Repost-‘From The Detroit News: ‘How The Treasury, GM Stock Deal Got Done’

Full post here.

‘Geithner has long wanted to exit GM soon, wanting to get out of the business of owning a large stake in an automaker. Some GM officials worried that after Geithner leaves in January, reaching a deal could have taken months, but Treasury officials disagreed.

Before the November election, the Obama administration had showed no interest in disposing of its 26.5 percent stake in GM — or 500 million shares — it had acquired in 2009 as part of GM’s bankruptcy restructuring.’

Over six years ago, when GM stock was selling at $2 a share and the debt-holders had been wiped out, this blog put up the video below.  Here’s a brief 2:00 min explanation by Bill Ackman of Pershing Square on why the GM bailout was likely a bad idea:

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Certain people benefitted more than they would have otherwise, of course, like the UAW and it’s fair to say the Obama administration which needed the votes in Ohio to get reelected, but others, including investors who risked their own money, and the taxpayers, most of whom didn’t have a say beyond their votes, lost money.  Obama, as politicians are wont to do, pretty clearly waited until after the election to quietly make the sale.

ZeroHedge has more here, and has been following the process for awhile.

My guess is Obama will try and maneuver away from the coming tax and regulatory fallout upon ordinary taxpayers, small businesses, and consumers from Dodd-Frank and Obamacare as it all begins to rain down.

The money has to come from somewhere, and it’s coming from you and me, through inflation, higher taxes, higher prices with costs passed down to the consumer, for starters.

My non-economist two cents.

Addition:  David Harsanyi at Reason has more.  Non-union employees pensions got raided and taxpayers foot the bill, so that Obama and the UAW can maintain power.

Two Quick Friday Links-Real Estate Money And Regulation

From The Cuture Of Capitalism: ‘Bribery At The Buildings Dept.-Again

Regulatory capture so serious it’s rife with corruption:

‘The corruption is, along with the regulation, a contributing factor in New York City’s sky-high housing costs. Mayor de Blasio seems to want to deal with those costs by subsidizing or forcing developers to build “affordable” housing, but an alternative approach would be to eliminate the bureaucracy that makes the housing so expensive to construct.’

Related On This Site: Big cities, especially New York, tend to over-regulate business, you can hope for efficient corruption: Richard Epstein At Defining Ideas: ‘City Planners Run Amok’Richard Epstein At The Hoover Institution’s Defining Ideas: ‘California’s Kafkaesque Rent Control Laws’Josh Barro At Business Insider: ‘Dear New Yorkers: Here’s Why Your Rent Is So Ridiculously High’

Megan McArdle at Bloomberg:  ‘Up, Literally:’

In D.C, they stop many condo developers before they can start:

‘What is a pop-up, you ask? Well, in a city where lots are small and expensive, the idea is that you take a 100-year-old row house, rip off the roof and put another level on the house. Usually, this is followed by the developer dividing the place into condos, because putting on a pop-up costs well over $100,000, and developers are the folks with the ready cash to do it. Having done so, they want to make as much money as possible, so they split the house into two units that will each fetch more than a single large place.’

Repost-Megan McArdle At The Daily Beast: ‘America’s New Mandarins’Megan McArdle At Bloomberg: ‘Piketty’s Tax Hikes Won’t Help The Middle-Class’

Pipelines Of People-James Panero At The City Journal: ‘Net Gains’

Full post here.

‘Since 2007, billions of dollars have poured into New York’s “Silicon Alley,” which recently vaulted ahead of the greater Boston area to become the nation’s second-largest tech hub behind California’s Silicon Valley. For a city that has long relied on its financial industry to spur growth and innovation, the resurgence of the tech sector is welcome news.’

Here’s a video from TheStreet, posted two years ago now with a Bloomberg rep (this blog stays on the cutting edge).

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As to the city government and the politics of the thing, if you want cash, you need cows.  From the NY Daily News on how the De Blasio administration is handling this development:

‘Alicia Glen, Mayor de Blasio’s deputy for housing and economic development, pledged to create a “real pipeline” of New Yorkers equipped for the new jobs in the city’s new economy.’

That won’t happen overnight, and for some people it won’t ever happen. It remains to be seen if labor activists can build pipelines that don’t primarily move labor activists and tax revenue around.

Related On This SiteJames Panero At The New Criterion: ‘Time to Free NY’s Museums: The Met Responds’

The Cresting Of A Hipster Wave?-From The New York Observer: ‘Brooklyn Is Now Officially Over: The Ascendance of Brooklyn, the Lifestyle, Above All Else’

Some Links On 5Pointz, Graffiti, & The Arts–Property Rights & The Rule-Of-Law

Have Fun Out There-A Few Tax Links

Where Did My Tax Dollars Go?-Type in your income and filing status.

WallStats.com has a huge Death And Taxes poster (for sale) that you can magnify to see Federal Spending.  Can’t see that much of it anymore without buying.

Roger Kimball links to OpenTheBooks.com, a work in progress which links to state, local, and federal government salaries and spending.   Comments are worth a read at Kimball’s piece.

-Check out those university salaries.  The Chronicle Of Higher Education did a State Of Academe in 2012.

If I’m not mistaken, the old greatness model used to incentivize the private sector more, whereas now some of the young, talented and ambitious may be more comfortable moving to D.C. and into the public sector and our universities.  There are problems with that, too.

Unsustainable entitlement spending, the boomer generation retiring, a pension system in crisis, a really complicated tax system, rising health care costs, a deep recession,  high unemployment and an especially partisan politics.

Interesting times.

Link From A Reader: ‘Richard Epstein Introduces Chicago’s Best Ideas To Students’

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As I’m neither a lawyer nor an economist, feel free to chime in.  Epstein is intense.

Once you convince yourself that the business of government is to ‘worry about the elimination of wealth differentials,” as he states, then you will almost always end up shrinking the pie.  Epstein advocates keeping the pie growing, and removing barriers for people to enter into voluntary exchanges where both parties can benefit.

The income inequality folks often end up making more inequality through good intentions, cinching off the economy at its top through crony capitalism (favoring a few business winners and creating barriers to market entry along with enormous, inefficient bureaucracies).  They can also increase the politicians’ control over the money supply, eroding capital and tying outcomes to short-term political cycles.  Aiming for more equality often leads to less equality, much as the equality of outcome folks want more one-man, one-vote democracy, which is pretty much impossible in practice.

The whole thing slows down and/or stalls as people fight more over less.

***Say you’re more conservative, or religious, a Burkean, a la Kirk, or very interested in what keeps families together and the restraints necessary upon individuals and their own passions, helping to pursue life, liberty and some happiness.  As a libertarian law/economics thinker, Epstein makes the case that conservatism is great for genetic relations and family units, but not always scalable beyond these smaller circles necessary to maintain greater freedoms in civil society:  our families, churches and civic organizations.  He advocates a broader system of voluntarily entered into agreements and contracts, through Chicago School economic theory, which keeps the pie growing below in a large republic like ours.

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***One concern from the conservative perspective is that libertarian theory can introduce an individualism into people’s lives that is destructive as much as constructive, one that can flirt with anarchy, anti-traditional, anti-authority.  Maybe that individualism is already here, as a friend points out, and if so, perhaps it’s better than filling the postmodern hole with rights-based secular humanism, collectivism, or tying postmodernism and leftist solidarity to liberalism proper. There is both a classically liberal and a deeply anarchic libertarianism.

Richard Epstein At The Hoover Institution: ‘Death By Wealth Tax’

Full post here.

‘The country’s preoccupation with income inequality has become the fount of many bad ideas. Among the very worst comes from Stanford University professor of economics Ronald McKinnon. Writing in the Wall Street Journal, he proposes the most radical of reforms under the most soothing of titles: The Conservative Case for a Wealth Tax.’

Of course, behind the  income “inequality” crowd, is the equality crowd, and most of the Left.  Even if Obama is not re-elected, we’re not out of the woods. 

Related On This Site:  Richard Epstein At The Hoover Institution Journal: ‘Three Cheers for Income Inequality’A Few Quotations From F.A. Hayek’s: ‘Why I Am Not A Conservative’Repost-From Fora Via YouTube: ‘Thomas Sowell and a Conflict of Visions

From The New England Journal Of Medicine Via CATO: ‘The Constitutionality of the Individual Mandate’

From If-Then Knots: Health Care Is Not A Right…But Then Neither Is Property?… From The New Yorker: Atul Gawande On Health Care-”The Cost Conundrum”Sally Pipes At Forbes: ‘A Plan That Leads Health Care To Nowhere’Peter Suderman At The WSJ: ‘Obamacare And The Medicaid Mess’

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Joel Kotkin Via Youtube: ‘Illinois Is In A Competition’

 

As Kotkin highlights, there’s the service economy, and then there’s the high-end economy they’re serving, with less and less in-between.  More taxation is an attractive option and the path of least resistance for many city politicians.  He argues that working and/or middle management and/or middle income jobs are hard to find, and especially hard to find outside of public service and government.  Once that economy goes away, so goes the heart and soul of your city (see Detroit).  He argues that Chicago has got to get competitive for business again.

I suspect many libertarians and conservatives will argue that the liberal focus on the arts, culture, equality, education under the banner of rights-based liberty is being done post-mortem in many cases.  It won’t bring back the jobs and opportunity that made the city hum, and beneath those liberal ideals, where the sausage is made, are politicians fighting for less and less pie, voting for higher property taxes, cronyism, unions, and union protectionism etc.  Like New York nearly did in the 70’s, or like Harrisburg did recently, borrowing itself into bankruptcy, cities can end up in tough times.  The liberal/progressive model doesn’t help.

The city that gave us the Chicago School is facing some real challenges as is most of the rust belt.

Of course, I think it’s fair to say that not everyone has the analytical/quantitative reasoning ability and corresponding education to succeed in the developing tech marketplace and explosion of biotech and the sciences either, even if the U.S. educational system is able to re-prioritize away from its old ways (both ideological and practical) and make us more competitive again.

Walter Russell Mead takes a look at the blue model from the ground up in NYC.

Related On This Site: The current administration can’t seem to imagine a problem that doesn’t involve a government solution: How Would Obama Respond To Milton Friedman’s Four Ways To Spend Money?From Bloomberg.Com: Nancy Pelosi Says “Bankruptcy Is Not An Option”

Milton Friedman Via Youtube: ‘Responsibility To The Poor’A Few Thoughts On Walter Russell Mead At The American Interest: “Why Blue Can’t Save The Inner Cities Part I”

How to end up in a conservative position Repost-Two Sunday Quotations By Albert Jay Nock in ‘Anarchist’s Progress’…when there is socialism vs authoritarianism and fascism all around you:A Few Quotations From F.A. Hayek’s: ‘Why I Am Not A Conservative’

Cities should be magnets for creativity and culture? –From The Atlantic: Richard Florida On The Decline Of The Blue-Collar ManFrom Grist.Org Via The New Republic Via The A & L Daily: ‘Getting Past “Ruin Porn” In Detroit’

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From Youtube Via Althouse-‘Paul Ryan: Hiding Spending Doesn’t Reduce Spending’

From The Health Care Summit.  Ultimately, how will the government control costs?

Arnold Kling grades the summit.

Also On This Site: The most knowledgable articles I’ve read that make the case for some government involvement are here:

Atul Gawande At The New Yorker: ‘The Cost Conundrum Persists’

Addition:  And with protectionism as a barrier for free trade across borders, farmers buying crop insurance on governement fixed prices etc. clearly there are problems with the nationalized farm subsidy programs as well.   

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