Saturday, April 25, 2009

Pocket Change

We've seen housing sales slump when home prices were high but interest rates low. Or when prices were low but interest high. Or when prices and interest were alike high. But we never have seen a bad housing market in which both home prices and mortgage interest rates were low.

Nonsense is passed off as wisdom. Those who caused the financial meltdown walked away with millions in bonuses while taxpayers covered the debts they ran up. The big-spending government claims it may cut our annual $1.7 trillion deficit in half by 2012 - but only after piling up trillions more in national debt.

In our Orwellian world, borrowing to spend what we don't have has been renamed "stimulus." Those who pay no federal income taxes - almost half of Americans - can somehow be promised an income tax "cut." In the new borrowing of trillions of dollars here and trillions there, billions of dollars now sounds like pocket change.


The climate change benefits that accrue from solar and wind power with 100 percent fossil fuel backup are associated with the fossil fuels not used at the standby power plants. Because solar and wind have the capacity to deliver only 30 to 40 percent of their full power ratings in even the best locations, they provide a carbon dioxide reduction of less than 30 to 40 percent, considering the fossil fuels needed for the "spinning reserve." That's far less than the 100 percent that many people believe, and it all comes with a high cost premium.

The United States will need an array of electric power production options to meet its needs in the years ahead. Solar and wind will have their places, as will other renewables. Realistically, however, solar and wind will probably only provide a modest percentage of future U.S. power. Some serious realism in energy planning is needed, preferably from analysts who are not backing one horse or another.

King O Redux

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They've already seen that the rights and privileges of shareholders are not worth diddly when the king is throwing his prerogatives around. He dispensed with the services of GM chief Rick Wagoner, though the king owned not a single share of GM stock at the time. His minions communicated the king's pleasure that GM consider discontinuing its GMC brand, maker of pickups and SUVs that offendeth the royal eye -- though these vehicles earn GM's fattest profit margins.

His current bailout strategy amounts to asking thousands of bondholders and GM retirees to buy stock in a GM that the king's own policies mean they'd be loony to buy. Add the fact that passenger cars and trucks in the U.S. are a trivial source of greenhouse gases in any case -- they could all become carbonless and it would be irrelevant in the face of China's and India's coal use. King Barack has only been on his throne for three months. His policies already have devolved into savage incoherence.

But Not Any More

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I'm Apparently Way Behind...

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Today's Alinsky Update: OBananas

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Obama’s advisers are further convinced that letting the public know exactly what the past administration sanctioned will undermine what they see as former vice president Richard B. Cheney’s effort to “box Obama in” by claiming that the executive order heightened the risk of a terrorist attack.

Rather than doing that, though, it prompted members of his own administration to publicly corroborate Cheney.  The White House tried to suppress the key part of Dennis Blair’s memo that acknowledged the success of the interrogations in thwarting at least one major terrorist attack against the US, the “Second Wave” airliner attacks after 9/11 aimed at Los Angeles.  The CIA separately insisted that its actions protected America from attack.  Cheney himself went back on the attack, describing some of the memos that Obama didn’t declassify, and launched a high-profile campaign to get them released.

On Capitol Hill, Obama’s strategy also backfired.  Republicans balked at the limited disclosure.

COTD #2: Tinfoil Logistics

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Pakistan WILL fall to the Taliban, it’s guaranteed. Period.

It’s guaranteed because the internal contradictions of Obama and Dems: hating America and it’s people while wanting to run it, have come straight up against hard, angry, lean men who want to be not just regional leaders but aspire to “Greatness” as a Mega-Regioonal leader. The new Osama.

And once Pakistan falls to the Taliban two things happen:

1. An Alamo like fight with all the US forces that cannot airlift out getting massacred or death-marched, and a miserable defeat followed by Obama groveling and begging once more …

2. And losing several at least US cities to nukes from “shadowy” organizations that are fronts for the Taliban.

COTD: Annenberg OSubversion

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I just got a chill up my spine on the subversion of our educational system. Obama's chairmanship of the Chicago Annenberg Challenge was about promoting and educating our youth with a social agenda of awareness and activism.

Fact - the CAC turned down grant requests from schools to improve math & science skills and only approved those with a social agenda.

Friday, April 24, 2009

Sun Tzu -- Part 3: Subversion

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OSun Tzu -- Part 2


Before Saul Alinsky there was Sun Tzu, via Cao's Blog.

See Sun Tzu on the Art of War

Here are Alinsky's Rules:

RULE 1: "Power is not only what you have, but what the enemy thinks you have." Power is derived from 2 main sources - money and people. "Have-Nots" must build power from flesh and blood. (These are two things of which there is a plentiful supply. Government and corporations always have a difficult time appealing to people, and usually do so almost exclusively with economic arguments.)

RULE 12: Pick the target, freeze it, personalize it, and polarize it." Cut off the support network and isolate the target from sympathy. Go after people and not institutions; people hurt faster than institutions. (This is cruel, but very effective. Direct, personalized criticism and ridicule works.)

Sun Tzu -- Part 1

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1. Sun Tzu said: In the practical art of war, the best
thing of all is to take the enemy's country whole and intact;
to shatter and destroy it is not so good. So, too, it is
better to recapture an army entire than to destroy it,
to capture a regiment, a detachment or a company entire
than to destroy them.
2. Hence to fight and conquer in all your battles
is not supreme excellence; supreme excellence consists
in breaking the enemy's resistance without fighting.
3. Thus the highest form of generalship is to
balk the enemy's plans
6. Therefore the skillful leader subdues the enemy's
troops without any fighting; he captures their cities
without laying siege to them; he overthrows their kingdom
without lengthy operations in the field.
7. With his forces intact he will dispute the mastery
of the Empire, and thus, without losing a man, his triumph
will be complete. This is the method of attacking by stratagem.

Of Kalugin And Putin

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Redux: Nowhere To Defect To

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Peace In Our Time

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A military officer said the Pakistani government missed its window of opportunity to contain the Taliban. “The time to stop this madness was five years ago, in Waziristan,” the officer said. “Instead, the government caved to the Taliban in North and South Waziristan, and this only emboldened them to conquer more and more territory. Now the Taliban is within reach of the capital, yet the government still seems to have no grasp on the threat.”

There may have been a major miscalculation, whose consequences are now creating grave concern in Washington. The Times Online used the “nuclear” word in its lede and added: “The US considers rooting out militant sanctuaries in Pakistan critical to success in the Afghan war. Washington is also worried about the security of Pakistan’s nuclear weapons.”

From handshakes to worries about nukes. From “peace in our time” to the Battle of Britain.


For a taste of what's ahead, recall the chilling effects of past CIA scandals. Back in 1995, then-Director John Deutch ordered a "scrub" of the agency's assets after revelations of past links to Guatemalan death squads. Officers were told they shouldn't jettison sources who had provided truly valuable intelligence. But the practical message, recalls one former division chief, was: "Don't deal with assets who could pose political risks."

One veteran counterterrorism operative says that agents in the field are already getting more careful about using the legal findings that authorize covert action.

Now, field officers are more careful. They want guidance from headquarters. They need legal advice. I'm told that in the case of an al-Qaeda suspect seized in Iraq several weeks ago, the CIA didn't even try to interrogate him. They handed him over to the U.S. military.


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REX MURPHY: Janet Napolitano: Myth Buster. “What is Barack Obama doing appointing someone to head Homeland Security, who, eight years after the attacks, does not even now know where the hijackers came from and how they got into their country? Here, it’s not her ignorance about Canada which should be troubling. It’s her ignorance of the most publicized event in modern American history. How can anyone be head of Homeland Security and not know the history of the 19 men who killed nearly 3,000 Americans? . . . If the man who promised Hope and Change, wants to give Canadians some Hope, he’ll Change the head of Homeland Security.”


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April 23 (Reuters) - Bank of America Corp (BAC.N: Quote, Profile, Research) Chief
Executive Kenneth Lewis testified under oath that U.S. Federal
Reserve Chairman Ben Bernanke and then-Treasury Secretary Henry
Paulson pressured the bank to not discuss its plan to buy
Merrill Lynch & Co, the Wall Street Journal said.

In a testimony before New York's attorney general Andrew
Cuomo in February, Lewis told prosecutors that he believed
Paulson and Bernanke were instructing him to keep silent about
deepening financial difficulties at Merrill, which BofA
acquired in January.

Lewis testified that the government wanted him to remain
silent while the two sides negotiated government funding to
help BofA absorb Merrill and its losses, the paper said, citing
transcripts of the testimony.

A representative of Cuomo questioned Lewis about his
failure to disclose Merrill's fourth-quarter losses, which
eventually totaled $15.84 billion, according to the paper.

Thursday, April 23, 2009

The Fed And The Corrosive Effect Of Inflation

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The Fed destroys time preferences because it turns people into consumption-oriented, gotta-have-it-now debt addicts. The Fed has wrecked the housing market and turned homes into leveraged bets.

The net effect of the recent surge in household debt is therefore to throw entire populations into financial dependency. The moral implications are clear. Towering debts are incompatible with financial self-reliance and thus they tend to weaken self-reliance also in all other spheres. The debt-ridden individual eventually adopts the habit of turning to others for help, rather than maturing into an economic and moral anchor of his family, and of his wider community. Wishful thinking and submissiveness replace soberness and independent judgement. And what about the many cases in which families can no longer shoulder the debt load? Then the result is either despair or, on the contrary, scorn for all standards of financial sanity.


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OUCH: Is The Government Acting Like a Payday Lender? “Banks want to pay back their bailout loans early, but Treasury doesn’t want to let them go.”

The Special Interest State

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The theoretical answer had been provided by the Progressive movement (the real one of the early 20th century, not the current faux version). Much of the Progressive movement’s complaint was that special interests, often corporate, captured the governmental process, and its prescriptions were appeals to direct democracy or to administrative independence and expertise on the theory that delegation to technocrats could achieve the ideal of “the public interest.”  

The real-world answer imposed by the New Deal and its progeny turned out to be special interest capture on steroids. Control comes to rest with those with the greatest interest or the most money at stake, and the result was the creation of a polity called “the Special Interest State” or, in Cornell University Professor Theodore Lowi’s terms, “Interest Group Liberalism.” Its essence is that various interest groups seize control over particular power centers of government and use them for their own ends.


OMonarch. OHubris. Tar. Feathers.

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It's good to be the king -- until you start tripping over your own robe.

So King Barack the Mild is finding as he tries to dictate the terms of what amounts to an out-of-court bankruptcy for Chrysler and GM. He wants Chrysler's secured lenders to give up their right to nearly full recovery in a bankruptcy in return for 15 cents on the dollar. They'd be crazy to do so, of course, except that these banks also happen to be beholden to the administration for TARP money.

Wasn't TARP supposed to be about restoring a healthy banking system? Isn't that a tad inconsistent with banks just voluntarily relinquishing valuable claims on borrowers? Don't ask.

It may also be the king's pleasure, he advised, to convert at some point the government's own $13 billion in bailout loans into GM stock.

There's just one problem: Why on earth would GM's creditors -- who include not just bondholders but the UAW's health-care trust -- want any part of this deal?


Wednesday, April 22, 2009

Deep Trouble

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why would the Obama administration say they want to regulate venture capital firms? Some suggest that it may be an end run in the undeclared war on wealth because venture capital can create enormous fortunes outside of taxable income. But there are several other plausible answers.

The first is that the Obama administration’s faux pas resulted from a lack of understanding the intricacies of the free market and conflating venture capital with Wall Street, banks and hedge funds. If job-creating venture capital is elusive to our current political leaders surely we are in deep trouble. How then can we trust their judgment on an ambitious restructuring of the national economy, which next targets 15% of U.S. gross domestic product in health care?

Obama is either in clearly in over his head, or else he is working to undermine the foundations of the capitalist system from within in order to strengthen the centralized power of the state.

Green Eyeshades

If the Department of Agriculture sliced the entire $100 million, that would be equal to 0.1 percent of its fiscal 2008 budget. The president, peering from beneath his green eyeshade at the secretary of agriculture, might remember this from The Washington Post of Jan. 24:

"Agriculture Secretary Tom Vilsack ... learned that his new workplace contains a post office, fitness centers, cafeterias and 6,900 employees. But he remained uncertain about exactly how many employees he supervises nationwide. 'I asked how many employees work at USDA, and nobody really knows,' he said."

while ladling he has, or thinks he has, saved about $15 million by killing, or trying to kill, a tiny program that this year is enabling about 1,715 District of Columbia children (90 percent black, 9 percent Hispanic) to escape from the District's failing public schools and enroll in private schools.

The Problem

Sixty percent (60%) of Americans say the federal government has too much power and too much money, according to a new Rasmussen Reports national telephone survey.

Just nine percent (9%) say the government has too little power and money. Twenty-four percent (24%) believe the government has about the right amount of both.

Not surprisingly, the Political Class sees things a lot differently. While 85% of Mainstream Americans say the government has too much power and money, just two percent (2%) of the Political Class agree. Nearly one-our-of-four members (24%) of the Political Class, in fact, believe the government has too little money and power, but 68% say it has about the right amount of each.

Overall, most Americans worry now that the federal government will do too much in response to the nation’s current economic situation.
However, 59% of U.S. voters agree with former President Ronald Reagan that “government is not the solution to our problem; government is the problem.

No Larry, It *Is* Fascism

It's not socialism because the government won't actually own the means of production. It's not fascism because America is a democracy, not a dictatorship, and Obama's program doesn't reach way down through all the sectors, but merely seeks to control certain troubled areas. And in the Obama model, it would appear there's virtually no room for business failure. So the state props up distressed segments of the economy in some sort of 21st-century copy-cat version of Western Europe's old social-market economy.

So call it corporate capitalism or state capitalism or government-directed capitalism.

Do we truly believe that raising tax rates on investors and moving to some sort of government-controlled banking system will sufficiently fund the entrepreneur and sustain democratic capitalism? Do we really believe that a federal-government-directed economic system will generate a sufficient supply of capital and credit to produce a strong economy?

I doubt it.

And yes, Bush was one too...

Tuesday, April 21, 2009

Sheer Hubris And Stupidity

(Ray Harvey -- author of the excellent new book "Leave Us Alone" -- has graciously contributed the following post. Be sure to click the "Read more" link and take it all in. Careful though, you might actually learn something! --Bob Gronlund)

Early in the 1970's, the Organization of Petroleum Exporting Countries (OPEC) -- which includes Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela -- imposed an oil embargo upon the United States. This precipitated a sharp decrease in U.S. oil supply.

Not to be outdone in terms of sheer hubris and stupidity, the American government got started at about that same time on its steady barrage of environmental regulations, all of which conspired to further reduce the domestic supply of oil and gas.
And it only ever seems to become more so...

What If?

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What if the City of Fort Collins decided that to decrease pollution and save fuel, your business would be “districted”? This means you could only serve customers from one part of the city. The city would decide which district you would serve. You would not be allowed to serve any other customers besides those “awarded” to you by the city. To be awarded those districts, you would be required to spend outrageous amounts of money to comply with the city regulations that would now be imposed on your business because you were “awarded” a “district”. The city will determine what you can charge for your services. The city will also perform your bookkeeping duties so they can guarantee you are following the regulations and prices the city has determined. What if you weren’t even awarded a district? You would not be allowed to operate your business in this city.
This is what is happening to Gallegos Sanitation and Ram Waste.

Monday, April 20, 2009

Katrina Pierson On Pink Slips For Congress

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Perspective For The Innumerate

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And apparently there are lots of them.

A Real Treat For Thinkers: An Interview With F.A. Hayek

F.A. Hayek Interviewed By John O'Sullivan from FEE on Vimeo.

Wow. Just Wow. Somehow they forgot to tell you that Keynesianism was discredited in the 70s by the combination of high inflation and unemployment that Keynes said couldn't happen if his theories were implemented. But Hayek predicted it of course. (From the site.)

Sunday, April 19, 2009

Going Slower Each Time

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Jeffrey Rogers Hummel and David R. Henderson continue to argue that the Fed had little or nothing to do with fueling the housing bubble during the first five or six years of the present decade. Their latest article along these lines appears in Forbes. This is the third rendition of their argument that I have read, and I am no more persuaded now than I was previously.

Hummel and Henderson base their argument mainly on the claim that the Fed was not an engine of inflation between 2001 and 2006 because the rate of growth of the monetary base and the rate of growth of various monetary aggregates were declining during that period.

I keep coming back to various analogies, such as this one: I walk onto the street and I'm hit by a car going 50 mph; the next day, I walk out and I'm hit by a car going 45 mph;
my being hit repeatedly cannot actually have hurt me because each day the car that hit me was going slower than the one that hit me the day before

The Missing 7%

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Heavyweights Kohn,Volcker Spar Over Inflation Goal notes that:

Federal Reserve Vice Chairman Donald Kohn's question-and-answer session at a Vanderbilt University conference Saturday was going as countless others surely have in his years as a top policy maker. ... Until Paul Volcker raised his hand."

Former Fed Chairman Volcker ... questioned how the Fed can talk about both 2% inflation and price stability. ... In the minutes of its January policy meeting, the Fed said ... 2% inflation would be ... price stability. "I don't get it," Volcker said ... By setting 2% as an inflation objective, the Fed is "telling people in a generation they're going to be losing half their purchasing power," Volcker said.

A friend observed that at least Volcker deserves credit here for somewhat favoring low inflation. I disagree. What the mainstreamers fail to realize is that even zero percent "targeted" (price) inflation is horrible.
In other words, a 2% (price) inflation is thus really like 7%.

Raaaacist Narrative Update

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SOME TEA PARTY PHOTOS from Fresno. “Fresno had over 7.500 attend the most polite protest I have ever witnessed.” Plus, “Black People Against Obama,” and “Mixed People Against Obama.” Hey, that’s not part of the narrative!

What's Old Is New Again

Professor Bainbridge reaches into the memory hole. Who with a brain can be surprised?

UPDATE: Image is fixed. But you want to click through to Bainbridge's site to be able to read the fine print anyway...

The Economic Illiterate Wanders In The Tea Party

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“I’m just concerned with the direction the country is going,” said Boyd, a Fort Collins resident who owns her own housecleaning service. “I believe capitalism is the way to turn the economy around, not government bailouts.”

She added: “I’m worried for my kids’ future, for my future income.”

Bryan Blakely was a dissenting voice, carrying a sign as he circulated slowly through the crowd: “95 percent are paying less.”

Blakely of Fort Collins said he was trying to remind TEA party attendees that most Americans will end up paying less in taxes under Obama’s budget.

Blakely said he supports a return to higher taxes for the richest Americans, which he called more “progressive.”

“I feel badly for a lot of these people. They feel they are being taxed more when actually they are being taxed less,” he said.

Rally attendees carried signs ranging from “When taxes rise, freedom dies” to “Smaller government is better for the environment” to “I will not be a slave to the government.”

This story in the Coloradoan about the local tea party is a great capsule of how ignorant the media is. Bryan Blakely is an economic illiterate and they have no clue how to call him on it. Nor the inclination of course.

As anyone with an economic IQ greater than that of a snail can tell you, there are three ways for the government to raise revenue: taxation, going into debt, and inflating the money supply.

You're now equipped to take a good guess at Bryan's IQ. And with just a bit of thought you will find yourself being "economical" with digits.

But be sure to go to the story and catch the video interview with Ray Harvey over to the right on the page. I highly recommend his new book "Leave Us Alone". It's not exactly in every book that you find the pig Rahm Emanuel eviscerated with a closing quote by Ludwig von Mises. Beauteous.

Heal Thyself

From the Philadelphia Inquirer's March 19 editorial:

... corporate executives who run their companies into the ground should pay dearly for their greed, ineptness and incompetence.

From the Philadelphia Inquirer's creditors, in bankruptcy proceedings:

“Since the debtors’ acquisition in June 2006, the debtors have not produced a financial forecast that it has attained, much less exceeded.Specifically, despite revising its business plan twice during 2008, the debtors were not able to closely project 2008 annual results. Indeed, the forecasts produced in late December 2007 and March 2008 were so badly missed that they exceeded a negative variance of 40 percent. After the 2008 forecast completions were missed, the EBITDA for the immediate months following were also missed, demonstrating that management was incapable of projecting their businesses in the very short term.”

I don't know about greed, but I do think the Inquirer should pay for its ineptness