Carl from Chicago

Business executive interested in history, economics, taxation and energy policy.

Around Chicago July 2011 (more)

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Upper left – the state of Illinois building lit up at night.  I still remember the building in that movie “Running Scared“.  Upper right – glad we have inspectors on duty.  Nothing wrong with that shack in the car lot, is there?  This lot is on a super heavily trafficked street too.  Lower left – I like goodbye kitty.  Lower middle – we went to a fantastic Chinese restaurant in the North in the Uptown area and I ate so much I thought I’d explode; they had a great “lazy susan” and kept filling it with food.  Lower right – oh Lord, won’t you buy me, a Mercedes Benz…

Cross posted at LITGM

“Dancing In The Glory Of Monsters” Book on Congo War Review

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Dancing in the Glory of Monsters by Jason Stearns

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The “World War in Africa” occurred in the Democratic Republic of the Congo (DRC). The first Congo war occurred in 1996-7 when the deranged Seko was taken out of power by the elder Kabila backed by Rwandan troops following their victories against the Hutus that perpetrated the Rwandan genocide. The second Congo war occurred in 1998-2003 as the Rwandans and Ugandans attacked again and many other nations intervened; the elder Kabila was assassinated and replaced by his son as leader of the DRC.

Ultimately elections were held in 2006 and Kabila won the election, based on his popularity in the Eastern part of the country (nearer Rwanda) for orchestrating the peace accord, while Bemba was popular in the West of the country nearer the capital Kinshasa. Bemba lost to Kabila in a run-off election for President and went into exile in the West; Bemba is now standing trial in the ICC.

Another confusing element of the conflict is the fact that Uganda and Rwanda, who were allies in the East against the DRC and its backers, had a fall out and started battling each other over the mineral riches in the areas they controlled. They had a cease fire but then one of the Tutsi leaders formerly part of the Rwandan-led Congolese Tutsis named Nkunda took a major role; in another odd turn the DRC allied with the official army of Rwanda and they both attacked Nkunda (Rwanda was also attacking Hutu militias on its border with the DRC) and Rwanda is now holding Nkunda prisoner (Nkunda is wanted by the ICC).

In addition to all these ongoing military events, it must be remembered that the DRC is VERY WEALTHY with regards to commodities. Per wikipedia:

the Democratic Republic of Congo is widely considered to be the richest country in the world regarding natural resources; its untapped deposits of raw minerals are estimated to be worth in excess of US$ 24 trillion

The Chinese are attempting to invest in the country, bringing construction capabilities and investment funds in exchange for access to DRC resources. This article is a NY Times interview with Kabila about the Chinese investment. On the one hand, China is willing to work with corrupt governments and do what it takes to get the deal (presumably including bribes, but this is never proven); Western countries are barred by their own laws (for the most part) from doing this type of contracting. On the other hand, the Chinese are actually intending to build infrastructure, rather than shower money on corrupt politicians, and this infrastructure would be tangible and in the words of the locals “you can’t put a railway in a Swiss bank account”.

In the light of the importance of these events to the world in terms of scale (the most deaths in an armed conflict since WW2, if you believe the unverifiable figures), I try to learn what I can from whatever sources are available, including the excellent book by Prunier (which I review here). Thus with this background I am bringing you my review of Dancing in the Glory of Monsters: The Collapse of the Congo and the Great War of Africa by Jason Stearns (here is his blog which is also full of interesting information).

The book is sprawling – if I hadn’t read Prunier’s book first, I would have been very confused (or vice versa; I had to read Prunier’s book twice to make half-sense of all the acronyms and various nationalities and battles).

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The Government is the Only Game in Town for Mortgages

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Today the US government basically controls the US mortgage market for housing. Per this article in the WSJ “Government Stays Glued To Mortgage Market” in the WSJ:

The government took over Fannie and Freddie in 2008 to prop up the housing sector, and taxpayers are on the hook for $138 billion…Together with the Federal Housing Administration and federal agencies, Fannie and Freddie are behind nine in 10 new mortgages.

The US government increased the limit on the dollar amount that these agencies can issue in order to keep housing prices from collapsing; now, much to the bewailing of the real estate industry, they are looking to tighten those limits.

Unfortunately, if the US government stops supporting loans, there aren’t going to be many new loans at all. If you attempt to get a mortgage that isn’t covered by one of these Federal agencies, expect to see a very large down payment, a higher interest rate, and to have sterling credit in order to close the loan.

Some regions are moving to cash in order to “clear the market”. In Miami 64% of transactions were “all cash”, with foreign buyers comprising the majority of the sales.

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Booze and Minnesota

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A few times Dan and I have joked that Wisconsin has the highest per-capita drinking in the USA. I’m sure that Minnesota isn’t far behind, with winters just as brutal as those in Wisconsin and not too much sunlight during those dark days and nights.

It is summer now in Minnesota and the state is shut down. As it turns out, apparently that isn’t a big deal. They don’t let all the prisoners out of jail, they just shut down the inessential services such as the annoying bureaucracy that requires you to get innumerable permits and papers to conduct your daily business. These not-so-essential state workers total 22,000 in Minnesota; probably a great batch of employees to cut next.

The new Democratic governor in Minnesota, Mark Dayton (wealthy heir who turned into a stone-redistributionist Dem) actually ran on a platform of taxing the top 1%, which is literally the stupidest thing in the world from a state tax perspective, since THOSE ARE THE PEOPLE THAT CREATE ALL THE JOBS IN MINNESOTA. As it is, you’d have to be nearly out of your mind to live in the darkness, snow and miserable mosquitoes (in summer) of Minnesota in the first place; but to put dis-incentives for the rich to live there is even more insane (note – I worked in Minnesota for many years and long winters and met some of the nicest, smartest people in that hard working state. But they are still insane for living in that weather).

As in Illinois, with our governor Quinn, the Democrat eked out a win (with 43% of the vote in the case of Minnesota) and then took this as a “mandate” to implement all of their programs as if they were Roosevelt trying to get the country out of the great depression (although that didn’t work so well, either). In the case of Quinn he raised Illinois taxes 67%, abolished the death penalty, appointed his cronies to state positions, and didn’t cut any spending. Awesome. In the case of Dayton, his plan was to raise taxes on the richest to 13.95%, on top of the Federal rates. Unclear in his plan is WHY anyone wealthy would intentionally stay in Minnesota to have all of their income taxed away while many other states with better climates (Florida, Texas) don’t have any state income tax AT ALL.

I think Dayton was crazy enough to hold out forever, as a populist. Unfortunately for him, the state was running out of booze. Apparently bars need to fill out a permit for $20 or so in order to buy booze and as they expired the bars would have to shut. Miller was going to have to shut down their operations for a clerical snafu (they overpaid so the state sent their permit back) and not distribute booze at all.

I really do think that the impending stopping of alcohol in the state of Minnesota helped precipitate a resolution to this budget standoff, where the governor gave in on his plan to drive all job-creators from the state.

Hats off to the Minnesota legislature for standing firm. Unlike Illinois, where not only do the dems run our legislature but our red representatives aren’t creative enough to flee the state at the prospect of a giant tax increase, like they did in Wisconsin to attempt to block Walker’s reforms.

Cross posted at LITGM