Today, there is an open letter to President Obama from two of the twelve men who walked on the Moon and a third who was supposed to but instead survived perhaps the most harrowing ordeal of them all:

The United States entered into the challenge of space exploration under President Eisenhower’s first term, however, it was the Soviet Union who excelled in those early years,” the letter begins.”Under the bold vision of Presidents Kennedy, Johnson, and Nixon, and with the overwhelming approval of the American people, we rapidly closed the gap in the final third of the 20th century, and became the world leader in space exploration.

When President Obama recently released his budget for NASA, he proposed a slight increase in total funding, substantial research and technology development, an extension of the International Space Station operation until 2020, long range planning for a new but undefined heavy lift rocket and significant funding for the development of commercial access to low earth orbit.

Although some of these proposals have merit, the accompanying decision to cancel the Constellation program, its Ares 1 and Ares V rockets, and the Orion spacecraft, is devastating.

America’s only path to low Earth orbit and the International Space Station will now be subject to an agreement with Russia to purchase space on their Soyuz (at a price of over 50 million dollars per seat with significant increases expected in the near future) until we have the capacity to provide transportation for ourselves. The availability of a commercial transport to orbit as envisioned in the President’s proposal cannot be predicted with any certainty, but is likely to take substantially longer and be more expensive than we would hope.

It appears that we will have wasted our current ten plus billion dollar investment in Constellation and, equally importantly, we will have lost the many years required to recreate the equivalent of what we will have discarded.

For The United States, the leading space faring nation for nearly half a century, to be without carriage to low Earth orbit and with no human exploration capability to go beyond Earth orbit for an indeterminate time into the future, destines our nation to become one of second or even third rate stature. While the President’s plan envisages humans traveling away from Earth and perhaps toward Mars at some time in the future, the lack of developed rockets and spacecraft will assure that ability will not be available for many years.

Without the skill and experience that actual spacecraft operation provides, the USA is far too likely to be on a long downhill slide to mediocrity. America must decide if it wishes to remain a leader in space. If it does, we should institute a program which will give us the very best chance of achieving that goal.

Neil Armstrong - Commander, Apollo 11  (aka the first man on the moon)

James Lovell - Commander, Apollo 13

Eugene Cernan - Commander, Apollo 17 (aka the last man on the moon)

Now I don’t agree that The Constellation Program was the right program, but it was better than nothing…

There have been a few stories in the news lately concerning the Alberta Oil Sands and the various moves toward or away from this resource.  A couple of interesting stories:

Canada looks to China to exploit oil sands rejected by US

BP risks investor outrage at ‘dirty’ oil deal

Chinese, Korean and Japanese firms have been interested in the oil sands for a while now, and some other firms from outside Europe / USA have slowly been investing as well, such as TAQA of Abu Dhabi.  In the BP story, apparently RIL of India may be willing to pay even more than BP for the assets of Value Creation.

Shell seems to be “slowing down” investment, and shareholder resistance to StatOil and BP investment are well documented.  The question for Canadians is – are we ok with all these foreign firms investing in the oilsands?

I would say YES, and even more that we want to encourage investors who are interested in exporting the products of the oil sands outside the North American market.   One of the dangers facing the oil industry in Canada is the Low Carbon Fuel Standard (LCFS) movement in the US, whereby states and business want to avoid using so-called dirty oil that has a high carbon footprint (I of course find is most interesting is when California went this route they exempted the oil from the Kern River field which has some of the highest CO2 emissions per barrel in the world, simply because it is in California…)  A good way to mitigate this risk to Canada’s economic growth is to develop other markets for our product.  And with investment coming from Asia, this should provide more impetus for Enbridge to build the Northern Gateway Pipeline from Edmonton to Kitimat, BC.  This will protect producers in the oil sands from being solely dependent on the fickle US market and may cause those in Washington to question they have looked a gift horse in the mouth…

Last night on 60 Minutes, the President of the United States squarely laid the blame for the economic recession of the last 18 months at the feet of “fat-cat bankers”.   I was disappointed, but not surprised, when the questioner failed to do their job and hold the President to account for the fact that state action over the last 40 years was the primary cause of these problems.

The administrations of Roosevelt, Nixon, Carter, Clinton and Bush all created a framework starting with the creation of Freddie Mac and Fannie Mae through to programs and rules forcing banks to lend money to people who in pure capitalist terms could never pay it back.     I have written on this before.

Admittedly, the bankers got greedy and had too much faith the “quants” who wrote the computer models that supposedly hedged the risk away to nothing (I still don’t understand how anyone thought that was possible).  But so did every investor in the stock market.   That is why it works.  Greed and fear are the primary drivers of humanity.  Nothing will change that.

And now Obama wants to repeat the mistakes that led to the crash of 2008.

The media should make sure they identify the right actors to blame – not trust the elected leadership to tell the truth.  That is why we have freedom of the press – to investigate the state!!!  60 Minutes has fallen a long way since the days of Mike Wallace…

I am very curious how the Supreme Court of the United States will deal with the McCain-Feingold restriction on corporate-funded (or even remotely funded) ban on election related publications, films or television.

While I would never claim to be a lawyer, it would seem to me that the First Amendment to the US Constitution should make such provisions in McCain-Feingold clearly illegal:

Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.

Barack Obama, the POTUS, spoke this evening to Congress on the Health Care Reform proposals being evaluated by the House and Senate and getting a lot of coverage in the press and blogosphere.  I wanted to comment on one section of his speech where I think he is either naive or nefarious.

Let me — let me repeat this: nothing in our plan requires you to change what you have (4). What this plan will do is make the insurance you have work better for you.

(1) Under this plan, it will be against the law for insurance companies to deny you coverage because of a pre-existing condition…

…They will (2) no longer be able to place some arbitrary cap on the amount of coverage you can receive in a given year or in a lifetime.

We will place a limit on how much you can be charged for out-of- pocket expenses (3), because in the United States of America, no one should go broke because they get sick.

And insurance companies will be required to cover, with no extra charge (2), routine checkups and preventive care, like mammograms and colonoscopies.

The emphasis and numbering are mine.

1. If insurance companies cannot deny coverage for a pre-existing condition, premiums will necessarily rise to cover said pre-existing conditions.  Admittedly, it seemed bizarre to me that insurance companies would deny coverage for something completely unrelated to the pre-existing condition, but the point is that forcing insurers to cover everyone and anyone, costs will rise.
2. Prohibiting the insurers from capping payouts or having additional fees for addition coverages will increase premiums, because costs will rise to cover additional services.
3. Limiting / prohibiting co-pays will force insurers to pay more, so to maintain their liquidity and profitability they will need to raise premiums.
4. While this claim may be true, with all the restrictions and requirements being foisted on the insurers, policy holders will find the increasing cost of their plans prohibitive.  As the private and employer plans become too expensive, people will be forced towards the taxpayer subsidized “public option” because it will “appear” cheaper.

Considering these few paragraphs, I am reminded of Wesley Mouch and Jim Taggart from Atlas Shrugged…

Thomas Friedman wrote yesterday in the Old Gray Lady:

One-party autocracy certainly has its drawbacks. But when it is led by a reasonably enlightened group of people, as China is today, it can also have great advantages. That one party can just impose the politically difficult but critically important policies needed to move a society forward in the 21st century.

I added the emphasis…  Mr. Friedman has openly admitted that he is a totalitarian socialist who thinks the Chinese Politburo is a “reasonably enlightened group”.  I’m not shocked.  It was fairly obvious to me over the years that Mr. Friedman was no fan of freedom.  Like many other “big thinkers” who have proposed more government regulation as the solution to our “problems”, China is the shining city on the hill – only because it is the biggest most successful communist state.  Friedman and his socialist co-thinkers, such as Paul Krugman and Michael Ignatieff are convinced that capitalism was doomed to fail, have used the recent recession as “proof” and want to impose autocratic government by a group of enlightened “philosopher-kings”, much like what Pierre Trudeau dreamed.

Friedman does make a strange argument however that America is a one-party democracy:

Look at the climate/energy bill that came out of the House. Its sponsors had to work twice as hard to produce this breakthrough cap-and-trade legislation. Why? Because with basically no G.O.P. representatives willing to vote for any price on carbon that would stimulate investments in clean energy and energy efficiency, the sponsors had to rely entirely on Democrats…{snip}…The only way for us to match them is by legislating a rising carbon price along with efficiency and renewable standards that will stimulate massive private investment in clean-tech. Hard to do with a one-party democracy.

So basically because the Republicans won’t vote the same way as the Democrats (thus making this a real two-party system), Friedman tries to make the case that the opposition is irrelevant and the majority side is behaving as a one-party system…  (This is pretty much how it has worked in most parliametry democracies that have a tradition of a majority government (e.g. the United Kingdom, Canada, Australia, New Zealand)).   He fails to remember that the point of democracy is so that different groups can have different ideas and the people have options.  In China, the people don’t have options and do get to select the Politburo.

I do find it entertaining that Friedman claims the advantages of China’s system in an article that starts on the subject of health care, considering that it was only in the last few weeks that China admitted to harvesting organs from prisoners for transplants…  Does Mr. Friedman think that is “enlightened”?

Diane Francis, after her stint at Harvard, once again proposes the wrong answer to the financial mess in which the US Government finds itself.  Yes, the United States has run deficits for too long using foreign lenders as a source of funding for US government programs.  But the solution is not more taxes on Americans – it’s less government.  The government cannot create wealth – it can merely redistribute it, generally in a less than fair or efficient manner.

Real economic activity – work, ideas and investment in activities that have a positive return – improve the standard of living of a people.  I agree – if the people want to continue the current level of government spending, then increased taxes are better than long-term borrowing.  But I suspect that many Americans would cringe mightily at paying higher taxes.  The problem is that politicians have spent too long lying to the public about how programs get paid for or how much they are really going to cost.  The people have to start to be honest about such things.

If Californians knew the full consequences of Proposition 13 when they passed it in 1978, and all the similar propositions that reduced the ability of the state to raise money while at the same time mandating funding of government programs that they would have voted for it?  I doubt it.

So the prescription should not be higher taxes, but transparency by government about how much a program will cost and what the tax burden must be to support it – and then let the people decide in an open and honest manner.

Protectionism is particularly bad for economic recovery because of how intergrated the world economy has become, and how complicated technology is compared to 50 or even 20 years ago.

The National Post has a good story about the problems for US stimulus projects with shortages of materials because of “Buy American” rules.

The fundamental problem is that during the extended period of economic growth that was enjoyed from 1992 through 2007, along with liberal trade rules, companies moved to produce various components of technology wherever made the most sense – be it a combination of cost, raw materials, transportation costs, availability of personnel, or other factors.  This is one of the reasons why technology (of whatever sort) became cheaper and more utilized in many industries.  But it also meant that no country, not even the United States, is currently capable of producing everything they might need for their own internal economy.  And if a country suddenly chose to produce all of these components “locally”, it would almost necessarily be at higher cost and take time to develop.

But such action requires significant and long term trade restrictions – government interference in the economy which has never succeeded in improving the standard of living of a nation’s people.   This is just another example of why trade restrictions and government interference in the economy are bad for all of us.

On Monday, Diane Francis attempted to defend the actions of the Obama administration by casting aspersions on the free market:

free enterprise was nearly murdered by Wall Street, AIG and other reckless financial institutions. They did not meet their defined responsibilities. They bent the law to bypass rules governing their behaviour. Many of them abandoned traditional banking and got into the gaming business. And they brought the world to the brink in the fall.

The problem here is that those on Wall Street did not act alone.  They colluded with the state.  For instance, in the dying days of the Clinton Administration, Congress passed and the President signed into law a reversal of the 1907 ban on bucket shops.  Note the significant similarity of bucket shops to credit default swaps that were the root of the fall of AIG and some investment banks.

And the development of these derivatives was partly driven by the need of the banks to unload questionable investments (i.e. toxic mortgages) inside structured investment vehicles.  And why did they have these toxic mortgages?  Because the government told them to lend money to pretty much anyone – because there was a political drive to increase the rate of home ownership in the United States.  These government interventions in the economy began during the Nixon administration, and were expanded and intensified during the administrations of Carter, Bush the First, Clinton and Bush the Second.

I will agree the financial industry does hold some of the blame – they trusted their hedging models that could not handle significant unexpected events.  This was shown to be true during the Long Term Capital Management crisis of 1998.  And they lobbied the government to allow “gambling” on the markets.

But the government allowed them to be less than transparent and allowed the gambling that was shown to be bad a century ago.

So Diane should be careful when she asks us to trust the state to fix a problem they had a significant hand in creating.  She should remember the prescient thoughts laid out by Ludwig von Mises in his book Liberalism:

… government intervention in markets will lead inevitably to unintended consequences that result in further government intervention.

Here are a number of things wrong with the GM bankruptcy and bailout package:

• The Canadian Taxpayer is putting in $10.5 Billion, which the government now admits we will likely never recover.
• In return we get $1.7 Billion in GM debt (so they owe us MORE money), and 12% of the stock in the company (which is essentially worthless)
• The deal is going to force GM to maintain 19% of it’s North American automobile production in Canada, regardless of whether that is the best business decision…  This sounds like a good way for an activist government to screw GM again later.
• Governments (Canada and US) will select all but one of the board of directors.  And the UAW gets to pick the final one.  And none of those three groups has any clue how to run a business…
• The deal that sold Opel to Magna (and Sberbank) prevents them from competing in North America – that sounds like a questionably legal cartel arrangement, but with government support it will survive.

One guy who has written some good stuff on this is Keith Hennessey.  His post today has some good ideas.  I don’t agree with everything he has written, but this was particularly good:

I urge the President to:

• Enshrine the principles from today’s fact sheet in the term sheets for the taxpayer investments in GM (and other firms). We did this last December in the GM and Chrysler term sheets. Tie yourself to the mast. This will give you an easy excuse later when someone pressures you to vote those shares in a way that conflicts with the taxpayer’s interest.
• Set clear rules for Administration contacts with GM – it’s probably best to funnel all contacts through specific Treasury or NEC officials on the autos task force.  No freelancing phone calls to the Administration-appointed directors or “informal chats” with them from White House staff, or from DOT, EPA, USTR, DOE, even State.  Put a firewall around interactions with GM.
• Come out hard and quickly against the first proposal from a Member of Congress to leverage the ownership stake for a non-taxpayer goal.  Nip it in the bud, especially if the idea comes from a friend.

I would have let GM fail in spectacular fashion – because the government shouldn’t be in business at all.  And if GM had been allowed to collapse it might have taught the rest of business world a real lesson in caution.