Fiat is returning to the US! I probably shouldn’t get so excited but I find it difficult not to when a car company enters a new market. Fiat has agreed to purchase a 35% stake in Chrysler. I do find it amusing an Italian car company with a reputation for being…finicky is going to raise the quality of Chrysler offerings.

The reason I bring this news up is the report that the Fiat-Chrysler alliance would bring seven Fiat models to the US. The most notable is the Fiat 500 which I mentioned nearly a year ago. I was excited about it back then, but today I’m feeling harsher. Perhaps it’s because now gas is $2 a gallon instead of above $3, but I’m just less willing to put up with the 500′s ugliness.

I’m also less confident the 500 can compete against the Mini Cooper. The basic Mini will get you a zero to 60 mph time of 8.5 seconds and 118 horsepower. The 500 has a 10 second 0 to 60 time and only 100 horsepower. Doesn’t the Mini Cooper also have more interior space? Unless Chrysler and Fiat is planning on selling the 500 for several thousand less, I’m not certain the car will be a success.

Those small headlights still bother me by the way.

Conan O’Brien takes a trip to the 2009 Detroit Auto Show…

This got me thinking maybe Conan is the Johnny Carson of my generation. Carson was a comedy legend and made the Tonight Show the premiere late night talk show for about thirty years. If Carson blessed a project with his presence it was guaranteed to be comedy gold. I never really found him all that funny though. He was okay sure. I could get some laughs out of watching, but Carson never really pulled me in as a diehard fan. Perhaps though that was just because I wasn’t a part of his generation so his comedy couldn’t reach me. Conan, on the other hand, never disappoints me. I have a feeling Conan connects with today’s 15 to 35 year old group, the way Carson did back in the 1960s through 1980s.

I made the mistake of watching this clip at work so I actually had to pinch my nose hard to stop myself from laughing out loud and making a spectacle of myself. Watch and celebrate Augbert’s double-800s on the SATs!

Last Friday I finally finished reading The Forgotten Man. This moment was a year in the making. In December of 2007 I took a trip to New York to visit family and friends. I bought two books to enjoy during that vacation. I polished off Paris 1919 easily (and loved it), but The Forgotten Man was harder. The chapters were longer than Paris 1919 so I really had to dedicate time to reading it. That wasn’t easy to do when I could barely stay awake while in my Mom’s house. When I came back to California I was only half way through it. Three days later I was raising a new puppy and life got very busy. So I put the book down and it collected dust until Saturday, January 10th.

What lit a fire under me was hearing about another book. I don’t like to leave books unfinished so before I could permit myself to get this other book I had to finish The Forgotten Man. Letting it sit for a year turned out to be a serendipitous choice. I got so much more from this book reading it after our financial crisis took hold. At the end of 2007 we knew the housing bubble was bursting but I think most of us believed it wouldn’t hurt the wider economy. Things would slow, but we would still grow. Now after the collapse of 2008 I can see so many parallels with the past year and the 1930-31 period. It seems the scapegoating of business is universal and politicians pandering to it a guarantee. Disbelief and shock are also universal. In those two years before FDR was elected, the public expected the US to come out of this latest recession quickly. Most people remembered getting through a recession in the first few years of the 1920s, and expected this to repeat.

Perhaps the business cycle would have repeated if the US followed the same policies as in 1923 and our “Great Depression” would have been another footnote to financial history. Somehow the lessons of that decade were lost on the 1930′s generation. Your high school history class tells you, FDR was the groundbreaker who took office and implemented a slew of new programs that represented a completely new economic policy for the US. It was a break from Hoover’s ‘do-nothing and let the market sort itself out’ attitude. It’s completely wrong though. Hoover was pushing to spend more government money to stimulate the economy (sound familiar?). Hoover pushed for public works projects and a bank holiday to restore confidence in the system. Hoover actually created the Reconstruction Finance Corporation, not FDR.

I’m going to quote Rex Tugwell from page 149 of the book because I think it sums up Hoover’s real legacy nicely. Tugwell was a member of the famous FDR “Brain Trust”. He had a lot of influence in the beginning of the New Deal, but fell out of favor at the end of the decade. Tugwell was outspoken and made himself into a lightning rod for New Deal criticisms.

‘When it was all over,’ Tugwell would later write, ‘I once made a list of New Deal ventures begun during Hoover’s years as secretary of commerce and then as president…The New Deal owed much to what he had begun.’

FDR rode Hoover’s coattails and stole his thunder. Not that Hoover had any ideas I approve of, but they were his. FDR was not a groundbreaker. He was certainly callous. He showed such disregard for the US economy. If Hoover’s real contribution to the New Deal was increased government spending, FDR’s contribution was fear. He’s famous for that “nothing to fear” line, but FDR did more than anyone to strike fear into American business and consequently paralyze the economy for the entire decade. He demanded more regulations (sound familiar?) and engaged in class warfare. He singled out utilities companies for destruction. He prosecuted businessmen on tax charges for using income tax loopholes that were entirely legal. A frozen economy suited FDR though because then he could claim America was in permanent crisis. That would justify any grab for more power to the federal government.

The Forgotten Man is a fascinating read for our times. We just lived through the same sort of economic shock as that generation and now we’re groping for a return to growth as they did. The mistake that era made was accepting that an activist government would save them. Hoover and FDR thought the government could spend America out of recession, and government should be the central player in the economy. Today we’re hearing a lot of talk about the need for the government to stimulate the economy and that it’s the only entity with the power to pull the country out of recession. That disturbs me so much, but this book has given me a lot of hope for our future. The difference today is that hardcore socialism has been discredited. It wasn’t in 1930 so FDR could embrace many of those ideas. Obama still can push our economy closer to the left, but he’ll never push for the government to become the nation’s primary source for growth. There won’t be any farm collectivizations or subsidies to stop growing food. No one will stand for tax rates in the 70% range.

I do want to warn you about the prose. The book is a little long winded. It would have been easier to read if the sections were shorter and snappier. There aren’t enough chances for your mind to rest and digest the information you’re taking in. However I did manage to read the entire book in seven days so if you’re properly motivated you can get through it. I think you’ll be better off after reading it.

Saving is getting its reputation dragged through the mud. To my astonishment, economists and politicians want to keep stimulus money out of peoples’ hands for fear that they would save it. The money would just be “wasted” that way. No instead we should throw cash at the construction industry. Somehow that’s productive.

Now I’m not going to say no infrastructure project is worthwhile. However I do not believe any bill that comes from Congress will be efficient. The wasteful programs will absolutely outnumber the worthwhile ones. Plus, infrastructure recoups its investment over many years. It will not provide the jumpstart that politicians are claiming. Please also consider that new road building has given diminishing returns since the 1950s and transit repairs do not recoup their expense in increased economic activity. Also, one thing that no one has considered is the expense we’re adding to future generations from this construction program. Everything we build to stimulate today’s economy will cost money to maintain in the future. This stimulus bill will become a permanent expansion of the government budget.

But that’s not my focus here. I don’t want the concept of saving to be besmirched without a defense. Getting money directly to people and business is not wasted money. Imagine that we all get government checks again, and everyone decides to put that money in their savings account. This can be a good thing. When all that extra money is deposited we’re a step closer to restoring confidence. People feel more secure because they padded their savings. Maybe it’s only worth a month of groceries, but that’s one more month where people won’t worry about eating. It’s one more month of peace of mind. Generating that peace of mind is what will create consumer demand and pull the country out of this slump.

There is a benefit on the bank side of this transaction too. Banks are just as scared about the economy as regular people are. The reason they have cut back on lending is fear they won’t have enough cash on hand to meet their bad loans. If people save more money, it increases the amount in bank deposits. This is money banks can use to improve their balance sheets. More cash on hand will bring down the level of panic in the financial sector and get us closer to resuming a more normal level on lending.

We’re too obsessed with finding a whiz-bang moment where the economy is magically restored. It’s as if economists believe there is this one economic input that must be tweaked to solve all our problems. Gee, maybe if the Fed Funds Rate was just another 25 bps lower, or unemployment payments were extended another 8 weeks the economy would just turn around. Recoveries do not happen like that. Emerging from a recession is a gradual process.

By the way I’m not in favor of a one time payment like we had back in Q2 of 2008. I just took offense at the idea that saving money is a bad thing. As a stimulus measure handing out cash to people has a very limited psychological benefit. I would like to see the sustained effort that would come from suspending payroll taxes take effect. Let’s stop collecting income, Social Security and Medicare taxes for two years. The government can borrow to make up the shortfall, as it has shown no fear of doing. It would be wonderful if cuts in those programs also occurred, but if I suggested that I would be entering the realm of fantasy.

And while I’m on my soapbox, I still think exempting profits on bank loans from taxes would provide a good incentive to banks to loosen their credit requirements.

This is way too funny. I mean laugh out loud funny.

Star Wars: Retold (by someone who hasn’t seen it) from Joe Nicolosi on Vimeo.

The slightest change in technology is known to baffle the elderly, so America’s transition from analog to digital TV will provide plenty of befuddlement. Here’s a video that encapsulates it.

The authority is legally required to have a balanced budget; it has massive budget gaps, he explains.

“Whatever,” Bria said with a note of jest. “He should just get the money for it. It’s a big commuter system. It’s cheap and it’s good for the environment to ride the bus.”

Why thank you Bria. What a great idea. The MTA will just get the money. It’s so simple.

Yes, the Daily News decided to speak to MTA chief Elliot Sander’s daughter about the coming service cuts. No, I have no idea why.

The reason why I’m being so hard on the unformed policy ideas of a 15 year old girl is that I just know millions of New Yorkers will say, “Yeah, she’s right!”. Millions of idiots who will bitch and moan, but never take a second to actually think of a workable idea. No she is not right. She didn’t say anything to be right about. I don’t care if ”whatever” is said in jest. She’s just being dismissive because she’s too lazy, just like everyone else, to make a hard choice. If she would have just given an answer I didn’t like I wouldn’t even bother bringing this up. She could have told her dad to abandon the 2nd Avenue Subway again to save money, or the 7 train extenion too. She could have suggested the subway stop running service from midnight to 6 am. I don’t like any of these ideas but at least she would have made the effort to solve the problem.

But fine, if just getting the money is good enough I can do that. The single ride fare is going to $5 and I’ll have the state legislature pass a special law to make it illegal for MTA workers to unionize so I can then slash their salaries. I won’t have to make any cuts in service after that. Problem solved.

United States Joint Forces Command exists and I have no idea what they do. They describe their job as…

Today                          

• We train and provide forces from all services to commanders around the world to work together as a joint team.
• We ensure the equipment each team brings to an operation is compatible.
• We provide teams with unique skills that can deploy at a moment’s notice to assist an operation.
• We coordinate our efforts with other nations to ensure we can operate together.

Tomorrow

• We develop a blueprint for how our military forces will conduct future operations.
• We test this blueprint to ensure that it works.
• From this blueprint we develop solutions that can be put into the hands of service men and women who will be engaged in future operations.

So I guess JFC exists to force the military branches to train together? Whatever they do, they have a Twitter.

When not Twittering, JFC also churns out policy books. The Joint Operating Environment 2008 is a summary of the crap spots on the globe, and what kind of crap may go down there. I bring it up because on page 36 (page 40 of the PDF) JFC mentions Mexico as a possible victim of “rapid collapse”.

Rapid Collapse is just like it sounds.

For the most part, weak and failing states represent chronic, long-term problems that allow for management over sustained periods. The collapse of a state usually comes as a surprise, has a rapid onset, and poses acute problems. The collapse of Yugoslavia into a chaotic tangle of warring nationalities in 1990 suggests how suddenly and catastrophically state collapse can happen – in this case, a state which had hosted the 1984 Winter Olympics at Sarajevo, and which then quickly became the epicenter of the ensuing civil war.

The IHT article that alerted me to this report seems to think JFC sees a limited likelihood for this to occur in Mexico. I think the IHT is misreading the report.

The Mexican possibility may seem less likely, but the government, its politicians, police, and judicial infrastructure are all under sustained assault and pressure by criminal gangs and drug cartels.

JOE2008 says it “may seem less likely”. It’s not saying it is less likely, but rather that we perceive it as such. JOE2008 doesn’t explicitly state what path towards collapse Mexico is likely to take. It could become a narco-state where drug smuggling cartels control the levers of government. It’s possible Mexico could turn into a feudal system based around drugs where different cartels control different areas of the country and the fiction of unified government doesn’t even exist. A civil war of varying intensity would be a possibility in that situation too.

Either situation is a nightmare for the US. It would lead to tens of millions crossing the vast southwest border to get away from the violence. Mexico would essentially empty out. This possibility is what has JFC lying awake at night. In this situation a US military deployment would be a necessity. We would also end up with refugee camps along the border.

If we found ourselves in this situation, what should we do? What can we do?

1. Nothing. Deploy our military to hold the line at the border and staff refugee camps. All we can do is wait for Mexico to sort itself out.
2. Invade, topple the narco-regime and install a friendly government.
3. Invade and annex Mexico. Ruled by military reconstruction program for decades.

Our response is going to depend on what we have in Mexico. As long as there is a government, even a puppet one, I don’t see us invading. We’ll just be stuck with millions of refugees. By the way, in that situation, we should start a program where college kids can get some student loan forgiveness by teaching English as a second language for two years in the camps. We all know any refugees will eventually end up being accepted into the US. We might as well try to diffuse the English vs. Spanish fight.

The only way we’ll invade is if Mexico becomes Somalia with more drugs. Even then I would be surprised if we mustered the political will to annex the country. I could already hear the outcry at the suggestion. It’s racist! No blood for oil! The UN would erupt with rage.

It leaves me really disappointed though because there are a lot of benefits to annexation. If Mexico underwent the sort of rapid collapse described by the JOE2008 report, then Mexicans already flushed their country down the toilet. Why should they keep it? As part of the US they could gain the rule of law. They would have better law enforcement and far less corruption. With peaceful homes, Mexicans can go about building their own lives.

Why would the US want this? For one it would solve our on-going problems with illegal immigration. A stable Mexico won’t produce people trying to escape it. Plus if we actually did have millions in refugee camps it’s better for them to be resettled back in Mexican territory rather than try to disperse them throughout the US. The US would also gain a smaller, and therefore more defensible, border with Central America. Mexico has a good amount of oil that is not being managed efficiently. We could free that up to private corporations to invest in. The reconstruction of Mexico would create an enormous economic boom in both the US and former Mexico too. Trillions would flood into the territories as roads, buildings, power generation is built or modernized. Real estate prices would skyrocket as American banks would be willing to make loans for former Mexican property, which is now in the US and subject to US laws.

I do see a problem though. Economically and governmentally, annexation is sensible. Culture would be a thorn in the side of this project. Mexico isn’t the monolithic state most Americans imagine it is. Under these circumstances I could see northern Mexico having an easy time joining the US. Culturally they’re similar to the US Southwest. The southern half may want to remain independent no matter what. The people are far more tribal down there. Don’t forget they tried to break away from Mexico in 1994. Perhaps the best option would be a hybrid of choices 2 and 3. The Mexican states that want to join the US could apply for annexation. I expect this to be the border states and maybe a few just south of them. The rest would be free to be independent themselves or form their own compacts.

But to rain on this parade, I think this is all moot. It’s true that Mexico is being terrorized by drug cartels but has it reached the same level as Columbia in the 1980s? I doubt it. If Mexico really is going to fall apart, we have time to watch for more signs.

Here’s an attitude that makes me weep. Just listen to Tiffany when she starts speaking at 1:13.

“I was really excited about it because it increases the regulations on the toy making industry.”

I sat here for a few minutes trying to digest that nugget of knowledge. Why would a person be excited about more regulation? The only answer I could come up with, besides them being a super lefty whackjob, is fear. Do you remember that big scare we had in 2007 over chemical contamination on toys imported from China? Tiffany works in the toy industry, so I can assume she remembers it well. Welcoming more government interference is probably her gut reaction to a scary situation.

But if you can keep your emotions in check, would you come to the same conclusion? I wish I could sit down with her and ask. She sure isn’t happy with these new regulations now, but does she want the government to stay out of it altogether or would she be happy if a loophole was created for her favorite businesses?

Sadly, I expect Tiffany would choose the loophole. What I have difficulty understanding are calm and rational people who choose more government intervention. Why trust the government? Time and again government agencies have shown themselves to be inefficient and corrupt. Why would you be willing to expand their power?

And speaking of individualism… It turns out you can’t blame McDonald’s for fat people. Researchers from Northwestern University and UC Berkeley have disproven the common idea that fast food restaurants are to blame for America’s fattening.

The nanny-state idea that the ubiquitous growth in fast food locations is causing us simple proles to overeat is wrong. It turns out those restaurants exist to meet our desire to eat more. So all those measures to ban new fast food restaurants, or zone them into extinction is pointless.

Analysis of food intake micro data suggests that although consumers eat larger meals at restaurants than at home (even after accounting for selection), they offset these calories at other times of day. We conclude that public health policies targeting restaurants are unlikely to reduce obesity but could negatively affect consumer welfare.

So please nanny-staters, stop bringing up Super Size Me and Fast Food Nation. Those “evil” fast food corporations aren’t making me fat. It’s my own fault.