HR 3221... the end of the US as we know it.

Dear Senator;


Please carefully consider both the practical cost and the precedent the US Government would be setting by passing HR 3221 or "The Foreclosure Prevention Act of 2008".

A vote for this bill is a vote for a blank check estimated to add an additional $800 Billion to the National Debt and many analysts and economists including our own Comptroller General David Walker have noted that the Federal Reserves response has already effectively given an estimated $300 Billion to the housing industry. As Congressman Ron Paul put it, this would be "the mother of all bailouts".

The US Government's policies and pressures on the banking industry throughout the 1990s and 2000s, and the Federal Reserve's slashed interest rates are directly responsible for creating an environment of artificially minimal risk for banks, which then extended lines of credit to people who would have never previously qualified - yet now the very same government is blaming "corporate greed" for the problems we are now facing.

It's time for Washington D.C. to learn that the meddling of legislature into the market has dire consequences for all involved by mitigating risks which directly contribute to poor judgment on the part of major institutions. We, the American people, cannot afford this bill's passage. We cannot afford the $5 trillion dollars in foreclosure debt, we cannot afford to add to the already extreme national debt, nor can we continue to subsist on the Keynesian mindset of the Federal Reserve and of politicians at large. Practically speaking, this bailout is likely to be the proverbial straw that broke the camels back.

But also from a moral standpoint, companies under American law were always intended to be treated effectively the same as individual citizens. When individuals and companies take on risks, and they pay off - they should be able to reap the benefits of their gamble. But also they need to bear the consequences for their failures. An analogy I used today is quite appropriate actually: From time to time, I buy and sell commodities on eBay. When I purchase an item that I think I might be able to resell, I am taking a risk - if I spend $200 but am at last only able to resell that item for $100, I have taken a loss. But I cannot go to my neighbor and demand that she pay me $100 to make up the difference at gun-point. I would be arrested for that behavior.

Yet that is PRECISELY what congress is attempting to do for Freddie Mac & Fannie Mae - and what it has already done for Bear Stearns.

Unfortunately, where my analogy is a scant 100 or 200 dollars, this bailout is Billions, even Trillions - forcibly taken from the American taxpayer and funneled straight into the hands of giant banks.

Surely you cannot believe that this is an acceptable moral position... Not only does it force those of us who didn't buy into the idea of cheap money and variable interest rate home-ownership to pay for the mistakes of those of us who did, it also shields the banks from having to learn from their mistakes. The passage of HR 3221 would send a message to every bank in America that no matter how stupid a thing they invest in, no matter how poor their lending review process is - the US Taxpayer will always be there to clean up after them. The excessively risky lending behavior of the past 10 years will be but a drop in the bucket compared to the tsunami that will be forthcoming as a result of this legislation.

Furthermore, I can't even begin to address the 270 amendments filled with the most egregious pork-barrel spending/legislating imaginable... What business, for example, do dozens of amendments related to energy policy have in a bill labeled the "Foreclosure Prevention Act"?? Honestly, the whole thing should be rejected outright on those grounds alone...

I personally fear that this bill will almost single-handedly bankrupt the United States and annihilate the value of our currency - which has stood so strong in the world for over 200 years and is now crumbling with each passing day.

Please, PLEASE vote NO on HR 3221. Let the banks and individuals pay for their own mistakes... and in doing so let's begin to salvage what we can of the dollar. The market will correct itself without your help if you let it. It might hurt for a year or two, but that is nothing compared to the damage that this bill will do to the United States in the long term.

Please vote NO.

Thank you,
Sean W. Malone
W. Hollywood, CA

Of course... it's all too late. The bill has passed through the Senate. No response yet from Boxer or Feinstein... as if I will ever hear back from them. "Representative government" my arse! This couldn't be worse for the American people or our economy. The tree of liberty needs refreshing...

MOVIE REVIEW: The Dark Knight

I went to see the mega-hit film, "The Dark Knight" this past Monday. I haven't done a film review of any type for a while, so I think it might be appropriate for this one.

Of course Heath Ledger gave an amazing final performance that blew everyone away... the writing was good, the directing was excellent, Bale's Batman continues to be kickass in all it's Frank Miller-style glory. It had action, adventure, mayhem, a Joker that rivals anything Mark Hamill ever voiced, fabulous new toys and a bigger scale than Batman Begins... plus the fact the whole cast of the first returned tells me that Nolan did a lot right by his people. On top of all that, I'm not a very big fan of Hans' (though I am of James Newton-Howard), and I think the score was well done and did what the movie needed it to do... not that it will be recorded as one of the greats.

But the thing I really loved about the film, was that it provided a premise about humanity that wasn't at all cynical!

Batman is really becoming one of my favorite heroes in the comic book lexicon... He is a human with no special powers, but uses his body and his mind to stand up to those initiators of aggressive force who will always threaten the lives and liberties (and subsequently happiness) of his fellow citizens. He's in a position to administer some justice, so he does. He doesn't kill, but he does step over the line in some cases... I have this love-hate relationship with superheroes as it is anyway. As much as I love the idea of justice being appropriately meted out by individuals acting righteously, I also hate the idea of concentrated power - or really any situation where one person is assuming the moral authority to decide what right and wrong are in all cases. Especially when so many superheroes have no solid philosophical core.

Superman has basic midwestern "decency" as his guide... Batman, "crime"... But heroes like The Flash? X-Men? Nothin... I mean really...

Anyway, that's neither here nor there... the point I want to make about the film is that somewhere towards the end, a choice must be made. Not by Batman, or any representative of government... but by ordinary individual people. The choice is a great little piece of game-theory actually:

There are two ferries loaded with people (no gay jokes please). One is full of prisoners. The other full of law-abiding citizens. Both ships are wired with explosives which are set to detonate at 12-midnight. The gaffe is: Each ship also has a detonator wired for the other ship... if one ship blows the other up before midnight, then that ship will survive. Will the criminals decide to blow-up the citizens? Citizens blow up the criminals? Or will neither act aggressively and accept their own deaths?

Such a great game isn't it? Criminals on the first ship would be "expected" to just take over and blow the other people up... and the law-abiding citizens immediately dehumanize the criminals suggesting that maybe they don't deserve to live anyway.

But ultimately... each ship was prepared to accept the loss of their own lives over being responsible for taking someone elses'... Of course it's a film, of course it's hyperbole... but it's the humanistic and optimistic position. Makes me really happy...

The whole film has terrible villains, mobsters, and a glut of corrupt government officials and cops enabling the criminals (just like it is in reality... hooray!) - but at no point does it make the statement that humans themselves are evil. It's the individuals, the average citizens and the people inspired by Batman's example who are all heroes... and thus, give Mr. Wayne something always worth fighting for.

Well done Nolan... Well done.

The Dark Knight:

Las Vegas!

Ohhhhhhhh..... Yeahhhhhhhhhhhh!

Man I had a great weekend. First off... I got to see 10 friends I haven't seen in over 3 years - 5 of whom have been my best friends forever. Hanging out with Rob, Zach, Tim, Wes & Frank was such an awesome thing. I've missed all those guys a lot.

Living in NYC and Los Angeles (and Portland!) has made keeping up with friends' activities a little tricky sometimes... Worse, I'm still too poor to travel on my own dime for my own reasons, typically.

Sooo.... when Rob told me he was getting Married - I was really excited for him (his soon-to-be wife is awesome and they've been dating for what... 7 years?), but I also knew it was going to be almost impossible for me to fly to Nebraska to visit them. Then, as if my prayers had been answered by an all-benevolent and super-intelligent purple space-squid, they decided to have the bachelor party in fabulous Las Vegas, Nevada!!

Well, Las Vegas is not only an easy, breezy 4.5 hour drive from Los Angeles, and apparently I can get there on less than one tank of gas - Hoorayy for the Honda Fit :) - but also... it's a hell of a fun place to be.

So I got there last Friday at about 5pm... to the Tropicana... which, let's be honest, was cheap. It's at the end of the strip and thus isn't a great location, but when you don't plan to spend much of your weekend actually *in* your hotel, who cares really? Shortly after I arrived, 6 of us (me, Rob, Zach, Tim, Rob's brother Ryan, and Geoff) went to the Brazilian restaurant "Samba" inside the Mirage. We went specifically for the rodizio and had sooo much meat we all about exploded. Some great pictures from the end of the meal in the linked album... Check those out.

Several hours, and way too much food later we proceeded down the strip to meet the rest of the group - stopping first at the Rockhouse for massive quantities of alcohol (a half yard for me, full yard for some) and then again to enjoy the Bellagio's fountains (more pictures available of that!). Finally acquired the rest of our group and proceeded to the "Treasures: Gentleman's Club & Steakhouse".

In case anyone's wondering, I didn't order a steak. ;)

Actually I'd never been to a strip-club before so it was a different experience for me... but it turned out to be a lot of fun. Mostly we did the obligatory bachelor party things for Rob - embarrassing him quite a bit at first I believe, which is always good - and then Wes and I spent the rest of our time there enjoying the atmosphere and conversing with each other... had a really fabulous time actually. Also, I might note that one of our party shocked us all by dropping an estimated $400.00 on public & private lap-dances... notably not a rich man, but apparently a very dissatisfied man, this perplexed me some.

Anyway, that was a lot of fun... and we didn't make it back to the Tropicana til about 3:30am. Then Wes and I got up "early" (9am) and went with Tim to get tickets for Penn & Teller's show that night.

The rest of the day was spent ambling about in the 115 degree desert heat, enjoying the Monte Carlo's fine buffet and walking through the Venetian. Soon enough... me, Wes, Tim and Frank were at the Rio, All-suites Hotel and Casino walking in to the Penn & Teller theatre.

I don't even know where to begin to describe the show... many bits I'd seen, some I hadn't... all were worth seeing in person. Highlights for me were Penn's cold-reading demonstration where he "psychically" read people's minds and told them what jokes they had selected from randomly chosen and completely real (I looked through one myself) joke books... all the while explaining how evil it is to claim psychic powers and play on the emotions of grief stricken, emotionally charged people. It was so brilliant. And... a variant on Houdini's metamorphosis where Penn did close-up magic for a selected audience member who was asked to hold a video camera and after an extremely funny sequence of plastic cows appearing out of "thin air", the actual trick was that the man from the audience was inexplicably replaced by Teller, though there was no apparent change in either the way the camera was focused or on the person himself on-stage from the perspective of the audience....

Jesus those guys are good at what they do.

Then.... After the show... I actually got to talk to them both for a little bit :) Penn a little longer than Teller. Meeting heroes is the coolest thing ever... especially when they are the coolest people ever. They are both exactly how they present themselves... pardon the reference, but there's no Bullshit there at all. Gracious and brilliant people, both a little nutty (but certainly no worse than me) and fundamentally honest. Moxie & Zoltan are lucky kids, that's all I've got to say.

I've emailed Penn a bit, and gotten kind responses, perhaps at some point I can hope for a bit more than that... I could live in Vegas ;) Maybe... holy shit it was hot...

Anyway... I think the main point here is that I had a fabulous time. I got to see some of my best friends, enjoy a spectacular environment complete with naked women and meet two of the greatest people in the world.

It was a good weekend.

"Windfall" Profits Taxes and why Barbara Boxer is an Idiot

Quite often, political emails are sent about the offices at Stiletto Entertainment. These emails are usually nothing more than preaching to the proverbial choir. Here in the entertainment industry in Los Angeles, it really doesn't surprise me that I get 3-5 emails a day preaching some quasi-socialist, "liberal" democratic position on one issue or another. It's usually equal parts blather and anti-Republican vitriol... Typically, it's just not worth caring much about.

Besides which, being a nut-job libertarian in the midst of such overwhelming group-think doesn't really make me want to pick a fight.

But yesterday... I got an email that contained a letter Senator Barbara Boxer had written as a response to one of her constituents about why she co-wrote and sponsors "The Consumer-First Energy Act of 2008" - S.3044.

This bill is a "Windfall Profits" tax that she'd like to impose on oil companies like Exxon Mobile (who posted a one quarter profit of $10 Billion recently)... Of course, the email that was sent to me was from a Stiletto employee who, true to form, decried the evil Republican minority shooting it down. The following was my response (slightly updated):

***

You know... I don't usually involve myself in the political emails bandied about by people in this office, but this one is a bit of a pet peeve of mine and probably deserves a response... The following is an excerpt from an article by Shikha Dalmia from Nov. 9th, 2005 in Reason Magazine called “Inherit the Windfall” – this is how she sets it up:

“When surging oil profits prompted both conservative and liberal members of Congress to summon oil company executives to Capitol Hill for a hearing earlier today, a public relations rookie crafted the statement below for the oil chiefs to deliver to their interrogators. Cooler heads prevailed, however, and the statement was discarded in a gilded trash bin. An underpaid Reason intern moonlighting as a janitor salvaged it for publication. Here it is:”

…I’m skipping over part of it to get to the relevant quote here, but what you really need to understand is that she's writing in satirical prose to illustrate the absurdity of Barbara Boxer's (and others') position:

“Our aggregate profits are so large because we have huge sales. But our profit margins—the more relevant measure—are below the overall Standards and Poor industry average. Exxon Mobil, the most profitable company among us, posted $100 billion in sales last quarter —the first American company to hit that mark ever. But its profits were $10 billion—hardly a margin that suggests the "price gouging" that some of you have accused us of.

In fact, the oil industry's margins are well below those of Gannett, the largest newspaper corporation—and no doubt far, far below those of Fox News, whose pandering populist anchor, Bill O'Reilly, maximizes his company's profits by questioning our right to maximize ours. If you really want a reliable revenue stream, why not tax windbags instead of windfalls?”

My own note: This article is from 2005, yes - but the public opinion, popularity and ability of oil companies to produce more has only decreased in the past 3 years… it's really easy to blame oil companies for high-prices, but perhaps you should be looking at Barbara Boxer (and her colleagues) and the policies of the US Government over the past 30 years to obtain a more comprehensive understanding of why prices are high. The rest of this fictitious letter is a litany of policy blunders – many, if not most of which, were not sponsored by Republicans and with the exception of only a few, nearly all were “bi-partisan”.

Profits have almost nothing to do with the current prices… Bottom line, it's a terrible fallacy to think that you can look at a company's profits in terms of just the numerical value and make some kind of assessment of what that means - YES, $10,000,000,000 seems like a ridiculously large number, but for the size of industry?? It’s really not that much… in fact, if you take that $10 Billion in profits divided by JUST the current population of the US (Google’s estimate for July is 301,139,947 – then every citizen in the US has only contributed a mere $33.21 all quarter to the profits of Exxon Mobil! How much money have you actually spent on Gasoline in the last 3 months? I've spent several hundred and I'm not even home half the time... (And of course, since it’s not just people in the US who buy oil, the actual contribution to the Exxon’s profits from your wallet is more like $20 a year - add $20 per dependent)

Furthermore, if you don't understand that even a large number like $10B has to be taken as a percentage in context of their operating costs… in this case Dalmia's point is that 90% of all revenue went into doing nothing but paying for operating costs throughout the whole industry… then you're not really understanding anything at all.

The Washington Post recently presented an article actually that pointed out that Exxon Mobil ranked 127th in 2004 in terms of profit margin throughout Fortune 500 companies… Yet they are No. 1 in aggregate profits. So if they deserve to be kicked around for “gouging”, why not all the other companies above it doing proportionally better?

The software industry typically has a profit margin of around 90% for example... Is it a surprise to anyone with that kind of a ratio how Bill Gates can become the richest man in the world within the span of 10-15 years?? Software has minimal overhead (i.e. basically just employee salaries and some offices) so the net gains are huge... which is great! - Because that frees up a ton of capital for further research and development.

Oil companies don't have as high a percentage to work with, but fortunately, when your profit is still $9-10 Billion, there's some money to work with after paying dividends to your investors... but the point is, it's scaling up or down and in either case you can't ignore that the costs for energy research are incredibly high compared to other fields... But that's exactly what supporters of tripe like S.3044 are doing...

But... continuing on with the article:

“Besides, we already tried windfall profit taxes—along with leisure suits and polyester ties—with disastrous results.
During the period between 1980 and 1987, the last time when such a tax was in effect, 1.6 billion fewer barrels of oil were produced—because such taxes diminish the incentive to produce oil.

Furthermore, if we are prohibited from recovering our exceedingly high storage costs, we will be less inclined to maintain large oil inventories that help tide the country over during production disruptions caused by calamities such as Hurricane Katrina. Please note that even though oil prices went up during the hurricane, no one outside the disaster area had to go without oil. Surely that is preferable to acute shortages and long waiting lines at the gas pump, which cause American workers to lose wages and the American economy to lose productivity.”

Basically – the prices right now have a lot more to do with long-term policy decisions than any sort of “price gouging”… unfortunately, politicians like Ms. Boxer have a VERY easy time just pointing to a big number and scaring the crap out of people – then applying malicious intent to a large group of individuals that the popular narrative already says are “evil” anyway. Weak.

On top of all that… Apparently Democrats (and Republicans) don’t seem to understand that any tax you impose on a business comes out in the price it charges for its services. So one of two things happens: Scenario A – Gas costs more for everyone to make up for the new tax, or Scenario B – Several oil companies go out of business, resulting in lower production (read: less supply, same level of demand = higher prices). Another great little article on this topic going a little deeper into the economics of this is here:

http://www.reason.com/blog/printer/126976.html (AND - it’s from just a couple days ago.)

Sorry, like I said, I normally just stay out of these emails – but this one just needs some better information… and I’m apparently feeling rather pedantic today. Anyway… I’m going to go ahead and disagree with Senator Boxer on just about everything she wrote – and be thankful an asinine bill like S.3044 isn’t yet law of the land…

Cheers everyone!

Sean W. Malone
Music Manager

...blah blah blah


***


Again... it's REALLY easy to point to a large, scary number and make people think that it's just "another case of corporate greed" and that they're being robbed. But as easy as it is, it's just about as fictitious and definitely as stupid.

Unfortunately - all that is right in line with the narrative we've been fed for a hundred years, so no one questions the premises...

It's getting to a point for me, that I'm so embarrassed by our politicians' collective lack of even basic economic knowledge... I'm a musician for pete's sake - I shouldn't be the one explaining this stuff to people! Least of all a US Senator... But apparently even a perfunctory knowledge escapes these people at every turn.

The Robin Hood story is a great tale, not because he "robbed from the rich to give to the poor" which is just unearned, bullshit collectivist wealth-redistribution (see: communist) but because he fought off thieves. The "rich" weren't bad because they turned a profit - but because they used their power as government officials (the SHERIFF of Knottingham) to take from those who'd earned their living. Somehow, socialists in this country (and others) turned that story into the opposite - persecuting successful entrepreneurs and glorifying government theft.

It's past time we all started asking the real questions of people like Sen. Boxer and quit buying into our politician's anti-intellectual bullshit... We don't even need to dig very far to find the fallacies in bills like S.3044.


PS. My "solution" is: Get government out of the way... Oil companies like BP and Shell are our best bet for a clean energy future... they already know energy (production and distribution!) and they've got the capital to do the research... they also have the market incentives to do it (and have been doing the work for years now). Don't "help" by subsidizing them, let them succeed or fail on their own merits - on their own ability to provide us (consumers) with what we need and want. That's it. Freedom... I know I'm a broken record on that issue... but it's pretty simple.

Catching Up: 4th of July - Freedom Day Post

Year after year, Independence Day remains the holiday that I both love and hate the most...

232 years ago, America did something no other nation in the history of the world has been able to do. Noooo, there's nothing new about a country throwing off the chains of a ruling nation and forming their own government - that happens all the time. In every other case the world has ever seen, whenever a nation has achieved "independence" it has used that moment in time only to establish yet another form of tyranny.

Historically, my favorite parallel has always been France actually... primarily because the ideas and philosophies that comprise our Constitution are derived largely from the French enlightenment - that and of course because France underwent it's own revolution, throwing off the shackles of Louis XV, during the same time as we got rid of King George.

The crucial difference of course was that while we took the philosophies created by David Hume, Voltaire, Baron de Montesquieu, Adam Smith as well as our own Thomas Jefferson, Ben Franklin, Thomas Paine, and John Adams - and a ton of other intellectuals that I'm not listing here - and created a system of government purposefully designed to protect individual liberty, the French replaced their monarch with a military emperor...


Tyranny is only possible if the people of a nation abdicate their inalienable rights to life, liberty and the pursuit of happiness to rulers of any kind. When we grant one group the power to decide what we are allowed to say (read: think), what we are allowed to do with our bodies and our property, who we are allowed to spend time with, or anything else then we are no longer free individuals. With freedom comes some responsibility of course - and only one real "limit" to that freedom is necessary to live among other people... any individual who wishes his own liberty simply must respect the liberty of others - for this reason, I've never been an advocate of anarchy. One must have recourse in the event that his freedoms have been abridged. We are not "free" to murder or to steal, not free to control to initiate force against others under any circumstances. Government of course, has only one real ability... force. Ultimately, a government is a group of people that have been granted the authority by a majority (implicitly or explicitly) of people in a nation to initiate force against others... for this reason, any powers of government must be watched relentlessly.

Our founding fathers understood this perfectly. This is why the system of government they created had specific, clear and easy to understand (before lawyers got too involved) limitations on what the government of the United States is allowed to do.

This is why I love the 4th of July.

It reminds me that, unique to human history, on this day in 1776, an intellectual movement was started that set about to create a government not based on "divine will" or ancient tradition, and not led by the desires of one thug to control other people with violent force - but instead based on the idea of providing as much freedom as possible to all people equally. Of course, some will point out that we still had slavery at the time, and that's true - though the truth is, every country did and many still do unfortunately. But regardless of this failure to live up to the full meaning of the ideas expressed by our nation's founders, those ideas are what provided the foundation for people all over the world becoming more free and more prosperous with each passing year.


However...

The 4th of July also reminds me that as America has progressed, especially over the last century or so, we have steadily lost sight of the fact that it is liberty that has been responsible for our success as a nation. We've grown fat and lazy, and security and safety seems to mean more to us now than liberty. We are now afraid to offend, in some cases, we're not only afraid - it's now actually a crime in some contexts! Worst of all, instead of expecting a government that protects our rights as individuals, we've spent the last 100 years clamouring for a government that "gives" us stuff...

Of course we never stop to ask where the stuff the government is passing around comes from. We don't concern ourselves with the cost, only the warm, fuzzy feeling we get "knowing" that our government is right there at every turn - protecting us from our own decisions, ready at a moments notice to bail us out if we buy a house we can't afford, never learn to manage our lives, or don't bother planning for our future... and always on someone else's dime.

Add to that regulatory organizations that are antithetical to our Bill of Rights, like the FCC controlling speech, DEA controlling substances adults are allowed to use, or even the IRS - which is one of the most egregious abuses of all when you stop and realize that the premise of an income tax is fundamentally that government has the power to take a part of your income (the product of your labor) by force... and we have a lot to be disturbed about.

The defenders of these ideas say things like "well, we need to provide safety nets" and that it's the rich who are going to pay for it all anyway - and of course they have "enough" money to support everyone else (apparently depending on the amount of income someone else has, suddenly it becomes morally acceptable to steal from them?). And of course all those rich people got rich via creating businesses - so we should definitely tax them too.

Of course, those businesses will inevitably pass the taxes they pay onto their consumers in the form of higher prices (or of course, fail entirely at the expense of the jobs of the employees who worked there). Someone has to pay the piper afterall... and to those who complain that businesses are in control? Ever stop to ask yourselves whether or not it'd be possible for them to be in control if government didn't have the power to use force within markets? That's another post entirely, but when someone has the power to decide your fate, it's only natural to do everything you can to make sure that your fate is secured positively... this means lobbying for the "right" force to be used.


None of this was part of the original plan...

On this 4th of July, I'd just like to remind everyone I know that it's the guarantees of FREEDOM, not democracy, and certainly not government's poorly provided (and monopolistic) services that has made America one of the most successful and prosperous nations of all time. Thomas Jefferson believed that it was everyone's duty to defend the public liberty - violently if necessary.

That's a pretty heavy thought.

I don't think we need a violent overthrow of the government. But I do think we need to wake up and defend our individual rights... Those rights are our birthright as Americans, as descendants of a group who created a system based on the rule of law and the philosophical idea that all people have ownership of their own lives - not a king or any other governor, and we would do well to remember that... Those are my thoughts for today. Tonight however, I will spend the evening on my roof watching the fireworks coming off of Hollywood Bowl - for which we have John Adams to thank by the way ;) Damn... those guys thought of everything!