In financial lingo, zombies are debtors that have little hope of recovery but manage to avoid being wiped out thanks to support from their lenders or the government. Zombies suck life out of an economy by consuming tax money, capital, and labor that would be better deployed in growing companies and sectors. Meanwhile, by slashing prices to generate sales, zombie companies can drag healthier rivals into insolvency. —BusinessWeek You would think that once was enough, that the failure of the first round was obvious, but no, Congress has done it again. They have released the second half of Paulson’s $700 billion and that shuffling sound you are hearing is the sound of zombies, coming at the smell of freshly-spilled money. According to Peter Coy, writing for BusinessWeek: “The Bush Administration has already ladled out billions o... [Read Full Article]

Insanity: Doing the same thing over and over again and expecting different results. — Albert Einstein That, as much as anything coming from the psychiatric community, sums-up insanity. It is the delusion, the break with reality, that provides the force of Einstein’s definition. What he is saying is that for Action X there is Result A and that you can perform Action X (assuming that nothing go wrong in the execution) a hundred or a thousand or a million times and you will always get Result A. It is like gravity. You can stamp your feet, argue and intellectualize against gravity all you like and it won’t matter a bit. Gravity works. The Physics of Economics – Tax Cuts Economics is another sphere where we have empirical evidence that certain things work and certain things do not. When President-elect Obama announced that 40% of his new economic stimulus plan involved tax cuts on business and individuals, his aides admitted t... [Read Full Article]