Tidbits Quotations on January 6, 2011
To Accompany the January 6, 2011 edition of Tidbits
Bob Jensen at Trinity University

Archive of Tidbits Quotations --- http://www.trinity.edu/rjensen/TidbitsDirectory.htm

The difference between reading and studying is like the difference between drifting in a boat and rowing toward a destination.
Oscar Feucht as forwarded by my minister, Ned Wilson
Jensen Comment
I might point out that rowing requires a lot more sweat.

Having already downed a few power drinks, she turns around, faces him, looks him straight in the eye and says, "Listen here good looking, I screw anybody, anytime, anywhere, your place, my place, in the car, front door, back door, on the ground, standing up, sitting down, naked or with clothes on… it doesn't matter to me. I just love it."

Eyes now wide with interest, he responds, "No kidding. I'm in Congress too. What state do you represent?"
Forwarded by Dr. Wolff


I haven't left my house in days. I watch the news channels incessantly. All the news stories are about the election; all the commercials are for Viagra and Cialis. Election, erection, election, erection -- either way we're getting screwed!
Bette Midler

Blessed are the young, for they shall inherit the national debt.
Herbert Hoover --- http://www.brainyquote.com/quotes/quotes/h/herberthoo110353.html

Fathom the odd hypocrisy that the administration wants every citizen to prove they are insured, but people don't have to prove they are citizens.
Ben Stein

I think political correctness can lead to some kind of paralysis where you don't address reality.
Juan William before he was fired after a distinguished career on NPR.

Whether or not you love or hate the scholarship and media presentations of the University of Chicago's Milton Friedman, I think you have to appreciate his articulate response on this historic Phil Donohue Show episode. Many of the current dire warnings about entitlements were predicted by him as one of the cornerstones in his 1970's PBS Series on "Free to Choose." We just didn't listen as we poured on unbooked national debt ($60 trillion and not counting) for future generations to deal with rather than pay as we went so to speak! . And yes Paul and Zafer, I know there may be better alternatives than capitalism as a basis for optimization of economies in theory. But all economic systems must deal with inherent greed in practice.
The Grand Old Scholar/Researcher on the subject of greed in economics
Video:  Milton Friedman answers Phil Donohue's questions about capitalism.--- http://www.cs.trinity.edu/~rjensen/temp/MiltonFriedmanGreed.wmv

Landesman wasn't being asked specifically about negative feelings over the Loveland Museum Gallery in Loveland, Colo., a taxpayer-funded art space that recently featured a controversial painting with Jesus Christ receiving oral sex from a man. He's certainly not used to critical questions about just how this blasphemy-by-numbers seems like a tiresome rerun -- Jesus in urine, Jesus in chocolate, Jesus in (homo)sexual ecstasy.
Brent Boswell, Shock and Awful Art, Townhall, October 22, 2010 ---
Rocco Landesman is the chairman of the National Endowment for the Arts
Landesman does not have the guts to display a similar offensive picture of Allah

In the U.K. everything is permitted unless it’s prohibited. In Germany, it’s the other way around; everything is prohibited unless it’s permitted. In Netherlands, everything’s prohibited even if it is permitted. And in France, of course, everything is permitted especially if it’s prohibited.
Sir David Tweedie, Former Director of the International Accounting Standards Board

Watch the CNN Video
"Make certain when you sign those papers that you didn't rely on accountants."
Rep. Charlie Rangel, Recently censured member the U.S. House of Representatives

Watch the Video
"Make certain that you rely on Turbo Tax, because then you have something non-human to blame for underpayment of your taxes."

Timothy Geithner, Secretary of the U.S. Treasury

The unemployed, unlike the rich whom this president has just bowed to, are, in fact, the job creators.
Keith Olbermann on MSNBC
Jensen Question
Does this mean that we can create 100 million new jobs by laying off 10 million people? Say what Keith?

Keith Olbermann warned in his Special Comment last night that Obama would not survive a primary challenge if he persists, because Democrats and progressives are wedded to principles, not personalities.
Hot Air, December 8, 2010 --- http://hotair.com/archives/2010/12/08/olby-obama-wont-get-renominated-if-tax-deal-goes-through/

Fox News Makes You Stupid? (Duped by a Joke)
Brent Bozell --- http://townhall.com/columnists/BrentBozell/2010/12/29/fox_news_makes_you_stupid

At her final press conference as House Speaker, Nancy Pelosi (D-CA) said, "Deficit reduction has been a high priority for us. It is our mantra, pay-as-you-go." The numbers tell a different story. When the Pelosi Democrats took control of Congress on January 4, 2007, the national debt stood at $8,670,596,242,973.04. The last day of the 111th Congress and Pelosi's Speakership on December 22, 2010 the national debt was $13,858,529,371,601.09 - a roughly $5.2 trillion increase in just four years. Furthermore, the year over year federal deficit has roughly quadrupled during Pelosi's four years as speaker, from $342 billion in fiscal year 2007 to an estimated $1.6 trillion at the end of fiscal year 2010.
Fox Nation, "Speaker Pelosi Leaves With a Whopper," January 4, 2011 ---


David Albrecht reminded us that Canada quietly reduced its top corporate tax rate ---


 I generally admire John Stossel's columns, but sometimes he's a loose cannon ---

This is actually quite good and written in Adrienne's usual entertaining style
"The Second Annual Jr Deputy Accountant Fed Year In Review," Jr. Deputy Accountant Blog, December 31, 2010 ---

"Keith Olbermann attacks Fox News, Bill O'Reilly in vulgar twitter exchanges," Examiner.com, December 30, 2010 ---

If you're Keith Olbermann, you spend the day insulting people and attacking Fox News on twitter with childish, profane messages.

Jonathon M. Seidl reports at The Blaze the outspoken, always-angry host spent Wednesday evening attacking Fox News and Bill O'Reilly when someone criticised him over his support for the far-left wing blog Daily Kos.

He started his twitter war with a message saying "Fox News is 100% bulls*" (expletive edited).

Olbermann - a man who fancies himself a modern day Edward R. Murrow - then sent a message involving manure and ended his tirade with a message attacking not only Fox News and Bill O'Reilly (a frequent target for Olbermann), but those who watch Fox News.

"I did it because his network is full of bulls* & O'Reilly is full of bulls*. & if you believe them you're full of bulls*", he tweeted. (Expletives edited)

Later, the Countdown host got into another vulgar exchange with a different twitter user over Rush Limbaugh.

Olbermann is well known for his angry commentary and air of self-importance. People he disagrees with are targeted on a segment where he picks the "Worst People in the World".

In another segment, he used the Nazi salute in an on-air attack of Bill O'Reilly, and he compared President Obama's tax rate compromise to appeasing Nazis.

One does not need a degree in psychology to see Olbermann has a serious problem. Either that, or he is the single most hate-filled liberal on the MSNBC lineup.

And that's saying something.

If MSNBC wants to be seen as anything other than the network of insane liberal hatred, it will need to put a stop to such behavior by its' hosts, even if it means firing them.

Jensen Comment
For even more laughs watch MSNBC's fiery and highly profane Ed Shultz lambast Fox Network for its political bias. The best weapons in the GOP arsenal are the filthy-mouthed and always-angry MSNBC progressives. Karl Rove actually wishes they could improve their dismal viewer ratings, especially among profanity-weary independents.

"The Triumph of Propaganda," by Nemo Almen, American Thinker, January 2, 2011 ---

Does anyone remember what happened on Christmas Eve last year?  In one of the most expensive Christmas presents ever, the government removed the $400 billion limit on their Fannie and Freddie guaranty.  This act increased taxpayer liabilities by six trillion dollars; however, the news was lost in the holiday cheer.  This is one instance in a broader campaign to manipulate the public perception, gradually depriving us of independent thought.

Consider another example: what news story broke on April 16, 2010?  Most of us would say the SEC's lawsuit against Goldman Sachs.  Goldman is the market leader in "ripping the client's face off," in this instance creating a worst-of-the-worst pool of securities so Paulson & Co could bet against it.  Many applauded the SEC for this action.  Never mind that singling out one vice president (the "Fabulous Fab") and one instance of fraud is like charging Al Capone with tax evasion.  The dog was wagged.

Very few caught the real news that day, namely the damning complicity of the SEC in the Stanford Ponzi scheme.  Clearly, Stanford was the bigger story, costing thousands of investors billions of dollars while Goldman later settled for half a billionWorse, the SEC knew about Stanford since 1997, but instead of shutting it down, people left the SEC to work for Stanford.  This story should have caused widespread outrage and reform of the SEC; instead it was buried in the back pages and lost to the public eye.

Lest we think the timing of these was mere coincidence, the Goldman lawsuit was settled on July 15, 2010, the same day the financial reform package passedThe government threw Goldman to the wolves in order to hide its own shame.  When the government had its desired financial reforms, it let Goldman settle.  These examples demonstrate a clear pattern of manipulation.  Unfortunately, our propaganda problem runs far deeper than lawsuits and Ponzi schemes.

Here is a more important question: which companies own half of all subprime and Alt-A (liar loan) bonds?  Paul Krugman writes that these companies were "mainly out of the picture during the housing bubble's most feverish period, from 2004 to 2006.  As a result, the agencies played only a minor role in the epidemic of bad lending."[iii]  This phrase is stupefying.  How can a pair of companies comprise half of a market and yet have no major influence in it?  Subprime formed the core of the financial crisis, and Fannie and Freddie (the "agencies") formed the core of the subprime market.  They were not "out of the picture" during the subprime explosion, they were the picture.  The fact that a respectable Nobel prize-winner flatly denies this is extremely disturbing.

Amazingly, any attempt to hold the government accountable for its role in the subprime meltdown is dismissed as right-wing propaganda This dismissal is left-wing propaganda.  It was the government that initiated securitization as a tool to dispose of RTC assets.  Bill Clinton ducks all responsibility, ignoring how his administration imposed arbitrary quotas on any banks looking to merge as Attorney General Janet Reno "threatened legal action against lenders whose racial statistics raised her suspicions."[iv]  Greenspan fueled the rise of subprime derivatives by lowering rates,[v] lowering reserves,[vi] and beating down reasonable opposition.  And at the center of it all were Fannie and Freddie bribing officials, committing fraud, dominating private-sector competition, and expanding to a six-trillion-dollar debacle.  The fact that these facts are dismissed as propaganda shows just how divorced from reality our ‘news' has become.  Yes, half of all economists are employed by the government, but this is no reason to flout one's professional responsibility.  As a nation we need to consider all the facts, not just those that are politically expedient.

Continued in article

Nemo Almen is the author of The Last Dodo: The Great Recession and our Modern-Day Struggle for Survival.

Bob Jensen's Rotten to the Core threads are at

Cash Flow versus Accrual Accounting
A Secret That Will Never Be Revealed on MSNBC and Most Certainly on Keith Olbermann's Countdown Show Where Deficit Reduction is "Bulls___"!
"Cooking the Books: The 2010 Deficit Was $2.1 trillion," by Bruce Bartlett, The Fiscal Times, December 24, 2010 ---

When federal finances are discussed, it is almost always in terms of the difference between expenditures and revenues. Usually, the former exceed the latter and we have a deficit. The cumulative total of deficits less the occasional surpluses is what we call the national debt. When we analyze the debt in terms of its burden, it is usually by looking at it in terms of the gross domestic product. Presently, debt held by the public, the most common measure of federal debt, is $9.3 trillion, or about 60 percent of GDP.

If the federal government was a corporation and one was contemplating buying shares of its stock, however, one would certainly want to know much more about its finances. One would want to know about the government’s assets as well as its liabilities. And one would want to know whether there are any liabilities other than those included in the figures for debt held by the public, among other things.

These data are not easy to come by. For many years they appeared only in an obscure mimeographed document called the Statement of Liabilities and Other Financial Commitments of the United States that the Treasury Department produced only because it was required by a 1966 law to do so. The reason is that the financial statement showed vast government liabilities not included in the usual figures for the national debt. Since 1998, these data have been published in a document called the Financial Report of the U.S. Government. The fiscal year 2010 edition was released on Dec. 21.

The most important difference between the Financial Report and the federal budget is that the former calculates costs on an accrual basis, whereas the latter only measures cash flow. Thus if the federal government incurred a debt that would not be paid until some time in the future, that cost would not be part of the conventionally measured national debt. It would only add to the debt when cash had to be expended to cover the expense that had been incurred. It’s worth remembering that private corporations are required to use accrual accounting and corporate executives would be jailed for using the sort of accounting that the federal government routinely uses.

The difference in accounting methods is most easily grasped in terms of Social Security. It has a liability over the next 75 years of $8 trillion more than the projected revenue from payroll taxes and interest on the Social Security trust fund. In every meaningful sense of the term, this is part of the national debt, but is excluded from the official debt figures.

Another consequence of ignoring future liabilities in calculating the national debt is that programmatic changes that save money in the future are similarly ignored. Thus, according to the Financial Report, Medicare had estimated liabilities in excess of future revenues over the next 75 years of $38 trillion at the end of fiscal year 2009. However, in the meantime, Congress enacted the Affordable Care Act, which contains significant cost controls on future Medicare spending. As a consequence, Medicare’s long-term liabilities fell by $15 trillion in 2010.


Financial Report of the U.S. Government --- http://www.fms.treas.gov/fr/index.html

Bob Jensen's threads on the sad state of governmental accounting ---

Wind farms in Britain generated practically no electricity during the recent cold spell, raising fresh concerns about whether they could be relied upon to meet the country’s energy needs.

"Wind farms becalmed just when needed the most," by Louise Gray, The Telegraph, January 1, 2011 ---

Despite high demand for electricity as people shivered at home over Christmas, most of the 3,000 wind turbines around Britain stood still due to a lack of wind.

Even yesterday , when conditions were slightly breezier, wind farms generated just 1.8 per cent of the nation’s electricity — less than a third of usual levels.

The failure of wind farms to function at full tilt during December forced energy suppliers to rely on coal-fired power stations to keep the lights on — meaning more greenhouse gases were produced.

Experts feared that as the Government moved towards a target of generating 30 per cent of electricity from wind — while closing gas and coal-fired power stations — cold, still winters could cause a problem in the future.

Prof Michael Laughton, emeritus professor of engineering at Queen Mary University London, said wind turbines became still just when they were needed most, meaning that the country was reliant on imported oil or coal.

Wind farms becalmed just when needed the most Wind farms in Britain generated practically no electricity during the recent cold spell, raising fresh concerns about whether they could be relied upon to meet the country’s energy needs.

Cross-country skiers at the wind farm at Whitelee near Glasgow, which is Europe's largest, but conditions in the cold spell left turbines still Photo: CHRIS JAMESBy Louise Gray, Environment Correspondent 8:00AM GMT 01 Jan 2011 33 Comments Despite high demand for electricity as people shivered at home over Christmas, most of the 3,000 wind turbines around Britain stood still due to a lack of wind.

Even yesterday , when conditions were slightly breezier, wind farms generated just 1.8 per cent of the nation’s electricity — less than a third of usual levels.

The failure of wind farms to function at full tilt during December forced energy suppliers to rely on coal-fired power stations to keep the lights on — meaning more greenhouse gases were produced.

Experts feared that as the Government moved towards a target of generating 30 per cent of electricity from wind — while closing gas and coal-fired power stations — cold, still winters could cause a problem in the future.

Prof Michael Laughton, emeritus professor of engineering at Queen Mary University London, said wind turbines became still just when they were needed most, meaning that the country was reliant on imported oil or coal.

Fears over record gas bills in cold weather01 Jan 2011 Derek Pringle: a captain's wicket is loaded with symbolism and England have Ricky Ponting's number01 Jan 2011 'Bonkers' green energy risks power shortages01 Jan 2011 The cost to every household of subsidising energy generation by wind farms01 Jan 2011 The Ashes: Australian cricket is no longer a game for hard men from the outback01 Jan 2011 2010: The Year in Review01 Jan 2011 The wind turbines may even use up electricity during a calm period, as they were rotated in order to keep the mechanical parts working. There are more than 3,000 turbines in Britain and the Department of Energy and Climate Change planned to have up to 6,000 onshore and 4,000 at sea by 2020.

Charles Anglin, of Renewable UK, which represented the wind energy industry, said that over a normal year wind turbines were working about a third of the time. He said future energy plans took into account periods when wind turbines were still, just as current models had backup available for when nuclear or coal plants were down.

“There are periods, of course, when it is not windy but year on year we are seeing growth,” he said.

Britain had 2 per cent of electricity from renewables in 2002, but that figure was now almost 10 per cent, with wind providing about half.

Continued in article

"America's Financial Future: Our Choice... But Not For Long," by Ken Blackwell, Townhall, December 23, 2010 ---

In August of this year, Admiral Michael Mullens, Chairman of the Joint Chiefs of Staff, advised Congress that “The National debt is the biggest threat to our national security.” In November, voter sentiment against the debt and deficit led to an historic rebuke of Congressional incumbents. In December, the President’s Debt Commission laid out in stark terms the imminent economic impact of continued deficit spending.

Apparently rejecting these clarion calls, the President and Congress acted in the lame-duck session to cut not one dime of federal spending, while increasing the national debt by nearly $1 trillion. They are ignoring a glaring problem that, if not addressed soon, will cause a panoply of other problems.

Some insist that the problem with increasing the debt by nearly $1 trillion is that the borrowed money will be loaned to us by China. Concerning as it is that we have become the world’s largest debtor to a foreign sovereign whose interests are (to put it mildly) not always in harmony with our own, that's not the biggest problem. What ought to be of even greater, more immediate concern is the fact that China will refuse to loan us the money.

From October 2009 to October 2010, we financed $734 billion of our $1.690 trillion deficit through loans from foreign entities. And while China remains our largest creditor, China actually reduced the amount of U.S. debt it holds by $32 billion over the last year—from $938 billion to $906 billion. Through its actions, China has indicated that it will no longer fund the U.S. government's practice of perpetual deficit spending.

So if not China, then who? That's the problem.

The largest increase in U.S. debt holdings over the past year was a near five-fold increase by the U.K.—from $108 billion to $477 billion — and a near three-fold increase by Canada — from $44 billion to $125 billion.

The reality is that the U.K. and Canada do not have another half-trillion dollars to loan the U.S. in 2011. According to the World Bank, the entire economic output of the U.K. and Canada combined is only about $3.5 trillion annually.

So if China won't and the U.K. and Canada can't, who is going to loan us a trillion dollars in the next 12 months? Nobody knows.

The economic threat from China and other foreign countries loaning us trillions of dollars is like falling off the Empire State Building. It isn't the fall itself that kills you ... it's the sudden stop.

Commonwealth investors increased their U.S. holdings last year as they fled debt holdings in the Eurozone, nearly collapsing several E.U. government-bond markets derisively referred to as the PIIGS—Portugal, Italy, Ireland, Greece and Spain.

Continued in article

Jensen Comment
We're worrying about a paper tiger here. Zimbabwe has shown us the light. We simply print trillions of dollars to make up for the deficits. Ben Bernanke listed when he took a continuing education course from Robert Mugabe.

Although all 50 states are in deep financial troubles, what state is in the worst shape at the moment and is unable to pay its bills?
Hint: The state in deepest trouble is not California, although California is in dire straights!

How did accountants hide the pending disasters?

Watch the Video
This module on 60 Minutes on December 19 was one of the most worrisome episodes I've ever watched
It appears that a huge number of cities and towns and some states will default on bonds within12 months from now
"State Budgets: The Day of Reckoning Steve Kroft Reports On The Growing Financial Woes States Are Facing," CBS Sixty Minutes, December 19, 2010 ---

The problem with that, according to Wall Street analyst Meredith Whitney, is that no one really knows how deep the holes are. She and her staff spent two years and thousands of man hours trying to analyze the financial condition of the 15 largest states. She wanted to find out if they would be able to pay back the money they've borrowed and what kind of risk they pose to the $3 trillion municipal bond market, where state and local governments go to finance their schools, highways, and other projects.

"How accurate is the financial information that's public on the states? And municipalities," Kroft asked.

"The lack of transparency with the state disclosure is the worst I have ever seen," Whitney said. "Ultimately we have to use what's publicly available data and a lot of it is as old as June 2008. So that's before the financial collapse in the fall of 2008."

Whitney believes the states will find a way to honor their debts, but she's afraid some local governments which depend on their state for a third of their revenues will get squeezed as the states are forced to tighten their belts. She's convinced that some cities and counties will be unable to meet their obligations to municipal bond holders who financed their debt. Earlier this year, the state of Pennsylvania had to rescue the city of Harrisburg, its capital, from defaulting on hundreds of millions of dollars in debt for an incinerator project.

"There's not a doubt in my mind that you will see a spate of municipal bond defaults," Whitney predicted.

Asked how many is a "spate," Whitney said, "You could see 50 sizeable defaults. Fifty to 100 sizeable defaults. More. This will amount to hundreds of billions of dollars' worth of defaults."

Municipal bonds have long been considered to be among the safest investments, bought by small investors saving for retirement, and held in huge numbers by big banks. Even a few defaults could affect the entire market. Right now the big bond rating agencies like Standard & Poor's and Moody's, who got everything wrong in the housing collapse, say there's no cause for concern, but Meredith Whitney doesn't believe it.

"When individual investors look to people that are supposed to know better, they're patted on the head and told, 'It's not something you need to worry about.' It'll be something to worry about within the next 12 months," she said.

No one is talking about it now, but the big test will come this spring. That's when $160 billion in federal stimulus money, that has helped states and local governments limp through the great recession, will run out.

The states are going to need some more cash and will almost certainly ask for another bailout. Only this time there are no guarantees that Washington will ride to the rescue.

Continued in article

Also see the Becker-Posner Blog ---

The Government' Recipe for Off-Budget Debt
"US Government 'hiding true amount of debt'," by Gregory Bresiger, news,com ---

Bob Jensen's threads on the economic crisis ---

The Sad State of Government Accounting and Accountability ---

"A Wind Power Boonedoggle T. Boone Pickens badly misjudged the supply and price of natural gas," by Robert Bryce, The Wall Street Journal, December 22, 2010 --- http://online.wsj.com/article/SB10001424052748704368004576027310664695834.html

After 30 months, countless TV appearances, and $80 million spent on an extravagant PR campaign, T. Boone Pickens has finally admitted the obvious: The wind energy business isn't a very good one.

The Dallas-based entrepreneur, who has relentlessly promoted his "Pickens Plan" since July 4, 2008, announced earlier this month that he's abandoning the wind business to focus on natural gas.

Two years ago, natural gas prices were spiking and Mr. Pickens figured they'd stay high. He placed a $2 billion order for wind turbines with General Electric. Shortly afterward, he began selling the Pickens Plan. The United States, he claimed, is "the Saudi Arabia of wind," and wind energy is an essential part of the cure for the curse of imported oil.

Voters and politicians embraced the folksy billionaire's plan. Last year, Senate Majority Leader Harry Reid said he had joined "the Pickens church," and Al Gore said he wished that more business leaders would emulate Mr. Pickens and be willing to "throw themselves into the fight for the future of our country."

Alas, market forces ruined the Pickens Plan. Mr. Pickens should have shorted wind. Instead, he went long and now he's stuck holding a slew of turbines he can't use because low natural gas prices have made wind energy uneconomic in the U.S., despite federal subsidies that amount to $6.44 for every 1 million British thermal units (BTUs) produced by wind turbines. As the former corporate raider explained a few days ago, growth in the wind energy industry "just isn't gonna happen" if natural gas prices remain depressed.

In 2008, shortly after he launched his plan, Mr. Pickens said that for wind energy to be competitive, natural gas prices must be at least $9 per million BTUs. In March of this year, he was still hawking wind energy, but he'd lowered his price threshold, saying "The place where it works best is with natural gas at $7."

That may be true. But on the spot market natural gas now sells for about $4 per million BTUs. In other words, the free-market price for natural gas is about two-thirds of the subsidy given to wind. Yet wind energy still isn't competitive in the open market.

Despite wind's lousy economics, the lame duck Congress recently passed a one-year extension of the investment tax credit for renewable energy projects. That might save a few "green" jobs.

But at the same time that Congress was voting to continue the wind subsidies, Texas Comptroller Susan Combs reported that property tax breaks for wind projects in the Lone Star State cost nearly $1.6 million per job. That green job ripoff is happening in Texas, America's biggest natural gas producer.

Today's low natural gas prices are a direct result of the drilling industry's newfound ability to unlock methane from shale beds. These lower prices are great for consumers but terrible for the wind business. Through the first three quarters of 2010, only 1,600 megawatts of new wind capacity were installed in the U.S., a decline of 72% when compared to the same period in 2009, and the smallest number since 2006. Some wind industry analysts are predicting that new wind generation installations will fall again, by as much as 50%, in 2011.

There's more bad news on the horizon for Mr. Pickens and others who have placed big bets on wind: Low natural gas prices may persist for years. Last month, the International Energy Agency's chief economist, Fatih Birol, said that the world is oversupplied with gas and that "the gas glut will be with us 10 more years." The market for natural-gas futures is predicting that gas prices will stay below $6 until 2017.

So what is Mr. Pickens planning to do with all the wind turbines he ordered? He's hoping to foist them on ratepayers in Canada, because that country has mandates that require consumers to buy more expensive renewable electricity.

How do you say boonedoggle in French?

Mr. Bryce is a senior fellow at the Manhattan Institute. His latest book is "Power Hungry: The Myths of 'Green' Energy and the Real Fuels of the Future" (PublicAffairs, 2010).

Jensen Comment
It has long been my contention since the oil crisis in the 1970s that alternative sources of energy will most likely never compete with oil and gas until at least 2030 because the Middle East and other world suppliers of oil will simply turn up their valves and lower their prices to make oil and gas the cheapest alternative, especially when our infrastructure of pipelines and fuel stations are all geared to oil and gas.

But we should still vigorously search for alternative sources of energy. That's what will make oil and gas prices "relatively" cheap for everybody. Without these other alternatives, sheiks will simply add more gold plating to their limousines.

"Taxes and the Top Percentile Myth A 2008 OECD study of leading economies found that 'taxation is most progressively distributed in the United States.' More so than Sweden or France," by Alan Reynolds, The Wall Street Journal, December 23, 2010 ---

When President Obama announced a two-year stay of execution for taxpayers on Dec. 7, he made it clear that he intends to spend those two years campaigning for higher marginal tax rates on dividends, capital gains and salaries for couples earning more than $250,000. "I don't see how the Republicans win that argument," said the president.

Despite the deficit commission's call for tax reform with fewer tax credits and lower marginal tax rates, the left wing of the Democratic Party remains passionate about making the U.S. tax system more and more progressive. They claim this is all about payback—that raising the highest tax rates is the fair thing to do because top income groups supposedly received huge windfalls from the Bush tax cuts. As the headline of a Robert Creamer column in the Huffington Post put it: "The Crowd that Had the Party Should Pick up the Tab."

Arguments for these retaliatory tax penalties invariably begin with estimates by economists Thomas Piketty of the Paris School of Economics and Emmanuel Saez of U.C. Berkeley that the wealthiest 1% of U.S. households now take home more than 20% of all household income

This estimate suffers two obvious and fatal flaws. The first is that the "more than 20%" figure does not refer to "take home" income at all. It refers to income before taxes (including capital gains) as a share of income before transfers. Such figures tell us nothing about whether the top percentile pays too much or too little in income taxes.

In The Journal of Economic Perspectives (Winter 2007), Messrs. Piketty and Saez estimated that "the upper 1% of the income distribution earned 19.6% of total income before tax [in 2004], and paid 41% of the individual federal income tax." No other major country is so dependent on so few taxpayers.

A 2008 study of 24 leading economies by the Organization of Economic Cooperation and Development (OECD) concludes that, "Taxation is most progressively distributed in the United States, probably reflecting the greater role played there by refundable tax credits, such as the Earned Income Tax Credit and the Child Tax Credit. . . . Taxes tend to be least progressive in the Nordic countries (notably, Sweden), France and Switzerland."

The OECD study—titled "Growing Unequal?"—also found that the ratio of taxes paid to income received by the top 10% was by far the highest in the U.S., at 1.35, compared to 1.1 for France, 1.07 for Germany, 1.01 for Japan and 1.0 for Sweden (i.e., the top decile's share of Swedish taxes is the same as their share of income).

A second fatal flaw is that the large share of income reported by the upper 1% is largely a consequence of lower tax rates. In a 2010 paper on top incomes co-authored with Anthony Atkinson of Nuffield College, Messrs. Piketty and Saez note that "higher top marginal tax rates can reduce top reported earnings." They say "all studies" agree that higher "top marginal tax rates do seem to negatively affect top income shares."

What appears to be an increase in top incomes reported on individual tax returns is often just a predictable taxpayer reaction to lower tax rates. That should be readily apparent from the nearby table, which uses data from Messrs. Piketty and Saez to break down the real incomes of the top 1% by source (excluding interest income and rent).

The first column ("salaries") shows average labor income among the top 1% reported on W2 forms—from salaries, bonuses and exercised stock options. A Dec. 13 New York Times article, citing Messrs. Piketty and Saez, claims, "A big reason for the huge gains at the top is the outsize pay of executives, bankers and traders." On the contrary, the table shows that average real pay among the top 1% was no higher at the 2007 peak than it had been in 1999.

In a January 2008 New York Times article, Austan Goolsbee (now chairman of the President's Council of Economic Advisers) claimed that "average real salaries (subtracting inflation) for the top 1% of earners . . . have been growing rapidly regardless of what happened to tax rates." On the contrary, the top 1% did report higher salaries after the mid-2003 reduction in top tax rates, but not by enough to offset losses of the previous three years. By examining the sources of income Mr. Goolsbee chose to ignore—dividends, capital gains and business income—a powerful taxpayer response to changing tax rates becomes quite clear.

Continued in article

"Uncle Sam Will Help Buy You an Alpaca:  How the government produces negative unintended consequences," by John Stossel, Reason Magazine, December 23, 2010 --- http://reason.com/archives/2010/12/23/uncle-sam-will-help-buy-you-an

I often bash government. I say it can't do anything better than people in a free market.

But the government is unequalled in producing one thing: negative unintended consequences. Show me a government activity, and I will show you bad results that even the program's advocates probably don't like. Here's one example.

Congressmen say our government should "support and strengthen family-based agriculture."

Abstractly, supporting family-based agriculture sounds good. Government policies often harm small farms by favoring corporate agribusinesses. Government could help family farms by ending the subsidies that mostly go to the big guys. But that doesn't interest the politicians. They prefer to do things like creating tax breaks to encourage livestock breeding.

The tax breaks have led to a boom in alpaca breeding. Twenty-five years ago, there were 150 alpacas in America. Now, there are 150,000.

One website even advertises: "Have Uncle Sam Help You Buy Your Alpacas."

Rose Mogerman raises alpacas in New Jersey, the most densely populated state. "I fell in love with them," she said.

But she fell in love with the tax break first.

"Yes. I have to be honest," she said. "I might have had two. I wouldn't have had 100. ... I was looking for a tax shelter."

The Alpaca Breeders Association asked its members, on a scale of 1 to 10, what motivated them to get into alpaca breeding. More than half rated "tax benefits" a 10.

Yes, alpacas are cute. They are also valued for the fiber made from their fleece. But selling the fleece doesn't explain the growth in alpaca raising. At auctions, prices have gotten absurdly high. Half-ownership of one male alpaca sold for $750,000.

This is not necessarily a good thing. Economists at the University of California, Davis warn that the industry is in a speculative bubble. "Alpacas sold today as breeding stock have values wildly in excess of even the most optimistic scenarios based upon current fiber prices and production costs," Tina L. Saitone and Richard J. Sexton write.

"(C)urrent prices are not supportable by economic fundamentals and, thus, are not sustainable," the UC Davis economists write. Their paper was originally published in the Review of Agricultural Economics in 2007 with the great title "Alpaca Lies? Speculative Bubbles in Agriculture."

In other words, people have over-invested, bid up input prices, and produced too many animals given expected future demand for their fleece. As a result, I bet lots of people will lose money. Tax policy is surely a big reason for the over-investment, and an unintended consequence will be bankruptcy for some alpaca breeders.

I'm using "bubble" in a nontechnical sense because, strictly speaking, a bubble is an unsustainable inflation of asset prices inconsistent with economic reality. However, even a wrongheaded tax preference is real and sustainable. So if the tax break is the reason for the alpaca boom, there's really no bubble.

The Alpaca Owners and Breeders Association says the UC Davis study is "seriously flawed (and) full of misinformation," but offered no evidence for that bald assertion. The authors stand by their study, saying that no conflicting studies have been published and that their research is confirmed by a recent price decline.

Government is good at inflating bubbles. The housing bubble was fueled by low interest rates, tax breaks, and subsidies.

Last year, I reported how Congress' ridiculous tax credits stimulated demand for electric golf-carts. Electric vehicles are touted these days as "green" technology and so were given special tax treatment. Unfortunately, the plug-in carts are ultimately connected to coal-fired plants. The National Research Council says electric cars may be worse for the environment than gas-powered cars. That didn't matter to the policy-makers.

Continued in article

"Census: Fast Growth in States With No Income Tax," by Michael Barone, Townhall, December 23, 2010 ---

For those of us who are demographic buffs, Christmas came four days early when Census Bureau Director Robert Groves announced yesterday the first results of the 2010 Census and the reapportionment of House seats (and therefore electoral votes) among the states. The resident population of the United States, he told us in a webcast, was 308,745,538. That's an increase of 9.7 percent from the 281,421,906 in the 2000 Census -- the smallest proportional increase than in any decade other than the Depression 1930s but a pretty robust increase for an advanced nation. It's hard to get a grasp on such large numbers. So let me share a few observations on what they mean.

First, the great engine of growth in America is not the Northeast Megalopolis, which was growing faster than average in the mid-20th century, or California, which grew lustily in the succeeding half-century. It is Texas.

Its population grew 21 percent in the last decade, from nearly 21 million to more than 25 million. That was more rapid growth than in any states except for four much smaller ones (Nevada, Arizona, Utah and Idaho).

Texas' diversified economy, business-friendly regulations and low taxes have attracted not only immigrants but substantial inflow from the other 49 states. As a result, the 2010 reapportionment gives Texas four additional House seats. In contrast, California gets no new House seats, for the first time since it was admitted to the Union in 1850.

There's a similar lesson in the fact that Florida gains two seats in the reapportionment and New York loses two.

This leads to a second point, which is that growth tends to be stronger where taxes are lower. Seven of the nine states that do not levy an income tax grew faster than the national average. The other two, South Dakota and New Hampshire, had the fastest growth in their regions, the Midwest and New England.

Altogether, 35 percent of the nation's total population growth occurred in these nine non-taxing states, which accounted for just 19 percent of total population at the beginning of the decade.

My third observation is that immigration is slowing down and may be reversed. Immigration accelerated during the 1990s, and the 2000 Census showed more immigrants than the Census Bureau had estimated.

In contrast, immigration has clearly slowed down since the housing bubble burst and the construction industry went bust in 2007. And the 2010 Census showed fewer residents in several high-immigration states than the Census Bureau had estimated were there in 2009.

"PolitiFiction True 'lies' about ObamaCare," The Wall Street Journal, December 23, 2010 ---

So the watchdog news outfit called PolitiFact has decided that its "lie of the year" is the phrase "a government takeover of health care." Ordinarily, lies need verbs and we'd leave the media criticism to others, but the White House has decided that PolitiFact's writ should be heard across the land and those words forever banished to describe ObamaCare.

"We have concluded it is inaccurate to call the plan a government takeover," the editors of PolitiFact announce portentously. "'Government takeover' conjures a European approach where the government owns the hospitals and the doctors are public employees," whereas ObamaCare "is, at its heart, a system that relies on private companies and the free market." PolitiFact makes it sound as if ObamaCare were drawn up by President Friedrich Hayek, with amendments from House Speaker Ayn Rand.

This purported debunking persuaded Stephanie Cutter, a special assistant to the President. If "opponents of reform haven't been shy about making claims that are at odds with the facts," she wrote on the White House blog, "one piece of misinformation always stood out: the bogus claim . . ." We'll spare you the rest.

PolitiFact's decree is part of a larger journalistic trend that seeks to recast all political debates as matters of lies, misinformation and "facts," rather than differences of world view or principles. PolitiFact wants to define for everyone else what qualifies as a "fact," though in political debates the facts are often legitimately in dispute.

For instance, everyone can probably agree that Medicare's 75-year unfunded liability is somewhere around $30.8 trillion. But that's different from a qualitative judgment, such as the wisdom of a new health-care entitlement that was sold politically as a way to reduce entitlement spending. But anyway, let's try to parse PolitiFact's ObamaCare reasoning.

Evidently, it doesn't count as a government takeover unless the means of production are confiscated. "The government will not seize control of hospitals or nationalize doctors," the editors write, and while "it's true that the law does significantly increase government regulation of health insurers," they'll still be nominally private too.

In fact—if we may use that term without PolitiFact's seal of approval—at the heart of ObamaCare is a vast expansion of federal control over how U.S. health care is financed, and thus delivered. The regulations that PolitiFact waves off are designed to convert insurers into government contractors in the business of fulfilling political demands, with enormous implications for the future of U.S. medicine. All citizens will be required to pay into this system, regardless of their individual needs or preferences. Sounds like a government takeover to us.

PolitiFact is run by the St. Petersburg Times and has marketed itself to other news organizations on the pretense of impartiality. Like other "fact checking" enterprises, its animating conceit is that opinions are what ideologues have, when in reality PolitiFact's curators also have political views and values that influence their judgments about facts and who is right in any debate.

In this case, they even claim that the government takeover slogan "played an important role in shaping public opinion about the health-care plan and was a significant factor in the Democrats' shellacking in the November elections." In other words, voters turned so strongly against Democrats because Republicans "lied," and not because of, oh, anything the Democrats did while they were running Congress. Is that a "fact" or a political judgment? Just asking.

As long as the press corps is nominating "lies of the year," ours goes to the formal legislative title of ObamaCare, the Patient Protection and Affordable Care Act. For a bill that in reality will raise health costs and reduce patient choice, the name recalls Mary McCarthy's famous line about every word being a lie, including "the" and "and."

Bob Jensen's universal health care messaging --- http://www.trinity.edu/rjensen/Health.htm

Darn! I could've become rich 50 years ago suing over the "prize" inside a box of Cracker Jacks!
If I'd only been smart enough to move to California and hire a lawyer.

Now the prize in each box of Cracker Jacks must be taped to the business card of a law firm.

And alongside the nutrition chart in each California fast food restaurant must be a bulletin board for law firm business cards.

Just think of how much easier it would be for Attorney General Cuomo if Lehman had offered an Elmo toy with the purchase of each Ropo 105 and a Barbie Doll with each Repo 108! The jingle could've been "A Barbie date with every 108."

"A Lawyer's Paradise:  Atop all its other woes, California adds litigation madness," The Wall Street Journal, December 24, 2010 ---
http://online.wsj.com/article/SB10001424052748703581204576033781635883412.html#mod=djemEditorialPage_t .

With an unemployment rate at the national outer limits of 12.4%, a state budget deficit of $28 billion, and rains that would have challenged Noah, Californians are in a glum mood this week. But that's no reason to take it out on the kids who may be the only happy citizens left in California. Tell that to the Center for Science in the Public Interest, which is suing McDonald's in California in the hopes of obtaining a court injunction banning Happy Meals. Only in California could such mindlessness float alongside a state crisis.

The Center for Science in the Public Interest is representing the mother of a six-year-old girl in a class-action lawsuit on behalf of all California children under the age of eight who have been exposed to McDonald's "inherently deceptive and unfair" marketing in the last three years. The suit claims that McDonald's has "engaged in a highly sophisticated scheme to use the bait of toys to exploit children's developmental immaturity and subvert parental authority" and that arguments over Happy Meals have caused "needless and unwarranted dissension in their parent-child relationship." Who can doubt that tableside Happy Meals arguments will be at the center of these kids' sessions with their shrinks in another 10 years?

The suit arrived too late for this year's report by the American Tort Reform Association of the nation's top "Judicial Hellholes," in which California placed second, behind top-ranked Philadelphia. (And for aficionados of the tort follies, remember that lawsuit filed in Long Island, New York, by one doctor who sued his doc partner for not yelling "Fore!" before an errant ball hit him in the eye? The state court of appeals ruled this week that failure to yell "fore" isn't "reckless conduct.")

The tort reform group's report lists some other notable examples of frivolous class-action suits in California, including one against more than a dozen olive-oil companies for fraud and deception. Allegedly, their extra-virgin olive oil wasn't extra virgin enough to meet USDA standards. Where were these attorneys when Madonna was singing about similar virginal nuances?

Another suit alleged that Apple misled customers with the claim that "reading on the iPad is just like reading a book." Au contraire. Unlike a real book which can be left outside on a hot day, the iPad automatically shuts down after reaching a critical temperature in order to allow its system to cool down.

More serious was a class-action suit brought against one of the nation's largest nursing-care providers Skilled Healthcare Group. It alleged that some of the company's facilities sometimes didn't provide the 3.2 nursing hours per patient per day as required by California's health code. A Humboldt County jury demanded that the company pay $677 million in damages. The financially strapped company settled for $62.8 million, but not until after its stock plunged 75%. The plaintiffs bar ended up with roughly $20 million of the haul and the patients with $26 million.

So by all means, add tort hellhole to floods, fiscal calamity and whatever else is turning once heavenly California into something else.

Bob Jensen's threads on the Lehman/Ernst Repo 105 scandal are at

Hi Paul,

I didn't know I changed any rules. I thought we were debating allocating economic resources via markets versus whatever planning board sharing system preferred by Paul Williams.

The Chicago Boys experiment in Chile ---

Rule 1
You assert that the Chicago Boys experiment was a "total disaster."
Rule 1 of scholarship is to back up such a bold out down with convincing evidence that the experiment was a "total disaster."
We're still waiting for you to follow Rule 1 with hard data backing up your claims of knowledge of the experiment and facts regarding its total disaster.

Rule 2
If an experiment is a disaster, Rule 2 calls for suggesting something concrete to put in its place that might've been less of a disaster.
We're still waiting for you to follow Rule 2 with something concrete for Chile since Chile has not yet reached utopian status.
Is there a non-capitalist nation that is your preferred model for lifting up the poor without capitalism?
Is there a modern utopian society that abandoned capitalism that serves as a model of success?
Were still waiting for some solid economic answers from you!

Rule 3
Rule 3 is to hope that an initiative to save lives and accomplish something marvelous might succeed even if it runs counter to your academic desires that it will fail.
Keith Olbermann, for example, violated Rule 3 in the Iraq war by hoping that the Surge would fail so that George Bush and Dick Cheney would be humiliated in utter defeat of the war. Olbermann hoped the Surge and that General "Betrayus" would fail.

I have a feeling that you hope the Chicago Boys experiment in Chile is a "total disaster" and that, as result of relying upon a Friedman experiment, Chile will ideally  fall deeper and deeper into the worst poverty in history so that you can then call the Chicago Boys experiment really, really, really a "total disaster."
How about a little Rule 3 hope even if it runs contrary to what you believe so deeply about Friedman experiments never succeeding.
Or do you really, really, really want the Chicago Boys experiment to fail?
Did you also hope the Surge would fail in Iraq?

Rule 4
Rule 4 is to give credit where credit is due. When Olbermann was confronted with evidence that the Surge far exceeded our expectations on the military front he shirked off the military successes and focused entirely on its failure to meet its goals perfectly on the political front.
Will you find any reason to give some credit for the Chicago Boys experiment to achieve some of its goals in Chile or will you pull an Olbermann by glossing over the successes in order to rant about where it did not perfectly achieve its goals.

Apples versus Geraniums
I would like to know who paid for Putnam's Italian streets, sewers, community centers, parks, food stamps (or "ration books" in Cuba), law enforcement, fire protection, homes, trucks, cars, water  works, schools, cathedrals, art, opera, etc? Where did the communities you admire most in Italy obtain the resources to share so wonderfully? Two solutions come to mind. One might be the profits from capitalism that in turn provided generous taxes to share among the residents. The other is that the Mafia returned home with the loot (just kidding)

When you tell us how Putman's top villages funded these things then you will be talking more about  apples than geraniums!
Can you tell us how these things were funded.

I'm a firm believer that under capitalism hope, love, and charity may have their greatest opportunities as long a robber barons don't usurp the markets essential for the success of capitalism. Friedman never denied that the poor would have to receive assistance. Jagdish is correct in that Friedman proposed a negative income tax for that purpose with internal controls to hold down frictions of fraud, deceit, and exploitation.




Maxine Says:

Let me get this straight . . . .

We're going to be "gifted" with a health care
plan we are forced to purchase and
fined if we don't,

Which purportedly covers at least
ten million more people,
without adding a single new doctor,
but provides for 16,000 new IRS agents,

written by a committee whose chairman 
says he doesn't understand it,

passed by a Congress that didn't read it but
exempted themselves from it,

and signed by a President who smokes,

with funding administered by a treasury chief who
didn't pay his taxes,

for which we'll be taxed for four years before any
benefits take effect

by a government which has 
already bankrupted Social Security and Medicare,

all to be overseen by a surgeon general 
who is obese,

and financed by a country that's broke!!!!!

'What the hell could
possibly go wrong

Bob Jensen's universal health care messaging --- http://www.trinity.edu/rjensen/Health.htm

Return to the Tidbits Archives ---


Shielding Against Validity Challenges in Plato's Cave ---

·     With a Rejoinder from the 2010 Senior Editor of The Accounting Review (TAR), Steven J. Kachelmeier

·     With Replies in Appendix 4 to Professor Kachemeier by Professors Jagdish Gangolly and Paul Williams

·     With Added Conjectures in Appendix 1 as to Why the Profession of Accountancy Ignores TAR

·     With Suggestions in Appendix 2 for Incorporating Accounting Research into Undergraduate Accounting Courses

Shielding Against Validity Challenges in Plato's Cave  --- http://www.trinity.edu/rjensen/TheoryTAR.htm
By Bob Jensen

What went wrong in accounting/accountics research?  ---

The Sad State of Accountancy Doctoral Programs That Do Not Appeal to Most Accountants ---


Bob Jensen's threads on accounting theory ---

Tom Lehrer on Mathematical Models and Statistics ---

Systemic problems of accountancy (especially the vegetable nutrition paradox) that probably will never be solved ---

Bob Jensen's economic crisis messaging http://www.trinity.edu/rjensen/2008Bailout.htm

Bob Jensen's threads --- http://www.trinity.edu/rjensen/threads.htm

Bob Jensen's Home Page --- http://www.trinity.edu/rjensen/