General Motors

President Bush should have let GM sink into bankruptcy like he threatened to do a day before he bailed them out.  I understand he didn’t want to hand that mess off to President Obama – but in the end he handed off a different mess.

Senator Shelbey seems to agree.  We are on a slippery slope.

Shelby assails large gov’t role in General Motors

Top Banking panel GOP member raps large federal stake in financially beleaguered GM Corp.

• On Friday May 29, 2009, 8:27 am EDT

WASHINGTON (AP) — Sen. Richard Shelby said Friday the government should have allowed the marketplace to decide General Motors’ fate and that the huge federal stake in the company puts Washington on “the road to socialism.”

Shelby, ranking Republican on the Banking Committee, argued that the financially beleaguered GM could have saved “lots of money” if it had chosen six months ago to file a Chapter 11 bankruptcy petition.

“What I worry about” is Washington’s large interest in the company, the senator said in a nationally broadcast network interview. “It’s basically going to be a government-owned, government-run company … a company that has been sadly run into the ground.”

Shelby represents Alabama, a state with a significant presence of non-U.S. automakers, including Honda, Mercedes and Hyundai.

Facing a restructuring deadline, GM is in the process of brokering a last-minute deal with bondholders and the United Auto Makers, and then is expected to file Monday what would be one of the largest bankruptcies ever.

Said Shelby: “I’m sure they haven’t cut enough and there are not enough concessions there.” 

The Treasury has loaned GM $19.4 billion and would provide $30 billion in additional financing to keep the new GM operating under bankruptcy protection. The government would get 72.5 percent of the new company’s stock under the plan.

A friend/neighbor and I sat down over memorial day weekend to discuss President Obama’s firt 100 days in office.  He the democract and me the republican you might expect firework but I think we were both “hopeful” that President Obama would do the right things when it comes to the economy.

I think the President (at this point in time) will be measured on how he manages this crisis after the fact.  Other presidents facing crisis during their terms have managed that crisis through the increase in power of the federal government (Lincoln, Wilson, FDR,  Bush, etc).  Today we have see a growth in power on the scale of the Civil War and WWII.  Since those two crisis have passed government power has continued to increase.

In case you didn’t think of it this way let me share with you my thought on POWER.  Their is not an unlimited amount of power – their is only so much.  It is like a piece of pie.  If someone has all the pie they have all the power.  Government has been taking more slices of pie than the states, local governments and people for a long time.  President Obama holds the knife in his hands.  How big of a pie is he willing to cut and who will he serve it to?  You or government.

To manage through the financial crisis government is buying, lending, and printing a lot of money.  They have an unbalanced amount of power and influence over private business and the markets.  We are headed toward hyperinflation and high interest rates (not today but we are on the path).

So, when the “crisis” is over what will President Obama do that could make him my hero?  Quickly exit from the financial markets and the automobile business.  Use the tools available to the President to tighten monetary policy in order to avoid Carter like inflation and keep interest rates low. 

We will see.

Where did Maryland’s Millionaires Go?

Millionaires Go Missing
The Wall Street Journal Reports

Maryland’s fleeced taxpayers fight back

Here’s a two-minute drill in soak-the-rich economics:

Maryland couldn’t balance its budget last year, so the state tried to close the shortfall by fleecing the wealthy. Politicians in Annapolis created a millionaire tax bracket, raising the top marginal income-tax rate to 6.25%. And because cities such as Baltimore and Bethesda also impose income taxes, the state-local tax rate can go as high as 9.45%. Governor Martin O’Malley, a dedicated class warrior, declared that these richest 0.3% of filers were “willing and able to pay their fair share.” The Baltimore Sun predicted the rich would “grin and bear it.”

One year later, nobody’s grinning. One-third of the millionaires have disappeared from Maryland tax rolls. In 2008 roughly 3,000 million-dollar income tax returns were filed by the end of April. This year there were 2,000, which the state comptroller’s office concedes is a “substantial decline.” On those missing returns, the government collects 6.25% of nothing. Instead of the state coffers gaining the extra $106 million the politicians predicted, millionaires paid $100 million less in taxes than they did last year — even at higher rates.

No doubt the majority of that loss in millionaire filings results from the recession. However, this is one reason that depending on the rich to finance government is so ill-advised: Progressive tax rates create mountains of cash during good times that vanish during recessions. For evidence, consult California, New York and New Jersey (see here).

The Maryland state revenue office says it’s “way too early” to tell how many millionaires moved out of the state when the tax rates rose. But no one disputes that some rich filers did leave. It’s easier than the redistributionists think. Christopher Summers, president of the Maryland Public Policy Institute, notes: “Marylanders with high incomes typically own second homes in tax friendlier states like Florida, Delaware, South Carolina and Virginia. So it’s easy for them to change their residency.”

All of this means that the burden of paying for bloated government in Annapolis will fall on the middle class. Thanks to the futility of soaking the rich, these working families will now pay Mr. O’Malley’s “fair share.”

Below average rainfall for 2009?

Waiting for a break in the rain so I could walk the dog, and WBAL just announced a flash flood warning for Howard County.

I began wondering just what kind of records we were setting for rainfall.   As of yesterday (5/25/09) BWI was about 1″ less than normal for the year (according to the National Weather Service).   Since Jan 1st, we have received 15.67 inches of precipitation while the average is 16.55 inches.

Looking at just May, so far we had received 4.81 inches, while in 2008 we received 7.77 inches for the entire month, and the record for May appears to be 8.71 set in 1989.

The one month record is 18.35 inches in Aug, 1955.

And just for comparison, the average yearly rainfall for Seattle, WA is 38.25 inches while at BWI it is 41.94 inches.  Go figure.