The TARP bailout map as a percentage of state GDP via Creative Class. Considering that TARP is for buying distressed financial assets and that most financial institutions are in New York and DC it isn't really a surprise that Arizona has not done well out of it. The distribution of funds is most likely directly connected to how many financial institutions are in a state. I am guessing Arizona is lacking in that area.

Barry Ritholtz remarks that until housing prices normalize a recovery is not possible. He quotes someone saying consensus is that prices have bottomed out and will rise. Ritholtz jumps on how wrong 'consensus' has been lately. FWIW we are looking at land and thing prices are going to come down further, probably another 50%. So we are waiting before we jump in.

We are ready to buy, have the money to buy, and want to buy, but are waiting out what we think will be further drops.

The NYT has an op-ed that is an 'I Quit' letter. The letter makes it sound like Jake DeSantis has unfairly had his salary taken in a populist backlash when he had nothing to do with the Credit Default Swaps that made AIG bankrupt and dependent on taxpayer support to remain solvent.

And there is the rub. If AIG had been allowed to fail, collapse and become bankrupt; such that it ceased trading as a solvent financial entity then Jake DeSantis would have no bonus either. It is only due to taxpayer largesse that he has a job in a company that is alive. As part of the taxpayer takeover, employment contracts such as DeSantis' should have been rewritten to remove all bonus compensation.

Secondly, I do pretty well for myself, but I could not survive on a $1 salary like DeSantis does. His experience is not the average or the normal working experience. So while the letter is supposed to evoke in me the feeling that it is all unfair, I do not have empathy.

AIG is a failed company. It should not exist, and would not exist as a trading corporation other than the rest of the country is bailing it - and Goldman Sachs - out. AIG should have gone through a Schumpeteristic creative destruction and consequently died economically. DeSantis should be thankful he is getting even $1 out of AIG. (more)

John Howard espoused his philosophy of conservative governance in his Australia Day speech in 2006. It included:

The permanent challenge for Australia is to avoid the extremes of big, overbearing government on the one hand and laissez-faire indifference on the other.

There is much in American society which I admire, but I have long held the view that the absence of an effective safety net in that country means that too many needy citizens fall by the wayside. That is not the path that Australia will tread. Nor do we want the burdens of nanny state paternalism that now weigh down many economies in Europe.

In this he is constrained as Australians are used to many of the social institutions such as medicare - which is really only a modern institution - and Howard was a majoritarian and nationalist populist. There are always inconsistencies in these views as well, Howard increased the pace of national legislation, regulation and centralization, while weakening many other wider safety nets through sectarian subsidy (private health for instance).

It is also popular to bash the laissez-faire nature of America, but it is that laissez-faire with which Australian economic rationalism was based upon, not to mention American capitalism saw off central planning and communism as an alternative means of social organization.

The main failure of modern American government was governance itself. The lack of adherence to existing regulations meant that financial institutions were able to act criminally and fraudulently; leading to a massive taxpayer bailout of the financial system under-pinning the American and global economy.

Australia did not have that issue, and certainly not to the same extent as the US did. In this Australian conservatism was superior to American conservatism.

Once you accept public money your actions come under political, and ultimately public scrutiny. Citibank is being told by the US Treasury to cancel an order for a 50 million dollar private jet. It is obscene for a company on public support to be doing that - they obviously have no understanding of politics and a massive sense of entitlement. I remain convinced these banks should have been allowed to fail. Unrepetant actions such as this and the bonuses given out show that only complete failure at the hands of capitalism and free markets will reform such behavior.

China, like the other Tiger Nations, is predominantly a mercantilist nation whose prosperity is heavily dependent on export growth to the United States and Europe; both of which have thrown in the consumer shopping towel and are dealing with righting their household balance sheets to minimise the effects of debt.

As Gary Sauer-Thompson notes this has left China with industrial over-capacity and no real state based policy to deal with it. The United States is not much better. It has a financial sector which is currently at over capacity and instead of allowing it to contract as capitalism and free markets would demand, instead taxpayer money and government policy has allowed the financial sector to remain larger than what the current economy requires.

Australia has required on the 'decoupling' thesis for its hopes of avoiding any slow down in growth. Barry Ritholtz writes;

Can China expand enough to make up for the contraction in US and European demand given that the two economies are more than six times the size of China? The answer to that last question is an emphatic no. The decoupling theory was that loss of the US consumer would not matter to the commodity producers like Canada and Australia or the manufacturers like China and Japan. How could any economist have thought that? Many did.

Unfortunately the US's consumption as built upon unsustainable cheap credit, which led to an over capacity of malls, which was were then filled with cheap trinkets and wares from China, Japan and other manufacturing nations. With the collapse of American consumption, so goes the factories of China as Chinese consumption and choice of goods is nothing like what Americans buy.

Until the US consumer gets on top of personal debt the global economy will not pick up pace again. The United States consumer remains the wealthiest on the planet and with the most fickle demands for what they want in life. China, Japan and the other mercantilist nations cannot change that fact - and at the moment the US consumer is tapped out of money on a national scale.

From the New York Times:

Feckless as it was for Bush to ask Americans to go shopping after 9/11, we all too enthusiastically followed his lead, whether we were wealthy, working-class or in between. We spent a decade feasting on easy money, don't-pay-as-you-go consumerism and a metastasizing celebrity culture.

I did not. I did the right things, saved, made sure my credit card debt did not get above $1000 and if it did I would freak out and pay it down immediately. I saved heavily, putting money in both low interest accounts and stocks. The only thing I used the HLOC for was car loans as the interest was cheaper. I was down right conservative in how I managed my money and affairs and for good reason.

What laid me low and put me back to square one was a divorce - a personal Black Swan to use the current fashionable vernacular for the unexpected and unwished for. Even now, despite my changed circumstances, I am fiscally conservative.

What chaps my ass isn't that I did things the right way and after ten years of hard work am back to square one - it is those that did not are getting bailout after bailout. Looting is not an improper term in this context. I am not scared of capitalism, and I am not scared of competing in the labor or entrepreneurial markets - those that failed, should fail, and have to compete in the same manner that I am.