Monday, April 20, 2009

What is fascism?

What exactly is meant by calling someone or some party "fascist"? According to the Merriam-Webster dictionary, fascism is:

 a political philosophy, movement, or regime (as that of the Fascisti) that exalts nation and often race above the individual and that stands for a centralized autocratic government headed by a dictatorial leader, severe economic and social regimentation, and forcible suppression of opposition


The basic problem with this term is the issue of degree. How "forcible" does suppression need to be? How "severe" does the "economic and social regimentation" need to be? Is an absolute dictator required?

It is difficult to see the raw definition applying anywhere in modern American politics, but I suppose some could argue that there may be a "hint" or "flavor" or fascism creeping into the mindset of various party operatives.

My hunch is that people are going to try to water down and redefine fascism to mean whatever makes their opponent look worse.

Fascism-light anybody?

Or maybe a little Neo-fascism?

-- Jack Krupansky

Monday, April 13, 2009

Will GM really file for bankruptcy before summer?

Some of the media coverage and chatter this morning seemed to suggest that a GM bankruptcy was likely before summer. But, if you read the coverage carefully, such as the article in The New York Times by Micheline Maynard and Michael de la Merced entitled "'Surgical' Bankruptcy Possible for G.M." it is clear that bankruptcy is still only an "option", not a near slam-dunk certainty as the chatter suggests. It seems clear that the "leak" of preparation for a bankruptcy filing is intended to convince bondholders and the unions that they really do need to cave in on the demands of GM management as the government is requesting. In other word, the content and timing of the "leak" is a negotiating tactic.

I do not doubt that the government is in fact making plans for a possible bankruptcy filing by GM. If the bondholders and unions do not cave, bankruptcy will then be the only reasonable option left to the government.

Either way, at least we will have the certainty that by summer GM will be headed for a "light" future without most of its current baggage.

I continue to lean towards voluntary restructuring without a formal bankruptcy. The bondholders will have to decide whether they want to chance the uncertainty of bankruptcy or cut a deal while they can. My hunch is that the end result will probably be about the same either way.

I am tempted to buy a hundred shares of GM as a "lottery ticket" for restructuring. An alternative is to buy some GM debt at a firesale price that will get converted to stock whether in bankruptcy or voluntary restructuring. The bonds would probably be a safer bet, but even now may be priced too richly.

The open question is how much money the government will have to supply to fund healthcare and retirement "bailouts" for GM, regardless of how things turn out in June. That may make the government the de facto "owner" of GM, for now. Hmmm... GM = "Government Motors". Sigh.

In short, my belief is that GM will restructure without bankruptcy.

It also appears that GM will pick up and own the "remains" of its bankrupt Delphi spinoff. That would be an appropriate resolution.

-- Jack Krupansky

Friday, April 10, 2009

I continue to have great confidence in President Obama and his entire team

Unlike many of President Obama's "supporters" who are "concerned" about many of his decisions and the members of his team, especially his economic team, and are offering "advice" on how he should do many things differently, I continue to have 100% unequivocal confidence in both the President and his entire team, including his economic team. They are all doing a great job.

My message to President Obama and his entire team: Damn your critics and full speed ahead!

Especially all of those critics who deign to refer to themselves as "Progressives."

-- Jack Krupansky

Wednesday, April 08, 2009

The Shadow Open Market Committee is back in action

After a three-year hiatus, the Shadow Open Market Committee (SOMC) is resuming operation. "The Shadow" is a small group of economists who meet periodically to present papers on and discuss various aspects of the economy and monetary policy that are relevant to the Federal Reserve in general and the Federal Open Market Committee in particular. They last met in May 2006 at the Cato Institute in Washington, D.C. They are now scheduled to meet for the first time since then on Friday, April 24, 2009. The format is changed and there are several new members. The group has not met since co-chair Charles Plosser was "demoted" to be the President of the Federal Reserve Bank of Philadelphia back in August 2006.

The old format involved a separate working session on Sunday afternoon, with a one-hour presentation and press conference late Monday morning followed by a luncheon. The meetings were open to the public.

The new format will consist of a three-hour symposium (well, two and three-quarters hours) in the morning with plenty of opportunity for audience participation, followed by a luncheon. The symposium is open to the public but requires advance reservation (I think.)

The goal of the SOMC, as stated on their old web site, was that:

The Committee's deliberations are intended to improve policy discussions among policy makers, journalists and the general public with the hope that wiser policy decisions will result.

The web site has not been updated since May 2006, so the SOMC "charter" may have changed, but I suspect not.

As the old web site says, "The SOMC is an independent organization whose members are drawn from academic institutions and private organizations." The SOMC is mostly academic, and certainly nobody currently in the government, although members of the SOMC have gone on to join the Federal Reserve and former Federal Reserve officials and employees have joined the SOMC after leaving government employment.

Previous members continuing on the "new" SOMC are Professor Gregory Hess of Claremont McKenna College, Mickey Levy of Bank of America, Professor Bennett McCallum of Carnegie Mellon University, and Anna Schwartz of NBER.

The new SOMC members are Professor Michael Bordo of Rutgers University, Professor Charles Calomiris of Columbia University, and Professor Marvin Goodfriend of Carnegie Mellon University.

The old SOMC met twice a year. It is not yet clear whether the new SOMC will meet on the same schedule.

I have been attending the SOMC as an observer since... longer than I can remember, since 2000.

The first SOMC meeting was back in September 1973. The SOMC was founded by Prof. Karl Brunner of the University of Rochester and Prof. Allan Meltzer of Carnegie-Mellon University.

The papers to be presented and discussed at the April 2009 "Shadow" symposium are:

  • Michael Bordo: "The Great Contraction 1929–1933: Are There Parallels to the Current Crisis?"
  • Charles Calomiris: "The Dos and Don'ts of Financial Regulatory Reform" and "TALF and PPIP: Will they Work to Unclog the Financial Plumbing?"
  • Marvin Goodfriend: "We Need an Accord for Fed Credit Policy"
  • Mickey Levy: "What's in Worse Shape, the Economy or Fiscal Policy?"
  • Bennett McCallum: "China, the U.S. Dollar, and SDRs"
  • Anna Schwartz: "Boundaries Between the Fed and the Treasury"

Gregory Hess will be moderating.

For those of us into economics, finance, monetary policy, and fiscal policy, it will be an exciting morning.

It is always interesting to listen to the form of questions asked by "the media."

See the Cato web site for details on attending.

-- Jack Krupansky

Monday, April 06, 2009

Health care without any fine print

"Universal health care", "health care reform", and similar phrasings are such mouthfuls of words that are also vague and confusing, and they do not tell you what you really want and need to know. We need a better slogan, and here it is:

Health care without any fine print

No fine print. None. Zip. Zilch. Nada. Not even a line requiring you to sign your name.

My requirements for any credible health care reform "package" are simply as follows:

  1. Care is universal. Everyone is covered and all treatments are covered. Period. No fine print about people or conditions that "may" not be covered fully.
  2. No non-medical information is needed before receiving care. An ID may be provided, but only to facilitate access to medical records for medical treatment.
  3. Anywhere and anytime. No restrictions as to where or when a person can receive care.
  4. No fine print! Really! No document is needed to describe anything other than the preceding three points. That's it! Really!

That's it! Really!

Oh, and one other thing, before I forget... No fine print!

-- Jack Krupansky