Adding the debt of the mainly nationalised banks to the National Debt raises it by £1.5 trillion

This article mentions that the ONS is adding the debt of RBS and Lloyds/HBOS to the National Debt as it considers them de facto nationalised companies. This raises the National Debt by £1.5 trn (£1,500,000,000,000).

This, however, is a slightly misleading way of looking at things. The debts of the banks are being counted as government debt - but the assets of the bank are not being counted as national assets. This does seem rather odd - and does show how accounting conventions can be a bit strange.

It also strikes me that - now the debt of these banks is considered nationalised debt - the government should go the whole hog and nationalise them. There is no benefit for the state in having small minority shareholders in these firms if they are not willing to bear the losses the banks are incurring and are insisting the taxpayer pick up the tab.

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Selangor Water Concession Buy-Back Offer: A Response

I received the following response below from HYS, who believes that our approach to the take over of water assets and concessions in Selangor victimises bondholders and shareholders. I will not respond in detail, as I believe the answer is already in the statement made earlier on the basis of our acquisition.

My short reply is, shareholders and bondholders enter into agreements eyes wide open. Should a concessionaire decides to so over-leverage itself, raising more money than it ever needed to operate the business relative to its actual equity investment, should the Government (i.e., Malaysian tax-payers) be made to bear the brunt of the bailout?

The politely written letter is as follows:

According to respective company's announcement, the Selangor Government offer to acquire their respective water business without taking over the debt.

Personally, I find it not fair to the shareholders of the company and the lenders.

The initial investment in the business was financed by equity holder through the company's share and lenders via debt. The purchase consideration offered by the State Government is below the sum of company's market capitalisation and net debt. Eventhough the management of the company would love to support the State Government's Proposal, they still need to take care the stake holders' wealth.

If the companies are being forced to sell the assets to the State Government, the implication to the malaysia stock market's sentiment is unpredictable. The lenders may end up holding huge NPL.

Hope I make my point clear.

Just to comment a little further, it's a little like the bailout of Malaysian Airlines (MAS), which got into deep financial trouble in the early 2000s due purely to excesses and weak management, and was unable to pay back its bondholders - should the Government have step in as it did and pay double the value of MAS, at the expense of the tax-payers?

So what do you think?

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Obama drives up the fear factor

CNN:

A new national poll indicates that nearly three out of four Americans are scared about the way things are going in the country today.

Seventy-three percent of those questioned in a CNN/Opinion Research Corporation survey released Monday say they're very or somewhat scared about the way things are going in the United States. That's six points higher than in an October poll.

Nearly eight in 10 say things are going badly in the country, with just 21 percent suggesting that things are going well. The survey also says that three out of four Americans are angry about the way things are going in the country. But three out of four questioned say that things are going well for them personally.

The poll was released a day before President Obama gives a prime-time address before a joint session of Congress.

...

Seventy-three percent of those questioned in a CNN/Opinion Research Corporation survey released Monday say they're very or somewhat scared about the way things are going in the United States. That's six points higher than in an October poll.

Nearly eight in 10 say things are going badly in the country, with just 21 percent suggesting that things are going well. The survey also says that three out of four Americans are angry about the way things are going in the country. But three out of four questioned say that things are going well for them personally.

The poll was released a day before President Obama gives a prime-time address before a joint session of Congress.

...

Obama has been selling gloom and doom to push his "stimulus" monstrosity through Congress adn it is having a negative effect on the pubic attitudes and will have an unstimulating effect on the economy. People made fun of President Bush when he asked Americans to go shopping, but that in fact helped to turn the economy around after the terorist attacks and along with tax cuts ushered in over six years of growth and reducing deficits.

Obama's poor leadership skills are being exposed, regardless of teh excuese made for him by his supporters.

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Preserve Fantasy Raptor Jobs

Would shutting down the Raptor really put 95000 people out of work? No. David Axe has the data:

Problem is, that 95,000 number counts indirect employment at firms for whom the F-22 program is just one of many clients. And it also counts Lockheed assembly workers who are in high demand for other aviation projects. In fact, ending Raptor production today might not result in a single unemployed aerospace worker.

Not to belabor the point, but this is one of the things that Mark Bowden might have bothered to research when writing his Atlantic article about the F-22. Unfortunately, he did not; rather, he uncritically repeated claims made by pilots and manufacturers (neither groups are noted for supplying informed, unbiased economic data) as to the aircraft's merits and economic impact. I would say that Bowden's article is singularly terrible (see James Fallows on this point), but for the fact that the article is a near repeat of Robert Kaplan's.... affectionate take on the B-2.

In any case, the F-22 topic of the day is that the Air Force has requested another 60 Raptors, which is a substantial reduction from what the Air Force wanted (380 fighters), but a substantial increase over what some defense analysts are willing to give. It's fair to say that my own thinking on this issue has evolved. While the United States is unlikely to face a crisis of air superiority in the short or medium term, it's true enough that foreign designs have become competitive with the best US air superiority aircraft, short of the F-22. Better training still gives the US a substantial edge, but it is nice to have the best aircraft available. I have also become steadily more disillusioned with the progress of the F-35 Lightning II; it's becoming apparent that the capabilities gap between the F-22 and the F-35 will be huge, but the price tag gap won't be very large at all.

Thus, while the entire F-22 project may have been a serious misallocation of resources, I don't think it naturally follows that buying an additional sixty aircraft, at this point, is a terrible idea. From an initial position it probably would have made more sense to continue production of advanced F-15s and F-16s. From where we are now, though, there seems to be little point in taking a step back. I doubt very much that there will ever be a manned air superiority aircraft better than the F-22; it will probably be the last of its kind.

Cross-posted to TAPPED.

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Funny. Not sports. But funny.

The Big Picture Dad with a great find.

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An afternoon at the bookstore

My favorite books store is Half Price Books in Collage Station. Because the city is the home of Texas A&M there is always a wide selection of military history. I found some real jewels today and only spent around $19.

Chesty, by Col. Jon T. Hoffman is about one of the most famous Marines of all time Lt. Gen. Lewis B. Puller. He worked his way up from a private to become a general. In the process he bacame a legend in the Marine Corps. Upon hearing that the Marines were surrounded at the Chosin Reservoir, he told the Marines under his command that we had the enemy right were we wanted them. We could shoot in any direction to kill them.

The Reminiscences of a Marine is by Maj. Gen. John A Lejeune whose family was moved from Nova Scotia to Louisiana where he was home schooled by his mother until he enrolled at LSU. In 1884 at age 17, he got an appointment to the Naval Acadamy in Annapolis. He spent the next 45 years in the service becoming the Commandant of the Marine Corps. The Marines East Coast base bears his name--Camp Lejuene. He was an early proponent of amphibious warfare.

Devil Dogs, Fighting Marines of World War I is by George B. Clark. The Germans gave the Marines that nick name because of the fericious way they fought. One of the great Marine Corps quotes comes from action in France as the Marines were joining some French units who were preparing to retreat. A Marine said "Retreat hell! We just got here." They stood their ground and defeated the German advance.

The other book jumps to the US invasion of Afghanistan. First In, An Insider's Account of How the CIA Spearheaded the War on Terror in Afghanistan is by Gary Schroen.

It may take me a few months to wade through these four, but I think it will be an enjoyable time.

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Effort and Merit

Aye.

...the key is that these two statements are very different:

Jason Greenwood, a senior kinesiology major at the University of Maryland echoed that view.

“I think putting in a lot of effort should merit a high grade,” Mr. Greenwood said. “What else is there really than the effort that you put in?”

“If you put in all the effort you have and get a C, what is the point?” he added. “If someone goes to every class and reads every chapter in the book and does everything the teacher asks of them and more, then they should be getting an A like their effort deserves. If your maximum effort can only be average in a teacher’s mind, then something is wrong.”

Sarah Kinn, a junior English major at the University of Vermont, agreed, saying, “I feel that if I do all of the readings and attend class regularly that I should be able to achieve a grade of at least a B.”

"Putting in a lot of effort should merit a high grade" is different than saying "I feel that if I do all the readings and attend class regularly that I should be able to achieve a grade of at least a B." The latter isn't really "entitlement"; it's a description of reality at any major college campus. Most students, in most courses, will get Bs if they attend class, and do all the work. This is as it should be; it's not as if a campus-wide B average is somehow vile and unnatural.

The Greenwood quote is different. Mere effort never merits a high grade; while I appreciate hard work, it has to result in actual achievement. Even if effort did merit high marks, grading "effort" is, in practice, impossible; how am I to know how hard student X worked on his or her paper? College isn't third grade, where direct monitoring of student process is at least conceptually possible. I do appreciate the frustration of students who do a lot of work and receive a bad grade, but it's not a problem for which there's a satisfactory solution.

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