By Monty Pelerin, posted March 11th, 2010 http://www.economicnoise.com/2010/03/11/the-wealthy-beg/ In a further sign of the deterioration of society, the wealthy (or formerly wealthy) believe they are entitled to be bailed out for their losses. The victims of the Madoff and Stanford scams are appealing to Congress for a bailout. Bloomberg reports:
Together, the groups hope to persuade Congress to add a requirement to the regulatory overhaul bill, now under Senate consideration, that brokerage firms pay about $4 billion in additional fees to the Securities Investor Protection Corp. fund. SIPC protects U.S. investors’ accounts against fraud or bankruptcy. The victims also want Congress to require the fund to compensate them up to $500,000 each in losses.
We all should have sympathy for the victims of these two Ponzi schemes. After all, their lives have been adversely affected, in some instances irreparably. However, to believe that the rest of the country has an obligation to make them whole is a bit outrageous.
The lobbying initiative “gives new meaning to the word chutzpah,” said James Cox, a professor at Duke University School of Law. “This is just a tax increase. It’s levied on banks but customers end up paying.”
Their effort is natural. After all, in a society that bails out banks that created the economic crisis, why would others not believe they are entitled to the same treatment? When “victimology” becomes the code, all deserve to be recompensed for anything that is bad, or even unsatisfactory. No one should lose money, even when it is their fault.
The claimants seek more than to be made whole. Apparently they believe they should be compensated for the fictitious profits that were reported to them:
Stephen Harbeck, president of SIPC, said his fund has enough money to cover all legally permissible claims up to the $500,000 maximum. SIPC has agreed to pay more than $650 million to other Madoff claimants.
Harbeck declined to comment on the victims’ lobbying. “Speaking only for myself, I cannot see where it would be good policy to change the law to pay fictional, contrived investment profits in a Ponzi scheme,” Harbeck said.
  What has become of society when such claims can be entertained? Have we socialized all losses? No, only those losses for the rich or politically connected.
The madness of this game is obvious. Joe Sixpack, struggles with increased expenses and taxes. He tries to feed his family and save some money along the way. Yet he is increasingly being asked to divert his earnings to bail out others for their unwise decisions.
Sometimes bad things happen to good people. That is just a fact of life. When that happens, we tend to want to help out. But the way the government plays this game is different from how private charity would play it. Good people, in the eyes of the government, are defined as rich people or large corporations. When bad things happen to them, we must make them whole.
Joe and Jill Sixpack are not rich enough to be considered “good people.” When something bad happens to them, they must fend for themselves. One wonders how long this scam can continue. How long will the Joes and Jills of this country tolerate this abuse?
By Monty Pelerin, posted March 11th, 2010 http://www.economicnoise.com/2010/03/11/another-blow-to-air-passengers/
Washington is cleaning up the airline industry with more regulation. NOT!
This latest example of Washington intervention is more patently absurd than others. All are absurd; this example is just so simple that it is understandable without a complex chain of reasoning.
It is classic top-down management in a world that is run from the bottom up. It illustrates perfectly why reality cannot be legislated out of existence. Trying to do so always produces unintended consequences. In this, as in most examples to help consumers, your life has been made worse.
From the American Thinker:
Unintended Consequences of Regulatory Overreach: Airline Delays
Clarice Feldman
Hoping no doubt to curry favor with passengers beset by lengthy delays Administration bureaucrats set unconscionably high fines for delays. As a result airlines will simply cancel delayed flights rather than bear these punishing consequences for often unavoidable delay:
Under new federal guidelines that take effect next month, airlines can be fined up to $27,500 per passenger if a plane is stuck on the tarmac for longer than three hours.
“How can they say there is nothing wrong with having someone sit on a seat and run out of water and everything and sit on there for three, four, five hours? That’s ridiculous,” Kelly said.
With the new fines, a delayed MD-80 could cost American Airlines close to $4 million, and a fine for a full 757 could cost more than $5 million.
“It’s unavoidable that more flights will be canceled to avoid fines,” said American Airlines spokesman Steve Schlachter. “It’s one of the unintended consequences of a bill that has no flexibility.”
Reminds me of Stalin’s punishing factory managers as saboteurs when they could not meet the unrealistic goals set in Five Year Plans by state planners.
Thomas Lifson adds:
Continental Airlines CEO Jeff Smisek explicitly told an investor conference that the airline will cancel flights rather than delay them and suffer fines.
By Monty Pelerin, posted March 10th, 2010 http://www.economicnoise.com/2010/03/10/a-shot-across-the-entitlement-bow/   Anyone who has looked at the financial condition of this country knows insolvency cannot be remedied without severe cutbacks in entitlements such as Social Security, Medicare and Medicaid. Similarly, major cutbacks in the welfare and warfare state will be required. These latter cutbacks are not sufficient. The bulk of the cuts must come from entitlements.
For those depending upon these benefits, the bad news is just starting. Bloomberg reports:
Erskine Bowles, co-chairman of the commission on U.S. deficit reduction, said entitlement programs such as Social Security will turn the nation into a “second- rate power” if their costs aren’t reduced.
“We’re going to mess with Medicare, Medicaid and Social Security because if you take those off the table, you can’t get there,” Bowles said today in a speech to North Carolina bankers in Greensboro. “If we don’t make those choices, America is going to be a second-rate power and I don’t mean in 50 years. I mean in my lifetime.”
By Monty Pelerin, posted March 10th, 2010 http://www.economicnoise.com/2010/03/10/state-university-vs-private-university/ 
I don’t have the data, but perhaps some readers might. I have often speculated that the cost of a state-university degree is higher than a private university. In my state, NC, it would be interesting to compare the cost per graduate of UNC-Chapel Hill to the cost per graduate of Duke University. I am speaking of cost, not tuition. Obviously, tuition at state universities is lower because it is subsidized by taxpayers. If anyone has a source of data, for either NC or any other state, I would be pleased to receive it and analyze it to test the hypothesis.
Not related to this cost comparison is a post today by Karl Denninger. Denninger takes no prisoners on his website. Here is a post dealing with the “privileged class,” the University of Illinois. I suspect most states are similar. We know from many sources that government employees are better compensated than their counterparts in the private sector.
Tuesday, March 9. 2010
Posted by Karl Denninger in Education at 19:56
Then aim your “demonstrating” at the people who are bankrupting your state – and you personally.
I speak specifically of people such as those that The Daily Illini pointed out – all employees for the University of Illinois.
Let’s see what we have here….
The head of the football team – the coach – makes $1 million. For coaching a college football team.
The “intercollegiate (sports) director makes $600,000.
The President of the University is just $50 large shy of a half-million.
A large number of Deans and Professors make $250,000 – or more.
Indeed, I have to get eight pages into this list before I drop below $200,000.
Oh, we also have two Lieutenants in the Police Department that make $192,545 – each – per year. Handing out tickets to scooter riders without helmets and issuing University Parking Citations (probably more than $200,000 worth of those) I’m sure.
Now maybe you can justify how it is that these fine bastions of American Government Employment earn these bloated salaries.
I will point out some demographics to readers for Champaign-Urbana, Illinois, where the University happens to be.
The median home price is $159,900, which the top fifteen pages of these employees can afford to pay cash for with one year’s salary.
The median income for a family is $52,628, while per-capita income according to the BEA is $31,354. Fewer than FIFTEEN PERCENT of the persons on the University Payroll make equal to or less than the median per-capita income for the city.
Oh, and let’s not discuss retirement benefits. Legacy pensions anyone? How about medical care once one retires. And speaking of which, what’s the retirement age?
There has been much written about overblown pensions, double and even triple-dipping and similar games. But this table, nicely sortable by salary, makes quite clear exactly who the system employs and how much they pay – and that the pay is, shall we say, ridiculous compared to the average private-sector prevailing wage.
This much should be clear: If you’re curious about why you’re being bankrupted with parabolic tuition and fee increases along with demands to take on outrageous amounts of debt to get a so-called “college education”, you might discern from the above that the only “educating” you’re getting in the UofI system is how to hold still while you’re bent over the table and violated.
What you, Dear Student, who is being given the whaaaaambulance treatment by the Administration (the folks making those six-figure salaries that are all radical multiples of the average living wage in your town) do about that “education” is, of course, up to you.
By Monty Pelerin, posted March 9th, 2010 http://www.economicnoise.com/2010/03/09/obama-at-the-bat/ 
A very clever take-off of “Casey at the Bat” Posted on February 25 if this link doesn’t take you to it.
Probably not too funny for Dems unless they are as disgruntled as the rest of the population.
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Friedrich von Hayek
Friedrich von Hayek founded the Mont Pelerin Society.
“Monty Pelerin” is a pseudonym chosen by this blogger to convey general agreement with the philosophy, goals and spirit of the Mont Pelerin Society. No other connection exists between the blogger and the Society.
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What has become of society when such claims can be entertained? Have we socialized all losses? No, only those losses for the rich or politically connected.
