Lucid Links (102609, Morning)

Who owns the deficit? It’s Pelosi Stupid — Well yes, but the president sets the tone as to what he’ll accept without a fight, and this president has hardly fought a thing. It must also never be forgotten that given who he chose as his Treasury Secretary, he owns TARP from its inception as much as anyone.

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Something to watch when third-quarter growth comes out later this week — What would it have been without government expansion? The answer in the second quarter, as you can see from this table, is 2.0%. That’s because while the whole economy contracted by 0.7%, the contribution to that result from government at all levels was +1.3%. A continuation of this trend would go a long way towards explaining why unemployment is expected to stay high.

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The economy needs a break, and Windows 7 might provide it — Vista, as I feared shortly before it appeared, became a drag on the economy. The only probably unquantifiable question is how much, but I have lots of personally observed and discussed reasons to believe that it’s significant.

First, there were the release delays. Once it was out in early 2007, there were incompatibilities, excessive system overhead, and a host of other problems. Once the negative buzz built, lots of consumers delayed new PC purchases as long as they could, or sought out machines with XP, the previous version of Windows. Those same problems on the business side caused many companies to stick with their XP-based applications and to avoid potentially productivity-enhancing custom application upgrades. Yes, Apple increased its market share with its envelope-pushing OSX upgrades, but not by enough to make any kind of meaningful difference in either business or the economy as a whole.

If Windows 7 really does “push a tech refresh in 2010,” that will be a very welcome change of pace. The fact that Microsoft got it into the stores well ahead of Christmas this year vs. missing the 2006 holiday season with Vista also bodes well.

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Teeth-grinder of the day (HT Kaus via Instapundit):

But from the outset, I’ve believed that the interventions were simply efforts to delay liquidation rather than to avert it altogether, to provide a breathing space in which managers could find homes for valuable assets (other companies) and find chumps to absorb the losses from bad decisions (that would be the taxpayers).

The quote is in a paragraph discussing the government’s bailouts of financial institutions, General Motors, and Chrysler, but is clearly more relevant to the car companies.

If what Newsweek columnist Daniel Gross claims is really true, the government shouldn’t have given (not “lent,” given; that’s right, given) money to GM and Chrysler in the first place. Failing that, it should have forced them into liquidation after the December 2008 – March 2009 gifts proved insufficient to save them.

By not doing that extending the misery, far more taxpayer money will be gobbled up for the sole purpose, at least in Gross’s opinion, of delaying the inevitable.

Somewhat related, something has not seemed right about Roger Penske’s withdrawal from his proposed purchase of GM’s Saturn, which supposedly occurred because he couldn’t find acceptable contract manufacturers to make new models a couple of years from now. One obvious unsettling factor is there were reportedly 15 other bidders when Penske reached what looked to be a virtually done deal with GM in June. Okay, where were they three months later when the deal tanked?

I have come across some information supporting that my instinct. If anyone has other information or links to articles with alternative explanations as to why Mr. Penske really pulled the plug, I’d like to see it or talk about it.

Update: Further teeth-grinding material comes from former car czar Steve Rattner at CNNMoney.com, on his illegal treatment of Chrysler’s secured non-TARP lenders. Here’s the worst from an article Kaus describes as “almost unreadably self-serving”:

Finally, we noted the golden rule of Wall Street: He who has the gold makes the rules. Or as my father used to say to his unruly children, “He who eats my bread sings my song.”

No sir, it’s “he who has the unlimited power of the federal government dictates the terms with no legal constraints” — which is why they should never have been allowed to get involved in the first place.