Live Free Or Move!

The Dynamics of Interventionism Strike Again!

2010-02-25T03:37:00.000-08:00

Here’s an interesting item from The Wall Street Journal… India produces barely half as much rice per hectare as China…3.4 tons per hectare as compared to 6.5 tons in China. Even dirt poor Bangladesh gets a better yield on its rice land – with 3.9 tons per acre of output.

What’s the matter with India’s farmers?

We return to a Daily Reckoning dictum to explain it. Anyone can make a mess of things, but to really cause a catastrophe you need taxpayer support.

Yes, Dear Reader, India’s agricultural sector gives us yet another example of central planning at work. In the ’70s, when India was even more of a socialist country than it is now, the government decided to boost production by giving farmers subsidized fertilizers. This led, as might have been predicted, to the overuse of fertilizers…one of which – urea – severely damaged the soil. Subsidies, bailouts, quantitative easing, fiscal stimulus – all produce perverse effects. In this case, the effects are so perverse that India can no longer feed itself. It’s forced to import a large part of its food. Naturally, food prices are rising – up 19% last year.

But the cost of food itself is only part of the story. There’s also the cost of the subsidies. In 1976, the fertilizer subsidy program cost $640 million. Now the price tag is up to $20 billion.

Both the soil and the budget are getting worn out. As crop yields decline, desperate farmers put on more and more cheap fertilizer. And then, as the food output goes down, the government thinks it has to ‘do something’ to fix the situation. What can it do? Provide more subsidized fertilizers!

Way to go, feds.

--from "Central Planning and the Parasites It Creates" (02/24/10) by Bill Bonner.

Howard Zinn on the War in Afghanistan

2010-01-28T12:30:00.000-08:00

How can a war be truly just when it involves the daily killing of civilians, when it causes hundreds of thousands of men, women, and children to leave their homes to escape the bombs, when it may not find those who planned the September 11 attacks, and when it will multiply the ranks of people who are angry enough at this country to become terrorists themselves?

This war amounts to a gross violation of human rights, and it will produce the exact opposite of what is wanted: It will not end terrorism; it will proliferate terrorism.

--from "A Just Cause, Not a Just War" by Howard Zinn.

The last paragraph calls to mind Ron Paul's "The Law of Opposites".

A Just Cause, Not a Just War

2010-01-28T12:28:00.000-08:00

Czechoslovakia was handed to the voracious Hitler to "appease" him. Germany was an aggressive nation expanding its power, and to help it in its expansion was not wise. But today we do not face an expansionist power that demands to be appeased. We ourselves are the expansionist power--troops in Saudi Arabia, bombings of Iraq, military bases all over the world, naval vessels on every sea--and that, along with Israel's expansion into the West Bank and Gaza Strip, has aroused anger.

It was wrong to give up Czechoslovakia to appease Hitler. It is not wrong to withdraw our military from the Middle East, or for Israel to withdraw from the occupied territories, because there is no right to be there. That is not appeasement. That is justice.

--from "A Just Cause, Not a Just War" by Howard Zinn.

What do the wars have to do with the SOTU anyway?

2010-01-28T11:22:00.000-08:00

[F]or a president who is prosecuting two wars and trying to protect the country against the threat of a terrorist attack, Mr. Obama spent only nine minutes in an address that lasted more than an hour on foreign policy. He renewed one of the most popular promises of his campaign for election, to bring the troops home for Iraq, saying “Make no mistake — this war is ending, and all of our troops are coming home.”

But he devoted only one paragraph to a far less popular decision, escalating the troop levels in Afghanistan. “There will be difficult days ahead,” Mr. Obama said. “But I am confident we will succeed.”

--from "Obama to Party: Don’t ‘Run for the Hills’" (January 27, 2010) by SHERYL GAY STOLBERG.

We're the TSA and You Can Count on Us!

2010-01-08T04:19:00.000-08:00

Live Free Or Move--to Costa Rica!

2010-01-08T04:13:00.000-08:00

Costa Rica is one of the few countries that is seeing migration from the United States: Yankees are moving here to enjoy a low-cost retirement. My hunch is that in 25 years, we’ll see large numbers of English-speaking retirement communities along the Costa Rican coast.

--from "The Happiest People" (January 7, 2010) By NICHOLAS D. KRISTOF at http://www.nytimes.com/2010/01/07/opinion/07kristof.html

The biggest government failure of all

2010-01-08T04:06:00.000-08:00

Hint: it is not the Christmas-Day, underwear-bomber incident.

Not only do we make the threat of terrorism bigger than it really is, but we continue to ignore one of the primary reasons we have a terrorist threat at all: an interventionist U.S. foreign policy practiced by Democrats and Republicans alike (the difference being one of style not substance) that gives Muslims good reasons to hate America. That – not security or intelligence shortcomings – is the biggest failure of our government and those in charge of it.

-- from "Once More Unto the Breach" (January 8, 2010) by Charles V. Peña

Marc Faber: Gold at $1150 today is cheaper than when it was $300

2010-01-07T04:12:00.000-08:00

”Gold remains the best bet as a currency these days because of the fact that the yellow metal supply is extremely limited. Gold at the current price of $1,110 per ounce is less expensive than it was sold for less than $300 per ounce years back,” Faber said batting for the bullish run that the yellow metal is in during 2010.

Faber explained that gold price should be treated in the same way that a company’s stock is being treated by investors. “A company’s stock could be less expensive at $100 than when it was selling for $10, because earnings growth has outpaced the appreciation of the shares and therefore its P/E has declined, gold could be cheaper at the current price than when it was at less than $300 because of the explosion of foreign exchange reserves in the world, zero interest rates, the huge debt overhang, and the expectation of further money printing,” he said.

According to Faber, global reserves of gold have grown from about $1 trillion in 1995 to over $7 trillion.

”Therefore, the share of gold in the world’s official reserves has declined from 32.7 per cent in 1989 to a current record low of 10.3 per cent,” he pointed out.

Faber said that he is still puzzled by the deflationists, who cannot understand that the explosion in foreign exchange reserves over the last 15 years is a symptom of a massive monetary inflation. “Ergo, I could argue that gold is now actually less expensive than when it sold for around $300 per ounce,” he said.

Faber said that central banks in emerging economies keep only a tiny fraction of their reserves in gold. “Eventually, I would expect them to follow the example of the Reserve Bank of India (RBI), which recently bought 200 tonnes from the IMF for $6.7 billion,” Faber pointed out.

”Now, just consider what the impact would be if China were to increase its gold holdings from presently less than 2 per cent of its $2.2 trillion reserves to 6 per cent or 10 per cent. Each 1 per cent increase in gold weighting would mean gold purchases of more than $20 billion, or nearly 600 tonnes,” he said.

Faber said that gold’s value may go from $1,100 per fine ounce to $1,500 or $5,000.

But he added that he “would not invest more than a sliver” of his wealth “into something without intrinsic value, something whose positive value is based on nothing more than a set of self-confirming beliefs”.

Faber said that he is not a perennial gold bug. “But, when governments spend far more than they collect in taxes (large fiscal deficits), and when central bankers engage in reckless monetary policies and, instead of treating the causes of the problems (excessive debt growth), treat the symptoms (deflationary forces), gold as a currency does make a lot of sense,” he added.

--from "Gold is cheap to buy at $1,100/oz: Marc Faber" (January 3, 2010) by Commodity Online

Is the U. S. government the next bubble?

2010-01-06T18:28:00.001-08:00

Back in 2000, Bill [Bonner] urged the Daily Reckoning faithful to “sell stocks; buy gold.” As fate would have it, stocks produced a LOSS during the ensuing ten years, while the gold price quadrupled. Good call!

Bill has gazed into his crystal ball once again, and he is offering a brand new Trade of the Decade: Sell US Treasury bonds; buy Japanese stocks. Your California editor heartily endorses Part I of this trade (while professing agnosticism on Part II).

Treasuries are indeed a “sell.”

In fact, Treasuries have been a “sell” for several months already. In the year just passed, long-dated Treasury securities produced their biggest annual loss since 1978. During the month of December, alone, yields skyrocketed along the entire yield curve, as price tumbled.

Just maybe, bond investors are growing a bit nervous about America’s mushrooming deficits. “President Barack Obama is borrowing unprecedented amounts for spending programs,” Bloomberg News reports. “US marketable debt increased to a record $7.17 trillion in November from $5.80 trillion at the end of last year.”

This disturbing trend leads economists Brian Wesbury and Robert Stein to conclude that “Government” will be the first major bubble of the new decade.

“Some claim a bubble has already formed in the global stock market, with prices up 60%-plus since the bottom in early March,” the duo observes. “Others claim commodities will be the next bubble… Still others say US Treasury securities are already in a huge bubble, with interest rates way too low. But maybe the worst bubble has nothing to do with the private sector at all. The public sector, particularly the federal government, has benefited enormously from absurdly low interest rates.

“Think about it,” Wesbury and Stein continue, “the federal deficit was $1.4 trillion in the fiscal year that ended in September, or 10% of GDP, the largest peacetime deficit on record. But net interest – the cost of servicing the national debt – was only 1.3% of GDP, the lowest in about 40 years. For comparison, net interest was absorbing about 3% of GDP in the 1980s and 1990s.”

Unfortunately, the skeptical economists observe, the government is relying on low-cost, short-term financing, which creates the delusion that “a massive increase in government spending [is] an easy burden to carry… Just like homeowners who relied too much on short-term adjustable rate mortgages, the federal government’s average debt maturity remains less than 4.5 years, which means net interest costs will soar over the next several years as the government rolls over its debt at higher interest rates.”

--from "Betting Against the US Treasury" (January 6, 2010) by Eric Fry

Why I've been reading Bill Bonner

2010-01-06T18:21:00.000-08:00

Back in 2000, Bill Bonner, author of financial newsletter The Daily Reckoning, announced his trade of the decade. It was a simple one: sell dollars, buy gold.

It turned out to be a good plan. In 2000, you could buy an ounce of gold for $280 (the average price over the year). Now, it will cost you $1,125. At the time, Bonner saw what most others did not. He saw the US not as an economy carefully and cleverly managed by then Federal Reserve chairman Alan Greenspan and his passion for low interest rates, but as a massive credit bubble waiting to burst.

He also saw the massive and growing national debt, the trade and budget deficits, and fast growth in the money supply as factors that would naturally debase the dollar over the long term. He also saw the credit bubble as global rather than peculiar to America.

So it made sense to him to hold the only non-paper currency there is – gold. Bonner had a good decade, making returns of 400 per cent plus. The question now is: Will he have another one?

I suspect he might. Why? Because he’s going for the same trade of the decade for the next 10 years as he has for the past 10.

This makes complete sense: nothing has changed since he made his first gold call except for the scale of the currency debasing going on around the world. Think ultra low interest rates almost everywhere, the money printing exercise that is quantitative easing, and the whopping rises in national debt levels – the arguments are all pretty well-rehearsed these days.

Another reason to suspect this next decade could go Bonner’s way is that he and the other gold bugs are no longer alone in their hoarding of gold – central banks have become net buyers for the first time in many years and fund managers are beginning to wake up to the idea that gold can hedge them against a great many nasty things.

Still, however compelling the case, one thing to bear in mind for this gold bull market is that it is likely to be very volatile. Why? Exchange traded funds (ETFs). These funds – which are much easier to buy and sell than physical gold – didn’t exist last time round, but this time they are huge: ETF Securities says it has $9.5bn worth of physical gold holdings backing up its products. That means that as investors fall in and out of love with gold, and trade ETFs that have to be physically backed, the gold price could gyrate violently.

Note that gold has already fallen back from its high of just over $1,200 back to $1,130.

Note too that, in the short term, it may well continue to fall. I mentioned in late October that I expected to see a short-term snap back in the dollar – that has happened, and as the dollar has strengthened, so the gold price has fallen. However, whatever happens in the short term, in a period of financial uncertainty on today’s scale, I just don’t think you can be without a proper precious metal.

I favour gold simply because it has no purpose other than to be an alternative currency, but there is also a case to be made for silver should you want to diversify (although don’t forget that physical silver, unlike gold, is subject to VAT). As they both fall back, it is probably worth stocking up on them at what I think will be temporarily lower prices. That’s particularly the case given the announcements in last week’s pre-Budget report. Gold pays no dividends so you can’t be forced to pay income tax at 40 per cent or 50 per cent on it. Instead, any profits will be pure capital gains – taxed at what now seems the very low rate of 18 per cent.

--from "The case for gold continues..." (December 11, 2009) by Merryn Somerset Webb

The recovery, such as it is, is a fraud

2010-01-06T17:56:00.000-08:00

01/06/10 Baltimore, Maryland – Carmen Reinhardt and Ken Rogoff say that “higher debt may stunt economic growth.” Hey, this is getting interesting. Maybe we’re not entirely alone here at The Daily Reckoning.

This is the second point we were going to make. For the most part, there is no recovery happening. And the part of the recovery that is actually happening is a fraud.

You can’t cure a problem of too much debt by borrowing more…even if the borrower is the federal government. When the private sector was over-borrowing, it was absorbing resources it couldn’t really afford. Plus, it was sending the wrong signal to producers, leading them to believe they had real customers on the other end of the line. What they had were people pretending to have more purchasing power than they really had. And when the credit got turned off, these customers disappeared, leaving the manufacturing sector with too much capacity and the retail sector with too much floor space to sell it.

Now, the government is doing the same thing – taking up resources it cannot really afford…and redirecting them to uses that it really can’t sustain. What’s more, this use creates a phony GDP… production for which there may or may not be any real demand. It looks like real GDP to the economists…after all, people are making money and spending it. But is anyone really any better off by building a piece of expensive machinery that gets shipped to Afghanistan at enormous cost and is later abandoned there? Or how about hiring another 1,000 bureaucrats to process health care paperwork? Is the world a better place as a result?

In the private economy, people are always making mistakes. People buy things they really don’t need with money they really don’t have. Then, they pay the price.

In the public economy, people are always making mistakes too. But since the person who makes the mistake is not the one who pays the price there is little incentive to ever recognize the mistake or to stop it. Just the opposite. In the public economy, people are rewarded for failure. The worse a situation becomes…the more money gets thrown towards it. Just look at Detroit!

Government mistakes become eternal…programs that can’t be stopped because too many jobs would be lost…useless community centers that can’t be closed…wars that go on forever…the bureau of this…the department of that…

More and more parasites…fewer and fewer honest workers. But parasites do not build honest prosperity. They just waste resources.

--from "Paying for the Mistakes of the Public Economy" (January 6, 2010) by Bill Bonner

We're headed for high inflation

2009-12-31T04:36:00.000-08:00

Even as the Dow sits above 10,000, the public remains justifiably anxious about the state of the economy. The Federal Reserve has worked overtime to convince the public that it has saved the economy from a meltdown, but with unemployment at a 26-year high and the dollar tanking, it's a hard sell. What most people easily understand is that the Fed has produced a monetary time bomb. Since August 2008 the monetary base (bills in circulation plus bank credits at Federal Reserve banks) has increased by 137%. If not defused, this bomb will eventually explode into inflation. We are told by Fed Chairman Ben S. Bernanke and other members of the Fed's bomb squad not to worry. They assert that they know how and when to disarm the bomb.

Such assertions are a stretch. After all, it was the Fed's ultraloose monetary policy and disregard for the value of the greenback that fueled the asset bubbles that burst and set off the panic and subsequent destruction of jobs and wealth.

The time bomb hasn't exploded yet because, for now, the expansion in the monetary base has not given rise to a comparable expansion in a broader measure of the money supply called M2. That's the monetary base, plus demand deposits (commercial and individual) at banks, traveler's checks, savings accounts, time deposits and money market mutual funds.

The key here is something called the money multiplier, which is M2 divided by the monetary base. The multiplier measures, in a sense, the inflationary bang from every buck the Fed creates. In August 2008 the multiplier was 9.1. By December 2008 it had collapsed to 4.9 and since then has declined along an irregular path to 4.2. When the demand for the more narrowly defined kind of money goes down, as it eventually will, the money multiplier will move back into a normal range of 8 to 9. That is, the dollars manufactured by the Fed will give rise to more money (broadly defined) burning holes in people's pockets. An excess of money in spenders' hands is a recipe for inflation. This is when the Fed will need to shrink its balance sheet, but it will not be willing to do so because unemployment will probably still be elevated. In this scenario inflation expectations will become unhinged and inflation will accelerate.[Emphasis added]

--from "Income During Inflation / Bonds are a risky venture when inflation is set to explode at any moment. Play it safe. Go for dividends." by Steve Hanke

Bonds are risky when inflation is set to explode

2009-12-31T04:27:00.000-08:00

In February 2009, Steve Hanke was recommending gold and TIPS (see my previous post). Here are his recommendations at the end of November 2009:

With the Fed intent on keeping interest rates artificially low for an extended period of time, some of my previous recommendations should still work well. In September I recommended tapping into gold and commodities via the SPDR Gold Shares (GLD), iShares S&P GSCI Commodity-Indexed Trust (GSG) and PowerShares DB Commodity Index Tracking Fund (DBC). Since then, these funds have appreciated by 13% to 15%, while the S&P 500 has notched a 9.2% gain. Retain these positions to protect your portfolio from the Fed.

With the inflationary wolf at the door, what's an income investor to do? Go for dividends.

Leggett & Platt ( LEG - news - people ) (LEG, 20), a manufacturer with a product line that started out as bedsprings and veered off into things like parts for farm machinery and retail shelving, generates plenty of cash, even when sales slump. The dividend, which eats up 50% to 60% of earnings, was raised last year and now comes to an annual 5% of the share price. Management has also spent cash on stock buybacks, shrinking the number of shares outstanding by 15% over the past three years.

Philip Morris International (PM, 50) is the second-largest tobacco company in the world. PM claims almost 16% of the non-U.S. cigarette market, a big plus for dollar bears. The market is currently pricing in a revenue growth rate that is lower than what the company has enjoyed over the past five years. The yield is 4.56%.

With its acquisition this year of Alltel ( AT - news - people ), Verizon Communications ( VZ - news - people ) (VZ, 30) has a customer base equal to 30% of the U.S. population. Annual revenue growth over the past ten years has averaged 11.9%. But Verizon is not receiving much credit for its rapidly growing wireless business (it owns 55% of Verizon Wireless). This segment is growing at an annual rate of 17% and is now larger than the wire-line side of the business. The dividend yield is 6.4%.

Kellogg ( K - news - people ) (K, 53) has a yield of only 2.8%, but its dividend is well covered (it uses up only 44% of earnings) and has enjoyed seven increases over the past ten years. The cold cereal company gets 34% of its revenue from outside North America. That portion will go up, so here is another hedge against a weak dollar, as earnings abroad get translated into EPS gains here. Wall Street is expecting mediocre growth--too pessimistic. Take a bite.

--from "Income During Inflation / Bonds are a risky venture when inflation is set to explode at any moment. Play it safe. Go for dividends." by Steve Hanke

Stocks for the long run?

2009-12-31T03:56:00.000-08:00

Following conventional wisdom has led a generation of investors down the road to ruin. That wisdom had us believing that over the long run stocks produce the highest returns, that a diversified stock portfolio protects you against loss and that the risk of owning stocks is small if you hold them for a long time.

We now know that conventional wisdom is wrong. While the number of decades in which equities in the U.S. underperform other asset classes may be small, the size of the shortfalls, when they occur, can be huge. For the first decade of this century it is highly likely that the return on U.S. stocks will be negative. For those who are near retirement, the shortfall is devastating; they might not get a shot at making up the loss in their lifetimes.

Diversification is useful, in varying degrees, most of the time. But there are occasions when all stocks dive simultaneously and putting your eggs in different baskets doesn't save you.

Like a broken record, the CNBC sages are still telling young people to buy stocks because if you have a long time horizon, you don't have to worry about these market fluctuations. While this sounds like a reasonable theory, it's wrong even if you're young. The so-called experts fail to account for the potential severity of the underperformance when stocks fall.

--from "Unconventional Wisdom" by Steve H. Hanke (02.25.09)

By sheer coincidence, I came across Hanke's 11-month old article today (January 31, 2009), when the Chart of the Day shows the returns from the Dow decade by decade:

Hanke's advice has been to buy gold and Treasury Inflation Protected Securities ("TIPS"):

If you followed my columns in 2008, you would have bought gold and inflation-indexed Treasurys. I'm not veering from this advice. Forget conventional wisdom and ignore play-by-play economic commentators. Buy federally guaranteed, inflation-protected TIPS and sleep soundly.

Today's Chart of the Day shows that the losses of the '30s were followed by gains in the '40s, '50s (huge gains), '60s, and even the '70s (slight gains) before the huge gains of the '80s and '90s. Will history repeat itself? Will the losses of the '00s be followed by gains in the '10s and '20s?

A modest goal? Or an audacious one?

2009-12-30T15:05:00.000-08:00

[O]ur goal for 2010 is a modest one. We hope to avoid losing money…and enjoy the show.

-- from "Taxpayer-Supported Colossal Blunders" by Bill Bonner

The underlying cause of the terrorist problem

2009-12-29T15:05:00.000-08:00

Al-Qaeda may not be a match militarily but it will more and more cause us to erode our liberty and sanity. In all the talking heads yaking on TV very little is said about the underlying causes of our problem: American military and diplomatic interventionism in the affairs of the Middle East. They do not hate us because of ”our liberty.”

-- from "Retreat From Reality: Some Obvious Observations" by Mario Rizzo

Marc Faber is bearish on Treasuries and cash

2009-12-29T04:50:00.000-08:00

And bullish on equities?

Investors need to be “very careful” holding U.S. Treasuries and cash, and U.S. stocks will rally as Federal Reserve Chairman Ben S. Bernanke and his colleagues may have to print more money to help the government finance its debts, said Faber.

The Standard & Poor’s 500 Index “could go up 200 percent if it prints enough,” Faber said. “The worst investment, in the long run, will be U.S. Treasuries, and cash which has no return at present. This is the one reason that I am moderately positive about equities is that this money goes into leverage plays.”

--from "Marc Faber Says Dollar May Rise 5-10% Versus Euro (Update1)" by Deirdre Bolton and Ye Xie

Doug Casey on Ben Bernanke as Time Magazine's "Person of the Year"

2009-12-29T04:29:00.000-08:00

L [Louis James, Editor, "International Speculator"]: So, Ben Bernanke just got named “Person of the Year” by Time magazine. I know you must have some thoughts in response to this auspicious event?

Doug [Casey]: I just don’t know where they find these people... On the other hand, Slime magazine has always said that those named Person of the Year are not necessarily the most laudable people, but those who’ve had the greatest impact on the events in a given year. That would explain Hitler’s achievement of the same honor, and Stalin getting the nod twice.

L: Not to mention Bin Laden.

Doug: Yes, let’s not mention him. This is different: Bernanke isn’t being held up as a villain, but as a hero.

L: The tagline Time puts on it is: “The story of the year was a weak economy that could have been much, much weaker. How the mild-mannered man who runs the Federal Reserve prevented an economic catastrophe.”

Doug: Right. And Bernanke is always presented as a Ph.D., a scholar of the Great Depression, its causes, and how to cure such an economic downturn. But he hasn’t prevented an economic catastrophe – he’s done just the opposite of what needs to be done, and there’s going to be hell to pay.

-- from "Doug Casey on Bungling Ben" (interview by Louis James, Editor, "International Speculator")

Capitalism: guilt by association

2009-12-29T04:10:00.000-08:00

with Alan Greenspan!

In the 1960s, [Alan Greenspan] was an acolyte of Ayn Rand and wrote a famous essay defending the gold standard, which I read in her book, Capitalism: The Unknown Ideal. And then he goes on to become the most inflationary Fed chairman in history until Bernanke superseded him.

The really shameful thing about Greenspan is, not only were his policies the igniters of the giant bubbles we saw in the stock market and then in real estate, but since he was associated with pure capitalism through Rand, his failures through government intervention in the market have falsely discredited capitalism as a system in many people’s view.

-- from "Doug Casey on Bungling Ben" (interview by Louis James, Editor, "International Speculator")

Pearls of wisdom from Chairman Ben

2009-12-29T03:56:00.000-08:00

From "Doug Casey on Bungling Ben" (interview by Louis James, Editor, "International Speculator"):

On July 1, 2005, Bernanke stated with great confidence that the U.S. was not experiencing a housing bubble, saying: “I think what is more likely is that house prices will slow, maybe stabilize, might slow consumption spending a bit.”

In November of the same year, he talked about derivatives, saying, “With respect to their safety, derivatives, for the most part, are traded among very sophisticated financial institutions and individuals who have considerable incentive to understand them and to use them properly.” He also said, “The Federal Reserve’s responsibility is to make sure that the institutions it regulates have good systems and good procedures for ensuring that their derivatives portfolios are well managed and do not create excessive risk in their institutions.”

And a couple months after that, back on housing again, he said, “Our expectation is that the decline in activity or the slowing in activity will be moderate, that house prices will probably continue to rise” . . . .

And in February of 2008, he said, “I expect there will be some failures of smaller banks.” Bear Stearns collapsed just a couple weeks later . . . .

Remember, this is the same guy who told the world that Fannie and Freddie were “adequately capitalized” and “in no danger of failing.”

Earlier this year he said, “Currently, we don’t think [the unemployment rate] will get to 10 percent." Wrong again and if you actually count people who are out of work, rather than the government’s phony subset of that number, we already have over 17% unemployment.

This guy is truly pathetic but nobody points any of this stuff out. That he can be so dead wrong about so many vital things and not get called on it is simply amazing to me it makes me feel like I’m living in some sort of demented parallel universe.

The destruction of the dollar will be the ultimate disaster

2009-12-29T03:45:00.000-08:00

I’m afraid the U.S. dollar is going to be totally destroyed. The consequences of that are going to make everything that’s going on now pale by comparison. I mean, as bad as the consequences of propping up all these dinosaurs like General Motors and AIG and General Electric and Goldman Sachs, among many others, might be next through direct theft from the U.S. taxpayer are, that’s nothing compared to what will happen when things get really bad, which they haven’t yet.

It’s really going to be bad when they destroy the dollar that’s when it’s really going to hit the fan. Runaway inflation is bad enough in a place like Zimbabwe, where most of the people are still living on a subsistence level. And it was bad enough in Germany in the 1920s, when most Germans were still living on farms or making things with their own hands. But in an advanced industrial society, as heavily urbanized as the U.S. is, runaway inflation is going to be unbelievably disastrous. As dim as the average American is, he’s bound to get perturbed when his quality of life nose-dives, and who knows what the social consequences of that will be. . . .

Runaway inflation in the U.S. would be the ultimate disaster. Think about all those people who have dollars set aside, which is to say the prudent middle class; they’ll be totally wiped out. Even huge corporations that have massive cash reserves, like Microsoft and McDonald’s, if they don’t hedge that cash with the utmost skill, could find those hoards wiped out and themselves bankrupted as well. Remember that people all over the world are holding U.S. dollars. There’s far more U.S. currency outside the U.S. than there is inside the U.S., and all those foreigners are going to resent it personally and hold it against Americans when their U.S. dollars are wiped out. On top of that, most central banks around the world hold U.S. dollars as their main asset, and that will be wiped out as well. It’s going to be a complete, worldwide disaster.

It’s going to be much worse than what happened in Germany or Zimbabwe. This is a couple orders of magnitude greater seriousness and it seems to me that this is almost certain to happen with a monumentally stupid person like Bernanke steering the ship of state into a reef.-- from "Doug Casey on Bungling Ben", (interview by Louis James, Editor, "International Speculator")

What we need is deflation, less consumption, and more savings

2009-12-29T03:42:00.000-08:00

[Speaking of Ben Bernanke:] I just don’t see how someone who’s studied the history of economics can so completely set aside its most pertinent lessons. It’s possible that he knows he’s caught between a rock and a hard place in technical economic terms, that he knows he and the economy are totally screwed and sees no choice but to carry on as long as he can and hope for a miracle. He probably knows that giving the economy the medicine it really needs would bring on a deflationary collapse, and losing his job would be the least of his worries.

As I’ve explained before, deflation is not only not a bad thing, it can be a very good thing. In a deflationary environment, the purchasing unit the dollar becomes worth more. That rewards people who have saved dollars, the prudent middle class upon which so much in modern society depends, and makes them prone to save more. Inflation makes people very loathe to save because what they’re saving is going down in value. And the solution to this depression we’re entering is not more spending, it’s not more consumption, it’s just the opposite of what these morons in Washington are saying: it’s less consumption and more savings. Savings are capital accumulation, and that’s what’s needed to start new businesses, create more jobs, and so forth in a sustainable way. Creating phony make-work jobs with more debt only serves to make things worse, come reckoning day.

So, switching from an inflationary policy to a deflationary one would be the right thing to do, but it would be such a sharp adjustment, this whiplash would hurt a huge number of people in the short term. And though most people don’t see it, the U.S. is on such a shaky political foundation at this point… It’s really become a question of “Do you want to die by fire or by ice?” Either way, the U.S. is going to crash into a brick wall at high speed.

-- from "Doug Casey on Bungling Ben", (interview by Louis James, Editor, "International Speculator")

Doug Casey on where to invest your savings

2009-12-29T03:29:00.000-08:00

First and foremost, all of your savings, money that you don’t want to lose but need in a liquid form, should be in gold or gold proxies. To a lesser degree, silver as well, silver being a sort of poor man’s gold. That’s number one. You should have a very large position in these two things.

Second, regarding the speculative funds that you have, remember how much money Washington is creating. That’s definitely going to inflate other speculative bubbles to be on the watch for. I think it’s possible to make serious money spotting these early and cashing in before they pop. That’s number two: position yourself for taking advantage of speculative opportunities.

Third and I can’t emphasize this enough is that since what we’re really looking at is a political disaster causing the economic disaster, you must diversify your assets politically. And since the epicenter of this meltdown is the U.S., it’s absolutely vital that you diversify your assets, including the gold and the speculative investments, outside the U.S. That’s number three, but not third in importance there will be foreign exchange controls, and once we have those, your alternatives will be severely circumscribed.

-- from "Doug Casey on Bungling Ben", (interview by Louis James, Editor, "International Speculator")

Taking internet companies public in the late '90s

2009-12-27T14:07:00.000-08:00

The basic scam in the Internet Age is pretty easy even for the financially illiterate to grasp. Companies that weren't much more than pot fueled ideas scrawled on napkins by up too late bong smokers were taken public via IPOs, hyped in the media and sold to the public for mega-millions. It was as if banks like Goldman were wrapping ribbons around watermelons, tossing them out 50-story windows and opening the phones for bids. In this game you were a winner only if you took your money out before the melon hit the pavement.

It sounds obvious now, but what the average investor didn't know at the time was that the banks had changed the rules of the game, making the deals look better than they actually were. They did this by setting up what was, in reality, a two-tiered investment system — one for the insiders who knew the real numbers, and another for the lay investor who was invited to chase soaring prices the banks themselves knew were irrational. While Goldman's later pattern would be to capitalize on changes in the regulatory environment, its key innovation in the Internet years was to abandon its own industry's standards of quality control.

"Since the Depression, there were strict underwriting guidelines that Wall Street adhered to when taking a company public," says one prominent hedge-fund manager. "The company had to be in business for a minimum of five years, and it had to show profitability for three consecutive years. But Wall Street took these guidelines and threw them in the trash." Goldman completed the snow job by pumping up the sham stocks: "Their analysts were out there saying Bullshit.com is worth $100 a share."

The problem was, nobody told investors that the rules had changed. "Everyone on the inside knew," the manager says. "Bob Rubin sure as hell knew what the underwriting standards were. They'd been intact since the 1930s."

-- from "The Great American Bubble Machine " by Matt Taibbi

Taleb and Mandelbrot on the unpredictability of economies and markets

2009-12-27T04:55:00.000-08:00

I’ve been influenced by a number of thinkers about the unpredictability of economies and markets. A couple of my favorites would be Nassim Taleb, author of Fooled by Randomness, and Benoit Mandelbrot, author of The (Mis)behavior of Markets. Another useful book on these ideas is Mauboussin’s More Than You Know. Mandelbrot writes a lot of highbrow stuff, but in this book he teamed up with Richard Hudson, a former Wall Street Journal editor, to reach a broader audience. Mandelbrot is a critically important thinker in finance. But he is not revered by academics.

As Paul Cootner, an MIT economist, put it: “If [Mandelbrot] is right, almost all of our statistical tools are obsolete. Almost without exception, past econometric work is meaningless.” So there you go. Academics ignore him because if he’s right, academia is pretty much a farce. Academics won’t embrace Mandelbrot’s ideas because their salaries depend on them not embracing those ideas.

So if you think that academia might be promoting a farce – for the first time ever, of course – you might want to examine Mandelbrot’s ideas in more detail.

-- from "The Yellowstone Syndrome" by Chris Mayer.

Government actions to rescue the economy actually threaten the economy

2009-12-27T04:51:00.000-08:00

This experience in Yellowstone sounds a lot like what’s happening in our economy today. Congress and the Federal Reserve are so busy “rescuing” specific pieces of the economy that they fail to realize how these efforts are threatening other pieces of the economy.

Our government has propped up the auto manufacturers. It’s propped up numerous banks, mortgage lenders and the world’s biggest insurer, AIG. But the rest of the economy is still swooning.

In fact, portions of the government’s rescue efforts are contributing to the economy’s difficulties. Because the Fed is supplying so much credit at such low rates of interest to the big finance companies, these finance companies can make a lot of money by simply buying Treasuries, rather then lending to businesses. The result is that most small and mid-sized companies cannot get loans. If the Fed’s did not supply credit so inexpensively, the banks would be forced to loan to businesses.

Unintended effects like this one produce unintended effects elsewhere, and before you know it, cause and effect are hard to discern…or to explain accurately. “Yet our minds are not beyond making up a cause to relieve the itch of an unexplained effect,” Mauboussin writes. “When a mind seeking links between cause and effect meets a system that conceals them, accidents will happen.”

That’s why so many so-called experts are so often dead wrong. They think that know what’s causing what. But they don’t.

For instance, there is no shortage of financial experts who will tell their clients to put 15% of their portfolio here and 10% there or whatever. And these experts will have definite opinions on each of their recommended mutual funds. This one is better than that one. They’ll give numbers. It will seem very concrete and real and “expert.”

But guess what? Almost all the experts produced an identical 35% loss for their clients in 2008.

If an investor hopes to minimize or avoid losses of this magnitude, they must understand that economies are complex adaptive systems – replete with feedback loops and black swans and power laws. Investors must approach the future with humility. And that means fearing risk more than craving reward. A humble investor will also insist on a margin of safety in each investment.

-- from "The Yellowstone Syndrome" by Chris Mayer.

The future is like a child

2009-12-20T04:46:00.000-08:00

[O]ver the last couple of weeks, an idea has been taking shape. The future is like a child. It will grow into an entirely new person. One that has never existed before. But it is a product of the past too. It may have Mom’s eyes…or Aunt Lou’s quick temper. It lives in a house originally bought by Dad when he was working for IBM in the ’80s. And it uses money that is controlled by an organization set up under the Wilson administration.

When we look ahead, we see enough elements of the past to confuse and mislead us. “Those who do not study the past are doomed to repeat it,” say the schoolteachers. But what about those who DO study history? At least one of Hitler’s top generals had in his pocket a copy of Caulaincourt’s recollections of Napoleon’s disastrous Russian campaign, when he was taken prisoner at Stalingrad.

We are supposed to believe that investors can avoid the calamities of the past by studying what happened in previous market cycles. To some extent it is true. You read enough stories of bubbles and you begin to get an instinct for them – at least at the extremes. That is how some of us were able to foresee the dotcom blow-up in ’00…and later, the blow-up in the financial sector in ’08.

Part of the problem is just filtering out the noise in the system. Probably 99% of what you heard is just noise – distracting information, misunderstood phenomena, and dubious data. When you read the commentariat…the pundits…the newscasters, economists, and analysts who are telling you what is happening and what lies ahead, you have to remember that most of them had no idea what was happening two years ago. Now, they have even less of an idea of what is happening.

We don’t have any idea either. For, like a newborn babe, this period in our financial history bears some resemblance to past cycles. The most striking resemblance is to the depression period of the ’30s in the US…and the long, slow depression in Japan since 1989. But it is different too. As you will see, below, we have far more to reckon with that we did in the ’30s.

Of course, those who misunderstood the financial bubble of ’03-’07 (Ben Bernanke thought it was a period of “Great Moderation” caused largely by his own superior handling of the Fed) now misunderstand the post-bubble world.

They think it is a technical challenge. They imagine that if Bernanke – whose bid for another term cleared the House yesterday – can just make the right adjustments, everything will be hunky dory.

Alas, Bernanke will do an even worse job than we would do. We have no idea. He has a bad one.

--from "Studying History in the Post-Bubble World" by Bill Bonner.

Is a bubble brewing in China?

2009-12-17T04:02:00.000-08:00

Schonberger: Are you at all concerned about a bubble brewing in China, given your investment there?

Schiff: Yes, I am concerned about that. They are creating too much money in China, and that is problematic. It will create bubbles in assets there. [However,] I think that the bubbles could inflate for a long time, given the real productivity and competitiveness of the Chinese economy and the savings that they have. This bubble could expand for five or 10 more years.

At some point, if we get real crazy valuations in Chinese assets, then I'll have to move out of that market. Right now, if you look at most Chinese companies based on dividend yields, P/E ratios, you don't have those kinds of crazy valuations yet.

--from "A Tough Year Ahead for the U.S. Economy?", an interview with Peter Schiff by Jennifer Schonberger.

To preserve wealth, invest outside the U. S.

2009-12-17T04:00:00.000-08:00

Any investor who wants to preserve or enhance their wealth has to look outside the U.S. The nations and areas of the world I think are the most vibrant now are in Asia -- Hong Kong as well as mainland China. I'm also buying the resource countries like Norway, Australia, and Canada. I own a lot of mining stocks -- principally Canadian companies. I'm also investing in parts of Europe and Latin America.

I think gold stocks relative to the price of gold have underperformed the price of gold for years. If you look at gold, right now it's still better than 10% above its 2008 high. Yet gold stocks are better than 10% below their 2008 high. Silver is still below its 2008 high by more than 10%. So I don't see a lot of speculation, despite what you hear about a bubble in precious metals. I don't see any signs of that all. Yes, the price is going up, but for good reason. I don't see a lot of speculation on the part of the general public.

--from "A Tough Year Ahead for the U.S. Economy?", an interview with Peter Schiff by Jennifer Schonberger.

Obama's multiple drags on the economy

2009-12-15T13:00:00.000-08:00

In the past year, the government has seized control of more than half of the nation’s mortgages, it has taken over one of the world’s biggest insurers, it literally controls major car companies, and it is now telling financial institutions how much they can pay their top executives. On top of this, the feds are seeking vast new powers over the nation’s energy markets (through the House Waxman-Markey “Clean Energy and Security Act” and pending Kerry-Boxer companion bill in the Senate) and, of course, are trying to “reform” health care by creating expansive new government programs.

For anyone who thinks free markets are generally more effective at coordinating resources and workers, these incredible assaults on the private sector from the central government surely must translate into a sputtering economy for years. Any one of the above initiatives would have placed a drag on a healthy economy. But to impose the entire package on an economy that is mired in the worst postwar recession, is a recipe for disaster.

-- from "Killing the Currency" by Robert P. Murphy.

Massive default by inflation?

2009-12-15T12:53:00.000-08:00

Conventional economic forecasts for government tax receipts are far too optimistic. The U.S. Treasury will need to issue far more debt in the coming years than most analysts now realize. Yet even the optimistic forecasts are sobering. For example, in March the Congressional Budget Office projected that the Obama administration’s budgetary plans would lead to a doubling of the federal debt as a share of the economy, from 41 percent of GDP in 2008 to 82 percent of GDP by 2019. The deficit for fiscal year 2009 (which ended Sept. 30) alone was $1.4 trillion. For reference, the entire federal budget was less than $1.4 trillion in the early years of the Clinton administration.

Clearly the U.S. government will be incurring massive new debts in the years to come. The situation looks so grim that economist Jeffrey Hummel has predicted that the Treasury will default on its obligations, just as Russia defaulted on its bonds in 1998. But another scenario involves the Federal Reserve wiping out the real burden of the debt by writing checks out of thin air to buy up whatever notes the Treasury wants to issue.

Many analysts are worried about Fed chairman Ben Bernanke’s actions during the financial crisis; Marc Faber is openly warning of “hyperinflation.”

-- from "Killing the Currency" by Robert P. Murphy.

Bernanke has been printing money like crazy, yet prices haven't gone up. Why not?

2009-12-15T12:44:00.000-08:00

Since the start of the present financial crisis, the Federal Reserve has implemented extraordinary programs to rescue large institutions from the horrible investments they made during the bubble years. Because of these programs, the Fed’s balance sheet more than doubled from September 2008 to the end of the year, as Bernanke acquired more than a trillion dollars in new holdings in just a few months.

If Bernanke has been so aggressive in creating new money, why haven’t prices skyrocketed at the grocery store? The answer is that banks have chosen to let their reserves with the Fed grow well above the legal minimum. In other words, banks have the legal ability to make new loans to customers, but for various reasons they are choosing not to do so. This chart from the Federal Reserve shows these “excess reserves” in their historical context.

U.S. depository institutions have typically lent out their excess reserves in order to earn interest from their customers. Yet currently the banks are sitting on some $850 billion in excess reserves, because (a) the Fed began paying interest on reserves in October 2008, and (b) the economic outlook is so uncertain that financial institutions wish to remain extremely liquid.

The chart explains why Faber and others are warning about massive price inflation. If and when the banks begin lending out their excess reserves, they will have the legal ability to create up to $8.5 trillion in new money. To understand how significant that number is, consider that right now the monetary aggregate M1—which includes physical currency, traveler’s checks, checking accounts, and other very liquid assets—is a mere $1.7 trillion.

-- from "Killing the Currency" by Robert P. Murphy.

Supply of dollars going up + demand for dollars going down = dollar crash!

2009-12-15T12:40:00.000-08:00

[C]entral banks around the world have been quietly distancing themselves from the U.S. dollar. Over the summer, officials in India, China, and Russia opined publicly on the desirability of a new global financial system, anchored on a basket of currencies or even gold.

We thus have in motion two huge trains of supply and demand, and the result will be an inevitable crash in the value of the dollar. Just as the Federal Reserve is embarking on a massive printing spree, the rest of the world is looking to dump its dollar holdings. It’s impossible to predict the exact timing, but sooner or later the dollar will fall very sharply against commodities and other currencies.

A crashing dollar will translate immediately into huge spikes in the price of gasoline and other basic items tied to the world market. After a lag, prices at Wal-Mart and other stores will also skyrocket, as their reliance on “cheap imports from Asia” will no longer be possible when the price of the dollar against the Chinese yuan falls by half.

The consequences will be so dramatic that what now may sound like a “conspiracy theory” could become possible. Fed officials might use such an opportunity to wean Americans from the U.S. dollar.

-- from "Killing the Currency" by Robert P. Murphy.

What should investors do to protect themselves?

2009-12-15T12:38:00.000-08:00

[W]hat should average investors do right now to protect themselves? First and most obvious, they should rid themselves of dollar-denominated assets. For example, government and corporate bonds promising to make a fixed stream of dollar payments will all become virtually worthless if huge price inflation occurs. (In contrast, holding U.S. stocks is not a bad idea from the point of view of inflation; a stock entitles the owner to a portion of the revenue stream from a company’s sales, which themselves will rise along with prices in general.)

Second, investors should acquire an emergency stockpile of gold and silver. If and when dollar-prices begin shooting through the roof, there will be a lag for most workers: They will see the prices of milk, eggs, and gasoline increasing by the week, yet their paychecks will remain the same for months or longer. If the dollar crashes in the foreign exchange markets, gold and silver would see their prices (quoted in U.S. dollars) increase in the opposite direction.

We can’t know the timing of the impending monetary catastrophe, but it is coming. Smart investors will minimize their dependence on the dollar before it crashes. At this late date, no one should trust the government and media “experts” who assure us that the worst is over.

-- from "Killing the Currency" by Robert P. Murphy.

Jim Rogers: other things being equal, buy commodities, not commodities stocks

2009-12-15T08:02:00.000-08:00

Studies show, in my experience, that commodities themselves outperform commodity stocks. In the ‘70s, oil prices went up 10 times; commodity oil stocks did nothing. With stocks you have to worry about the management and the balance sheet—a hundred things. Commodities are pretty dumb: If there's too much oil, the price is going to go down; if there's too little, it's going to go up. Oil doesn't care who the head of the Federal Reserve is; it doesn't care what laws Congress passes, for the most part. But if you're Exxon, you've got to worry about that stuff.

The studies show that you would've made 300 percent more investing in commodities themselves over the past several decades than in commodity stocks, but if you know a company that's going to discover a lot of natural gas in Berlin, you buy all you can. Then you call me. Because then you're going to make a lot more money than in commodities themselves.

-- from "Jim Rogers: Long Sugar, But Getting Short Bonds", an interview with Jim Rogers by Heather Bell.

Jim Rogers: solar and wind have a brilliant future because government will subsidize them even if oil prices don't rise enough to make them economic

2009-12-15T07:58:00.000-08:00

Alternative energy has a fantastic future if you can find the right companies that can execute—whether it's wind power or nuclear power or solar power; whatever it happens to be. Solar and wind are not economic right now at these prices for oil, but oil prices are going to go higher, and if they don't, the governments are still going to subsidize that kind of energy, so they have a brilliant future.

-- from "Jim Rogers: Long Sugar, But Getting Short Bonds", an interview with Jim Rogers by Heather Bell.

Jim Rogers: the fundamentals are improving for commodities and only commodities

2009-12-15T07:56:00.000-08:00

Commodities are the only place I know where the fundamentals are improving. The fundamentals at Citibank are not improving; the fundamentals for commodities continue to improve, and that's where I'm focusing. Perhaps currencies—if you know what the Japanese yen is, you might consider investing there, or the Swiss franc or the Canadian dollar. But other than that, for the most part, I haven't bought any stocks except in China last fall.

The only bubble I see developing in the world right now is in long-term government bonds in the United States. The idea that somebody would lend money to the United States for 30 years in U.S. dollars at 4 or 5 or 6 percent interest is incomprehensible to me. I'm not short bonds right now because the government keeps driving them up—I don't know how long they're going to do it—but I do suspect and hope that sometime in the next year or two, I'll be shorting U.S. government bonds, because that's the only bubble I see developing.

-- from "Jim Rogers: Long Sugar, But Getting Short Bonds", an interview with Jim Rogers by Heather Bell.

Jim Rogers: we're making the situation worse

2009-12-15T07:54:00.000-08:00

What we are doing now is making the situation worse. The idea that you would solve a problem of too much debt and too much consumption with yet more debt and yet more consumption? That defies comprehension, for me. Now, I'm not a politician, or obviously I'd think this was brilliant.

It's making the situation worse, and in two or three years—or maybe even next year—we're going to be facing a much, much worse situation.

-- from "Jim Rogers: Long Sugar, But Getting Short Bonds", an interview with Jim Rogers by Heather Bell.

The vicious cycle

2009-12-14T13:01:00.000-08:00

U. S. interventionism leads to terrorism, which, in turn, leads to more U. S. interventionism.

[M]any Americans look at the occupations of Iraq and Afghanistan and say, “Our government is there to kill the terrorists. If it wasn’t there killing the terrorists, the terrorists would be coming to kill us here in the United States.”

The problem is that such Americans have it backwards. They think that the terrorism comes first, giving rise to the necessity for invading and occupying Iraq and Afghanistan to kill the terrorists before they come and kill more people in the United States.

Actually, it’s the other way around. U.S. interventionism comes first. For example, consider the brutal sanctions against Iraq during the 1990s, which killed hundreds of thousands of Iraqi children. Consider also U.S. Ambassador to the UN Madeleine Albright’s infamous statement to “Sixty Minutes” that the deaths of half-a-million children from the sanctions were “worth it.”

Those two things made people in the Middle East terribly angry. As year after year went by, with the death toll rising in Iraq, the anger began boiling over into rage. After all, there was nothing that anyone, including Americans, could do to bring the sanctions and continuing death toll to a halt. In fact, whenever an American was caught delivering humanitarian aid to the Iraqis in violation of the sanctions, he was prosecuted viciously by the U.S. government.

Moreover, fueling that fire of rage was the unconditional financial and military aid provided the Israeli government by the U.S. government, the deadly and illegal no-fly zones over Iraq, and the stationing of U.S. troops near Islamic holy lands.

The rage finally boiled over on September 11, 2001. Actually, it had boiled over long before that. In 1993, Ramzi Yousef committed a terrorist bombing of the World Trade Center. At his sentencing hearing, he angrily pointed not to America’s freedom and values but to U.S. foreign policy, including the brutal sanctions on Iraq that had killed, even up to that point (1993) countless Iraqi children..

The twisted part of all this is that the U.S. government used the 9/11 attacks as an excuse to take the very types of intervention actions it had been doing before 9/11 — the things that gave rise to the anger and rage that had culminated in the terrorist attack in 1993 and then again on 9/11. By invading Iraq and Afghanistan, the government continued killing more and more people in that part of the world, arguably many more people than the pre-9-11 sanctions had killed.

There is one — and only one — way to restore a sense of normality to our country: Withdraw all U.S. troops from overseas, beginning with Iraq and Afghanistan. To think that the U.S. government can continue to kill people without incurring the risk of retaliation from people who sympathize with the victims of occupation is folly.

-- from "More Blowback from U.S. Foreign Policy" by Jacob G. Hornberger.

"Dr. No" says, "it's time to go"

2009-12-12T04:23:00.000-08:00

Excerpts from Ron Paul's statement before the Foreign Affairs Committee, United States House of Representatives, December 10, 2009:

[W]e are told that we have to “win” in Afghanistan so that al-Qaeda cannot use Afghan territory to plan further attacks against the US. We need to remember that the attack on the United States on September 11, 2001 was, according to the 9/11 Commission Report, largely planned in the United States (and Germany) by terrorists who were in our country legally. According to the logic of those who endorse military action against Afghanistan because al-Qaeda was physically present, one could argue in favor of US airstrikes against several US states and Germany! It makes no sense. The Taliban allowed al-Qaeda to remain in Afghanistan because both had been engaged, with US assistance, in the insurgency against the Soviet occupation. . . .

Nevertheless, the president’s National Security Advisor, Gen. James Jones, USMC (Ret.), said in a recent interview that less than 100 al-Qaeda remain in Afghanistan and that the chance they would reconstitute a significant presence there was slim. Are we to believe that 30,000 more troops are needed to defeat 100 al-Qaeda fighters? I fear that there will be increasing pressure for the US to invade Pakistan, to where many Taliban and al-Qaeda have escaped. Already CIA drone attacks on Pakistan have destabilized that country and have killed scores of innocents, producing strong anti-American feelings and calls for revenge. I do not see how that contributes to our national security. . . .

[T]he only solution to the Afghanistan quagmire is a rapid and complete US withdrawal from that country and the region. We cannot afford to maintain this empire and our occupation of these foreign lands is not making us any safer. It is time to leave Afghanistan.

-- from "It Is Time To Leave Afghanistan" by Ron Paul

Where fuel is $100/gallon

2009-11-26T05:09:00.000-08:00

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

2009-11-26T05:07:00.000-08:00

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!

2009-11-26T05:00:00.000-08:00

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?

2009-11-26T04:22:00.000-08:00

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).

What Lew Rockwell is thankful for this Thanksgiving

2009-11-25T11:52:00.000-08:00

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

2009-11-25T03:46:00.000-08:00

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

2009-11-25T03:09:00.000-08:00

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

Dumb and Dumber Wars

2009-11-25T03:00:00.000-08:00

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?

2009-11-25T02:35:00.000-08:00

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.

Uncle Sam asks for a bank loan

2009-11-24T18:05:00.000-08:00

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

2009-11-24T13:16:00.000-08:00

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

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

2009-11-24T03:25:00.000-08:00

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)!

John Nichols on Bill Moyers and Vietnam & Afghanistan

2009-11-23T13:17:00.000-08:00

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

2009-11-23T13:10:00.000-08:00

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

2009-11-23T13:08:00.000-08:00

Government in Washington says the government in Kabul is corrupt!

The bursting of the 'Bama bubble

2009-11-23T13:06:00.000-08:00

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

Live Free Or Move--To Switzerland!

2009-11-23T12:13:00.000-08:00

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

Health insurers maximize profits by denying valid claims?

2009-11-20T06:51:00.000-08:00

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

UPDATE:

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

2009-11-20T06:05:00.000-08:00

Hint: they're not all good!

See "Profit: Not Just a Motive / Profits Tell Producers What They Should and Should Not Do" by Steve Horwitz.

God must be a Brazilian!

2009-11-17T13:11:00.001-08:00

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

2009-11-17T09:05:00.000-08:00

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

2009-11-17T04:06:00.000-08:00

Click here.

The real struggle: liberty vs. power

2009-11-06T11:00:00.000-08:00

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?

2009-11-06T04:10:00.000-08:00

“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

2009-11-06T03:37:00.000-08:00

“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

The Left and the Right vs. Liberty

2009-11-05T07:01:00.000-08:00

[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

McChrystal Doesn’t Get It—Does Obama?

2009-11-03T14:12:00.000-08:00

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?

2009-11-03T13:50:00.000-08:00

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!

2009-11-03T13:33:00.000-08:00

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

2009-11-03T13:03:00.000-08:00

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

2009-11-03T03:41:00.000-08:00

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

The Fruits of Intervention

2009-10-31T04:50:00.000-07:00

We ran Saddam out of Kuwait and put U.S. troops into Saudi Arabia. And we got Osama bin Laden's 9-11. We responded by taking down the Taliban and taking over Afghanistan. And we got an eight-year war with no victory and no end in sight. Now Pakistan is burning. We took down Saddam and got a seven-year war and an ungrateful Iraq.

Meanwhile, the Turks, who shared a border with Saddam, have done no fighting. Iran has watched as we destroyed its two greatest enemies, the Taliban and Saddam. China, which has a border with both Pakistan and Afghanistan, has sat back. India, which has a border with Pakistan and fought three wars with that country, has stayed aloof.

The United States, on the other side of the world, plunged in. And now we face an elongated military presence in Iraq, an escalating war in Afghanistan and potential disaster in Pakistan, and are being pushed from behind into a war with Iran.

"America rejects the false comfort of isolationism," said George W. Bush in his 2006 State of the Union. And we did reject that false comfort. And now we can enjoy the fruits of interventionism.

-- from "The Fruits of Intervention" by Patrick J. Buchanan

Climate change suicide

2009-10-31T04:34:00.000-07:00

Thanks to misreading the significance of a brief period of rising temperatures at the end of the 20th century, the Western world (but not India or China) is now contemplating measures that add up to the most expensive economic suicide note ever written.

-- from "The real climate change catastrophe" by Christopher Booker

Climate change groupthink run amok

2009-10-31T04:31:00.000-07:00

Future generations will wonder in bemused amazement that the early 21st century’s developed world went into hysterical panic over a globally averaged temperature increase of a few tenths of a degree and, on the basis of gross exaggerations of highly exaggerated computer predictions combined into implausible chains of inference, proceeded to contemplate a rollback of the industrial age.

-- MIT's Richard Lindzen, as quote by Christopher Booker in "The real climate change catastrophe "

The real climate change catastrophe

2009-10-31T04:28:00.000-07:00

More and more eminent scientists have been coming out of the woodwork to suggest that the IPCC, with its computer models, had got it all wrong. It isn’t CO₂ that has been driving the climate, the changes are natural, driven by the activity of the sun and changes in the currents of the world’s oceans.

The ice caps haven’t been melting as the alarmists and the models predicted they should. The Antarctic, containing nearly 90 per cent of all the ice in the world, has actually been cooling over the past 30 years, not warming. The polar bears are not drowning – there are four times more of them now than there were 40 years ago. In recent decades, the number of hurricanes and droughts have gone markedly down, not up.

As the world has already been through two of its coldest winters for decades, with all the signs that we may now be entering a third, the scientific case for CO₂ threatening the world with warming has been crumbling away on an astonishing scale.

Yet it is at just this point that the world’s politicians, led by Britain, the EU and now President Obama, are poised to impose on us far and away the most costly set of measures that any group of politicians has ever proposed in the history of the world – measures so destructive that even if only half of them were implemented, they would take us back to the dark ages.

-- from "The real climate change catastrophe" by Christopher Booker

Healthcare reform and other fairy tales

2009-10-31T04:07:00.000-07:00

Like an uninquisitive child, most people seem willing to believe politicians when they promise to subsidize and compel the use of medical “insurance” while reducing prices without controlling choices. And while they’re at it, they’ll cut the budget deficit and boost economic growth. One shouldn’t have to be an economist to smell a scam.

-- from "The Goal Is Freedom: The Welfare State Corrupts Absolutely / What's wrong with healthcare reform" by Sheldon Richman

If the science is settled, why so many climate models?

2009-10-29T15:27:00.001-07:00

It has been often said that the "science is settled" on the issue of CO2 and climate. Let me put this claim to rest with a simple one-letter proof that it is false.

The letter is s, the one that changes model into models. If the science were settled, there would be precisely one model, and it would be in agreement with measurements.

Alternatively, one may ask which one of the twenty-some models settled the science so that all the rest could be discarded along with the research funds that have kept those models alive.

We can take this further. Not a single climate model predicted the current cooling phase. If the science were settled, the model (singular) would have predicted it.

-- from "Physicist Howard Hayden's one-letter disproof of global warming claims" by Stephan Kinsella

Howard Zinn on Obama

2009-10-29T15:07:00.000-07:00

Everyone wants to support Obama, [Howard Zinn] continued, or at least everyone in his circle. Everyone wants to love Obama. But let's face it: "His presidency doesn't measure up. I have to say that. But why? How? How come?"

Militarism, he answered. Obama has kept the troops in Iraq. He's sent more troops to Afghanistan. "He's continued a military foreign policy."

Not to be a know-it-all, Zinn said ("though I do know it all," he joked), but those who expected great change from this president were fooling themselves. Look at history, he urged, invoking his mantra; Democrats are as aggressive as Republicans.

"They're all in this for war," he said. "That's what we call bipartisanship." Those surprised or disappointed are those who "exaggerated expectations, romanticized him, idealized him. Obama is a Democratic Party politician. I know that sounds demeaning. It is."

-- from "The Return of Howard Zinn, and Company / A packed house hears a left-wing critique of Obama" by Seth Rolbein

How does Afghanistan pose a threat to the United States?

2009-10-29T04:01:00.000-07:00

Syndicated columnist Gene Lyons asks the question "Why are we still in Afghanistan?"

"One of the enduring oddities of the American foreign policy debate," he writes, "is that asking the most obvious questions is all but forbidden. For example, how does Afghanistan pose a threat to the United States?"

It doesn’t.

The 9/11 attacks were an aberration. So many people in our internal security and law enforcement structure were asleep at the wheel that it’s downright criminal. An attack like 9/11 shouldn’t occur again. Nobody in our Homeland Security apparatus wants to be the schmo who let it happen on his watch. "Fighting them over there" has nothing to do with national security. They don’t have an air force or a navy that can get us over here.

As Lyons says, "Terrorists can’t defeat the United States; they can only cause American politicians to self-destruct in fear of taking blame for future atrocities."

That, unfortunately, is precisely why Obama is going along with this cockamamie escalation. Imagine how Dick Cheney and the rest of the war banshees would wail if Obama stiff armed Gen. Stanley McChrystal’s escalation demand and somebody snuck through the Homeland Defense screen and blew up a school or a stadium or something. Ouch!

Military pundit Ralph Peters is on the right side of the Afghanistan issue. "Even if everything went perfectly in Afghanistan — which it won’t — the results would be virtually meaningless: Our mortal enemies (above all, al-Qaeda) have dug in elsewhere, from Pakistan to Somalia," he wrote recently in the New York Post. "Our soldiers are dying for a fad, not for a strategy. Our vaunted counterinsurgency doctrine is the military equivalent of hula hoops, pet rocks and Beanie Babies: an oddity that caught the Zeitgeist." Indeed, counterinsurgency (COIN) is the "it" strategy now, the Army’s reason for being. There won’t be any big tank battles in the Fulda gap. COIN is the only kind of war left; without it, there is no Long War.

Of course, if we don’t need the Long War, we don’t need to do COIN in Afghanistan.

And we don’t need the Long War. But it looks like we’re going to get it.

-- from "Alas Afghanistan" by Jeff Huber

Another scientific revolution?

2009-10-28T18:06:00.000-07:00

I see many parallels between the struggle for acceptance of a heliocentric solar system and the acceptance of a free-market, stateless society. The cast of characters has changed somewhat: Galileo’s Papal State is today’s democratic state; Catholic doctrine has been replaced by statist, democratic doctrine; the geocentric view is now the leviathan central government; the religious intelligentsia have been replaced by high level bureaucrats; and the illiterates can now read but they are ignorant of economics.

The scientific intellectuals, who furthered Copernicus’ work, are today the anti-intellectual intellectuals(5), striving to spread the notion of liberty. They continue to work and expose the evils of majority rule, often at the expense of advancement in their careers, subjecting themselves to ostracism, ridicule and sometimes, even being jailed for refusing to obey the laws of the state.

Galileo’s premise was accepted as truth because the predictions that it made were ultimately visible. As his followers perfected the technology required to observe the phenomena he had described, they became evident and accessible to more and more people. It was then impossible for the (Papal) State to deny the reality.

This is what I see happening with the freedom movement. Our technology is the Internet and the Mises Institute, the centre for development of free-market theory. The predictions that were made by Mises, Rothbard, Hazlitt and so many others are coming true and we, the ignorant masses of today, are finally being enlightened.

-- from "Copernican Shift, then and now" by Catherine LeBoeuf-Schouten

Rationally ignorant healthcare "reform"

2009-10-28T08:52:00.000-07:00

The Senate Finance Committee has filed its current version of healthcare reform. . . .

It is 1,502 pages long and it is in legislative language. If passed, it will affect our lives in important ways. Let me suggest that you all read it carefully and then let your senators know what you think.

Of course you won’t do that and neither will I. We are rationally ignorant and we shall remain that way.

Will the senators, not on the committee, read it? I doubt it. They will be too busy giving their opinions on selected portions. However, special interests will know about the particular provisions that affect them. As to the senators on the committee, staffers will give summaries. How much they understand or care about provisions that affect the general interests in contrast to the interests that elect them is unknown.

The welfare state makes a mockery of the rule of law and of representative democracy.

--from "Planning And Democracy: Redux" by Mario Rizzo

Economic Correction Disease

2009-10-28T04:34:00.000-07:00

Another national emergency! Terrorism…the banking crisis…now Swine Flu.

Why it is an emergency, we don’t know. Our sister, living in Virginia tells us that several of her grandchildren have come down with the Swine Flu. It doesn’t seem to bother them anymore than any other flu.

But every emergency is an opportunity. The feds don’t want to waste it. Instead, they swing into operation with a rescue plan. It will end up costing billions…hundreds of billions…or maybe even trillions. We don’t know what they’ve got in mind. But we know what will come of it. It will end up extending the power and influence of the government. So far, the feds are the only real winners from any of these crises. Federal outlays, as a percentage of GDP have shot up from less than 20% of GDP in 2000 to more than 26% in 2009.

Will it do any good? Public health is not central banking. And it’s not economic planning. Force everyone to wear a surgical mask and maybe lives would be spared. Or, maybe not. Without the immunity of occasional bouts of flu, who knows? Maybe people would be more susceptible to the next disease. The American Indians were almost wiped out…because they had no immunity to European diseases. . . .

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

Democracy’s Most Critical Defect

2009-10-28T03:15:00.000-07:00

[I]f I were to send a private Predator drone to Pakistan to fire explosive missiles into villages, killing women, children, and other innocent persons, I would be seen as a monstrous mass murderer, and demands would be made that I be apprehended and “brought to justice” or killed. Yet when President Obama causes deaths in this way, no such demands are made. How did Barack Obama come by the right to kill innocent people? By democratic election to the presidency of the United States, of course. Most people actually believe, and act on the belief, that mere election to a political office can endow a person with standing to disregard the moral requirements applicable to people in general. And not only the elected official, but all those officials beneath him in the chain of command ― nobody demands that the technician who sits comfortably in the United States and directs the exact operation of the lethal drone be brought to justice; he, as the saying goes, is “only following orders.”

-- from "Democracy’s Most Critical Defect" by Robert Higgs

The Democrats in Congress have the power to end war

2009-10-27T03:10:00.000-07:00

“Every thinking person wants to take a stand against hate crimes, but isn’t war the most offensive of hate crimes?” asked Rep. Dennis Kucinich, who did not vote for the bill, when I spoke to him by phone. “To have people have to make a choice, or contemplate the hierarchy of hate crimes, is cynical. I don’t vote to fund wars. If you are opposed to war, you don’t vote to authorize or appropriate money. Congress, historically and constitutionally, has the power to fund or defund a war. The more Congress participates in authorizing spending for war, the more likely it is that we will be there for a long, long time. This reflects an even larger question. All the attention is paid to what President Obama is going to do right now with respect to Iraq and Afghanistan. The truth is the Democratic Congress could have ended the war when it took control just after 2006. We were given control of the Congress by the American people in November 2006 specifically to end the war. It did not happen. The funding continues. And while the attention is on the president, Congress clearly has the authority at any time to stop the funding. And yet it doesn’t. Worse yet, it finds other ways to garner votes for bills that authorize funding for war. The spending juggernaut moves forward, a companion to the inconscient force of war itself.”

-- Dennis Kucinich, as quoted by Chris Hedges in "War Is a Hate Crime"

Society cannot be planned from the top down

2009-10-26T03:08:00.000-07:00

Mises died a year before what is usually considered the Austrian revival, which is often dated from 1974 when Hayek received the Nobel Prize, a prize that was entirely unexpected and which had to be shared with a socialist and which shocked a profession that had no interest in the ideas of either Mises or Hayek, whom they considered to be dinosaurs.

It is interesting to read Hayek's acceptance speech, which the Mises Institute published this year. It is a tribute to a profession to which he wanted closer ties. But it was not a loving presentation of the glories of academia. In fact, it was the opposite. He said that the most dangerous person on earth is an arrogant intellectual who lacks the humility necessary to see that society needs no masters and cannot be planned from the top down. An intellectual lacking humility can become a tyrant, and an accomplice in the destruction of civilization itself.

It was an amazing speech for a Nobel Prize winner to give, an implicit condemnation of a century of intellectual and social trends, and a real tribute to Mises, who had stuck by his principles and never given into the academic trends of his time.

-- from "Economics and Moral Courage" by Llewellyn H. Rockwell, Jr.

It's time to pusue a foreign policy of noninterventionism

2009-10-24T03:23:00.000-07:00

It’s high time we adopted the isolationist policy recommended by our founding fathers. I’m not talking about withdrawing from the world as an economic and diplomatic superpower. I’m suggesting that we just say no to strewing our military strength far and wide every time we have a temper tantrum. The past eight years have shown that our military might doesn’t accomplish our national objectives. Let the crazy world take care of itself.

-- from "Make the World Go Away" by Jeff Huber

A kinder, gentler city on the hill

2009-10-24T03:21:00.000-07:00

The neocons would have us believe that we can be a force for good in the world by blowing it up bits at a time. Can a belief get any sillier? (If she floats, she’s a witch.)

The oceans and our size provide us with ample security protection, just as they did in the day of Washington and Jefferson and Franklin. No one can invade and occupy us. Nobody would ever be crazy enough to pop a nuclear missile off in our direction, or in the direction of any of our friends (do we have any of those left?)

No one is interested in competing with us militarily, not even Russia or China. Let’s start coming home and fixing our own problems, and take the world off our shoulders. It will get along fine without us bombing it on a regular basis.

It’s time to become that kinder, gentler nation and that shining city on the hill that Republican presidents Ronald Reagan and George H.W. Bush exhorted us to be.

-- from "Make the World Go Away" by Jeff Huber

Too much debt in the public sector = default and hyperinflation?

2009-10-23T18:30:00.000-07:00

Richard Koo, author of The Balance Sheet Recovery, recalls how it was during Japan’s long, dark passage:

“We had these false starts… The economy would begin to improve and then we’d say ‘oh my god, the budget deficit is too large.’ Then we’d cut fiscal stimulus and collapse again. We went through this zigzag for 15 years.”

Koo understands what is going on, more or less. Companies and households are paying off debt. He and Paul Krugman believe the feds have to continue pumping money into the system or they’re going to have a “lost decade,” just like the Japanese.

You have to keep the stimulus money flowing “until the private sector de-leveraging is over,” he says.

By our calculations, it will take 5-10 years for the private sector to de-leverage. By that time, the feds will have added trillions in debt to public finances. Since they can’t finance that much from private domestic savings, and since foreigners will be wary about lending that much even if they had it, the Fed itself will have to pony up the money. This will put the dollar in further danger…along with the entire global financial system.

Koo may be right – as far as his thinking takes him. He should think a little further. The problem is debt. Too much debt in the private sector caused bear markets and a bank crisis. Too much debt in the public sector will cause big problems too – a default…and hyperinflation. Worse than a depression.

-- from "How Much Juice is Left in this Bear Market Rally?" by Bill Bonner

Will the Dow/gold ratio reach 1/1?

2009-10-23T18:24:00.000-07:00

The typical major bear market lasts 15-20 years. The last one began in 1966. It wasn’t until 1982 – 16 years later – that the next major bull trend began.

This bear market is already 10 years old. Perhaps it will end in 2015. Maybe in 2020. We don’t know when. We only know how it will end – in misery.

Now, despite 10 years of stinkin’ returns, investors still believe in stocks. They still hope to find the ‘next Google.’ They still punish fund managers who hold back. They still read the financial press. They still watch CNBC. They still want to know what stock to buy.

Yesterday, they bid up the Dow 131 points. The price of stocks to gold is about 10 to 1. When this trend began ten years ago, we predicted that the Dow and gold would go all the way to 1 for 1. We guessed it would happen at the 3,000 to 5,000 level. We’ll stick with that prediction until it proves correct…or it makes us look like a fool.

-- from "How Much Juice is Left in this Bear Market Rally?" by Bill Bonner

Macro for Dummies

2009-10-23T18:17:00.001-07:00

Visitors to this blog know that when I'm not letting loose with my own opinions, I try to except just the best passages from blog posts by other authors. Well, I've met my match in "Macro for Dummies" by Bill Bonner. I don't think I can or want to leave out a single word. So, instead of quoting the entire post here, I urge you to read it in its entirety! Just click here.

War Between The Generations

2009-10-23T15:14:00.000-07:00

There was no cost of living increase in Social Security payments this year because ... well, there was no increase in the cost of living.

But this isn't fair to Seniors because they've always gotten raises in the past and, you know, they expect it. And American politics is not about dampening expectations among any voter group and especially not the one with the highest percentage likely to actually go to the polls. Old people, you see, vote. Young people go skateboarding and middle-aged people are too tired from working those two jobs.

So, a nice little $250 check will be going out to everyone on Social Security – to include, one assumes, Ross Perot and others in his tax bracket –and these checks will be honored by people who are, at present, too young to vote.

-- from "War Between The Generations"

10,000 is the new 7,500!

2009-10-23T03:14:00.001-07:00

[W]hen adjusted for inflation, the bear market that concluded in the early 1980s was almost as severe as the one that concluded in the early 1930s. Also, the inflation-adjusted Dow is now a little more than double where it was at its 1929 peak and trades a mere 51% above its 1966 peak – not that spectacular of a performance considering the time frames involved. It is also interesting to note that the Dow is up 54% from its March 9, 2009 low which is actually slightly more than what the inflation-adjusted Dow gained from its 1966 peak to today. . . .

--from Chart of the Day

For comparison, here is the unadjusted chart of the Dow (note that the time scales on the two charts are different):

--from Chart of the Day

What happened to global warming?

2009-10-21T14:38:00.000-07:00

For the last 11 years we have not observed any increase in global temperatures.

And our climate models did not forecast it, even though man-made carbon dioxide, the gas thought to be responsible for warming our planet, has continued to rise.

So what on Earth is going on?

-- from "What happened to global warming? " by Paul Hudson

There's more to peace than the absence of war

2009-10-21T14:26:00.000-07:00

[W]e are used to thinking of peace merely as the absence of full-scale military conflict. But this is a very narrow notion of peace. Real peace is the absence of aggression, whether on an international scale or localized within a small area. Real peace requires not merely the absence of large-scale military conflicts, but also the absence of aggression in domestic affairs concerning individual citizens.

While foreign affairs and military operations are no doubt an important aspect of world peace, fixation solely on these issues concedes a fundamentally statist premise: that peace concerns only those conflicts occurring between governments and other large and militarily powerful entities (such as terrorist groups). Under this view, to use force against a government or paramilitary organization is "war," but to aggress against an unarmed citizen is mere "public policy."

This view is extremely shortsighted and cannot be expected to yield any genuine or lasting peace. The reason is simple: peace is not a concept which should be restricted — or even primarily directed — towards conflicts between governments and other military entities. It applies just as much to domestic conflicts between governments and their own citizens as to conflicts between military powers.

Peace should also not be restricted solely to the prevention of killing. It applies just as much to conflicts involving tax collectors and the appropriation of private property as to conflicts involving helicopter gunships and the killing of people. . . .

[T]o be a genuine and effective advocate for peace, one must oppose the initiation of force in principle and in all its manifestations. One must oppose the initiation of force whether it is undertaken on a small or a large scale, and whether it is directed towards the killing of people, other trespasses against their bodies, or the appropriation of their property. In short, one must accept the nonaggression principle and all that it implies in both domestic and foreign policy. . . .

Unfortunately, many of the so-called "peace activists" celebrated for their opposition to wars are hostile to the very social system that would ensure a genuine and lasting peace. In fact, these "peace activists" are not in favor of peace at all. They are merely opposed to certain large-scale military operations.

Such activists are often quite happy to lend their support to the initiation of force against domestic citizens, to plunder them of their property for the purposes of redistribution, or to enslave them under the watchful eye of government bureaucracies. In these smaller-scale conflicts, many allegedly "peace-loving" people routinely support statism and aggression as the means to achieve their domestic policy goals. . . .

Some have argued that it is incongruous to award a peace prize to a president currently locked in two wars. But even this is a rosy view of the situation; for one needn't look as far as foreign policy to find a host of other issues on which this "champion of peace" favors violence as the means of obtaining his desired goals. As president of the United States, he presides over a coercive apparatus larger and more powerful than any in human history, and like his predecessors, he wields his political power against both domestic citizens and foreigners to routinely deny them their property rights, their liberties, and even their lives.

In drug policy, the president is locked in a "War on Drugs" in which he commands government agencies as they violently assault, rob, and imprison people who attempt to trade or ingest substances prohibited by their political masters. In social policy, he is fighting a "War on Poverty" in which millions of people are robbed of their rightful property in order to fatten the wallets of social-service bureaucrats and associated lobbyists, with the residual left over for poorer people. In economic policy, he fights a "War on Greed," in which people are forcibly prevented from trading their own property as they see fit, and entire industries are nationalized to the inept hands of government masters.

The Principle of Nonaggression

These smaller-scale assaults and robberies are no different in their moral principles from larger-scale conflicts involving armed military forces. The same moral rules apply to both situations. In either context, the initiation of violence is morally wrong, and incompatible with a peaceful society.

If we look to the root of the problem, to the aggression lying behind these "public policies," then we see that supposedly serene nations like the United States are far from peaceful — notwithstanding the absence of tanks in the streets. . . .

The apparent serenity of neighborhoods with white picket fences and lush lawns can be deceiving, and it leads many residents of developed countries to believe that peace has been achieved in their own backyard. Indeed, some believe that statist policies such as taxation, regulation, and other property-right violations are still "peaceful," notwithstanding the threat of force involved, since the enforcement of these rules generally does not involve the use of actual physical violence against the body of any person.

After all, in most "peaceful" nations we are not used to seeing people shot in the streets or hauled off to the gulag. Even under fairly repressive domestic conditions, things can still be "peaceful" in the sense that there is not much overt violence or rebellion.

But this simply means that people have been brought to a state where they routinely comply with the edicts of their political masters, and avoid the incarceration or violence that would result from their refusal to do so. This is clearly not genuine peace, any more than a slave house is peaceful if the will of the slaves for resistance has been broken and overt violence has become unnecessary.

Military Conflict and Domestic Repression

The foregoing analysis is not intended to imply that there is no difference between overseas military adventures and instances of statist domestic policies. Nor is it intended to imply that the analysis of military conflicts is in any way less important than the analysis of domestic policies. The point is that only a principled stand for peace, including consistent opposition to statist policies, can be expected to yield a more peaceful society over time.

There are, of course, many differences between military conflicts and domestic public policies. Military struggles are likely to be far more destructive than domestic ones, but they are also far more complex. While particular war crimes may be morally clear cut, moral arguments over the legitimacy of the wars themselves are often complicated by long histories of retaliation and escalation, involving many different groups, often fighting for generations. On the other hand, taxation, regulation, and the suppression of legitimate civil liberties are quite clearly acts of aggression, in which there is no question of the victim having previously aggressed against the attacker.

For this reason, it is all the more imperative for genuine advocates of peace to take a stand against unambiguous cases of domestic aggression embodied in the statist policies that abound in their own homelands. For if one cannot even recognize the immorality of clear-cut instances of government violence at home, what hope can there possibly be to understand the moral imperatives applying to convoluted, foreign, military struggles with histories tracing back over generations?

Peace versus Statism

While specific conflicts are often complicated, the fundamental principles underlying a peaceful society are relatively simple. If the members of a society accept the nonaggression principle and repudiate the initiation of force, then there will be peace; if instead they support statism, there will be violence, repression, and war.

Once a person knowingly countenances a single act of aggression against property rights, any moral objection to violence they may have had is breached. Regardless of whether the issue in question is drug prohibition, estate taxes, zoning regulations, or government welfare schemes, support for the violation of property rights establishes the principle that the initiation of force is a legitimate means for achieving one's ends — that it is morally proper.

The transition to supporting larger-scale acts of aggression is then just a matter of degree, with the extent of support differing from person to person. Such a person may certainly oppose large-scale military conflicts out of concern for the scale of the destruction. But theirs is not an objection to the use of aggression itself; it is merely a concern that this much violence goes too far!

Without a principle against aggression per se, there is no logical basis for any agreement on the level of violence that is legitimate. There is no logical basis to say that this much violence is okay, but that much is too much. And so, inevitably, once the principle of nonaggression is tossed aside, people are led on a path to statism and destruction, upping the ante until full-scale war is the result.

The Nobel Peace Prize for Barack Obama makes perfect sense. It is an award routinely bestowed on those who do their utmost to aggrandize government and agitate for increased statism in pursuit of their goals. As philosopher Hans Hermann-Hoppe once noted, "If you want to win the [Nobel Peace Prize], it is good that you are a mass murderer; at least that helps." Although President Obama is by no means the most oppressive recipient of this infamous prize, his penchant for statist policies at home and abroad makes him an ideal candidate for the award.

Since some have charged that awarding the prize to President Obama is premature, I will save them the suspense: Obama will continue to work to expand US government power both abroad and over its domestic citizens. He will continue to push forward a statist agenda and he will routinely use violence to plunder people of their rightfully owned property, suppress their civil liberties, and deprive them of their lives. As such, he will become, if he is not already, a perfectly fitting recipient for the Nobel Peace Prize.

--from "Peace and the 'Peace Prize'" by Ben O'Neill

What government needs to do to improve healthcare

2009-10-21T13:45:00.000-07:00

[B]elieve me, I understand why people think, "The government needs to do something!" Those people are right, the government does need to do something. Specifically, it needs to get out of healthcare.

How Government Screws Up Health Insurance

It's not an accident that health insurance tends to be tied to employment. During the wage-and-price controls of World War II and the Nixon era, companies competed for employees not by offering higher salaries (which was illegal) but by offering perks such as health insurance.

Currently, one of the major reasons companies offer insurance as part of compensation packages is that it is tax deductible. In other words, if a corporation pays $10,000 a year to insure you and your family, they can write it off as a business expense, and you won't pay taxes on it. But if the corporation increased your salary by $10,000 and told you to buy your own insurance, you would get taxed on that money.

Another major distortion is that there are barriers to interstate competition among health insurers. If all the Obama administration wants to do is promote options for consumers, this seems like low-hanging fruit.

-- from "The Wall Street Journal Defends the Predator State" by Robert P. Murphy

The time to shut down this madness is now

2009-10-09T02:58:00.000-07:00

It’s time to bring our troops home. They’re not doing any good. That’s not their fault. At the tactical level, the level at which combat occurs, they’re unbelievably competent. But strategically, use of military force by global hegemon America has become a losing proposition.

We need to let the Afghanistan conflict blow itself calm at the nearest opportunity. We can best do that by fading away and letting the natural political forces that exist in that part of the world duke things out among themselves.

We don’t need to send any more kids over there to get killed or have their legs blown off, or to take part in the slaughter of innocents that they’ll experience trauma about for the rest of their lives.

We need to shut down this madness now.

-- from "Just Say No to McChrystal" (October 09, 2009 ) by Jeff Huber

A stimulus that has failed to stimulate?

2009-10-08T14:40:00.000-07:00

Unemployment hit 9.8 percent last month (a conservative estimate, to be sure). The Obama administration once said it would approach 9 percent -- if the "stimulus" did not pass. With the "stimulus" it was supposed to be less than 8 percent by now. (See graph.)

When do we declare the "stimulus" a failure? Huh?

--from "Unemployment Keeps Rising" (October 04, 2009) by Sheldon Richman

The four-party healthcare system

2009-10-08T12:44:00.000-07:00

Did it ever make sense to create a health care system in which fourth-party employers purchase insurance for their first-party employees from third-party corporations, which in turn pay second-party providers for health care products and services?

--from "The Modern Health Care Maze: Development and Effects of the Four-Party System" by Charles Kroncke and Ronald F. White

What it feels like to be a libertarian

2009-10-08T12:17:00.000-07:00

Libertarians spend their lives accurately predicting the future effects of government policy. Their predictions are accurate because they are derived from Hayek’s insights into the limitations of human knowledge, from the recognition that the people who comprise the government respond to incentives just like anyone else and are not magically transformed to selfless agents of the good merely by accepting government employment, from the awareness that for government to provide a benefit to some, it must first take it from others, and from the knowledge that politicians cannot repeal the laws of economics. For the same reason, their predictions are usually negative and utterly inconsistent with the utopian wishful-thinking that lies at the heart of virtually all contemporary political advocacy. And because no one likes to hear that he cannot have his cake and eat it too or be told that his good intentions cannot be translated into reality either by waving a magic wand or by passing legislation, these predictions are greeted not merely with disbelief, but with derision.

It is human nature to want to shoot the messenger bearing unwelcome tidings. And so, for the sin of continually pointing out that the emperor has no clothes, libertarians are attacked as heartless bastards devoid of compassion for the less fortunate, despicable flacks for the rich or for business interests, unthinking dogmatists who place blind faith in the free market, or, at best, members of the lunatic fringe.

Cassandra’s curse was to always tell the truth about the future, but never be believed. If you add to that curse that she would be ridiculed, derided, and shunned for making her predictions, you have a pretty fair approximation of what it feels like to be a libertarian.

If you’d like a taste of what it feels like to be a libertarian, try telling people that the incoming Obama Administration is advocating precisely those aspects of FDR’s New Deal that prolonged the great depression for a decade; that propping up failed and failing ventures with government money in order to save jobs in the present merely shifts resources from relatively more to relatively less productive uses, impedes the corrective process, undermines the economic growth necessary for recovery, and increases unemployment in the long term; and that any "economic" stimulus package will inexorably be made to serve political rather than economic ends, and see what kind of reaction you get. And trust me, it won’t feel any better five or ten years from now when everything you have just said has been proven true and Obama, like FDR, is nonetheless revered as the savior of the country.

--from "What It Feels Like To Be A Libertarian" (January 2009) by John Hasnas

How to stop the Senate healthcare plan

2009-10-08T11:14:00.000-07:00

My inclination is to say: let this healthcare program happen. The only real check will be the bankruptcy of the welfare state. Trouble is that many good people will get hurt.

-- from "Delusions of Healthcare Policy" by Mario Rizzo