new crusades on which to wander. But that’s just me.

I bring you David Gross of San Francisco, who not only:

…asked his bosses for a radical pay cut, enough so he wouldn’t have to pay taxes to support the war.

but

In any event, his employer turned him down and he quit.

Which, I guess, good for him, standing up for his convictions that way and all. Left unanswered, at least for now, is whether federal taxes are levied on the wages of “guests of the Federal Government”. Why would I be curious about that? Because

Gross, 38, now works on a contract basis, and last year he refused to pay self-employment taxes.

All by itself, that doesn’t distinguish him from a lot of people. The AP story notes that between 8 and 10 thousand people fail to pay their taxes for reasons similar to those of Gross. Contained in the story, at a meta-level, is the fact that this particular non-Rhodes Scholar allowed the AP to write a story about him evading taxes. Nothing like calling out the IRS by name to get them to leave you alone. Posing in two pre-mug shots for the story? A priceless addition, though I’m sure the Feds could already have found him whenever and wherever they needed to.

Of course, these days, he won’t end up becoming a guest of the Federal Government:

Unlike the days when Thoreau was sent to prison in a tax protest against the Mexican-American War, modern war tax protesters rarely go to prison, according to tax resisters. The IRS may take their money from wages and bank accounts - with penalties and interest - after sending a series of letters.

“They’re very polite, which makes it a little boring,” said Rosa Packard of Greenwich, a longtime anti-war tax protester.

But if he thinks he is going to avoid collection of his taxes owed, by hook or by crook, after having trumpeted his resistance on a national newswire, he’s perhaps not smart enough to be gainfully employed, as a contractor or otherwise.

Will his protest, and others like his, have the desired effect? As James Taranto said in the OpinionJournal piece where I first saw this story, “Something tells us the economy will survive.”

Addendum - Mr. Gross expands on his and his fellow protesters’ thoughts and methods, with emphasis on the actual question I posed:

A frequent challenge to conscientious tax resisters whose resistance leads to fines and penalties is “won’t the government just end up with more in the end?”

The Ghandi quote that follows the snippet above is interesting and informative, if not completely dispositive.

Unlike Mr. Gross’ first commenter Ken (bottom), I have no desire to see Gross locked up, and wish him the best in what I consider to be a Quixotic quest, even though I disagree with it.

This month’s dose of stupidity, widely and deeply covered everywhere (really, Google it if you don’t believe me - 17 million items found as of this writing), is the Comprehensive Immigration Reform bill (a variation which will only find you 1,180,000 Google hits).

I don’t pretend to be able to add anything new to the debate that’s not been said before, but think it interesting to note here, for myself, what’s right, what’s wrong, and what’s wildly fanciful about the process of this bill, as it progresses to its conclusion.

First, a couple basics that inform my thoughts on the matter:

• Illegal immigration is just that - illegal, and it’s illegal for many reasons, not least of which is national security
• We, as a nation, have failed lamentably in securing our borders, and the Immigration Reform & Control Act of 1986 was an honest attempt to remedy that, providing amnesty for 3 million illegal aliens
• Depending on whose numbers you use, there are between 12 and 20 million illegal immigrants in the US today, most from Mexico and Central America
• Clearly the 1986 act failed in every meaningful way to solve the stated problem
• Undaunted, our legislative overlords are in the process of rushing through a new bill, to do the same thing, only larger by a factor of 3 to 6 times in scope
• Amazingly, they pretend to think that this time, it will work, when a three year old could argue that it won’t, and win convincingly
• Notwithstanding all the difficulties of this newly planned amnesty, uprooting 12 to 20 million residents and throwing them out of the country is too cold-hearted for most Americans, including me, to countenance
• So we’ve got a problem here, and some rational compromise is required
• Added for clarification: I don’t believe illegal immigrants, particularly from Mexico, come here primarily for the public benefits

However, the currently proposed immigration bill is assuredly not the compromise we need, and isn’t in fact a compromise at all - it starts on the side of aggressive generosity, and is now being whittled and wheedled (Pelosi - no skills tests, Bingaman - cut guest visa numbers from 400,000 to 200,000, risking calls for additional concessions and giveaways elsewhere, Bush - we can’t ask illegals to pay back taxes or fines) to become an even more toothless/worthless/harmful piece of legislation, one that will have the effect of throwing our Southern border wide open, and placing a drain on the country’s resources that will be bad for all, including the illegals presently here.

A page containing the summary status on S.1438 can be found here.
The full bill can be found starting here.

A quick look at the White House’s backgrounder page on the issue finds these nuggets:

President Bush Discusses Comprehensive Immigration Bill

“Immigration is a tough issue for a lot of Americans. The agreement reached today is one that will help enforce our borders, but equally importantly, it will treat people with respect. This is a bill where people who live here in our country will be treated without amnesty, but without animosity.”

President George W. Bush
May 17, 2007

Three Key Points About The Bush Administration’s Border Security And Worksite Enforcement Achievements

1. Since The President Took Office In 2001, The Administration Has More Than Doubled Funding For Border Security – From $4.6 Billion In 2001 To $10.4 Billion In 2007.

2. As A Result Of This Investment And Other Deterrence Factors, The Number Of People Apprehended For Illegally Crossing Our Southern Border Is Down By Nearly 27 Percent In 2007 From This Point In 2006.

3. Immigration And Customs Enforcement (ICE) Has Replaced The Old System Of Administrative Hearings And Fines With A Much Tougher Combination Of Criminal Prosecutions And Asset Forfeitures – A Much More Aggressive Approach Toward Cracking Down On Employers Who Knowingly Hire Illegal Aliens. This has resulted in a significant increase in arrests for criminal violations brought in worksite enforcement actions.

…&c, &c, &c.

All that would be grand, if it mattered at all - it doesn’t, and the reasons it doesn’t matter are precisely the same as those which guarantee the functional failure of the present proposal if it’s enacted. The number of people apprehended for violating our border is down 27%. Even assuming that this actually indicates better enforcement, it’s telling that the true numbers behind the statistic aren’t disclosed here. To the extent that the number of people who evade apprehension is any meaningful non-zero number, it proves enforcement, however much more is spent on it today, is a failure. 12-20 million existing illegals is further proof.

The increased enforcement actions touted in his third bullet point sound quite draconian, until you realize he’s not talking about enforcement actions against the myriad groups of wandering day laborers in cities like Houston and other border states. He’s talking about employer actions, because this is now and has always been all about ingratiating the Republican Party with the Hispanic community, legal and illegal. Color me unimpressed.

It’s not as though Bush hasn’t always claimed to want to fix immigration - he’s actually quite good at following through with his stated intentions (not always achieving the goals, of course, but he seldom drops an issue he claims to find important). The problem is that in particularly in immigration reform, where the electoral beneficiaries are far more likely to be his opposition, he continues to play deal-maker, and gives in at the hint of opposition, even when a rational assessment would indicate he’s being played like a rube. Bidding against oneself is never good. Doing so, as Bush is presently, against the wishes of the American people (46% against, vs. 26% for), and is clearly opposed by some of those he wants to carry water for him in Congress.

Remember that justification, above, for pushing the immigration bill through? No, not the one about simply trying to regularize a tough situation for a lot of present illegals - the other one, involving ingratiation? From the Rassmussen poll link above:

The challenge for proponents of the legislation is to convince voters that they are serious about enforcement and that the proposal will truly work. Until that can be accomplished, public opposition to immigration reform is likely to remain very high. In an era where voters overwhelmingly believe that members of Congress are more interested in their careers than the public good, that will be a difficult goal to achieve.

Groveling for future votes, in a manner opposed by present voters, seems pretty craven. And par for the course, to be honest.

Lindsey Graham (R-SC), has a couple pages on his website attempting to debunk what he calls the myths surrounding the bill. He’s also got a 4 page summary of the plan, in PDF format. Both do a creditable, if not credible, job of calming fears about what the plan is, and how it will work. They even provide specific answers to some of the more inflammatory objections put forth so far, such as Hugh Hewitt’s apparent misread, in which he came to the conclusion that the bill provides ICE 24 hours to approve or deny an applicant for the “Z Visa”, conferring semi-regular status. According to the mythbusters on Graham’s site, it appears Mr. Hewitt was wrong.

Both Hewitt and Dr. Thomas Sowell, whose opinion I generally find respectable and intelligent, appear to have facts wrong in a couple of places, including their shared assertion, including Sowell’s from an article published today at National Review Online, that the “the 700-mile fence on paper that has become the two-mile fence in practice”. The White House page linked above makes specific reference to “86 miles of primary fencing” in existence today. When the goal is 700 miles, 86 doesn’t seem a lot. When the comparison is 2 versus 86, the proponent of the lower number needs to support it, or be seen overreacting.

But time will tell, and these gentlemen’s skepticism, as well as that of others, seems well warranted by other actions on the part of this bill’s supporters. Including (ahem) Lindsey Graham (R-SC), while tongue-bathing a gathering of La Raza:

It’s a 4 minute video, and aside from the mealy-mouthed thanks to McCain and Kennedy, and the repeated attempts to be seen to be as Hispanic as his audience, the money shot is in the last 10 seconds, where he says

We’re going to tell the bigots to shut up.

Not smooth at all, and not indicative of comfort in his position, by a long shot. There’s also Michael Chertoff, the Secy of DHS, who has repeatedly made unkind assertions about anyone who doesn’t think the current proposal is tough enough:

MICHAEL CHERTOFF, HOMELAND SECURITY SECRETARY: You know, Wolf, first, I understand there’s some people who expect anything other than capital punishment is an amnesty.

…and

I understand that some people think it’s not tough enough. Maybe they want people thrown in jail for 10 years or they want people executed.

Also not smooth, and based on his repetition, apparently it’s part of the designated talking points.

As with the hideously expensive and poorly designed Medicare Part D entitlement extensions, which Ted Kennedy called “a good down payment”, to Bush’s complete lack of embarrassment, it looks as though Bush and his team are being led down a path to destroying the remaining credibility of the Republican party, while the Democrats laugh up their sleeves.

But that’s all just politics. What about the reality?

It’ll be completely unenforceable. The presumption that 12+ million illegals will willingly pay an immediate $1,000 penalty (the provision designed to pretend this isn’t an amnesty), followed by a $4,000 fee before getting a green card, exiting the country, and getting in line for years to get back in, is interesting, if a bit laughable. Even if the bureaucracy is mustered to put those requirements into effect (hardly a guaranteed happening), the alternative, simply remaining in the underground economy, remains, and might well be the preferable alternative. We’ve shown a complete inability to effectively manage this part of the population in the US over the past decades, and there cannot be a realistic expectation that this bill will suddenly change that.

If we’re not prepared to throw out all the illegals (and we’re not, nor should we necessarily be), we’re also not prepared to deal with non-compliance to the new legislation.

I’ll leave it for others to explain the third plank of inadequacy for this proposal. There’s the politics, the enforcement, and the ruinous cost to our economy. One prediction of that last bit can be seen in the May 10, 2007 testimony before the House Committee on Small Business by Robert Rector, of the Heritage Foundation. $2.5 trillion is a big, big number.

Addendum - For a rebuttal of Rector’s numbers, see this non-bylined piece in today’s WSJ.

For an interesting bit of alleged backroom intrigue, see “Pelosi: Immigration bill will pass over my dead body“.

See also this, I don’t know what to call it, so I’ll call it a “head fake”, from Dick Morris - “Republicans should back immigration compromise“. The crux of Morris’ argument appears to be encapsulated here:

Democrats want Hispanics to vote but don’t want them to work and compete with their labor union allies for jobs.

Republicans want them to work (since the employers are mostly Republican) but don’t want them to vote.

This bill, unfortunately, allows current illegal immigrants to work immediately but defers giving them the franchise for almost a decade. It’s a bill a Republican should love.

As arguments go, this one’s neither flattering nor convincing.

Friday evening, Reuters had a short story entitled “New York mayor goes to Texas, outlines energy plan“. In it, New York Mayor Michael Bloomberg had yet another chance to claim he’s not running in the 2008 presidential campaign.

And of course he isn’t. However, barring some true oddity, I think he will be, before the end of June.

Why? Well, that’s the easy part - nobody in Texas, at least nobody I know in Texas, was dying to hear the Mayor’s view of the nation’s energy plan. Because he knows nothing about it? Hardly - I’m sure he’s given it a good bit of thought, and he appears to have some interesting ideas, among the less practical ones. Because he has precisely zero control over it, including his lack of a bully pulpit from which to influence policy credibly on the matter, he has no national platform, as NYC Mayor, from which to insist his views be considered.

His Houston visit was politicking, pure and simple. Of course, he’s a politician, and that’s what politicians do. Except for Michael Bloomberg, that is. His Honor spent the entirety of his first term and the bulk, so far, of his second staying singularly focused on the needs of the voters who put him into office. Within the remit of his New York duties, he’s even proposed energy, conservation, and environmental policies that are quite far-reaching. From an April 26 story in The Economist:

…the mayor, Michael Bloomberg, has turned deficits into surpluses. He has also managed to make New Yorkers live healthier lives, banning smoking and trans-fats. Now, he has set his sights on the city’s long-term sustainability.
…
The mayor is proposing 127 new initiatives dealing with land, air, water, energy and transport. His proposals include introducing molluscs into the city’s waterways as natural bio-filters, adding bicycle lanes and hastening the cleaning and rezoning of 7,600 acres (3,100 hectares) of contaminated land.
…
Some of his provisions are even more ambitious. He plans to cut the city’s greenhouse gas emissions by 30% in part by improving the efficiency of power plants. To pay for this, a $2.50 monthly surcharge will go on electricity bills. He argues that by spending $30 a year until 2015, every household will save $240 a year after that. This bid for energy conservation would be the broadest attack on climate change ever undertaken by an American city.

(ellipses mine)

Serious stuff, in other words. However, it’s stuff that, New York City being what it is, can be implemented in New York City without needing validation or support from elsewhere in the US. Therefore, his newfound focus on opinionating, in Houston as well as what I presume will be future national venues, would seem to have nothing to do with his ambitious plans for his own city.

And there’s nothing wrong with that, I’d add. Contradictions between what he says and what he appears to be doing aren’t my point here, not least because I see no contradictions. Let’s look at what he’s said on the matter of his supposed candidacy, from the Reuters article:

“I’ve said repeatedly I am not a candidate for president of the United States. I plan to serve out my 965 days left to go” as mayor, he said at a press conference after his speech

“I am not” clearly isn’t the same as “I will not be”, and of course he plans to serve out his remaining 965 days (from May 11, 2007) as mayor, because he hasn’t formally started a run for, and has no guarantee of achieving, the nomination of his party for president in 2008.

So, since this isn’t an epistle about his (imaginary) squishiness regarding his plans for higher political office, what is it? Two things, actually.

First, an armchair critique of his energy plan, which plan is also summarized in the Reuters piece:

His proposals, offered up at the center of the nation’s energy industry, included increased offshore drilling for oil and gas and the construction of more nuclear plants.

He also pushed for development of more wind power and for government to encourage investment in clean energy sources.

Bloomberg said current federal ethanol policies made little sense because they promote production of corn-based ethanol over the more efficient sugar-based fuel.

He also threw out increases in government-mandate fuel efficiency standards, and the alternative of fluorescent bulbs over incandescent, stating that:

“If we do, Americans would save 120 million tons of carbon dioxide emissions and $14 billion every year,” he said.

Which could be true, I guess, even though I don’t know whether he attributes those savings to the bulb change, the CAFE change, or both. No quibble here with the ideas, at least.

Of his other plans, increased offshore drilling for oil and gas and the construction of more nuclear power plants seem to make good sense, to the extent they’re coupled with reasonable attempts to become more energy efficient in addition to becoming more energy self-sufficient.

His thoughts on ethanol are great, as far as they go - focusing on sugar-based ethanol production as opposed to corn-based is an excellent choice, for several reasons. Sugar can be turned into ethanol far more efficiently, and shifting emphasis to sugar would go a long way toward opening up some of the grotesquely protected agricultural markets in the US. As covered in the May 10 Economist story “Insatiable”, the currently planned renewal of the farm bill, a once-every-five-years affirmation of welfare for farmers, the supports envisioned for “corn, wheat, rice and other favored crops” are slated to drop from $7.5 billion all the way down to $7 billion. Big deal. This is in addition to “just under $44 billion a year on other kinds of subsidies to poor farmers, including food stamps, school lunches and so forth”, for which no meaningful changes are planned.

That’s only part of the trouble, though - in addition to price supports, the government, at the behest of US farm conglomerates, maintains punishing tariffs on sugar imports, which limits the impact of one of Brazil’s best exports on the US market. From the April 12 Economist Survey of Brazil:

The showcase is ethanol. Brazil’s variety, based on sugar cane, is cheaper than anyone else’s and has encouraged a lot of innovation beyond the basic commodity. “With biofuels we’re suddenly at the forefront,” says Fernando Reinach of Votorantim Novos Negócios, which runs a venture-capital fund that invests in ethanol technology.

Contrast this with US, primarily corn-based, ethanol products, also via The Economist, on April 4:

Farmers love it because it provides a new source of subsidy. Hawks love it because it offers the possibility that America may wean itself off Middle Eastern oil. The automotive industry loves it, because it reckons that switching to a green fuel will take the global-warming heat off cars. The oil industry loves it because the use of ethanol as a fuel additive means it is business as usual, at least for the time being. Politicians love it because by subsidising it they can please all those constituencies. Taxpayers seem not to have noticed that they are footing the bill.

But corn-based ethanol, the sort produced in America, is neither cheap nor green. It requires almost as much energy to produce (more, say some studies) as it releases when it is burned. And the subsidies on it cost taxpayers, according to the International Institute for Sustainable Development, somewhere between $5.5 billion and $7.3 billion a year.

Ethanol made from sugar cane, by contrast, is good. It produces far more energy than is needed to grow it, and Brazil—the main producer of sugar ethanol—has plenty of land available on which to grow sugar without necessarily reducing food production or encroaching on rainforests. Other developing countries with tropical climates, such as India, the Philippines and even Cuba, could prosper by producing sugar ethanol and selling it to rich Americans to fuel their cars.

Long story made only slightly longer, focusing a bit on sugar-based ethanol seems like a half-measure. Focusing a lot on it, by increasing its use in US ethanol production, reducing subsidies for corn-based ethanol, and fully opening the incoming market for sugar-based product would be a full measure that made solid sense. Doing all that, plus focusing on cellulosic ethanol, made from wood, shrubs, and agricultural waste, would be like hitting the trifecta.

His other mildly objectionable idea is that of having the government “encourage investment in clean energy sources”, which has had dubious knock-on effects in both the past and present, using the current corn-based ethanol craze as one of many examples.

Overall, his energy plan probably rates a solid B, if not a B+.

The other purpose for this now-longer-than-planned screed is to wonder whether both Mr. Bloomberg and the voting public wouldn’t be well served by a bit of political Mau Mau.

Picture this: Bloomberg is a Republican in name only, and no, I’m not using that term in a derogatory fashion. Back when he was a Democrat, to the best of my knowledge, he could adequately have been described as a Democrat in name only, too.

He’s a capable politician, and a capable executive in charge of a large and complex polity. (Please ignore, for the purpose of this analysis, his nannyish actions on smoking and trans-fats, well-intentioned as I’m sure they were) These attributes seem far more interesting than some clap-on/clap-off political party affiliation. And as a result, the presumption that he would or should run in the race for the Republican presidential nomination strikes me as anything but a foregone conclusion.

Further picture this: A presidential race between Rudy Giuliani and Michael Bloomberg. They have some of their views in common with one another, not least, this (also from Reuters piece):

…when told Giuliani said in his Houston appearance that managing New York City was the best preparation for being president, a smiling Bloomberg agreed.

“I think he couldn’t be more right. And I could not have said it better myself,” he said.

I’m not actively rooting for such a match-up, mind you, and if such a race were to happen, I have no idea which candidate I’d prefer. But I do think it would be interesting, and could result, all other things being equal, in one of the cleanest presidential campaigns in memory.

If you happened to pick up a copy of today’s issue of USA Today, you could find a story entitled “Katrina claims stagger corps“. You could find the same thing if, as happened to me, you saw it on a newswire, and thus didn’t have to trouble yourself with purchasing the paper, with its sometimes-difficult-to-stomach format and voice. (n.b. - not it’s opinion voice, but the clipped, short attention span voice they seem to choose for their stories, often resulting in news that, while it’s neither more nor less accurate than anywhere else, didn’t get the name “McNews” for nothing)

The story’s key points are a bit breathtaking - New Orleans is seeking $77 billion in restitution and Louisiana’s attorney general wants $200 billion.

New Orleans and Louisiana, swamped when the city’s storm protections failed during Hurricane Katrina, demand the federal government pay a damage bill that is more than double the entire cost of the massive Gulf Coast rebuilding effort.

So many claims have been filed against the U.S. Army Corps of Engineers that the agency needs at least another month even to tally the floor-to-ceiling stacks, spokesman Vic Harris says.

{…}

Those two alone are more than double the $110 billion Congress approved for Florida and the Gulf Coast after Katrina and two other hurricanes struck in 2005.

(ellipsis mine) Ouch.

The story, having specifically listed the amounts above sought by New Orleans and the state itself, goes on to elaborate:

New Orleans and Louisiana seek broad requests for costs after Katrina but don’t list specific damages.

The great thing about suing for damages, from a defendant’s point of view, is that the damages do have to be enumerated. In addition, any mitigation already provided will have to be taken into account, and surely the federal government’s $110 billion so far approved must have contained some funds which have been applied against such damages.

There’s also the sticky matter of shared responsibility. Particularly in the case of New Orleans, the actions taken and omitted by Mayor Nagin and his government in the aftermath of the hurricane would imply competence at some small fraction of anything the Corps might have exhibited. In any event, it’s going to be a royal mess to sort out.

Luckily, there’s an attorney involved, so don’t you worry; this should all end up right as rain:

Homeowners could seek damages of an additional $200 billion or more, says Jerrold Parker, a lawyer whose firm is trying to organize a class-action suit against the corps.

“Just looking at the place, it’s clear that there’s tremendous damage,” he says. “The fact is, everyone knew the protections were inadequate.”

{…}

The corps must either pay or reject each of the claims. Those whose claims are rejected can take the agency to court. Parker says his firm represents more than 3,000 people who want to sue.

(ellipsis, again, mine) For the record, “Just looking at the place, it’s clear that there’s tremendous damage” doesn’t count as “enumeration of damages”. He also presumes, of course, that his 3,000 clients’ claims and the contingent fees he hopes to glom from them are all in addition to the generous amounts sought by the various government agencies. This doesn’t even pass the “red face test“, let alone the “giggle test“.

Left undiscussed in the story is the rationale by which the government and its agencies are liable for failing to provide absolute and flawless protection for flooding in, say, New Orleans.

A city that lies “5-10 feet below sea level“. On the same page linked just left, you will see that…

The Army Corps of Engineers verifies that the New Orleans area has 325 miles of Congressionally authorized hurricane protection including: Westbank (66 miles); New Orleans to Venice, La. (87 miles); LaRose, La to Golden Meadow, La. (40 miles); Grande Isle, La. (7 miles); Lake Pontchartrain and vicinity (125 miles).

…but Mother Nature doesn’t pay much attention to the Army Corps, let alone (just like the rest of us) to Congress.

Bad things happen to good cities. They also happen to New Orleans, which is not now, nor has it been in the past, a “good city”. It’s a truly unique city, and a very interesting one, but neither of those connotes goodness. While less, or at least differently, so than in the past, due to the effects of the hurricane, it’s still a bit of a cesspool.

It’s cops are notoriously and blatantly corrupt. They’ve had more than their fair share of murderers wearing the uniform, too. And, aside from the murder, that’s just the cops - the elected politicians are no better. William Jefferson, he of the refrigerated cash, is a stellar example of this breed, but hardly the only one.

But it doesn’t stop there. From the Autumn, 2005 issue of the City Journal:

The second job is less obvious. New Orleans’s immutable civic shame, before and after Katrina, is not racism, poverty, or inequality, but murder—a culture of murder so vicious and so pervasive that it terrorizes and numbs the whole city.

In 2003, New Orleans’s murder rate was nearly eight times the national average—and since then, murder has increased. In 2002 and 2003, New Orleans had the highest per capita city homicide rate in the United States, with 59 people killed per year per 100,000 citizens—compared to New York City’s seven. New Orleans is a New York with nearly 5,000 murders a year—an unlivable place. The city’s economy has sputtered over the past generation partly because local and state officials have failed to do the most elementary job of government: to secure the personal safety of citizens.

And then there’s the race card, described in the same article:

In the aftermath of the storm, hand-wringers wondered why they hadn’t noticed before that so many American blacks live in Third World conditions—supposedly only because they’re black. CNN’s Wolf Blitzer voiced white America’s knee-jerk best: “You simply get chills every time you see these poor individuals. . . . So many of these people, almost all of them that we see, are so poor, and they are so black,” he mused on the air.

But Americans didn’t notice this before because it’s not true. Despite the president’s rhetoric, and despite those indelible images from the Superdome and the Convention Center, New Orleans is just as much a black success story as a black failure story.

Yes, New Orleans has a 28 percent poverty rate, and yes, New Orleans is 67 percent black. But nearly two-thirds of New Orleans’s blacks aren’t poor.

Yes, it’s true that nearly 25 percent of New Orleans’s families live on less than $15,000 a year, according to the 2000 Census. But 19 percent of New York’s families live on less than $15,000—and it’s much more expensive for poor people to live in New York, making them poorer.

New Orleans itself, its attorneys, and their clients, even more so than the state of Louisiana, appear to be trying to make their myriad problems those of all their fellow U.S. citizens. Simultaneously claiming poverty and race-based neglect from the federal government along with dismay at how wretched the city is now, ignoring that it’s pretty much always been wretched, they’re going for the gusto.

Or trying to.

It seems unlikely that, once the mess of layered claims, some bogus, some inflated, and some already addressed by insurance or other government single- double- or triple-handouts, is parsed, the extent of damage related to the breach of the levee system might be anywhere near crystal clear.

Add to that the absurdity of expecting guarantees from anyone, government or not, of protection against the weather, it becomes easier to hazard a guess as to what the outcome of this might be. I expect that the Army Corps, and by extension, all U.S. taxpayers, will be absolved of the imaginary financial responsibility that the plaintiffs in these cases are trying to foist off onto us.

In an editorial today, the WSJ describes the reasons that Monica Gooding, a Justice Department’s liaison to the White House, will be exercising her Fifth Amendment right to not provide testimony to Patrick Leahy’s Senate Judiciary Committee.

Long story short:

Ms. Goodling has been around, and she can see Democrats don’t really want to know the truth; they want to shout “liar, liar” and set the stage to accuse Justice officials of criminal behavior. In a statement to the committee explaining her decision, Ms. Goodling said, “I have read public remarks by members of both the House and Senate Committees on the Judiciary in which those members have drawn conclusions about the subject matter and the testimony now under investigation by the Committee.”

They continue, a bit later, with this:

Count Ms. Goodling’s silence as one more unintended consequence of the Scooter Libby case. Mr. Libby made the mistake of cooperating with the investigation into a leak he had nothing to do with, and he later found himself charged with perjury based on little more than conflicting memories of who said what and when. The prosecutor never even charged anyone for the leak that started it all.

There’s no apparent underlying crime in this “scandal” either, but we’ll bet more than one Democrat will soon be calling for a “special prosecutor” to investigate it nonetheless.

The editorial page makes good and valid points. However, according to a story yesterday in USA Today:

In a USA TODAY/Gallup Poll taken Friday-Sunday, respondents said by nearly 3-to-1 that Congress should issue subpoenas to force White House officials to testify.

A majority (53%-26%) of the respondents thought that the attorneys were fired for political reasons rather than for job performance, and a majority (59%-30%) thought that the Democrats were investigating for primarily political, rather than ethical, reasons.

All three majorities are correct, in my opinion, though the impact of their being correct, and the focus that they and the Senate are taking appears misguided.

Yes, of course the attorneys were fired for political reasons, in some cases coincident with them not having done their jobs. They were political appointees, and as such, can be politically un-appointed at the discretion of the administration. This should not be a matter of concern or angst on anyone’s part, and I find it humorous that it is.

Yes, of course the Senate Democrats are trying to embarrass the administration, and that’s the way things have been done for much of the past decade or so. As much as I personally wish it could be stopped, this, too, should not be a surprise to anyone who’s been paying attention, and I find it humorous that it is.

Yes, subpoenas should be issued, and yes, the Senate should get their grandstanding and shaming done. But the focus, on the “politically motivated firing of US Attorneys”, is the problem. The real issue to investigate is the obfuscation from Gonzales’ office about what happened, why, when, and how.

Like so many things in the current Administration, rather than just having come out and said “We fired some political appointees. For political reasons. Get over it.”, it appears that there was some level of effort put into shoving the story under the rug. “Mistakes were made”, said Gonzales, in the Washington Post article linked above.

It’s the mistakes, the misstatements, and the mishandling that should be investigated, not (all due respect to Stuart Gerson, who claims that such mid-term firings shouldn’t be done), the unobjectionable dis-appointment of political appointees.

It’s all about the ham-handedness, you see.