Quotes of the day

You need to know that the end is near to be able to transcend the ordinary. I have met people my age who lost their lovers to accidents and others who lost their lovers to disease over time. Without exception, the former envy the latter. We had the chance to say goodbye. Nothing tyrannizes death like acceptance of it.--unattributed

Say Henry Kravis sells $1 million of units, generating $1 million of taxable income. He pays $150,000 in federal taxes, assuming all his proceeds are long-term capital gains. Let's say half that gain -- $500,000 -- becomes deductible to KKR's corporation at a 35% rate. This saves KKR $175,000 in taxes over 15 years. Of this, $149,000 -- the aforementioned 85% -- goes to Kravis. The payments to Kravis beget further deductions for KKR, begetting further payments to Kravis, and so on. You end up with about $206,000 in payments to Kravis. Adjust for the fact that they're spread over 15 years, and they're equivalent to about $150,000 today. So the public firm would be giving Kravis tax-sharing payments about equivalent to his tax bill, assuming, as I said before, that all his profits are capital gains. (KKR declined to discuss Kravis's tax situation.) Kravis would have to pay income tax (at ordinary rates) on his tax-sharing payments, poor baby. But he'd still be getting a helluva deal on his gain, compared with what regular folks pay.--Allan Sloan

The fact that nearly 80 per cent of those [local Chinese government] projects have at least some capacity to service their debt is quite amazing.--Qu Hongbin, chief China economist at HSBC

I agree that these loans won’t pose a risk to the banking system, but that doesn’t mean that there won’t be huge losses. It just means that the losses will be covered by the household sector. For years I have been arguing that without liberalizing interest rates and pushing through governance reform, there won’t be meaningful reform in the domestic financial system. It isn’t even conceivable to me that a combination of rapid credit growth, socialized credit risk, severely repressed interest rates, and serious lack of transparency could ever have led to anything other than large-scale capital misallocation and rising debts.--Michael Pettis

A number of people ask: “Ok, let’s suppose for a minute that the UVA study is accurate, and that those on Medicaid do fare worse than the uninsured. Are you suggesting that we abolish Medicaid and do nothing about the problem of the uninsured?” No—I am suggesting that we transition to something akin to the Swiss model, whereby we offer graduated subsidies with which the poor can buy consumer-driven private insurance. Simply sending them the cash would be far more efficient than what we do now.--Avik Roy

Measured in a variety of ways, Wall Street giving to Democrats is down. Overall, five of the top 10 sources of donations to the DNC in 2008 were Wall Street firms, according to an analysis of campaign donations by the nonpartisan Center for Responsive Politics. This election season, just one financial company—the investment-management firm Capital Group Cos.—ranks in the top 10. Employees of Goldman Sachs Group Inc. donated a total of $1.1 million to the DNC in 2008, making Goldman the biggest source of campaign cash to the Democratic Party. Goldman employees have donated about $100,000 to the DNC so far in the 2010 congressional elections, according to the center's data.--Laura Meckler and Brody Mullins

Obama need not wonder about his legacy, even this early. It is already fixed, and in one word: Afghanistan. He took on what he made America’s longest war and what may turn out to be its most disastrous one.--Garry Wills

There's a very good chance that in two years, Obama is still going to be trying to explain why unemployment is above 8% and GDP is kind of anemic. If that's the case, the Republicans will hold the house and the senate at the end of 2012.--Megan McArdle

If most of our problem consisted of legacy debt, inflation would be the answer. However, since most of our problem is future unfunded liabilities, which increase with inflation, the inflation solution does not work quite so well.--Arnold Kling

I do not think we will ever know what would have happened to the economy without the fiscal stimulus and the large monetary interventions. My guess is that the overwhelming majority of economists would agree that we will never know the answers to those questions. However, in the competition for public attention, [Alan] Blinder and [Mark] Zandi have two advantages. First, they support a narrative in which government experts did the right thing, which is comforting to government experts and all who believe in them. Second, at a tactical level, their use of an esoteric computer model along with those two decimals of precision, they intimidate journalists and other laymen. I know that they think this is for a good cause. They really believe that the stimulus and TARP were good policies that got a bad rap. But in my view that does not justify this unseemly exercise in propaganda dressed up as research.--Arnold Kling

The Victorian British and the Soviet Union, the story goes, were part of a long historical continuum of arrogant conquerors that met their match in the country's xenophobic, fanatical, trigger-happy tribesmen. Given a record like that, it's obvious that the effort by the United States and its NATO allies to stabilize the shaky government in Kabul is doomed to fail. Look, failure is always a possible outcome, especially judging by the way things have been going lately. But if the United States and its allies end up messing up their part of the equation, blame it on their bad policy decisions. Don't blame it on a supersimplified version of Afghanistan's history -- especially if you prefer to overlook the details. ... I made my first visit to Afghanistan that same year. The Afghans I met were neither xenophobic nor bellicose. What they wanted most of all was peace, and they didn't trust their own leaders to bring it. "We're sick of fighting. We hate war. We want to have a free election," one grizzled -- and illiterate -- warrior told me. "And let's have the United Nations come in and make sure it's fair, so the warlords don't interfere." I heard similar views from many Afghans. Nowadays that vision sounds a bit like a dream, and it's hard to say precisely how many of his compatriots shared it for real, but I can't help recalling the sentiment. One thing is for sure: If we really want Afghans to attain the future they deserve, clinging to a fake version of their history won't help. --Christian Caryl

... the startup country could be awesome. And only the most employable folks would be allowed in at the start, so the economy would be blazing, mostly from IT jobs and light industry. Arguably, China accidentally performed a variant of this experiment with Hong Kong. Oversimplifying the history, Hong Kong was part of China and leased to the United Kingdom for 99 years, like a startup country within a country. When the lease expired, China presumably made a fortune by getting it back in a far more robust form than it could have generated within the Chinese system. A startup country designed today could, in fifty years time, become a tax-generating windfall for the parent country. And it would also test a lot of concepts for building, banking, economy, energy, and lifestyle.--Scott Adams

When my kids were babies, I thought about holding Yankees hats and Lakers hats over their heads in their crib, then pinching them until they started crying (to condition them to instinctively hate those logos/colors). Then I realized that was barbaric and probably would get me thrown in jail. Still, if your kids root for teams you hate, that means you've failed as a parent and you probably should just give the kids away and try again.--Bill Simmons

I figured out why the LeBron/Wade alliance bothers everyone beyond the irrefutable "Jordan would have wanted to beat Wade, not play with him" argument. In pickup basketball, there's an unwritten rule to keep teams relatively equal to maximize the competitiveness of the games. That's the law. If two players are noticeably better than everyone else, they don't play together, nor would they want to play together. If the two guys have any pride at all -- especially if they play similar positions -- then getting the better of each other trumps any other scenario. They want that test. Joining forces and destroying everyone else would ruin the whole point of having the game. It's like a dad kicking his young son's ass in a driveway one-on-one game. What's the point? When LeBron and Wade effectively said, "Instead of trying to whup each other, let's just crush everyone else" and "If these teams end up being uneven, we're not switching up," everyone who ever played basketball had the same reaction: "I hate guys like that."--Bill Simmons

Nothing prepares you for your first time. You’re out with someone, maybe a date, maybe just friends, everything’s fine, and then he whips it out, right in front of you — at a restaurant, on the street, anywhere. You try not to look at it, you try to look absolutely anywhere else — finally he finishes and puts it away and continues on with the conversation, just like nothing happened. Or maybe he airs it out for awhile, or even — casually — holds onto it, in case it vibrates. You know, the phone. ... Etiquette is not just about which fork to use. Or rather, it is — but now it’s fork, fork, cellphone; the vibration of which signals the end of the Enlightenment. Because it signals the end of the individual as we know it.--Peggy Nelson