Goodbye, Sweet Pea

Just over six years ago, my wife came to me and said she wanted to adopt her best friend's dog – a Rottweiler named Sasha. I told her “no way.” I didn't like rotties, because just one year before I was pinned back-first to a wall by one that tried to bite me. I fought it off with my keys, and I thought that actually owning one would at least be a challenge. My wife accepted my answer, and walked away with little more than a gentle plead. But then about a week later her friend showed up with the dog in tow. I'm glad she did. I was wrong.

The last six years with Sasha have been full of doggie tales. Some fun. Some horrible. Most just moderately entertaining. But all of them have been great learning experiences. She turned out to be probably the most loving pet I've ever known. She would lie on the floor and watch me move from room to room. I couldn't be out of her sight for more than a few minutes before she had to join me in whatever I was doing. She didn't care what was going on. She just wanted to be with me. Her favorite thing to do was a full body flop into my lap, where she would lay there and paw and stare at me lovingly. On occasion, it was “belly-bellies.” I think all dogs love those. It was that kind of activity, day-in and day-out, for years, that changed my mind about the breed. They exude adoration. Now I'm a fan of rotties. I like them for all of their problems and attributes. And she had lots of both.

For all of her difficulties; the tumors, two knee replacements, bad eyes, real bad gas, and two bladder stones that required special food; she also had some very good traits. She always showed a genuine affection for all humans; a love for, and desire to protect, any animal or person that was obviously a baby; an incredible amount of loyalty and obedience, and the desire to be with the pack at all times. She was never aloof. With all of the time and energy I spent with her, in training and in socializing, at the doctor's office, at the park, or just playing or walking around, I know my life is far richer for having her than not. I've even watched jealously on more than one occasion as others with more than one rottie walked by. She and they made me wish I had more.

But I say that with a little bit of guilt, because there were times when I wanted to do something other than wait hand-and-foot on my ailing dog. I can remember many mornings when she didn't want to get out of bed, and I would say, “Sasha, GET UP. GO OUTSIDE. LET'S GO.” Most days I had to carry her up and down the stairs. At the very end I had to carry her right out to the spot where she would always pee, and then straight back to bed as well. But her passing has left me with the understanding that taking care of her wasn't my burden; it was my privilege. Most rotties live to be only about nine or ten years old. Sasha was over twelve. That means I did my job well.

What I focused on most over the last several weeks of her illness, was her tumor-addled paw and her ears. They were the softest ears I've ever felt. I twirled them constantly. If I ever needed to feel better, all I needed to do was touch her ears. And she loved it. She would always beg for more. But her paw worried me. The tumor continued to grow, and it was nearly all I could do to focus on staving off infection. Her ears, her tumors. I miss them all.

It was her ears I was twirling while looking into her eyes as the doctor inserted the needle into her arm. I kept telling her “you're such a good girl.” “We love you, sweetheart.” I felt compelled to make her feel comfortable, no matter how horrible I felt. And I think I did. But I believe one of the most hollow feelings in life is taking the life of another who trusts you so implicitly. How amazing is it that I profess my love for someone while simultaneously taking her life. Only the heartless could feel it acceptable.

But it had to be done. So the day before yesterday, she went to sleep for the last time. I then took her and one of our other two pups out to a shady tree they all seem to enjoy. And there I buried her under it. But as I filled the hole, I didn't feel relief. Not for her, or for me. I felt disgusted. I feel as though her life were cut short, even while I feel as though she were holding on just for us.

Ironically, the last thing to be covered by soil was her beautiful left ear. It put a sunken, memorable end to a life that I think should have lasted longer. I still can't believe that it was so dirty. I wanted to pull it out and pet it again. But I think I'll have to wait a long time for that.

So, for now. Goodbye, Sweet Pea. We love you. You've been such a good girl.

Don't Believe Everything You're Told

I found this story on a Yahoo Finance page the other day. It's called “The Worst Predictions About 2008.” Normally I don't care to put up just one link of a page that I would otherwise just email to my friends and family. But these predictions are so bad, they deserve to be posted. Among the worst are why Barack Obama can't win; “Bear Stearns is not in trouble;” and Freddie Mac and Fannie Mae are “fundamentally sound.” What makes these more staggering is who said it.

Merry Christmas Everyone

And a happy and much more prosperous New Year.

No Taxation Without Representation

Wars we don't want; pork spending as if it's necessary; lobbyists writing laws for lawmakers; and taxpayer bailout dollars disappearing into nowhere. I don't even have to touch on the electoral college; the appointment of a Kennedy with no experience, or the possible sale of a Senate seat in Illinois. I have no idea how anyone can read a story like this one, and still believe that our government actually represents the people.

A Good Ben Stein Article

I like Ben Stein. I think he gets his economics views correct most of the time. I don't agree with him on many things - even in this article. And I've been disappointed by his commentaries several times. One of them being “Re-inflate the Economy Now.” I think my jaw nearly hit the floor with that one. But in this article, he gets a number of things right. He says “Bye-Bye, Buy and Hold.” He's bearish on Paulson and Bernanke, and rightfully so. And he believes we have placed too much trust in government. Now there I couldn't agree more.

Speaking of disagreeing... I find it strange that someone could say we're placing too much trust in government, and then call for the government to re-inflate the economy now a bit perplexing. But to each his own.

Fear Can Be Logical

I've heard so many people say that the market is a rational place to put your money, only to be confounded later when there is some unbelievable run on stocks in either the positive or negative direction. They seem to be left wondering how such a thing could happen. I think I can clear this up a little. It's just perception.

On an individual level, it's perfectly rational to place your extra money in the markets in the hope that it will increase in value. That's rational. It's also rational to withdraw your money the moment you see it reduced in value. You don't want to lose your cash. You're trying to get more. So on a micro level, you're doing exactly what is correct for you, although most technical analysts will say that pulling your money away due to your fear is an emotion, and emotions aren't rational. Which isn't always true. What could be more rational than walking away from a scenario in which you genuinely believe you could lose part of your livelihood?

But on a macro level that kind of activity looks really bad. On good news of mediocre companies doing something well, a stock can climb to many times its legitimate worth. We then say it's “overvalued.” But I have to ask... Overvalued according to whom? The disinterested person doing the valuing, or the individual making a fortune? The reverse is also true for “undervalued” stocks. Here is our subjectivism.

On a macro level, these wild swings appear to have no reality-based explanation. From a distance it looks as though there are millions of people running into and out of stocks in haphazard fashion, like a group of mindless lemmings, one following the other for no particular reason. We think they are thinking: “He's going that way, so I'll go that way.” But it just isn't that simple.

On the other hand, what successful investors and analysts tell us to do is put aside our emotions, let our portfolios weather the storms, and ignore the reversals, flat spots and runs in favor of a more nebulous, and as yet, unrealized, unforeseeable long term goal. Now here is where we become irrational. This is essentially hope. Watching total strangers take money out of our pockets, and doing nothing to prevent it goes against all rationality. The most logical thing an individual can do is take immediate action to stem such activities. But we're told not to do that. We're told to let it ride, and that this is the most logical thing we can do. It may, in fact, be the method of operation of the more successful investors. But they are remaining illogical in the face of an extraordinary amount of information to the contrary. If we could know factually where the tops and bottoms were going to be, we could simply make decisions about when to enter and exit. We could eliminate guessing and hope. Now that would be logical.

What I'm trying to say is that what most people believe about the market is that individuals trading there are doing so irrationally, while the market itself works in a totally rational fashion. But that's not exactly correct. The market as a whole only appears to be irrational, because of our perceptions about “heard” responses to good or bad news. And that is also subjective.

At some point in the future, I would like to see the field of technical analysis incorporate the price of fear into a formula. For now it's only wishful thinking. But maybe with such a formula, we can one day put a premium on fear, and reduce it to little more than a blip on our screens.

But for now, I have here a jpeg of my trading screen. You can see the overall effect of bad news. The news that the company might have to go through an "organized" bankruptcy. GM went down significantly. First the quickest, most savvy investors sold (1). Then a few deal seekers moved in (2). Then the rest of the buying public sold (3). I get to see this sort of thing all the time. I actually made a little on this stock. I had enough logical fear to get out before the big dip.

Here is an interesting blog, showing that GM is now worth less than Gamestop.

Roaches Scatter When Lights Turn On

Former NASDAQ Chairman Bernie Madoff has proven that market corrections are still good.

In an incredible display of total disregard for the money and lives of honest people, Mr. Madoff appears to have pulled off the largest ponzi scam in history. According to some preliminary lists, the fraud includes congressmen, A-list celebrities, high profile mutual funds and banks, charities, and a number of other well known individuals and businesses that are now scrambling to find out how much they've lost, and how they can minimize the damages. He was finally caught by the massive turnaround in the economy, when new money and new participants became more difficult to find. In this new, and tougher, marketplace most of his investors were trying to withdraw funds, rather than add to existing investments. Mr. Madoff, who founded Bernard L. Madoff Investment Securities LLC, appears to have run the scheme for years without incident. So far the estimated total for the scam is around 50 billion dollars. But FBI officials are still sorting out the details of how the ponzi network was organized.

Going back to a man I quoted just a short time ago who wrote at length about market corrections:

“It destroys essentially those companies and industries that live a parasitic existence at the expense of the rest of the economy, and which owe their existence to our present fiat money system.”
- JÖRG GUIDO HÜLSMANN

I think we can say with certainty, that Mr. Madoff was in fact leading a “parasitic existence at the expense of the rest of the economy.” We could say the same thing about Freddie and Fannie, the auto industry, and parts of the banking sector – especially now that they're being propped up. Exposing these goings on is just one more reason to love market corrections. Corrections are good, not bad.

You can find, and download free of charge, HÜLSMANN'S entire essay entitled "Deflation and Liberty" here.

It's All Been Done

Tired of getting surprised by bad economic news? You should be. But it's not necessary. As author Llewellyn H. Rockwell, Jr. explains, our television and radio reporters are stunned to see what's going on in the marketplace. They give us their information as if no one could have possibly predicted what our government and marketplace would be doing right now. But that's simply wrong. The long term, and even some of the day-to-day trends, of our current market conditions fit a “textbook” model of the Austrian Economics Business Cycle. So if you're tired of feeling let down every day, and you want to understand how long this business cycle will last, then try reading his article above, and check out the mises.org website for more.

Instinctively Heroic

Just recently I touched on evolution a little bit. About one day later, I had the privilege of seeing this video on television. The main driving force behind evolution is self preservation. Food, water, shelter, flight from possible injury or death. Then there are other needs. Procreation, defense of territory, the needs of family. Dogs, though, we should place in a slightly different category from the just “evolving” label. I believe that no other animal on earth has been genetically manipulated by humans more than Canis Familiaris. Dogs have been bred to selflessly serve humans. To take our commands and obey them. This video, though, should make a person stop and think a little about evolution. It made me wonder if a higher kind of consciousness (or breeding) had temporarily overcome basic instinct. These street pups aren't stupid. They know that in order to survive they need to stay away from cars. So this dog has placed secondary evolutionary drive (needs of family) ahead of primary evolutionary drive (self preservation). That's the very definition of self-sacrifice. And that just doesn't seem very instinctive. It seems, well, bred. If dogs are man's best friends, then clearly, this video shows that they are also dog's best friends. I'm absolutely proud to have three of them.

Economy Perspective

We don't need any more proof that we're in a BIG bear market. We see it every day. The TV, the radio, the newspapers. All of them tell us about the abundance of hardships in every corner of the economy. But sometimes a simple chart is all you need to put the gravity of the situation into real perspective. WARNING. If you don't like gravity... go away.

Spores, spores, spores

I nearly always get strange looks whenever I share my enthusiasm for hunting and growing mushrooms. (No, I don't eat “magic” 'shrooms.) I've always considered them a tragically underutilized source of food and medicine. In this video, mycologist, and another one of my favorite authors, Paul Staments, offers excellent evidence of why mushrooms could very well save the planet.

He touches on subjects like: they consume oil; they produce great antibiotics; they reduce carbon dioxide; they're the world's best immune system boosters; they can permanently repel insects from your home; they have the potential to produce new fuels. I'm sure you will be fascinated by this presentation. He received a standing ovation. So maybe I'm not so strange after all. The presentation is just over 15 minutes long.

Personality Typer

I took a cue from Gregory Mankiw, and put into “The Typealyzer” my blog address. Here's, supposedly, my personality type from their personality/blogger site profiler. Funny. I don't have any argument.

The Thinkers

The logical and analytical type. They are especially attuned to difficult, creative and intellectual challenges, and always look for something more complex to dig into. They are great at finding subtle connections between things and imagine far-reaching implications. They enjoy working with complex things, using a lot of concepts and imaginative models of reality. Since they are not very good at seeing and understanding the needs of other people, they might come across as arrogant, impatient and insensitive to people who need some time to understand what they are talking about.

On a separate page, they said this:

The Mechanics

The independent and problem-solving type. They are especially attuned to the demands of the moment, and are masters of responding to challenges that arise spontaneously. They generally prefer to think things out for themselves and often avoid inter-personal conflicts. The Mechanics enjoy working together with other independent and highly skilled people, and often like to seek fun and action both in their work and personal life. They enjoy adventure and risk, such as driving race cars or working as policemen and firefighters.

Funny. I can't argue with that either. Except for the "conflicts" part.

Die, Keynesianism, Die!

For some reason, John Maynard Keynes and his largely disproven economic ideas about government involvement in an economy, “full employment,” and government's ability to “create jobs,” just refuses to go away. Some of the arguments against Keynes are:

1. Government doesn't create jobs. It only takes money, in the form of taxes, from one part of the economy and redistributes it to another part of the economy. This is called a spending multiplier. Its ratio is 1:1. In other words, one dollar gets produced in the economy for every dollar government takes out of the economy. Again, in other words, the pie doesn't get any bigger. It just gets distorted.

2. Government, and its concomitant bureaucracy, has been proven to be one of the least efficient methods of job production. It's much less efficient than the private sector.

3. Government job “creation,” in areas like public works, can only go on for as long as government continues to spend in those areas.

4. Keynesianism failed during Roosevelt's time in office.

5. It failed during the Hoover administration.

6. It failed during President Carter's fight with stagflation during the '70's.

7. And it failed more recently in Japan, during the 1990's, when the Japanese government spent a fortune trying to force their country out of a moribund economy. It cost them a fortune, and it didn't work. It was a hugely expensive mistake. The '90's are now referred to as "The Lost Decade."

Yet what does the president elect want to do to pep up the U.S. economy? Spend, spend, spend – exactly the opposite of what the country really needs. It's the very same mistake that has been made already, all over the world. When will our politicians learn?

"The Fallacy That Government Creates Jobs," by Daniel J. Mitchell.

"Obama Offers First Look at Massive Plan To Create Jobs," from The Washington Post.

Stop Rewarding Business Failures

Should the American people bail out the big three? Absolutely not. And there are plenty of very good reasons for this. The bailout is now hovering between 40 and 50 billion dollars, which isn't going to be nearly enough for the Detroit behemoths. But the money seems almost guaranteed now – once the CEO's of the big three decided to show up in fuel efficient cars to please the U.S. congress. But that's what they have to do, when they come with hats in hands. After years of paying for massive legacy programs; overpaying their employees with wages, vacations, health care, etc.; selling cars the American people demand less of every year; and a laundry list of other costly problems, they are now, not surprisingly, going bankrupt. But something else is also not surprising. Their competitors are still profitable – even in this economy.

Take a look at the labor cost differences between the companies here.

Writer Daniel Ikensen and USA Today both talk about the “nausea-inducing jobs bank scam.”

Gary Burtless talks about bad modeling, gas-guzzling decisions, and the high cost of unproductive labor.

In “Don't Bail Out The Big Three,” writer Bill Steigerwald goes through a quick question and answer session on some of the most popular and pressing questions.

This auto blog talks about Toyota's expectations for a drop in profit, right, profit, in 2008.

Here's more and more Toyota profit news.

Don't Confuse Cause For Cure

Here Murray Rothbard explains what actually causes economic depressions and recessions, and brings to light why Karl Marx still has such a profound effect on modern economic thought.

Opportunity Costs - Politician Style

I'm still laughing hysterically at our government “reformers'” attempts to save us from ourselves. I'm now more convinced than ever that their “reforms” and “rescues” will ultimately cost us more than had they just left everything alone.

In “Anatomy of a Breakdown,” writer Michael Flynn explains that the cause of the crisis came not from deregulation, but rather from government meddling on behalf of the poor, whom they determined needed “affordable housing.” In the 1970's, we called it “The Community Reinvestment Act.” Today, we simply call it Freddie and Fannie.

Here are a few more headlines from this past week. We can expect to see a lot more of these in the coming years.

"Obama wants auto industry reformer"

"The Big Three Have a Plan: Ask for Even More Bailout Money"

"TARP Trouble: GAO Report Rips Internal Controls, Bank Monitoring"

Atheist Logic

I've been thinking about atheism over the last few days, after watching some videos on the web of the most prominent atheists in the world. And I've noticed a strange double standard. Atheists have chosen not to believe in GOD for at least one of the same reasons that believers have chosen to believe – a lack of evidence – faith.

Aside from the standard arguments of: there cannot be a man with scepter in hand lording over all of us as if we're puppets (ego, free will); there's no harm done in not believing, because it doesn't make you any less human (secular humanist); the world would be better off without religion (anti-religion); all that we see is a process of evolution, not creation (evolutionist); the Bible is folk lore, fable or modern popular delusion that changes slightly over time (nonsense), there is one argument that I hear repeated quite often with the atheists: “There's no proof” (scientific, or reason).

The two that make the most sense, of course, are the scientific arguments. The evolutionist will tell you that humans came from apes, who in turn came from the fishes in the ocean. Maybe it's true. Maybe it isn't. But the theory of evolution in and of itself doesn't eliminate the idea of a universal creator. Nor does science in its entirety, for that matter. It's simply a process that we are in the process of understanding. So far, all we have to study is what's here on planet earth. And given the size of the universe, we simply don't have enough information to decide one way or the other. Either about apes, or about the originating galactic “primordial ooze.” We still don't have even so much as a scale upon which to put into perspective the size of the universe. The size of a galaxy – yes. The distance between galaxies – yes. But not the entire known and still as yet unknown universe. We have no reference whatsoever for such grand distances. There's also something about the evolutionary time tables the evolutionists don't want you to know. They're full of holes. They have massive gaps during which no one understands what happened. The best we can do is make an educated guess. And in some cases, the outcome of these gaps is a profound jump in evolutionary standards. So I hope that no reasonable person has made up his or her mind about the existence of GOD based upon the evolution evidence, and lack of evolution evidence, that we have here on earth. That's horribly near-sighted, because there's so much more of the universe to study. So, for now, the size of our universe and the breadth of our future knowledge are beyond our comprehension. It might be best to just say we don't get it yet. But not so for the atheists.

So, the only rational argument I keep coming back to is: “There's no proof.” That's logical. And correct. There isn't. But this argument isn't scientifically responsible. Our scientists will be the first to tell us that “absence of evidence isn't evidence of absence.” So atheists, many of whom claim to have very logical and scientific minds, are in essence, making up their minds that there cannot be a GOD, because of a lack of evidence – which isn't scientific. The most rational, responsible and scientific conclusion, ultimately, would be the one of the agnostics: Maybe. Maybe not. We don't know.

At the very least that position would keep a person's mind open, rather than shutting it down. Science is, after all, the process of inquiry. But, alas, this isn't the case for the atheists.

Ironically, it's also the identical rationale for the believers in GOD. They have decided to believe in spite of a lack of evidence. They believe that believing is better than not believing. But they're not using a science-based argument to help them make up their minds. They don't ask for proof. They have simply used the very essence of faith. So at least we can say that their final conclusion to believe is consistent with how they've made up their minds. Again, not so for the atheists, several of which I've watched belittle believers for using their same methodology.

Now don't take too much personal offense. I'm only beating up the atheists a little. They're used to it. Ultimately, I could care less what people believe, so long as they don't try to force their beliefs on me – something else the faithful and the atheists have in common in my experience. I'm just looking for consistency. And, in my humble opinion, atheists have some extra steps to take to remain logically consistent. The faithful, not so much. And I've often wondered about some other things.

Questions atheists should answer (not for me, for themselves):

Evolution implies intention. It's not sexual reproduction for the sake of propagating a species, but a specific direction. Intention toward something. A destination, if you will. How does evolution know which way to go? Doesn't evolution, in and of itself, imply a very specific brand of consciousness? Where does that come from?

According to modern evolutionary theory, evolution takes place in incremental steps over millions of years, and many generations. But according to modern medicine, we currently use less than 10 percent of our brains. How is it possible that we have developed 90 percent of something that appears to serve us no purpose? How can evolution rectify such a dilemma?

A single-celled organism that has no brain and no central nervous system also has the ability to understand when it's being attacked by another, and has the knowledge and ability to respond by defending itself. This implies external consciousness and knowledge of self. How is this possible without a brain or nervous system? Where does the consciousness come from? Is it “cellular” consciousness? And how can knowledge be applied without a brain?

Also, if matter cannot be created nor destroyed, what happens to the energy, which is in and of itself matter (E=MC2), located in our bodies? Where does it go? For that matter (pardon the pun) where did it come from?

In reference to the last question, there is another instance of energy disappearing. How can a black hole (also still theory) simply consume matter? Again, if energy cannot be created nor destroyed, where does it go? If there is, as our scientific community tells us, a “point of infinite implosion,” shouldn't there be, according to our own scientific laws, also a point of infinite explosion? Where is it? Where does the matter go?

The point I'm trying to make in the above two examples, is that there must be a place where the matter comes out, in one form or another. We don't know where that is, but we now take it for granted (faith, if you will) that it simply goes away. And that's not consistent – yet – with our scientific laws. I suppose to some the argument of basic matter coming and going seems irrelevant. We will probably find the answers soon enough. But to remain logically consistent in one's atheistic, scientific belief system, one must have evidence before one changes his or her mind. But basing a belief system on faith in science theory is just as logically irresponsible as faith in any other endeavor. Theorists are often very, very wrong.

Do you believe in the big bang? If not, your logic might be consistent. If so, there are other questions that need to be answered.

What existed before the big bang? What did the Big Bang explode into? It can't be "nothing." Empty space, mostly empty space, is what we have after the big bang. So a "nothing" argument isn't logical. And a “something” argument implies that (our) space itself has an edge (an end of our measurable time), and that there is something else beyond that edge (albeit mainly empty), which is, for our purposes, time independent. This also implies another dimension to our current reality that we have no knowledge about – a time independent reality – which itself implies another possible existence that we don't understand. So what did the Big Bang explode into?

Though we don't have any actual evidence of a galactic primordial ooze, our scientists accept, largely with total disregard to other theories (Steven Hawking has a good one), that everything in the universe came from such a primordial ooze. They claim that, given the current expansion rate of the universe, we must have this most primitive thing in our past. But observation of expansion now only means that we're expanding now. It doesn't necessarily mean that we've always been expanding from a central point in spacetime – especially since we have nothing more than theory on which to base our opinions.

In reference to the above statements, today science readily accepts the “primordial ooze” idea. The theory (yes, theory) posits that everything in existence today came from a point in our distant past that is smaller than the head of a pin – in fact, far, far smaller than the head of a pin. Given that we believe there are hundreds of billions, or possibly hundreds of trillions, of galaxies, each with hundreds of billions of stars (the Milky Way alone has 200 to 400 billion), and hundreds of billions of planets (how many zeros is that?) within each galaxy, does this amount of mass squeezed into such a small space appear to be sound scientific logic? Or does it seem more logically plausible that all the mass in our universe came from another place?

And one last, slightly philosophical, question.

If the painting does not paint itself, the poem does not write itself, nor the sculpture carve itself, how did the universe create itself?

Boy, am I glad I got that out of my head. Maybe now I can concentrate on something worthwhile.

Bailout Now Tops 8.5 Trillion

Growing, growing, gone
The healthy economy as we once knew it has now been eighty-sixed in favor of the massive TARP bailout, and all of its equally expensive pals. It seems our government and the media just can't stand only 94 percent of the American population working, only 94 percent of American households still solvent, and a much needed credit market correction. Our bubble has finally burst. One would think that since our elected leaders had for years warned us about the ills of “easy credit,” that a simple, albeit large, banking and credit industry correction would be welcome. But now they've changed their minds. “We need to free up the credit markets,” we hear. Every day there are more cries of “it's a crisis;” “do something.” So the once evil and toxic “easy credit” has now become their much sought cure.

Please. Anything.
Well, they did something. They have now agreed to back up 8.5 trillion dollars worth of bad debt, or about 60 percent of the entire GDP of the United States ('07), and hand it all over to the largest industries in the country. Can you say “transfer of wealth” boys and girls? I think you can. But we have to ask...Why are they doing this? My answer? Votes and fear.

Credit Crisis?
Although it may be a little more difficult for you to get a home loan, it's not impossible. You can still get these loans, though your down payment will have to be larger, and your credit history will need to be healthy. Ironically this is exactly what the banking sector required from all of its loan customers, before the government began pushing its home-as-American-birthright agenda through Freddie and Fannie. Strange isn't it? Historically, our situation was exactly what we're looking for today. Higher credit requirements. Less regulation. Less risk. Healthy banking industry. Who knew? Well...we did. But the Washington insiders didn't.

Auto loans are even better. Automakers are desperate to sell cars right now. No money down deals are advertised daily. So no credit crisis there.

Credit cards? Yes, we have more credit cards in the U.S. than we have people, but we've chosen not to use them in favor of...gasp, savings! Thrift, economy and savings, oh my! This is supposed to be bad?

Votes And Fear
They're saying that they're afraid if they don't move rapidly to get the (credit) markets moving again that there will be layoffs, a spike in unemployment, and those will lead to a dissatisfied electorate. And when the next round of elections takes place, all of the dissatisfied peoples will be revealed. But ultimately they're only guessing about the magnitude of future unemployment. They have no empirical evidence upon which to place their fears. We are in totally uncharted waters.

So in their infinite wisdom of how to correct an “out of control,” uh, free marketplace, they've done something hideous. They've distorted more than half of the economy. They've twisted our productive effort up to the top of the corporate ladder. They've created the largest corporate welfare program this country has ever seen. I have to wonder how many in the working/voting classes see this as equally dissatisfying. But their fear is an emotion, and not logical, after all. They just want to protect their future votes. And do something.

Follow My Lead
So again, the American people are left to pay for the emotions of fear-filled bureaucrats. They've placed an 8 trillion dollar bet on our future. And their jobs. Our elected leaders are telling us to do as they do. Use your credit. They're hoping that if they spend 8 trillion now, that we will produce more than 8 trillion later.

Honestly, though, I have my doubts. Chase Bank just burned through its first 25 billion dollar TARP payment (which they used to buy new assets). Now it's back for another 20 billion, and over 300 billion in loan guarantees – which they've been given. The auto industry guarantees doubled from 25 to 50 billion. All of it without a plan. It's only a matter of time before we see more of this behavior from other TARP-filled corporations.

So use your cards, people. Use your cards. The government wants to stimulate the economy and take credit for its new, larger welfare program. They just neglected to tell us what kind of welfare.

And one parting question...does any of this seem like a "representative" government to you?

Here are a couple of sites dedicated to tracking how much the bailout is costing us.
http://www.breakthebailout.com/node/3
http://www.ritholtz.com/blog/2008/11/tracking-the-bailout/

Here is a site that compiles a lot of information on the bailout and all of its minutiae.

Here is some good Citigroup info.

Here is the Citigroup bailout in detail.

This is a “Bailout Reader” page.

http://www.youtube.com/watch?v=nlcOJz9vb_E

Hayek's Wise, Prophetic and Spooky Words

Here is a quote from Nobel Prize winning economist F.A. Hayek, reprinted from The University of Chicago Law Review, from the spring of 1949.

“Socialism has never and nowhere been at first a working-class movement. It is by no means an obvious remedy for the obvious evil which the interests of that class will necessarily demand. It is a construction of theorists, deriving from certain tendencies of abstract thought with which for a long time only the intellectuals were familiar; and it required long efforts by the intellectuals before the working classes could be persuaded to adopt it as their program.

In every country that has moved toward socialism, the phase of the development in which socialism becomes a determining influence on politics has been preceded for many years by a period during which socialist ideals governed the thinking of the more active intellectuals. In Germany this stage had been reached toward the end of the last century; in England and France, about the time of the first World War. To the casual observer it would seem as if the United States had reached this phase after World War II, and that the attraction of a planned and directed economic system is now as strong among the American intellectuals as it ever was among their German or English fellows. Experience suggests that, once this phase has been reached, it is merely a question of time until the views now held by the intellectuals become the governing force of politics.”

They're not “ideologues”?

Here economist Richard Ebeling explains the misconception that Barack Obama's economic appointees are “pro market.”

7.7 Trillion And Counting

Like kids in a candy store, our Federal Reserve has done everything it can to consume and steal its way through as much product as possible before heading home. They (Paulson & Bernanke) originally told congress that the total for the TARP bailout would be 700 billion dollars. They then turned toe and loaned out over 2 trillion dollars. Now they're pledging a sum total of over 7 trillion dollars, 24,000 dollars for every man, woman and child in the U.S., or roughly half of the GDP for 2007. In legal parlance, that's known as a “bait and switch,” something the government has passed laws against.

So now, in what appears as a soon-to-be-tragic abuse of power, we're getting to see first hand the truly fragile nature of our marketplace when it's up against such massive manipulations. Fear is creeping in faster than before, not just because of publicly perceived doom and gloom, but also because of the interventions themselves. So in their heavy-handed efforts to alleviate fear and create stability, they have succeeded in doing exactly the opposite. But ultimately that's just the status quo in intervention history. One would think that Ben Bernanke already understands this fact, since he's an economist and Depression Era historian. But apparently not.

These amounts are staggering. And so is Bernanke's attitude. In testimony on November 18th, he stated: “We take collateral; we haircut it; it is a short-term loan; it is very safe; we have never lost a penny in these various lending programs.” He's referring to lending out less money than the current market value of whatever collateral was accepted by The Fed. But so far, only they can say what that collateral is worth, since no one has been allowed to inspect their books. And I have a couple of nagging questions. Correct me if I'm wrong. These banks were over extended with bad assets in the first place. That's why they're in trouble. So what assets (collateral) are left? Their buildings? Their computers? Do those add up to several trillion dollars? Or are they offering as “collateral” the same SPV's that have wreaked so much havoc in the first place? What else do they have to offer? Their “good” loans? Which ones? How about their stocks? How much are they worth now? And when creditors collect, is it first-to-loan, first-to-get-paid-back? Essentially, the oldest loans come first. Right? So that leaves the American taxpayers last in line. If they've “never lost a penny” on these kinds of loans, which I doubt, then they had better be extraordinarily sure that the monies going out now will indeed be repaid. I know a poker face when I see one. And Bernanke seems far too dismissive about the size of these loans for my comfort. I feel like I'm watching a poker player with two pairs bluffing his way through to the end of the pot. Or maybe, to use another metaphor, like a policeman telling a crowd “don't worry; nothing to see here.”

Henry Paulson leaves me feeling the same way. In his testimony, he stated: “I think it would be extraordinarily unusual if the government did not get that money back and more.” Hey, Hank. Isn't this entire “credit crisis” an “extraordinarily unusual” situation? Isn't it, what most journalists, pundits and government watch dogs are calling “unprecedented”? That is, nearly by definition, extraordinarily unusual. His poker face isn't good either.

All of this adds up to a sum total of “what the bejabbers is going on?” We're shaking our heads at the size and scope of it. And we're shaking in our shoes over its implications.

We can't trust these guys anymore. They say one thing, and do something else. Then they change their minds, and tell us, in Paulson's own words, “you should thank me.” They've been binging on greenbacks, and it's time to cut them off. I would like to suggest a myopia intervention. You've had enough boys. Now back away from the printing press.

But I need to take a moment here, to digress, and smile smugly over what Congressman Scott Garrett (R) from New Jersey said recently regarding The Federal Reserve. He said:

“Whether it’s lending or spending, it’s tax dollars that are going out the window, and we end up holding collateral we don’t know anything about. The time has come that we consider what sort of limitations we should be placing on the Fed so that authority returns to elected officials as opposed to appointed ones.”

This is, in my humble opinion, the very first rumbling of a call to nationalize The Federal Reserve, which is step two in my “Top 30 Watch List For Economic Armageddon.” It's another one of my “I told you so” moments. To my surprise, they've skipped a couple of steps. But I guess that shouldn't surprise me. It is government after all.

Remember, once they call for step one, “A State of Emergency,” our “crisis” will be seen as totally “out of control,” and the only remedy a bureaucrat understands is more control. That's the very definition of governance - to restrict, to control. And just one sidebar-style question: does this seem like a “representative” government to you?

My “Top 30 Watch List For Economic Armageddon”

U.S. Pledges Top 7.7 Trillion to Ease Frozen Credit

Another Day, Another $800B: 'Staggering Size of Bailout Necessary,' Economist Says

Bail-Outrage: Misuse of Funds, Lack of Transparency a National Disgrace

Who's Afraid of a Little Deflation?

This is a quote from JÖRG GUIDO HÜLSMANN, dated just last month, addressing the fears of deflation. It's from one of his essays you can get for free here.
There are also pages and pages of full length books on Austrian Economics, political economy, morality and especially our current financial mess, all of which can be downloaded free of charge.

"To raise these questions is to answer them. The crisis did not hit us despite the presence of our monetary and financial authorities. It hit us because of them.

Then there is the fear factor. If we follow a hands off policy, the majority of experts tell us, the banking industry, the financial markets, and much of the rest of the economy will be wiped out in a bottomless deflationary spiral.

The present essay argues that this is a half-truth. It is true that without further government intervention there would be a deflationary spiral. It is not true that this spiral would be bottomless and wipe out the economy. It would not be a mortal threat to the lives and the welfare of the general population. It destroys essentially those companies and industries that live a parasitic existence at the expense of the rest of the economy, and which owe their existence to our present fiat money system. Even in the short run, therefore, deflation reduces our real incomes only within rather narrow limits. And it will clear the ground for very substantial growth rates in the medium and long run.

We should not be afraid of deflation. We should love it as much as our liberties."

JÖRG GUIDO HÜLSMANN
Angers, France October 2008

In addition, if you're interested in the bailout and its ramifications, which are getting more ridiculous every day, you can check out their “Bailout Reader” blog. It has a huge pool of information about causes, effects, and best of all, what can be done to remedy our current financial situation.

What Are They Thinking?

Ever wondered “What are they thinking?” when watching the news of our financial mess? In “Everything bad is good again,” writer Jacob Sullum puts some great illogical head scratchers into perspective. It's pretty funny.

Out of Control (I Told You So pt. 2)

I've been reviewing some of the most recent information about the TARP program (Troubled Assets Relief Program). And I've dragged out of the online financial mire some interesting information that just isn't getting the attention it deserves. If you've been following the bailout news at all, you know that it's costing the American taxpayers about 700 billion dollars. And that more businesses, especially the automotive industry, are asking for a slice of the total, or even better, a bailout of their own. And lawmakers are seriously considering it. So not only is the program failing to bring about the stability that was promised. But it's also growing in amount, and branching out into other industries. These manuvres are in lock step with what I predicted in my other posts. But silly me, I gave the government, and their quasi-government “helpers” at The Federal Reserve, some credit (catch the pun?). I thought the massive amount they were confiscating publicly was all they would get.

Little did anyone know, they would get far more. But The Fed didn't make this massive addition public. What's most shocking, though, is that they're not accountable to anyone. So why just confiscate 700 billion, and be accountable for it, when you can confiscate over 2 trillion, and be accountable for less than half? Let's just go for broke. http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aS1eWoJj0sKc

That's right. I said 2 trillion. Henry Paulson and the people at The Federal Reserve are now taking on the responsibility of doling out more than 2 trillion dollars. In an impressive and rapid response, Bloomberg News filed a freedom of information act request, demanding clarity in these massive transactions. It's important for taxpayers to know where their money is going. But the Federal Reserve refused. Bloomberg followed up by filing a lawsuit demanding disclosure. And still today the Fed is thumbing its nose.

The crux of this issue, though, isn't that they don't want to turn over their books for inspection. Any reasonable person can understand that what is essentially a client list is proprietary information. And the federal reserve isn't necessarily run by the government. So they don't have to turn over their books, unless they are accused of criminal activity. Which they're not. The real problem is that they have acquired another 1.3 trillion dollars in taxpayer monies without congressional approval.

This is no little booking error. It was a conscious decision – probably by a number of people working within The Fed. So it begs some serious questions. How did The Fed get it? Who within (or outside) The Fed authorized the use of these extra taxpayer funds? What authority do they have to do such a thing? What standards were used in making the decision to continue the program outside of congressional oversight? What standards will be used to decide who gets the additional money? Why, if the amount is so enormous, and the money not theirs, would they knowingly deny the rightful owners of the dollars access to their information? Was denial of this access predetermined? What was the original destination of the additional funds? Were they to be used in other programs that will now be underfunded?

To wit. What gives them the right? I smell a hideous abuse of power here. The last time I checked, it was criminal for private individuals to simply take taxpayer dollars. If they have confiscated the money, it could very well be a criminal act. If it's a loan they intend to pay back, the people deserve disclosure. But no charges have been filed – yet.

That much is shocking. But now is where the story gets funny, and borders on the ridiculous. When questioned about the extra money, Fed Chairman Ben Bernanke stated that he thinks disclosure would be “counterproductive.” His reason?

“There is a concern that if the name is put in the newspaper that such-and-such bank came to the Fed to borrow overnight for a perfectly good reason, that others might begin to worry 'is this bank credit worthy?' and that might create a stigma, a problem, and might cause banks to be unwilling to borrow, and that would be counterproductive.”

He's worried about their... reputations. So he's denying access to the information about what he's doing with huge amounts of taxpayer dollars, because he's worried about the banks getting a bad name. Isn't it a little late for that? He sought to alleviate concern over that issue by following up with statements like “We take collateral,” and the loans are “very safe.” So this begs another question. If you take collateral, and the loans are clearly safe, why not let everyone see your info? If what he said were actually true, it would be obvious to anyone with a little bit of interest. Reputations would remain in tact, and transparency would help to lessen any emerging Big Brother fears. (When was the last time you got a loan for a home, or even just a car, without telling every little financial detail to the people giving you the loan?) But all the while, Henry Paulson is testifying: “We need oversight. We need protection. We need transparency. I want it. We all want it.”

So this becomes strangely dysfunctional. What a pair, these two. Is this a conscious out-of-touch-with-each-other act? Is it unintentional? Or are they really on separate pages? Are they playing good cop/bad cop? Or are they the keystone cops? We might have to wait until charges are filed. Or at least until someone resigns.

Meanwhile, your dollars are getting sucked out of The Federal Reserve's doors as if there's a giant money vacuum outside. All of it essentially vaporising into no one knows where. I take that back. Only Henry Paulson and Ben Bernanke know where.

Here are some quick links giving just the numbers on how much the bailout is costing us, and who has received money so far.
http://www.breakthebailout.com/node/3
http://www.ritholtz.com/blog/2008/11/tracking-the-bailout/

Mises.org offers a lot of free books on line. One of them that's of particular interest right now is this book by Jorg Guido Hulsmann, explaining why deflation isn't what the politicos and the media make it out to be. It's only about 45 pages, and definitely worth the read.

Here is a website dedicated to following just the bailout.

Here is a Wall Street Journal discussion board video that takes about 4.5 minutes.

Here are some more links from mises.org, my favorite site, just in case you're starting to get a little skeptical about whether or not the bailout will actually work. Market corrections are good – not bad.

Consumers Don't Cause Recessions

Markets Need Time, Not More Poison

Financial Crisis and Recession

In Praise of Bankruptcy

I Told You So

In my post "Hear No Evil; See No Evil," I made a prediction that the bailout program will not work, or its results will be marginal at best. I also stated "...they will do two things: lobby for more money, and further contort their bailout package to make it look like they're doing everything they can."

It's now been just a few weeks since the TARP program was given the green light, and already there are serious problems. So far, there are complaints of politicizing the funds and who gets them; showing preferences to friends and former business acquaintances; general mismanagement of the amounts given, and how they're tracked; heavy, behind-closed-doors lobbying; and, of course, calls for more money and expansion of the program. If politicians weren't so ridiculously predictable, it might actually be fun to sound like a prophet once in a while. Instead, it's just nauseating. But I'll make another couple of predictions anyway. By the time this program is fully under way, Henry Paulson will have well over a trillion dollars at his personal disposal – a trillion dollars of your money - one thirteenth of the total U.S. GDP. (Is he the first to singularly have authority over that much money?) In addition, there will be multiple committees and subcommittees trying to govern the program, all of which will be fighting for influence over amounts, timing and distribution rights.

But I'm also a firm believer in Mr. Murphy, and his one, undeniable law.

This is rapidly becoming one of the most worrisome economic times in American history. And if there is any way that this government can prove to the world how impotent it really is, that time is now. At some point Mr. Murphy will raise his ugly, old, wart-filled, wretched head, and remind everyone that he never, ever goes away. In fact, he's already started. Can you smell it? I can. The stench of failure. It's almost time to get out the pitchforks.

In this article, one of my favorite authors, Robert Higgs, skewers the TARP, and gets in some great digs on several other policies, industries and hysteriopots. It's really worth the time to read this article, and get a less than Chicken Little review of what the TARP is, does, has done, and what should be done. He calls it “The TARP Is Dead, Long Live The TARP.” Owch.
http://mises.org/story/3217

Mark Thornton advocates a “Slash and Burn” policy to bring the economy back to a healthy norm.

Daniel Mitchell details why bailing out the auto industry is a bad idea.

Daniel Ikensen explains why “There's Nothing Wrong With a 'Big Two.'"

And in "How Did We Get Into This Financial Mess?", Lawrence White explains where the mess really originated.

http://biz.yahoo.com/cnbc/081118/27781824.html
http://biz.yahoo.com/ap/081118/congress_autos.html
http://biz.yahoo.com/ap/081118/financial_meltdown.html

The Good Die Young

My condolences to the families and friends of everyone lost in the Mexican Interior Ministry airplane crash on November 4th, in Mexico City. Mexican citizens have been shaken very hard by the event. It's made news daily since it happened. There were a total of 13 people lost – 8 on the plane, and 5 bystanders on the ground. The plane crashed in a prominent and famous locale during rush hour traffic. The site just happens to be in line with one of the landing lanes at Mexico City International Airport. The crash has so far been attributed to possible pilot error during a necessary correction due to jet wash from another plane. Several interior ministry employees were on the plane at the time. There were no survivors. In the United States, a similar event would be like losing nearly the entire U.S. Cabinet in a single crash. What has saddened Mexicans most is the loss of Secretary of the Interior, Juan Camilo Mourino, who, since Calderon took office, had been very successful in fighting internal corruption and drug cartels. He was a personal friend of Felipe Calderon, and publicly very popular.

http://news.xinhuanet.com/english/2008-11/08/content_10326077.htm
http://en.wikipedia.org/wiki/2008_Mexico_City_plane_crash
http://www.bloomberg.com/apps/news?pid=20601086&sid=al.fglwKaupA

Dog Flourishes On Two Legs

Meet Faith, one of the world's most impressive dogs. It's rated G, and takes about two minutes. “The greatness of a nation and its moral progress can be judged by the way its animals are treated." - Mahatma Gandhi

Super Powers

Here is a funny youtube video of a couple trying to spice up their sex life. It's PG-13, and takes about 6 minutes.

Hear No Evil; See No Evil

Here's proof government causes major distortions in the marketplace, and they don't listen to the responses.

A story published on Yahoo News November 12th, entitled “Stocks lower as Paulson unveils change in bailout,” states:

"...the government's $700 billion financial rescue package won't
purchase troubled assets from banks as originally planned.

Paulson also announced a new goal for the program to support
financial markets which supply consumer credit in such areas
as credit card debt, auto loans and student loans. He said,
'with a stronger capital base, our banks will be more confident'
to support economic activity."

Later in the same article, is the news of widespread reaction.

“Morgan Stanley outlined plans to cut 10 percent of staff... The layoffs are in addition to a 10 percent cut made earlier this year.”
“Morgan Stanley also plans to restructure its money management business by cutting 9 percent of the group's workforce.”
“In midday trading, the DOW shed 278.21, or 3.2 percent...”
“...Standard & Poor's 500 index dropped 29.34 points, or 3.26 percent...”
“the NASDAQ composite index stumbled 47.86 points, or 3.03 percent...”
“The Russell index of smaller companies fell 17.00, or 3.52 percent...”
“Declining issues outnumbered advancers by about 9 to 1 on the New York Stock Exchange.”

An article published mere hours later says it all: "Stocks skid on news gov't won't buy banks' assets."

So my question is: exactly what part of “more confident” was Mr. Paulson talking about? The banks? Obviously not. The markets? Nope. Consumer spending? No. That's down also. So they must have their fingers in their ears, and hands over their eyes, because the signals that stampede by the rest of us are incredibly obvious, but seem to pass by Washington without so much as a pitter-patter sound. And they're paying no attention whatever to the trillions of dollars in private investments in the stock markets, which make up college monies, retirement savings, vacations, etc., all drying up and blowing away every time they make one of these announcements. And to make matters worse, they're going to expand the program. No surprise there. In this one Yahoo News article, we have perfect examples of the three things gov't does best: lie, grow, and waste money. I said it elsewhere on this page; bureaucrats need to be beaten over their heads with reality. Let us not forget that this all happened in less than 24 hours. So thanks, Mr. Paulson, for all of your "help." With friends like you, who needs enemies?

I would like to make a prediction. This bailout program will not work. If there is any response at all, it will be marginal at best. When this failure becomes apparent to the power players in Washington, they will do two things: lobby for more money, and further contort their bailout package to make it look like they're doing everything they can. They'll then tell the people, “This time it will work.”

http://biz.yahoo.com/ap/081112/wall_street.html
http://news.yahoo.com/s/ap/20081112/ap_on_bi_ge/financial_meltdown
http://biz.yahoo.com/ap/081112/wall_street.html

Is There a Real "War On The Middle Class?"

If you've been listening to our politicians and pundits lately, you might actually think that the middle class has it harder today than ever before. Is it true? Nope. It's H-Y-P-E. Here are the numbers.

Mark's Top 30 Watch List For Economic Armageddon

Here are the events that I'm personally looking for to tell me when a very real economic catastrophe is near. I call it the “change we need.” Ha. I crack me up. Some of these have been done in the U.S. already, and I've listed which ones as "Done" at the beginning of each entry. I've also listed which ones have not yet been done, but which I expect will be done eventually. Some others, just for effect, I've listed with an asterisk (*) at the end of the entry to denote which ones were attempted by Nazi Germany prior to WWII. I'm calling this list the “change we need” in reference to Barack Obama's campaign slogan, because I believe that this “change” will bring an eventual swing in the political pendulum back to responsible, non-interventionist, small government. I've tried to list them in order of what I think resembles least to most important. Take note of how many I've listed as "Partially," or "Not yet." I believe that once this list is fulfilled in its entirety, our economic doom will be at hand. And the real change that follows will be much better for all of us.

30. (Done) Intervene when a hyper-inflated marketplace shows signs of correction. Do this regularly, and tell everyone it's for necessary “calm” and “control.” *
29. (Done) Raise personal income and corporate taxes to new highs. *
28. (Done) Encourage economists to publicly state that lowering taxes doesn't necessarily raise gov't revenues.
27. (Done) Protect inefficient businesses from failure by tax, tariff, cap-and-trade, anti-dumping laws and subsidies, among other things. Then tell everyone "It's for your own good." *
26. (Done) Bail out inefficient businesses when they fail in spite of your efforts, by confiscating as much money as they need. Whitewash all failures with propaganda. Then rinse and repeat. Then tell everyone "It's for your own good." *
25. (Done) Make a laundry list of government restrictions and mandates for all businesses to pay, including health care, minimum wages, environmental restrictions, multiple licensure and operational safety regulations, among other things. Then tell everyone "It's for your own good."
24. (Done) Have prominent economists decry capitalism as either dead, on its way out for something better (Marxism), or in need of a great deal of restraint. *
23. (Done) Condemn competition as uncivilized, and force cooperation. * (Communism)
22. (Done) Tell the voters that government “creates” jobs. *
21. (Done) Tell the people the only thing needed to correct all of society's ills is just a little more government. Paint the government as a new messiah. *
20. (Done) Consider the desire for profit to be “greedy.” *
19. (Done) Let the media elect whichever politicians they desire most. *
18. (Done) Engage in costly and multiple military conflicts that ultimately no one has any specific need for, and are most likely to lead to extraordinarily expensive failures. *
17. (Done) Take away cheap labor. *
16. (Done) Allow special economic interests to manipulate lawmakers.
15. (Done) Allow lawmakers to stay in office no matter how detached they become, or how dissatisfied the electorate becomes. *
14. (Done) Guarantee all tax monies to those same lawmakers, despite the electorate's dissatisfaction. *
13. (Done) Tell the taxpayers that government "needs," or "deserves" their tax dollars.
12. (Done) Consider any monetary policy that might have an effect on the economy of less than half a billion dollars to be "chump change."
11. (Done) Force the biggest companies in the nation to forgo profit in favor of the political whims of politicians. * (Corporatism, or Mixed Economy)
10. (Done) Print as much money as you think you need. *
9. (Done) Punish businesses when you feel you can no longer trust them, or when you personally consider them “too big.” *
8. (Done) Publicly redistribute privately earned wealth, involuntarily making each neighbor responsible for all the ills of every other neighbor. Then tell everyone "It's for your own good." * (Socialism)
7. (Done) Think that a governing body, consisting of a small number of individuals, that cannot voluntarily control its own spending, will somehow be able to control the ins and outs of a multi-trillion dollar economy that consists of billions of individuals located all over the face of the earth. Pursue this idea, despite the fact that it has been proven throughout history to be a bad idea that fails every time it's tried. Then tell everyone "This time it will work." *
6. (Done) Run up massive debts and deficits, the depth and breadth of which have absolutely no comparison in human history, and consider them normal. *
5. (Done) Arbitrarily manipulate interest rates. *
4. (Partially done) Nationalize the banking industry. *
3. (Done) Let the government consume 40 percent or more of the country's GDP. * (federal tax rate is currently over 37 percent) (Promised 8.5 Tril. on Dec. 1st, for bailout - equal to 60% of GDP for 2007)
2. (Not yet) Nationalize The Federal Reserve.
1. (Not yet) Call for a “State of Emergency.” *

http://en.wikipedia.org/wiki/Corporatism
http://en.wikipedia.org/wiki/Mixed_economy
http://bloomberg.com/apps/news?pid=20601109&sid=arEE1iClqDrk&refer=home
http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)
http://www.bizjournals.com/sacramento/stories/2008/12/01/daily3.html
http://articles.moneycentral.msn.com/Taxes/Advice/YourRealTaxRate40.aspx

Red vs. Blue Financial Crisis PSA: Rock Bottom

Here is the funniest summary I've seen of our current financial woes. It takes about three minutes.

Mankiw for President 2012

When I read this, I had to post it. Can we call for election do-overs?

Obama Wins; and loses

Congratulations to President Elect Barack Obama. In winning last night's election, you have inherited:

The largest government debts ever seen.

An economy sinking into recession.

Rising unemployment.

Two unpopular wars, in which if we stay in country you will be breaking your campaign promise. But if we leave, the countries will almost certainly devolve into civil war and create more anit-american sentiment.

And the worst political divisions this country has ever seen.

Good luck, sir. You're going to need it.

A Trillion Dollar Health Care Lie

Crisis (kri sis), n., pl. -ses (sez) 1. a turning point, as in a sequence of events, for better or for worse. 2. a condition of instability, as in international relations, that leads to a decisive change. 3. a personal tragedy, emotional upheaval, or the like. 4. a. the point in the course of a serious disease at witch a decisive change occurs, leading either to recovery or to death. b. the change itself. 5. the point, as in a play, at witch the antagonistic elements confront each other. - Webster's Dictionary, 1990.

Intro:
You may not believe me when I say this, but... There is no such thing as a “health care insurance crisis.” It doesn't exist. It's a figment of the media's collectivist imagination.

Often I come across articles that seem to screech about how many people in the U.S. are foregoing health care insurance, and how dangerous and unfair this is. But this “crisis,” first, implies the notion that we are living with a lack of health care insurance. And second, at least in today's political climate, also implies that government needs to do something about it immediately, or there might be no relief from such a critical state. None of this is true.

First things first. Exactly how many people in the U.S. are uninsured? Official estimates by The National Center for Health Statistics states that “...55.3 million persons of all ages were uninsured for at least part of the year...” in 2008, up from the 45-48 million number that was being quoted just a couple of years ago.

Given the extraordinarily high price of gas over the summer, and the state of the economy today, the increase shouldn't surprise anyone.

Second, who makes up the bulk of these uninsured people? According to the U.S. Census Bureau, at least 17 million of the 55.3 million person total earn over 50,000 dollars per year. Nine million of those earn over 75,000 dollars per year. In one analyst's observation, health care coverage just isn't a “good buy” for them. With the money they make, they can choose their priorities, and apparently health insurance is not on their lists. These people, who for whatever reason, have chosen not to purchase this kind of product, clearly could afford it. They make up just over 30 percent of the total uninsured in this number. So when the total number of uninsured is cited, without bringing this statistic to light, the argument being made is disingenuous.

The real numerical lowdown:
In total, over 18 million of the uninsured are between the ages of 18 and 34, and choose to spend four times more on entertainment than on what it would cost them to obtain health care coverage. Fourteen million are eligible for government health care programs, like Medicaid, but choose to stay out. Twelve million (now more like 14 mil.) are “undocumented workers,” who don't buy health insurance, but, like poor legal citizens, ultimately can still get care, because federal laws demand that hospitals give care to those in need.

So how many are really uninsured? Today, about 11.3 million. Does roughly 3% of the population of the country going without health insurance sound like a “crisis”? Does it sound like “ a condition of instability...that leads to a decisive change.”? Not really. The legal system forces hospitals to care for those who are sick or injured, despite their ability or willingness to pay. They then write off the costs, or a portion of them, which is then passed on to you, the taxpayer. Or the costs are passed on through creative cost shifting (a.k.a. you), and/or higher insurance premiums.

This is insulting, but not enough to turn our health care system into a single payer system. The arguments here are that since the taxpayer is footing the bill anyway, why not just make the whole system, or the majority of it, controlled by government? Then they can decide how, when and in what quantity to use our tax dollars, so costs can be controlled. (I scared myself just writing that last sentence.) I'll dismiss, for now, the fact that the medical industry is arguably the most heavily regulated industry in America. The second part of the gov't controlled argument, is that other countries have similar systems. That prices, care quality, care distribution, taxes and all the rest are kept comfortably in check, while individuals reap the financial rewards of good ol' big brother's all-encompassing arms. If only such simpleminded market manipulations were true. Other countries have tried this. And failed. Many of them who thought that restrictive regulation could be a panacea are actively trying to disengage from a gov't controlled medical industry in its entirety. They've publicly learned a very hard lesson that economists summarize with the phrase "That free lunch is going to cost you."

The Crux of the issue:
But the trillion dollar question is: Is there a lack of health care insurance in the U.S.? No. The people of the United States spent 2.2 trillion dollars on health care in 2007. So the market exists. How about affordable insurance? Now that's a great question. Health care costs have risen roughly 98-100 percent in just the last 10 years. This is a huge problem. But what is the cause? According to many studies, regulation.

What the Cato Institute says specifically in their study is for every two dollars we spend on regulation, we get one dollar of medical benefit. Clearly, the laws of economics are failing to manifest in the medical establishment. According to the SBA, small businesses spend about 1-3, and no more than 5 percent of their revenues on regulatory costs. Large businesses spend less. If this doesn't give weight to the argument of over regulation, nothing will.

In addition, there is another, glaring indicator that a game is afoot in your doctor's office. But it's not your doctor's fault. S/he is just complying with the rules, and working within the market they're given. Here's my personal observation. When you walk into a clothing store, what do you see? Product, cash register, sales person, price tags. When you walk into a fast food restaurant, what do you see? Front desk, cash register, sales person, prices up high. Now walk into your doctor's office. What do you see? Any prices? None. Never. Why? Because you don't pay the price. Your insurance company does. And they can do it, much to their pleasure, behind closed doors, where you can't hear them negotiate.

We don't have a market for health care services in America. There simply isn't one. What we have is a market for health care insurance. All of it manipulated by our government, and protected by insurance special interests, while you get to foot the bill. You're being force fed the story of a “health care insurance crisis,” from the media, and one hand of big brother. All of this goes on while big bro's other hand takes the massive dollars you ultimately don't need to pay in premiums, from the insurance lobby, so they can legally solidify themselves into your lives even more.

There is no “health care insurance crisis.” But there is a crisis. There's no market at all for ordinary citizens to know up front what 10 stitches will cost; what several nights in intensive care will cost; what setting a broken bone will cost. At least not without all of the two dollars of reg's for one dollar of benefit distortions. The best way to get relief from the “critical state” that I talked about a moment ago is to demand less regulation, fewer special interests, and most importantly, total control over your medical care. The real “health care crisis” in our country is that you are not in control.

http://freemarketcure.com/
http://freemarketcure.com/blog/?p=317
http://cdhc.ncpa.org/
http://www.cato.org/pubs/pas/pa527.pdf
http://en.wikipedia.org/wiki/Health_care_in_the_United_States#Healthcare_regulatory_costs
http://www.sba.gov/advo/research/rs186.pdf

Alan Greenspan: Heartbreaker

October 30th, 2008

As I sit here beginning my very first entry into bloggerville, I have to confess that I'm extraordinarily saddened by some recent events that took place in Washington D.C.
Former Federal Reserve Chairman Alan Greenspan, a man for whom I've had a great deal of respect for many years, said something that I'll never forget. When pressed into some clearly disrespectful anti-free market questioning by Congressman Henry Waxman, who asked: “Do you feel that your ideology pushed you to make decisions that you wish you had not made?” Greenspan replied: “Yes, I’ve found a flaw. I don’t know how significant or permanent it is. But I’ve been very distressed by that fact.”
I swear there are times when you can physically feel your heart break. The ideology he was referring to is his unwavering respect for deregulation, the free market and laissez faire capitalism in general. He said he was in a state of “shocked disbelief,” over the current banking and credit mess, while The New York Times called his questioning “the harshest grillings of his life.”
Harsh yes. But deserved? No. The House Oversight and Government Reform Committee, of which Henry Waxman has been a part since 1997, had plenty of opportunities for many years to limit the perceived and real risks being taken on by the financial industry. But rather than regulate, they elected to do nothing, which is precisely what Greenspan would have wanted, I assume. Ironically, Waxman also said: “You had the authority to prevent irresponsible lending practices that led to the sub prime mortgage crisis. You were advised to do so by many others.” Pardon me, Mr. Waxman. But you also had the authority. And you were also advised to do so.
In fact, the former Federal Reserve Chairman had warned about derivatives, mortgage backed securities and other perfectly reasonable market-made SPV's. But he disagreed, particularly with the democrats, about what needed to be done. He was right then; and he's still right today. What he said was: “The evidence strongly suggests that without the excess demand from securitizers, sub prime mortgage originations would have been far smaller and defaults accordingly far lower.”
Herein lies Mr. Greenspan's true genius. Civility, humility and the continued ability to point fingers where they deserve to be pointed, and insult those who are clearly guilty, though they still today don't understand they've been insulted.

Q: What do you suppose he meant by “excess demand from securitizers...”?
A: Falsely created demand from a regulated market (Freddie and Fannie) that knows it can't fail, because it's backed up with tax dollars.

Q: What did he mean by “...sub prime mortgage originations would have been far smaller and defaults accordingly far lower.”?
A: Not only did the government create the market and create truly irrational false demand, but without the original government intervention, the incredibly expensive “credit crisis,” and “rescue package” messes we now find ourselves in the midst of, would be much, much smaller.

So in other words, not only did government clearly make this mess, it made it far, far worse than had it simply left the market alone to its own devices. I would like to submit that sans government intervention, the only suffering going on would be in those companies irresponsible enough to overextend themselves in the first place. Their shareholders, of course, would also suffer, but at least without specific bureaucratic intervention from Washington, they would still have the ability sue. Not so for the tax payers now. I personally wonder how many champaign corks were popping at Freddie, Fannie and in certain Wall Street boardrooms when the bailout (not the “rescue package”) was announced.
Greenspan went on: “Whatever regulatory changes are made, they will pale in comparison to the change already evident in today’s markets. Those markets for an indefinite future will be far more restrained than would any currently contemplated new regulatory regime.”
Herein lies Greenspan's lack of genius. Subtlety is wasted on the dense. Bureaucrats need to be beaten over their heads with reality, not politely served econospeak light from a man they no longer fear. He needs to tell them they're hypocrites. He has to tell them outright, “Don't bother creating another oversight committee or subcommittee. From now on the market will voluntarily be more conservative and take less risk than you or anyone else can impose.” He did, after all, tell them quite some time ago that requiring financial institutions to hold a substantial number of these same SPV's would be a good method of getting them to show self restraint. But with the bailout firmly taking the place of restraint, why bother? The losses will be easily absorbed by the biggest, least insightful, most irresponsible lending institutions in the U.S. All of their monies given to them by you, so they can now resume their activities after having been punished less by the government than by the market.
Of course, it does cost them a little. But what a pittance. They give the government some stock in their companies, and they get millions, or in some cases billions, in return. It's just a little government involvement, which is what they wanted anyway.
I've never agreed with everything Greenspan has done, and/or said. But unfortunately for the voters (um, taxpayers), the only thing that truly motivates a government paper pusher is fear. Or at the very least awe from a clearly superior intelligence. I now, however, have a sneaking suspicion that the next episode of “shocked disbelief” will be from the taxpayers when they see how much damage and market distortion this bailout and all of its new regulations will create over the long term. And the next episode of “harshest grillings” will be your fire-sale-seared wallets, as the new Washington elite purge desirable market corrections away in some other industry. As I write this, the insurance industry and the big three automakers are being watched closely by Washington. The insurance industry has already asked for help. And the government has stated publicly that it will back up outstanding loans for the automakers. Feel the pinch yet? No? Don't worry. They'll pinch harder very soon.
Ultimately, Greenspan broke my heart with what he said the other day, because it's so far removed from the man he used to be – a true fighter for laissez faire capitalism. In an essay he wrote in 1961 on anti-trust, Greenspan said:

Americans have always feared the concentration of arbitrary power
in the hands of politicians. Prior to the civil war, few attributed such
power to businessmen. It was recognized that government officials
had the legal power to compel obedience by the use of physical force
– and that businessmen had no such power. A businessman needed
customers. He had to appeal to their self-interest.

The concentration of power about which he was speaking is now more than ever in the hands of politicians. And if there is anyone in the country, maybe in the world, who should be fighting harder than ever to reel in bureaucrats, it should be a man like Greenspan. Maybe he's been an economist for too long. Maybe he's been associating with politicians for too long. But two things are certain. He's not the “radical for capitalism” that he used to be; and government power is growing at an alarming rate.
But some of us are still the radicals for capitalism that he and a few others used to be. We still want to fight for true free markets (which we've never actually had), rather than our current mixed economy.
Let me say that I know where “the flaw” is. I know “how significant” it is. And I know how “permanent” it will be. It started when people like Alan Greenspan gave up, or “conceded.” It started when people like Henry Waxman and the media gleefully celebrated and repeatedly publicized his “concession,” and their perceived coup d'etat over his inability to rectify his personal intellectual difficulties while seated in front of them. The flaw, ultimately, is government. And it's not going away. Unless the people demand it.
Otherwise, we will watch as the ever growing parasite that is government consumes the host who so graciously lets it live. Our economy just might come to a screeching halt with ever more government - a large, statist government, and sadly a public that is apathetic regarding interventions, lazy for government handouts, and ignorant of economics and our history. These last weeks have been hugely significant for anyone paying attention. And these problems are not going away. In fact, they are likely to get much, much worse before the people demand that government gets out, and stays out, of our economy.