Obama plans to reduce the deficit by $4 trillion in the next 12 years. What does this mean? $8 trillion of new debt in 12 years not $12 trillion in debt. In 2011, the federal government had $2.2 trillion in revenue and $3.8 trillion in expenditures (wiki).

Having some debt is OK and can be sustainable. Here 3% of debt to GDP ratio seems to be a number that is sustainable. And this can be achieved by perhaps 2018 based on Obama's budget, which may not include all of his budget deficit fighting measures. But does this all matter? Japan has been borrowing at a 1.4% interest rate with a total debt of over 200% total GDP. Currently, we're close to 100% of total GDP (here).

Eventually it will matter and when it does health care costs will be the biggest factor. Interesting blog post about comparing the Ryan and Obama plan on controlling Medicare costs. How do we control costs and give people the health care they need. Do we use market forces or a government panel?

"Medicine is an inexact science that with deals with life-and-death questions. In many cases, there's little evidence to determine whether a particular treatment will help. In that gray area, it's very difficult to define what counts as "needed services.""

$33 Billion

$33B/$3,819B = 0.86% of the proposed federal budget.
$33B/$1,645B = 2.0% of the budget deficit.

For the proportion of the federal budget being addressed, is it a real cry for fiscal sanity? is it worth a federal shutdown?

http://www.cato-at-liberty.org/spending-growth-nondefense-discretionary/

AIG

Why is AIG important? Why did the Fed rescue AIG?

AIG insures banks and other institutional investors in on securities that they buy.

Having the insurance reduces the security owner's risk and allows them to buy more securities and have less capital on hand in order to back themselves. It's my understanding that goverments regulate how much capital companies need to back their securities.

If AIG goes under then all of the banks and investors would have higher risk and would have to have much more capital in order to protect themselves from defaults of their security.

The CEO of Bank of America says that he "doesn't know of any major bank that doesn't have some significant exposure to AIG." More here

So what about Lehman Brothers? It's mainly banks and pension funds that have deals with Lehman. I imagine these are investments with Lehman and banks probably hold Lehman's debt.

"Unwinding Lehman's complex deals will take months if not years. During that time the global financial system will be snarled up. Many banks won't know for sure how much they are exposed to Lehman, and will have difficulty freeing up the money in those deals." From BBC

Stop Eating Meat

A UN report claims that cows are the biggest threat to the environment:

The 400-page report by the Food and Agricultural Organisation, entitled Livestock's Long Shadow, also surveys the damage done by sheep, chickens, pigs and goats. But in almost every case, the world's 1.5 billion cattle are most to blame.Livestock are responsible for 18 per cent of the greenhouse gases that cause global warming, more than cars, planes and all other forms of transport put together.

Livestock are also a major cause of acid rain as they emit more than two-thirds the world's ammonia. Ranching and overgrazing are destroying forests and pastures; cows need 990 gallons of water to produce one gallon of milk; and the amounts of pesticides, antibiotics, and hormones used in livestock are all lead to dangers in human health.

"The report concludes that, unless drastic changes are made, the massive damage done by livestock will more than double by 2050, as demand for meat increases."

The Independent

Go Bucks?

We may be number one in the football rankings but based on an NCAA annual report the academics of our football team are poor at best.

Under an NCAA measurement called the Academic Progress Rate, teams are scored on a scale of 1 to 1,000 based on whether their athletes stay enrolled and make adequate progress toward their degrees. Teams that do not achieve a score of at least 925, which equates to roughly a 50-percent graduation rate, may lose scholarships.

Ohio State scores a 925. 24 of the 64 bowl-bound football teams are under 925. A closer look at Graduation Success Rates shows that 55% of all Ohio State football players graduate. The shocking statistic is that out of the 64 teams we have the lowest graduation rate for African-American football players: 32%.

Ohio State may make me happy winning football games but at whose expense?

Chronicle article
Football Study

Milton Friedman Quote

From Andrew Sullivan.

"Alcohol and tobacco cause many more deaths in users than do drugs. Decriminalization would not prevent us from treating drugs as we now treat alcohol and tobacco: prohibiting sales of drugs to minors, outlawing the advertising of drugs and similar measures. Such measures could be enforced, while outright prohibition cannot be. Moreover, if even a small fraction of the money we now spend on trying to enforce drug prohibition were devoted to treatment and rehabilitation, in an atmosphere of compassion not punishment, the reduction in drug usage and in the harm done to the users could be dramatic.

This plea comes from the bottom of my heart. Every friend of freedom, and I know you are one, must be as revolted as I am by the prospect of turning the United States into an armed camp, by the vision of jails filled with casual drug users and of an army of enforcers empowered to invade the liberty of citizens on slight evidence," - Milton Friedman, in a 1990 open letter to Bill Bennett, big government conservative.

Homosexuality is Natural

"We may have opinions on a lot of things, but one thing is clear -- homosexuality is found throughout the animal kingdom, it is not against nature," an exhibit statement said.

Geir Soeli, the project leader of the exhibition entitled "Against Nature," told Reuters: "Homosexuality has been observed for more than 1,500 animal species, and is well documented for 500 of them."

Yahoo! News Article

The Economic Case Against Charity

"If people really were altruistic, there would be much less volunteering. It would almost always be more effective to volunteer less, work overtime, and give more. A Dutch banker can pay for a lot of soup-kitchen chefs and servers with a couple of hours' worth of his salary, but that wouldn't provide the same feel-good buzz as ladling out stew himself, would it?"

Slate article