The controversy that has abounded recently about the use of waterboarding as an “enhanced interrogation technique” for terrorist detainees is rather superfluous. Torture is different to different people, depending on your frame of reference or the “relative” circumstances. Maybe, you’re like the person who said about pornography, “I can’t describe it, but I know it when I see it”. Is that the way we see torture?
Torture is technically defined as something that causes intense suffering and/or pain particularly in the context of punishment or coercion. The legal difference between torture and other forms of ill treatment lies in the level of severity of pain or suffering imposed. In addition, torture requires the existence of a specific purpose behind the act, such as to obtain information. Methods of torture can be both physical and/or psychological and can have lasting effects.
It is really difficult to get your arms around the legal definition since courts in different countries don’t agree. For example, the European Convention of Human Rights (HCHR) definition, as interpreted by the Court of Strasbourg, considers torture as just inhuman and degrading treatment, which can mean no invasive action at all. That means, for example, all the detainees are being tortured because they are being held without trial. What about what the U.S. government did to Japanese citizens during WWII, or what police do to criminals as a matter of routine?
I think we make the mistake of getting bogged down in the definition, which is rather illusive, but should speak to the events or conditions that cause the use of torture and then make moral judgment from that.
John Locke, the 17th century English philosopher who greatly influenced our founders and is the source of our belief in the rule of law and the priority of legislative power, also believed there were situations where the rule of law did not apply. These are circumstances where the executive branch has the “power to act according to discretion, for the public good with prescription of the law, and sometimes even against it”. Remember when President Lincoln suspended the writ of habeas corpus in 1861 when Confederate sympathizers in Maryland burned bridges and attacked federal troops. The Supreme Court ruled that only Congress could do this and ordered the release of the criminals. Lincoln disobeyed the order, saying that the executive must sometimes do things it would not do in ordinary times. Does this change how you view Lincoln or his values?
I would say that 9/11 was extraordinary, even more so than the attack on Pearl Harbor. The question is: Was the nation in danger on 9/11? Was the President justified to imprison the terrorists in Guantanamo? Were the enhanced interrogations justified? Were they useful in protecting our country and its citizens?
Our beliefs and values are such that nothing stands in the way of protecting our freedom and the safety of our people. If the world thinks less of us because we waterboarded 3 high level terrorists in the process, so be it. Let’s not dress this issue up in some righteous quest to save our reputation in the world. If you ask me, doing less to protect our freedom and the lives of our citizens would actually harm our status on the world stage, give comfort to our enemies, and send the wrong message to our friends and allies.
Sunday, May 24, 2009
Tuesday, May 19, 2009
California, Here I Go!
That’s a take-off on a song that Al Jolson made famous in the 20’s called “California, Here I Come”. I was not around at that time but we’ve come a long way from then. So long in fact, that it now looks like we will be replaying that song in reverse. As I write this, Californians will be voting on six tax initiatives aimed at saving the State from utter bankruptcy.
It now appears that a reckoning may be here for the liberal tax and spend governance that has exemplified this State for many years. I predict that the voters, weary from this perennial gouging by public unions and special interests, will reject most of these initiatives to take more of their money. I hope this rejection will be the wake-up call needed to motivate real tax reform. Otherwise, the federal government will have another bailout on its hands, for surely California is too big to fail! It also poses an interesting question the Constitution never anticipated, “How does Washington take over a State?”
These are interesting times for many States that are now facing nearly a $100B budget deficit this year. Their “soak the rich” policies have created a mass exodus that leaves a vacuum of depleted jobs and a serious brain drain of entrepreneurs and small business. It illustrates that because people, capital, and businesses are mobile they will generally go to more tax-friendly locations when given the choice, particularly in these times.
The Great Tax Myth
The notion that increasing State taxes on the rich (>$200/yr.) provides more services, better schools, and improved infrastructure which in-turn attracts people and businesses is an utter myth. In fact, the opposite is true. The Wall Street Journal recently reported data from Richard Vedder of Ohio University which showed that from 1998-2007 more than 1,100 people a day moved from the highest income tax States such as California, New Jersey, New York, and Ohio and relocated mainly to nine tax haven States like Florida, Nevada, New Hampshire, and Texas. Also, these no-income tax States created 89% more jobs and had 32% faster personal income growth.
Take for example, New Jersey, a State where I lived from the age of 19-27. In the early 60’s the State had no income tax and no sales tax. It ran budget surpluses and attracted a variety of industries. Today its income and sales taxes are among the highest in the nation, yet it generates continuous deficits and its schools rank among the worst. We have seen similar trends over the years in California, where teacher’s unions have negotiated the highest salaries for classroom teachers, yet their schools have the second lowest test scores in the nation.
Let’s hope that politicians look at the Texas model which still has no State income tax and created more jobs in 2008 than all other 49 combined. It’s the economy, stupid, that generates revenues for services and growth, not the tax rate.
Good luck California, you’re beautiful but I don’t like your personality!
It now appears that a reckoning may be here for the liberal tax and spend governance that has exemplified this State for many years. I predict that the voters, weary from this perennial gouging by public unions and special interests, will reject most of these initiatives to take more of their money. I hope this rejection will be the wake-up call needed to motivate real tax reform. Otherwise, the federal government will have another bailout on its hands, for surely California is too big to fail! It also poses an interesting question the Constitution never anticipated, “How does Washington take over a State?”
These are interesting times for many States that are now facing nearly a $100B budget deficit this year. Their “soak the rich” policies have created a mass exodus that leaves a vacuum of depleted jobs and a serious brain drain of entrepreneurs and small business. It illustrates that because people, capital, and businesses are mobile they will generally go to more tax-friendly locations when given the choice, particularly in these times.
The Great Tax Myth
The notion that increasing State taxes on the rich (>$200/yr.) provides more services, better schools, and improved infrastructure which in-turn attracts people and businesses is an utter myth. In fact, the opposite is true. The Wall Street Journal recently reported data from Richard Vedder of Ohio University which showed that from 1998-2007 more than 1,100 people a day moved from the highest income tax States such as California, New Jersey, New York, and Ohio and relocated mainly to nine tax haven States like Florida, Nevada, New Hampshire, and Texas. Also, these no-income tax States created 89% more jobs and had 32% faster personal income growth.
Take for example, New Jersey, a State where I lived from the age of 19-27. In the early 60’s the State had no income tax and no sales tax. It ran budget surpluses and attracted a variety of industries. Today its income and sales taxes are among the highest in the nation, yet it generates continuous deficits and its schools rank among the worst. We have seen similar trends over the years in California, where teacher’s unions have negotiated the highest salaries for classroom teachers, yet their schools have the second lowest test scores in the nation.
Let’s hope that politicians look at the Texas model which still has no State income tax and created more jobs in 2008 than all other 49 combined. It’s the economy, stupid, that generates revenues for services and growth, not the tax rate.
Good luck California, you’re beautiful but I don’t like your personality!
Friday, May 8, 2009
GM's Bankruptcy - More of the Unfairness Doctrine
Developments in the bankruptcy negotiations for Chrysler and GM are excellent examples of this administration’s definition of the fairness doctrine, as they see it. It all depends on whose shoes you’re wearing. In my last post, the Chrysler bankruptcy showed how the secured lenders got swindled out of their contractual rights under bankruptcy law by government intervention. The GM bankruptcy illustrates the bias treatment of unsecured creditors due to government edict. Both these events violate the basic rules of a free market and the rule of law, which are the basic precepts of our founding fathers and our democracy.
In a conventional Chapter 11 bankruptcy, unsecured creditors are all in the same position and are usually treated by the court in a similar way, depending on their risk level and their importance to the company’s survival. In the GM case, there are three unsecured creditors in question, the bondholders (pension funds, hedge funds, investors) who bought these bonds from brokers, the United Auto Workers Union (UAW) who are owed money by GM as a result of the retiree health benefit trust set up by the company, and the U.S. Treasury who recently shelled out money in an effort to keep GM out of bankruptcy.
The bondholders hold the greatest debt at $27.2B, the union is next with $20B, followed by the U.S. Treasury with $16.2B. The government imposed solution is for the bondholders to get 10% of the ownership from converting their note to equity. That’s less than five cents on the dollar. The U.S. Treasury gets 50% of the stock and $8.1B in debt, as much as 87 cents per dollar, and the union gets 40% of the stock which covers one-half of their note and $10B more in cash over time. That’s worth approximately 76 cents on the dollar. The government and the UAW will own 90% and manage GM. How’s that for fairness? It looks like the private sector comes up short again when the government calls the shots and the guy with the largest claim gets short- changed in a rather disproportionate way.
Tell me, do you think that GM will ever get private investment capital in the future? Would private money readily come to TARP banks that are now being run by Treasury? When politics start to control business decisions, profits become less important. Witness the stagnation of business growth in the Socialist countries of the world. When growth slows the only option a Socialist government has is higher taxes. I’m afraid the cat’s out of the bag unless private interests go to the courts to block these two unfair and unjust bankruptcy charades. We better start standing up about this, because it’s our money that’s at stake. You can’t keep making something from nothing.
In a conventional Chapter 11 bankruptcy, unsecured creditors are all in the same position and are usually treated by the court in a similar way, depending on their risk level and their importance to the company’s survival. In the GM case, there are three unsecured creditors in question, the bondholders (pension funds, hedge funds, investors) who bought these bonds from brokers, the United Auto Workers Union (UAW) who are owed money by GM as a result of the retiree health benefit trust set up by the company, and the U.S. Treasury who recently shelled out money in an effort to keep GM out of bankruptcy.
The bondholders hold the greatest debt at $27.2B, the union is next with $20B, followed by the U.S. Treasury with $16.2B. The government imposed solution is for the bondholders to get 10% of the ownership from converting their note to equity. That’s less than five cents on the dollar. The U.S. Treasury gets 50% of the stock and $8.1B in debt, as much as 87 cents per dollar, and the union gets 40% of the stock which covers one-half of their note and $10B more in cash over time. That’s worth approximately 76 cents on the dollar. The government and the UAW will own 90% and manage GM. How’s that for fairness? It looks like the private sector comes up short again when the government calls the shots and the guy with the largest claim gets short- changed in a rather disproportionate way.
Tell me, do you think that GM will ever get private investment capital in the future? Would private money readily come to TARP banks that are now being run by Treasury? When politics start to control business decisions, profits become less important. Witness the stagnation of business growth in the Socialist countries of the world. When growth slows the only option a Socialist government has is higher taxes. I’m afraid the cat’s out of the bag unless private interests go to the courts to block these two unfair and unjust bankruptcy charades. We better start standing up about this, because it’s our money that’s at stake. You can’t keep making something from nothing.
Saturday, May 2, 2009
Chrysler Bankruptcy - Saved by Fiat ?
We are now witnessing one of the most outlandish violations of business ethics in history, compliments of your U.S. government on the road to Socialism. Can you believe that our President has proclaimed that Chrysler now has a new lease on life because it’s going to be managed by Fiat? A company that makes some of the worst cars on the planet! In addition, the largest shareholder in this new company (55%) is going to be the United Auto Workers, who have single handedly caused this bankruptcy.
Fiat would actually take a 20% stake, plus warrant options, for nothing but an exchange of “know-how” – no cash, not one dollar! Fiat’s warrants will give it the opportunity to increase its ownership (equity) by up to 15 more percentage points, if it introduces efficient engines in the U.S. and rolls out a car that gets 40 miles to the gallon. The irony is that Chrysler already has this “know-how” today, but nobody wants to buy the car.
Here’s another joke. To make this deal happen, the U.S. Treasury (you and me) will contribute $3.3 billion to the plan: $2.0 billion to pay off Chrysler’s senior secured lenders at 33 cents on the dollar (wonder why they’re hacked off), and the rest of the money will be used to pay the company’s bills during the bankruptcy. The government also says that it is willing to “pitch-in” another $4.76 billion more in order to keep Chrysler running for several years. That’s on top of the $4.0 billion that the government lent Chrysler previously, a debt that will now be forgiven as part of this arrangement. With a deal like this, why do we need Fiat? Britney Spears could run this company pretty easily and continue her singing career as well!
Oh yes, what did the UAW give up to make this all happen? Well, they gave up part of their retiree health care fund which was owed $10.6 billion by Chrysler; instead they will only get $4.6 billion paid back with interest. Someone should tell them that most of us get Medicare when we retire, but of course the UAW can’t settle for that. Also, they gave up a cost-of living allowance, a Christmas bonus, two paid holidays, and they will forego vision and dental care benefits. What a pity; such a sacrifice. Maybe someone should also tell them that many workers are taking pay cuts today, but I guess that would be too much to ask. So, since the UAW has given up so much, let’s give them 55% of the company! Who negotiated this deal for the government, Barney Frank or Chris Dodd?
To top off this travesty, President Obama had a press conference to criticize the secured lenders who, according to bankruptcy law, have the contractual right to be paid off first on the $6.9 billion of secured debt they hold, but I guess Mr. Obama just rewrites the law as he goes along. Those “greedy vultures” who lent that money to Chrysler in good faith should be happy with 33 cents on the dollar. He ought to know, he won the election.
Fiat would actually take a 20% stake, plus warrant options, for nothing but an exchange of “know-how” – no cash, not one dollar! Fiat’s warrants will give it the opportunity to increase its ownership (equity) by up to 15 more percentage points, if it introduces efficient engines in the U.S. and rolls out a car that gets 40 miles to the gallon. The irony is that Chrysler already has this “know-how” today, but nobody wants to buy the car.
Here’s another joke. To make this deal happen, the U.S. Treasury (you and me) will contribute $3.3 billion to the plan: $2.0 billion to pay off Chrysler’s senior secured lenders at 33 cents on the dollar (wonder why they’re hacked off), and the rest of the money will be used to pay the company’s bills during the bankruptcy. The government also says that it is willing to “pitch-in” another $4.76 billion more in order to keep Chrysler running for several years. That’s on top of the $4.0 billion that the government lent Chrysler previously, a debt that will now be forgiven as part of this arrangement. With a deal like this, why do we need Fiat? Britney Spears could run this company pretty easily and continue her singing career as well!
Oh yes, what did the UAW give up to make this all happen? Well, they gave up part of their retiree health care fund which was owed $10.6 billion by Chrysler; instead they will only get $4.6 billion paid back with interest. Someone should tell them that most of us get Medicare when we retire, but of course the UAW can’t settle for that. Also, they gave up a cost-of living allowance, a Christmas bonus, two paid holidays, and they will forego vision and dental care benefits. What a pity; such a sacrifice. Maybe someone should also tell them that many workers are taking pay cuts today, but I guess that would be too much to ask. So, since the UAW has given up so much, let’s give them 55% of the company! Who negotiated this deal for the government, Barney Frank or Chris Dodd?
To top off this travesty, President Obama had a press conference to criticize the secured lenders who, according to bankruptcy law, have the contractual right to be paid off first on the $6.9 billion of secured debt they hold, but I guess Mr. Obama just rewrites the law as he goes along. Those “greedy vultures” who lent that money to Chrysler in good faith should be happy with 33 cents on the dollar. He ought to know, he won the election.
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