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Thursday, November 26, 2009

Where fuel is $100/gallon

Just imagine the size of the carbon footprint!
Think for a moment the role played by gasoline and other fuels in the current conflicts, three times greater than was the norm per soldier in Vietnam. A modern US soldier requires 22 gallons of fuel per day. American forces in Iraq alone are supplied by a fleet of 5,500 fuel trucks. The Pentagon estimates that the cost of fuel delivered to the front lines in Afghanistan and Iraq averages $45 per gallon, including all expenses but excluding legacy costs like interest on borrowing money to buy the fuel in the first place. The fuel goes into Blackhawk helicopters which use about five gallons of aviation fuel every minute they are in the air, armored Humvees which get 8 miles per gallon, Stryker combat vehicles at 3 miles per gallon, and the new generation of Mine Resistant Ambush Protected (MRAP) vehicles which are being introduced into Afghanistan in large numbers to defend against roadside bombs. The MRAPs undeniably save lives, but they are heavily armored, weighing from fourteen and up to 52 tons depending on how they are configured. The lightest ones get only 4 miles per gallon of fuel and the heaviest less than a mile per gallon. Because the money is borrowed to pay for the fuel, the final true cost to the US taxpayer will likely exceed $100 per gallon when the current level of war debt is finally amortized around the year 2017.
-- from "The Cost of War" by Philip Giraldi (November 26, 2009).

The 7 trillion dollar wars

A total of one trillion dollars has been spent already in Iraq and in Afghanistan but legacy costs to include paying off the money that was borrowed and medical care for the many thousands of wounded soldiers and marines will drive the total cost of the war past the $5 trillion dollar mark even if the two wars were to end tomorrow. Harvard economist Joseph Stiglitz is now suggesting that a final figure approaching $7 trillion is not inconceivable inclusive of Obama’s early 2009 surge in Afghanistan coupled with the escalating costs of supplying US forces. If Obama adds thousands more soldiers at the request of Generals Petraeus and McChrystal, the final tab will go higher.
-- from "The Cost of War" by Philip Giraldi (November 26, 2009).

Tell Obama to finish the job and bring the troops home--now!

Apart from any other moral or practical considerations, the United States simply cannot afford to continue feeding an insatiable war machine. Extending the conflict to Iran will likely break the bank. Someone should speak the truth to President Obama, who is pledging to "finish the job" in Afghanistan, explaining that the best way to finish is to end the sorry debacle. The President should make the politically difficult but necessary decision to stop the bleeding and bring our soldiers home.
-- from "The Cost of War" by Philip Giraldi (November 26, 2009).

Does "finish the job" mean 34,000 more troops?

John Nichols ("The Nation") on Obama's Afghanistan plan:
President Obama plans to formally announce on December 1 his decision with regard to the request from some of his more ambitious generals for a massive troop surge in Afghanistan.

But indications are that the president who was elected to set a new course for the nation when it comes to foreign policy will instead "stay the course" set by his quagmire-prone predecessor.

Obama announced Tuesday that he plans to "finish the job" in Afghanistan, and there is a growing consensus that he will agree to dispatch roughly 34,000 U.S. troops to the country.

The president says he plans to use his December 1 "finish-the-job" speech to signal "resolve to the allies while not signaling open-ended commitment to the American people."

Translation: There will be talk of an exit strategy -- with reassuring references to "benchmarks" and "off-ramps" -- but no exit strategy.

Obama indicated on Tuesday that he plans to expend a good deal of political capital to promote what is effectively becoming his war. "I feel very confident that when the American people hear a clear rationale for what we're doing there and how we intend to achieve our goals, that they will be supportive," he said.

But there is likely to be significant resistance to what many Americans -- some of whom serve in Congress -- see as a plan to steer the country deeper into a quagmire.
--from "Obama's 'Finish the Job' Talk Sets Stage for Afghan Troop Surge" by John Nichols (11/24/2009).

Wednesday, November 25, 2009

What Lew Rockwell is thankful for this Thanksgiving

I will give thanks tomorrow that I am an anarcho-capitalist and do not worship the emperor nor the empire.
-- from "Thanksgovernment Day" by Lew Rockwell (November 26, 2009).

Retirement planning

Americans refuse to look at their retirement portfolios and ask this question: "Will I be able to live comfortably on this capital?" With interest rates at banks under 1%, the answer is obvious: no. Yet they do not change. They do not triple or quadruple their rate of savings. They do not plan to stay in the work force until 75 or 80. They do not buy foreign currencies or gold. They do not plan to start a business to retire into.
-- from "Kicking the Can While Riding a Tiger" by Gary North (November 25, 2009).

Gold vs. the dollar

--from Chart of the Day (November 25, 2009).

Dumb and Dumber Wars

Invading Iraq was dumb. Escalating the war in Afghanistan will be even dumber. It will cost a lot of money and won’t accomplish a doggone thing except get a lot of people killed – most of whom will be civilians who want nothing more than for us to leave them alone.

The latest sanctioned leak says we’ll send another 34,000 troops to Afghanistan, and if Gen. Ray Odierno, the Desert Ox, has his way, we’ll have that many troops in Iraq through 2015 or whenever.

God help America. We have no strategy. We have no achievable objectives. We have no idea what we’re doing.
-- from "Dumb and Dumber Wars" by Jeff Huber (November 25, 2009).

They call this science?

See "Congress May Probe Leaked Global Warming E-Mails" by Declan McCullagh (November 24, 2009).
The irony of this situation is that most of us expect science to be conducted in the open, without unpublished secret data, hidden agendas, and computer programs of dubious reliability. East Anglia's Climatic Research Unit might have avoided this snafu by publicly disclosing as much as possible at every step of the way.

Tuesday, November 24, 2009

Uncle Sam asks for a bank loan

Everyone knows what when wrong with sub-prime. When you lend money to people who can’t pay it back, you’re asking for trouble. So, if you’re out of a job and looking for a sub-prime loan to buy a double-wide trailer you’re out of luck. Bankers won’t give you a dime.

But now, the world’s lenders are doing something just as dumb. They’re lending to governments. Imagine you were a banker. And the US government comes to you for a loan.

“Do you have enough income to cover the payments,” you ask.

“Well, no,” comes the answer. “In fact, our revenue has fallen off a little. Because of the recession, you know. Like everyone else.”

“How bad is it?”

“Uh…we spend nearly two dollars for every dollar of income.”

“Oh…and you expect us to lend you money? What do you have for collateral? What is your net worth position?”

“We were hoping you wouldn’t ask. The most recent tally of our obligations comes to $113 trillion.”

“Well, don’t you have assets?”

“We have some buildings in Washington…military bases around the world…things like that. But as a practical matter, you could never foreclose on them.”

“Oh, I see…”

What is interesting is that the world’s investors are beginning to see that the US and many other governments are bad credit risks. This is an extraordinary event. Until now, the US government has been able to finance and refinance its debts at the lowest rates in three generations. Lenders have wanted to lend the feds money, because they believed they were the safest credits in the world.

Bankers can always be counted on to find the worst investments at the worst time. They are at the tail end of the chain of insights that begins with the sharpest, most independent-thinking analysts…runs through the broker/hedge fund community…passes on to the financial journalists and the TV pundits…arrives at the lumpeninvestoriat through the popular media…and finally gets to bankers when they pick up the Wall Street Journal and read about what’s going on.

Now, the bankers are buying sovereign debt – government paper – because they think it offers a “risk free” return. In fact, it is one of the riskiest investments you can make.
-- from "The Golden Years" by Bill Bonner (November 23, 2009).

What behavioral finance teaches us about Afghanistan

See "Go with the Savvy Investors " by J. Victor Marshall (November 20, 2009).

From the "pot calling the kettle black" department (2)

Yesterday, I posted "From the "pot calling the kettle black" department ". Today, Eric Margolis has posted "The Pot Calls the Kettle Black" (November 24, 2009)!

Monday, November 23, 2009

John Nichols on Bill Moyers and Vietnam & Afghanistan

See "Bill Moyers Tells a Tale of Two Quagmires: Vietnam & Afghanistan " by John Nichols (November 21, 2009).
[O]nce again, a small circle of advisers debates the course of action, but one man will make the decision.
Shouldn't he ask Congress for a declaration of war first? And shouldn't all options be on the table? I.e., shouldn't one option on the table be a congressional declaration of peace and immediate withdrawal of U. S. troops from Afghanistan and Iraq?

Al Gore could become world's first carbon billionaire

See "Al Gore could become world's first carbon billionaire " (November 3, 2009).

Is Gore putting his money where his mouth is or is he putting his mouth where his money is?

From the "pot calling the kettle black" department

Government in Washington says the government in Kabul is corrupt!

The bursting of the 'Bama bubble

See "Approval-Disapproval Gap Drops from 56 Points to 5" by M. J. Perry (November 21, 2009).

Live Free Or Move--To Switzerland!

See "High-taxed City workers consider Swiss move" by Jonathan Sibun (21 Nov 2009).

Friday, November 20, 2009

Health insurers maximize profits by denying valid claims?

Surely some do, some of the time. But not all do, or so claims Bryan Caplan in "Health Insurance and Reputation".

In an actual free market who would buy medical coverage from a company with a reputation for trying never to pay claims or dropping customers after they get sick?
--"Another Mystery of the Universe" by Sheldon Richman (November 24, 2009).

The unintended consequences of taking profits out of healthcare

Tuesday, November 17, 2009

God must be a Brazilian!

After all the recent oil discoveries in the subsalt, offshore Brazil, people are saying, "God must be a Brazilian!"

But it's not just oil that Brazil has plenty of:

-- from "Contrarian Alert, Fishy Jobs Report Details, Getting Water to China, Unemployment Benefits and More!" by Addison Wiggin and Ian Mathias

13 VS. 2,000,000

Thirteen soldiers die in Texas and it's all we talk about. Two million die in Afghanistan and Iraq and we don't notice and we don't even want to hear about it. Only 12 percent of Americans aged 18 to 24 can find Afghanistan on a map.
-- from "13 VS. 2,000,000" by Ted Rall

Fix Your Terrible, Insecure Passwords in Five Minutes

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Friday, November 06, 2009

The real struggle: liberty vs. power

The real struggle is between persons who love liberty and persons enthralled with power. A liberty lover refuses to exercise power over others and, therefore, has solid principles upon which he can stand when defending himself against those who would exercise power over him. In contrast, someone enthralled with power – by endorsing its exercise over others – kicks out from beneath his own feet the principles he will need to stand on when the time comes for him to defend himself against the power of those who would force him to submit to their will.
-- from "Liberty, Power, and Principles" by Don Boudreaux

Gold mania ahead?

“I think we’re still in the early stages of what could become a gold mania,” opines Chris Mayer. “While there are a lot more people talking about gold now and the gold price is close to all-time highs, it remains an underowned asset. Only a small fraction of investors own any gold at all. Hardly any institutions own any gold, either. As we now have 10 years of market-beating data for gold, it’s going to attract more attention.

“I think that attention will eventually carry it to a price of $2,000-3,000 pretty easily -- maybe more. So far, gold has had a steady march up since 2000. The last leg, the mania phase, always has a rapid and explosive move before it’s all over. We’re not there yet.

“As for what will pull gold back down, I think a strong economic recovery could derail gold’s story for a time, but as long as the U.S. dollar makes its way to new depths over time, I think the gold price will drift higher.

“Most people think of gold as an inflation hedge. To me, it is more than that. Gold is primarily a bet against the creditworthiness of the issuers of paper currencies. In other words, as the creditworthiness of the U.S. government weakens -- thanks to high debts and deficits -- gold will be a strong asset… and gold stocks ought to be one way to juice the return you get from gold. Our two gold stocks are up 80% and 40% since we bought them earlier this year. If we get any pullback in gold, I’ll be a buyer.”
--from "CIT Dies, Manufacturing Back to Life, The Recession’s Real End, When to Sell Gold and More!" by Addison Wiggin and Ian Mathias

Buffett takes a ride on the railroad

“The press seems to say,” a reader writes, “that Warren Buffett was making a statement on the recovery of the U.S. economy with the purchase of his favorite railroad. But I read a quote that he didn't know when the recovery would occur. What would a rational person with over 20 billion in U.S. cash do when the dollar is about to collapse? Buy railroads or other tangible stuff. And he thinks the cost of energy will go up radically. Sell trucking, buy rail.”

The 5: Good points. It’s also worth noting Buffett offered lots of BRK shares to complete the deal. In other words, he’s implicitly saying that the assets of the Burlington railroads have more value than the stocks in the Berkshire portfolio.

--from "Extend and Pretend, Understanding The Fed, Biometric IDs and More!" by Addison Wiggin and Ian Mathias

Thursday, November 05, 2009

The Left and the Right vs. Liberty

[Lew] Rockwell shows that when people on the political right point to "liberal" increases in government power and say, "They're attacking freedom!" they are correct — as are those on the political left who point to "conservative" increases in government power and say the same thing. The problem Rockwell illuminates is that both camps are blind to the damage done by their own impulses to expand the power of the State. A massive, unrestrained government is a bull in a china shop.
-- from "Cultivating Sound Ideas" by George C. Leef

Tuesday, November 03, 2009

McChrystal Doesn’t Get It—Does Obama?

McChrystal operates under the illusion that American military power can provide a shield from behind which Afghanistan can remake itself into a viable modern society. He has deluded himself and others into believing that the people of Afghanistan want to be part of such a grand social experiment, and furthermore that they will tolerate the United States being in charge. The reality of Afghan history, culture and society argue otherwise. The Taliban, once a defeated entity in the months following the initial American military incursion into Afghanistan, are resurgent and growing stronger every day. The principle source of the Taliban’s popularity is the resentment of the Afghan people toward the American occupation and the corrupt proxy government of Hamid Karzai. There is nothing an additional 40,000 American troops will be able to do to change that basic equation. The Soviets tried and failed. They deployed 110,000 troops, operating on less restrictive lines of communication and logistical supply than the United States. They built an Afghan army of some 45,000 troops. They operated without the constraints of American rules of engagement. They slaughtered around a million Afghans. And they lost, for the simple reason that the people of Afghanistan did not want them, or their Afghan proxies. . . .

Obama may have won the Nobel Peace Prize, but if he allows himself to be bullied into supporting McChrystal’s foray into Afghanistan, he will reveal himself as the worst kind of warmonger. True, he didn’t invent the Afghan quagmire. That honor resides with George W. Bush, who also is to blame for the American fiasco in Iraq. But history will be surprisingly gentle toward America’s 43rd president. Bush will share the blame for his calamitous military decisions with the mistaken policies of previous administrations, a compliant Congress, headstrong advisers, servile intelligence agencies and, of course, the shock of the events of Sept. 11, 2001. Bush will be seen more as a useful idiot than a ruthless ideologue. Obama, with his obvious intelligence, soaring rhetorical skills and Nobel credentials, does not readily fit such a characterization. If he decides to reinforce failure in Afghanistan by dispatching tens of thousands more American troops to that disaster, America’s 44th president will cement himself as a grand fraud, a hawk hiding in dove feathers. Given his potential for doing good, one clearly would not want such a scenario to play out.

The president’s lack of military experience screams out when he calls America’s involvement in Afghanistan a “good war.” He would have been better off trying to make the case for a justifiable war, or even a necessary war, but to label a process that brings about the death and injury of thousands as “good” makes me wonder about Obama’s fitness to be commander in chief. His seeming inexperience on national security affairs and foreign policy leave him vulnerable to domestic political pressures that emanate from these arenas. The president does possess the vision to see a world in which America stands side by side with other nations as an equal, operating with a shared notion of due process and respect for the rule of law, but that doesn’t square with any decision to deploy more troops to Afghanistan. Expanding the war in Afghanistan will lend credence to the central worry about Obama: that, at the end of the day, this man of vision might in fact be little more than an Illinois politician who is willing to barter away American life, treasure and good will for political gain on the domestic front. And, in doing so, it will undermine his noble vision of an America “resetting” its relationship with the world following eight years of unilateralist militarism. . . .

Afghanistan has, over the centuries, earned its reputation as the graveyard of empires. Just ask the Greeks, Mongols, British and Russians. If Barack Obama ultimately agrees to dispatch more American troops to Afghanistan, he will ensure not only that America will add its name to the list of those who have failed in their effort to conquer the unconquerable, but also that his name will join the ranks of those leaders throughout history who succumbed to the temptations of hubris when given the choice between war and peace. The Nobel committee will have failed in its gambit to motivate America’s 44th president to embrace the mantle of peacemaker, and the American people will be left to sort through the detritus of war brought on by yet another failed president.
-- from "McChrystal Doesn’t Get It—Does Obama?" by Scott Ritter

Healthcare: too important to be left to the market?

Consider health care, which is the topic du jour and the foremost example of something that is "too important to be left to the market." First, health care is defined and revealed by the market process, and second, we can't know how much is "enough" without prices, profits, and losses. As always, claims like this are exercises in robust political economy: even if we grant the ethical assumption that health care occupies a different moral category than other goods and services, it isn't clear that a government monopoly will do better than a free market.
-- from "Common Objections to Capitalism" by Art Carden

Let's take their profits and use them to fund free healthcare for all!

For fun, let’s imagine confiscating all the profits of all the famously greedy health-insurance companies. That would pay for four days of health care for all Americans. Let’s add in the profits of the 10 biggest rapacious U.S. drug companies. Another 7 days. Indeed, confiscating all the profits of all American companies, in every industry, wouldn’t cover even five months of our health-care expenses.
-- from "How American Health Care Killed My Father" by David Goldhill

Intentions and results

Among the earliest lessons that I teach my freshman economics students are (1) intentions are not results, and (2) to oppose a government program is not necessarily to object to the intentions stated by that program’s advocates.
-- from "Intentions and Results" by Don Boudreaux

A correction is supposed to correct mistakes

David Einhorn, one of the few people to make money in the crash of sub-prime debt:

“The financial reform on the table is analogous to our response to airline terrorism by frisking grandma and taking away everyone’s shampoo. It gives the appearance of ‘doing something’ and adds to our bureaucracy without really making anything safer.”

The Wall Street Journal reports that even bankruptcy can be a good thing. “Household Debt Can Hasten Recovery…when it goes unpaid,” says a headline.

The whole idea of a correction is to wash out mistakes. If people can pay their debts down, the mistakes are corrected. The system is strengthened. If they can’t, the process of correction can happen faster. Bad debts are written off quickly. Then, a real recovery can begin. Either way, the system comes back in better shape.

Too bad the feds are getting in the way!

A decent correction should carry off those who made the biggest mistakes – in the present case, the firms on Wall Street that wagered billions on a bigger and bigger bubble. But instead of letting them go broke, the feds rewarded them.

Wall Street profits are a ‘gift’ from the state, says George Soros.

But wait, what kind of gift is this? If you give $100 to your neighbor, that’s a gift. But what if you tax your neighbor on the left $100 in order to give the money to your neighbor on the right? That’s a gift too…but of a special kind. You’re ‘redistributing the wealth,’ you might say.

And what if you do a quantitative easing? You know, you print up a $100 bill and give it to your neighbor? That’s a gift too.

Yeah, thanks a lot.

Meanwhile, the recession is said to have come to an end in the US. GDP growth is positive, say the papers. But if this is a recovery, let’s hope it comes to an end soon.

Existing house prices continued to fall in September.

Unemployment continued to worsen. “Signs of recovery don’t extend to jobs,” says the WSJ.
-- from "Economic Correction Disease" by Bill Bonner