Capping salaries to create jobs? It really works!

Rocky just read the most brilliant idea to create new jobs in this post-financial crisis world.

Jan. 30 (Bloomberg) … Earlier today, Senate Democrats took the first step toward limiting pay for workers at companies receiving federal bailouts. Senator Claire McCaskill of Missouri introduced legislation to restrict compensation at such companies to $400,000, the equivalent of the U.S. president’s salary. Another measure being proposed would create a court to restrain executive compensation.

Rocky observes that if the government “caps” compensation on the best and brightest employees at a company, those employees will quit. The capped employees will then either launch or join an unregulated company.

Once they settle into their new positions, these employees will count as “new jobs created” in the monthly statistics of the Labor Department (even though they are just moving around). The old positions will not count as “job losses.” (Although the regulated company performance will deteriorate faster, that’s a problem for the Treasury Department, not the Labor Department.)

Perversely, the lower the cap, the more jobs that will be “created.” So, if Obama wants to “create” millions of jobs, he can pick random industries, force them to accept a few government dollars, and just keep lowering the salary cap!

Note to Senator McCaskill: You wrote that the $400k cap is based on the salary of the President of the United States. Does your cap for executive compensation permit the following tax-free FREE perks: Company Residence (White House); private chef and dining room; private jet (Air Force One); private helicoptor; 34 member domestic staff; private security detail; and a personal “needs” expense account, which total tens of millions of dollars each year?

Memo to Ford: Burn natural gas not cash

Rocky supports the major automobile manufacturers’ initiatives to reduce American dependence on imported oil. This includes research into fuel cells, natural gas, and the combustion of leftover General Tso’s chicken from Rocky’s local Chinese Restaurant.

The following news story from Bloomberg surprised Rocky:
Jan. 29 (Bloomberg) — Ford Motor Co., insisting it can survive without federal loans, said it burned $5.5 billion in cash in the fourth quarter.

Rocky knows of no internal combustion engines that efficiently burn “cash.” This opinion is based on independent research he conducted many years ago:

As a political science experiment, Rocky replaced a Chevy’s gas cap with a rolled-up copy of the editorial page from the New York Times. He then set the newspaper on fire (Chevy “Blazer.“) He believes that the test results can be extrapolated to Ford vehicles and a wad of US currency.

Rocky applauds the news that Ford will not seek Federal loans. He also ponders whether Ford’s R&D Department may actually be wiser than they appear: “Is cash trash?”

[Disclosure: Rocky is currently bullish on gold. But his opinion may change at any time.]

Boneless pig farmers lobby for their pork

McDonalds is bringing back the boneless McRib Barbeque Sandwich in selected markets. Rocky believes that lobbying by the Boneless Pig Farmers of America for their piece of the “pork” in Obama’s $800 Billion stimulus package may explain this controversial culinary development.

From today’s Wall Street Journal:
“When you’ve got 800-plus billion dollars to spend, you’ll have an equal number of opinions on how it should be spent,” said Chris Galen, spokesman for the National Milk Producers Federation, the dairy industry’s main lobbying group.

Rocky respectfully disagrees with Mr. Galen’s comment. The world population is only 6.7 Billion, and there are far too few economists amongst that total to create 800 billion opinions.

Nonetheless, Rocky believes that much of the lobbying may be for naught. No matter what Obama tells him to drink, Rocky still prefers a Diet Coke with his McRib, rather than a pint of milk.

The Official website of the BPFAA (Boneless Pig Farmers of America): http://www.bonelesspigs.org/bonelesspigs_MMH.swf is well worth a visit.

The Car Wash Index: leading economic indicator?

On a recent frigid Sunday morning, Rocky noticed a long queue of cars at the full service cash wash ($12), but the self-service car wash ($3) next door was completely deserted. Rocky hypothesized that this might be a leading indicator of improved consumer sentiment — and perhaps a bullish omen for the stock market.

Rocky needed a car wash, and he didn’t like to wait. He pulled into the deserted self-service car wash, and fed a five dollar bill into the change machine. Only a single quarter came out. The car wash owner explained that the change machine dislikes the new $5 notes, and the owner handed Rocky five $1 bills. (Rocky now had a 5% profit.)

Instead of taking his $0.25 windfall and driving away, Rocky turned the machine to “soapy wash” and began to douse his car with a high pressure stream of soapy bubbles.

The soapy stream lathered the vehicle, and instantly turned into a frozen coating of thick white custard — denser than the shaving cream an old-time barber uses. The liquid froze solid as it reached Rocky’s car!

The wash cycle ended after five minutes, and Rocky’s car had a white frozen shell. Rocky scraped the ice from his windshield and drove off, having mummified the encrusted road salt and sand under this new protective ice finish.

Rocky glanced in his rear-view mirror as he drove away, and saw shiny, clean cars pulling out of the expensive full-service car wash down the street. Perhaps a little early to aggressively buy stocks, he concluded.

Citibank doesn’t want my money! (Vikram Pandit meet William Safire)

Rocky reports that his Citibank teller just refused to deposit a check drawn on Wachovia Bank. The check was in the amount of “Twenty-Nine Hundred Dollars,” and the teller politely informed Rocky that she would only accept the check if it read “Two Thousand Nine Hundred Dollars.”

Rocky offers the following explanations for this bizarre experience:

1) Congress revised the Uniform Commercial Code last week. Rocky missed the announcement because he was the only customer shopping at Sears. At Sears, Rocky bought large garbage bags which he heard were “too big to fail.”

2) The Federal Reserve replaced the US Dollar with Itunes Cards. (If true, Rocky happily offers his daughter’s Britney Spears CD in trade for foreclosed real estate.)

2) Rocky is a dinosaur. Noone writes checks anymore.

3) George W. Bush signed the “No Child Left Behind” Law. He missed one child. (She’s a teller with Citibank.)

4) Citi discourages investments with “strings attached” … such as a depositor who, one day, might actually want his money back . Government TARP funds have no such strings.

Professor John Taylor …and his views on the financial crisis

No Artificial Bubbles Allowed

Rocky Humbert hails from a rusty old mill town — a town still best known for its brewery that scorns artificial carbonation. As a sixth grader, Rocky’s art teacher sent him to the principal’s office for talking during class (“pass the crayons, please”). This experience left Rocky permanently distrustful of Government and Authority Figures.

Rocky wants to share a new academic paper written by Professor John Taylor at Stanford University. It’s the first paper that Rocky has seen which postulates a unified theory of WHY the financial crisis developed, and why it accelerated during the last several months. It’s consistent with Rocky’s view that Art Teachers and Treasury Secretaries make lousy guests at family barbeques.

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