It’s Not a “Double-Dip Recession”

The “green shoots” (no offense, Larry Kudlow) have withered and died. Well, actually, that’s not the case. The truth is that there were never any green shoots; rather, there was only government spending and regulatory policy creating the illusion of recovery in the eyes of people who have no understanding of economics. (No offense, almost every financial and economic pundit on television.) This is not a double-dip recession because the first dip of the recession never stopped dipping — it was just disguised. This is all still the same super-depression which is still in its first stages. Here’s an example of what I mean:

December home sales down nearly 17 percent

WASHINGTON (AP) — Sales of previously occupied homes took the largest monthly drop in more than 40 years last month, sinking more dramatically than expected after lawmakers gave buyers additional time to use a tax credit. The report reflects a sharp drop in demand after buyers stopped scrambling to qualify for a tax credit of up to $8,000 for first-time homeowners. It had been due to expire on Nov. 30. But Congress extended the deadline until April 30 and expanded it with a new $6,500 credit for existing homeowners who move.

“It’s ‘exit stage left’ for first-time homebuyers,” wrote Guy LeBas, an analyst with Janney Montgomery Scott.

December’s sales fell 16.7 percent to a seasonally adjusted annual rate of 5.45 million, from an unchanged pace of 6.54 million in November, the National Association of Realtors said Monday. Sales had been expected to fall by about 10 percent, according to economists surveyed by Thomson Reuters.

The report “places a large question mark over whether the recovery can be sustained when the extended tax credit expires,” wrote Paul Dales, U.S. economist with Capital Economics.

In other words, once the government stopped distorting potential buyers’ incentives, the market collapsed again. Paul Dales thinks this puts the recovery in jeopardy. What he can’t say (or doesn’t understand) is that the distorting of markets via government policy caused the problem in the first place, that distorting it further does not constitute a recovery, and that there is no “question” about the future of home sales.

Obviously the government is going to continue trying to prop up markets, therefore I expect to hear talk of  a “triple-dip recession” in the not too distant future.

Dignity: Where is yours?

I’ve discussed a few times that voting is indicative of a lack of dignity. The way I see it, casting your support for a lying, thieving hypocritical scumbag so that he or she can win an election and rule over you demonstrates a sickening lack of self-worth. But such a public display of self-denigration in the realm of politics is not limited to voters; no, those who work for the scumbags also lack dignity. Andrew Young is a former aide to lawyer-politician John Edwards. Edwards’ estimation of Young’s worth (and Young’s own demonstration of his lack of dignity) follow:

In an excerpt from his upcoming interview with ABC News’s Bob Woodruff, Young alleges that Edwards asked him to arrange a fake a paternity test.

“Get a doctor to fake the DNA results,” Young said Edwards told him. “And he asked me … to steal a diaper from the baby so he could secretly do a DNA test to find out if this [was] indeed his child.”

Deceit by faking a paternity test is, of course, disgusting enough, but stealing a dirty diaper? Where would your head have to be — where would your life be — if you agreed to try to steal a dirty diaper to determine if your boss, who was cheating on his wife, fathered the other woman’s child? I think I’d rather be a heroin addict than a political aide.

It’s OK because he’s “our guy”.

Let’s use the following video clip of Star Wars Episode III as a metaphor. In this clip, Emperor Palpatine will represent whoever is President at any given time; Anakin Skywalker will represent people foolish enough to vote; and, Mace Windu will represent victims of tyranny (for instance, innocent civilians in Iraq and Afghanistan).

Court rules US can keep secrets in surveillance

NEW YORK – A federal appeals court ruled Wednesday that law professors and attorneys who represent Guantanamo Bay detainees cannot force the government to reveal whether an anti-terrorism program eavesdropped on their conversations. The 2nd U.S. Circuit Court of Appeals ruling supported the findings of a lower court judge in Manhattan who also rejected the attempt to uncloak the warrantless electronic surveillance system’s targets. The National Security Agency and the Department of Justice had refused to comply with a 2006 Freedom of Information Act request by the lawsuit’s plaintiffs. The government had refused to confirm or deny the existence of any records obtained under the Terrorist Surveillance Program, authorized by President George W. Bush after the Sept. 11 terrorist attacks.

Bush had described the highly classified program as crucial to national security, saying it was designed to intercept the international communications of people with known links to al-Qaida and related terrorist organizations. The appeals court said it did not consider whether the program was constitutional, only whether it was right for the government to withhold facts about who was targeted. “The fact that the public is aware of the program’s existence does not mean that the public is entitled to have information regarding the operation of the program, its targets, the information it has yielded or other highly sensitive national security information that the government has continued to classify,” the appeals court wrote. “Indeed, the fact that the TSP’s existence has been made public reinforces the government’s continuing stance that it is necessary to keep confidential the details of the program’s operations and scope,” the three-judge panel added.

The appeals court said the government had sufficiently established “that nondisclosure is appropriate — perhaps essential — for reasons of national security and confidentiality.” The 2nd Circuit said its findings were consistent with rulings on the matter by other federal courts. Lawyers for the plaintiffs did not immediately return phone calls for comment Wednesday. Lawyers representing Guantanamo detainees had argued in the lawsuit that they would have to conduct conversations with their clients differently if the government was eavesdropping on their talks.

This should come as no surprise since in April of 2009, the Obama Administration invoked “State Secrets” to kill a lawsuit over the unconstitutional surveillance programs instituted by the Bush Administration. These were Obama’s campaign promises on the issue:

“Barack Obama opposed the Bush Administration’s initial policy on warrantless wiretaps because it crossed the line between protecting our national security and eroding the civil liberties of American citizens. As president, Obama would update the Foreign Intelligence Surveillance Act to provide greater oversight and accountability to the congressional intelligence committees to prevent future threats to the rule of law.”

and

“As president,” the promise said, “Obama would update the Foreign Intelligence Surveillance Act to provide greater oversight and accountability to the congressional intelligence committees to prevent future threats to the rule of law.”

This is why it was so important for you to vote for Obama: he was going to turn the country around after 8 years of Bushian disaster. “Yes we can!” “Change we can believe in!” “Hope!” What you got instead of change was the 3rd Term of George W. Bush. Has there been a single major policy break from the previous administration? Let’s see.

• War in Iraq? Same.
• War in Afghanistan? Worse!
• Belligerence toward Pakistan and Iran? Same.
• Belligerence toward Yemen? New!
• Bailouts for the banking cartel? Same.
• Bailouts for inefficient, zombie industries? Same.
• Unconstitutional surveillance/spying programs? Worse! (Hard as it is to believe anyone could be worse than Bush on civil liberties, Obama actually has expanded the power and scope of these abuses and reduced oversight.)
• Individual rights? Worse! (Indefinite detention without trial!)

So why was it so urgent to vote for this rich, whitish, lawyer-politician? When you support a politician, you end up not only being partially responsible for all the evil he inflicts, but you also end up having to justify that evil. You become a useful idiot, a minion of a power-hungry pathological liar and ego-maniac , and you have to betray your own principles and values in order to rationalize the evil your guy is responsible for. How foolish.

"Your guy" (George W. Bush) is evil incarnate but "my guy" (Barack Obama) is saintly (even though they behave identically).

Land of the Free!

How quickly it has accelerated. Just 10 years ago or so, I would fly with my pocket knife key chain — it was a full 4-inch blade — in my pocket. As of a few years ago, God help you if you try to bring a bottle of water on to your flight. But that’s just the beginning. What’s the next step for the Land of the Free? Check this out:

Less than 24 hours after the terrorist attempt, travelers at airports around the world, from Frankfurt to Rochester, N.Y., began experiencing heightened screening in security lines. Even as airlines began limiting United States-bound passengers to just one carry-on bag, travelers will feel the most significant changes during the actual flights.

According to a statement posted Saturday morning on Air Canada’s Web site, the Transportation Security Administration will severely limit the behavior of both passengers and crew during flights in United States airspace — restricting movement in the final hour of flight. Late Saturday morning, the T.S.A. had not yet included this new information on its own Web site.

“Among other things,” the statement in Air Canada’s Web site read, “during the final hour of flight customers must remain seated, will not be allowed to access carry-on baggage, or have personal belongings or other items on their laps.”

In the past, I’ve described the American taxpayer as suffering from battered person syndrome, but we’re moving way beyond that now. For the American citizen, it’s not enough to forgive the abuser and make excuses for his behavior; no, now the American citizen seems to be begging to be abused. This is BDSM territory. There’s some twisted sexual psychosis at play there, and it’s fair to call American citizens “submissives”:

BDSM is a form of consensual sex between two or more individuals, who use their experiences of pain and power to create sexual tension, pleasure, and release. The compound acronym, BDSM, is derived from the terms bondage and discipline (B&D, B/D, or BD), dominance and submission (D&s, D/s, or Ds), sadism and masochism (S&M, S/M, or SM).

BDSM includes a wide spectrum of activities, forms of interpersonal relationships, and distinct subcultures. Many of these experiences are still considered to fall out of conventional sexual activities and human relationships.
Activities and relationships within a BDSM context are characterized by the fact that the participants usually take on complementary, but unequal, roles. Typically, participants who are active — applying the activity or exercising control over others — are known as tops or Dominants. Those participants who are recipients of the activities, or who are controlled by their partners, are typically known as bottoms or submissives. Individuals who move between top/dominant roles and bottom/submissive roles – either periodically within a relationship, or from relationship to relationship – are known as switches.

I mean, if you have a better explanation for the endless humiliation and abuse Americans allow to be heaped upon them, please, speak up. I’m all ears. If you ask me though, the ones who aren’t submissive have already gotten the hell out. What are you waiting for? Or do you like the abuse?

The Audacity of Audacity

Matt Drudge is not without his shortcomings. For instance, he demonstrates a markedly Republican bias on his news site Drudge Report. This is unfortunate since the only justifiable bias is a libertarian one i.e. the bias of truth. Nevertheless, one of Drudge’s crusades is a war against the hoax of global warming, and for his efforts on that front I am truly appreciative. A favorite tactic of his is presenting the weather conditions at the locations of global warming get-togethers, with hilarious results as these events often seem to occur with a blizzard raging outside. This is especially true for poor Al Gore who seems to face icy, inclement weather anywhere he travels to warn about the imminent danger of global warming.

Which is it, heat stroke or hypothermia?

When I was a child during the 1970s, the danger was an imminent ice age. And acid rain. Population bombs and food shortages. You name it, and some luddite has another reason why mankind should move into caves and only eat nuts and berries which have already fallen from their respective trees or bushes. It’s a psychological disorder, to be certain, perhaps a reaction to being overwhelmed by the complexity of existence. At least, that is, to the extent that people believe in such nonsense. Al Gore, for instance, absolutely does not for a second believe his own propaganda. If he did, one would expect his own lifestyle to conform to that which he proposes for the rest of us. Obviously, it does not. Rather, Gore is what those of us who study economics refer to as an entrepreneur. The man has found a niche for himself and he is making a fortune. Like most successful entrepreneurs in the age of corporate-socialism, his real fortune lies in convincing politicians to promote his niche at taxpayers’ expense. According to this article, Al Gore’s net worth was in the $1,000,000 to $2,000,000 range in 2000. As of 2008, his net worth was estimated to be approximately $100,000,000. Furthermore, should some variation of “Cap and Trade” become law (and quite possibly even if it doesn’t), Gore stands to become the world’s first Eco-Billionaire.

Of course, none of this should surprise any of you. Cui bono, people, cui bono. I was 5, maybe 6-years-old when my father used the chess board to explain a variation of the cui bono concept. Always ask yourself why your opponent made that specific move. What was he looking at? What is he thinking? What does that move accomplish both immediately and down the road? What is he preparing for and what is he working toward? In short, who gains and how?

Later on, the lessons became more involved and complicated but just as important. For instance, he showed me how to read between the lines by contrasting stated motives with personal behavior. Those politicians promoting the global warming agenda just have your best interests at heart, right? People who lie for a living, who cheat on their own spouses and thus subject their entire families to shame and disgrace? Sure, they’ll treat their own “loved ones” with such disregard, but you? You and your well-being are important to them. How can you delude yourself so?

So let me just sum this up by saying if you want to know what the truth about global warming is, follow the money and power up for grabs. This is easy to do and far more effective than trying to become a climatologist yourself.

Sports Talk

Since the government shills and media financial pundits have determined that the “recession” is over and the “green shoots” are really giant Sequoia trees in full growth mode, I’ve decided to deviate from posting about economics for today and discuss instead some of the sporting events which interest me. Let’s start with Mixed Martial Arts (MMA).

MMA is, of course, my favorite sport. I wrestled in high school, coached wrestling in my twenties (albeit as an unpaid assistant at my alma mater), and got into a few fights here and there growing up. (I conservatively estimate my non-sanctioned street-fighting record to be 16-0-1 — the “1″ being the result of my facing 6 opponents at once and getting some cracked teeth and a split under my eye requiring stitches; however, I broke one jaw, cracked another head open on some concrete, and bloodied up a couple of other faces before the fight came to a mutually determined stop.) I’m not worried about admitting to fighting in my youth as I’m pretty sure the statute of limitations in each of the jurisdictions is now long since past, and at any rate I live in Sicily and I doubt they extradite for such minor offenses. Back to MMA. I’ve been a huge fan of Jon Jones since I saw him beat up Parker Porter in June of 2008. Tonight, I woke up early (3am) to watch him obliterate Matt Hamill and lose by disqualification for dropping two illegal elbow shots (straight downward with the tip of the elbow — they’re called “12 to 6″ elbows, an orologian metaphor). I thought the fight was poorly refereed and should have been stopped much, much sooner, perhaps when Hamill, a three-time NCAA Division III National Champion freestyle wrestle unable to resist Jones’ mount at all, was battered with the first 15 or 20 elbows to the face. It turns out that Hamill either dislocated or separated his shoulder when Jones executed a beautiful trip/throw prior to turning Hamill’s face into carpaccio. Nevertheless, despite Jones’ repeated glances at the ref to encourage a stoppage to the fight when it was clear to Jones that Hamill was done, the ref did not call a halt to the massacre until after the illegal blows, at which point, Hamill not being able to continue, Jones was disqualified. Those are the rules, and Jones being a true sportsman, accepted the judgment and said all the proper things in the post-fight interview. So Jones suffered his first loss and is now 9-1. Or is he? Sometimes a fight can be ruled a no-contest when it’s stopped from an illegal blow, but the transgressor was completely dominant and the victim had no chance whatsoever to win, as in this case. Given Jones’ immense popularity, and given the fact that a rematch would obviously be pointless, there is the possibility of the decision being overturned. Let’s hope so, but it’s mostly immaterial since Jones is clearly the future of MMA and will be a champion before he’s 25 (he’s 22 now). Here’s a low-quality video of the fight:

Next time: The New Orleans Saints. (Yes, they really are 11-0, which means the world might really be coming to an end.)

Late to the Party

I’ve been off-line for a bit, so when Barack Hussein Obama was awarded this year’s Nobel Peace Prize “for his extraordinary efforts to strengthen international diplomacy and cooperation between peoples”, including the murder of Iraqis, Pakistanis, and Afghans, I was unavailable for comment. Now that I’m back, all I’m going to say is that this is the most absurd awarding of the prize since Yasser Arafat and the Israelis shared the prize in 1994. The continuing collapse of Western Civilization is going to produce a multitude of similar ridiculousnesses, so be prepared.

Mark Twain, Please Report to Your Office

Screen capture of "http://www.joewilson.house.gov/" on 9/10/2009

Tragedy struck last night, friends: A professional liar at a professional liars’ convention called a fellow liar a liar and Mark Twain was not available for comment:

I suspect Ron Paul’s routine is immediately to head to his bathroom to shower with bleach upon exiting the chamber. By the way, did WWE Chairman Vince McMahon script last night’s session of Congress in preparation for his wife’s potential victory in Connecticut’s Senate race?

American Taxpayers: Battered Person Syndrome

Screen capture of “http://www.chryslergroupllc.com/en/” from 12/9/2008.

I defy you to find a better description of the American taxpayer than this one:

A person who, because of constant and severe domestic violence usually involving physical abuse by a partner, becomes depressed and unable to take any independent action that would allow him or her to escape the abuse. The condition explains why abused people often do not seek assistance from others, fight their abuser, or leave the abusive situation. Sufferers have low self-esteem, and often believe that the abuse is their fault. Such persons usually refuse to press criminal charges against their abuser, and refuse all offers of help, often becoming aggressive or abusive to others who attempt to offer assistance. Often sufferers will even seek out their very abuser for comfort shortly after an incident of abuse.

As an outsider, I know it’s pointless for me to encourage Americans to take action. They won’t. They can’t. See above. But I still have to speak my mind. It’s a character flaw. And today what’s on my mind is the abuse American taxpayers take. Let’s look at the auto “bailouts”. I put bailouts in scare quotes because the auto companies were “loaned” money which never had any chance of being paid back. I put “loaned” in scare quotes because philosophers must address the question of whether a payment of money constitutes a loan if it’s impossible that it will be repaid. Way back in 2008, when George W. Bush was still serving his second 4-year term as Thief-in-Chief,  American taxpayers were told that the bailout bill set “clear guidelines for long-term viability.” Here’s a clip of Kaplan lying to the people for almost 8 minutes if you care to relive this abuse:

Barney Frank, notorious taxpayer beater, assured Americans that the loans would be repaid. I know, I know, he loves you, but sometimes you make him really angry and he loses control. Let’s relive this incident (you can fast-forward to 4 minutes 50 seconds or so):

At this point, I need to make a clarification. I’m tired of having to make the distinction between “Austrian School economics” and “mainstream economics”; as Peter Schiff put it, we don’t say “Chinese physics”, we simply say physics. Austrian School economics is economics. All that other stuff is “econostrology”. So from now on, in this blog, the distinction will forever more be between “economics” and “econostrology”. Now let’s revisit your tax dollars.

The econostrologers assured you that bailing out The Big Three was necessary. They told you that the loans would be repaid. They lied to you:

Taxpayers face losses on a significant portion of the $81 billion in government aid provided to the auto industry, an oversight panel said in a report to be released Wednesday. The Congressional Oversight Panel did not provide an estimate of the projected loss in its latest monthly report on the $700 billion Troubled Asset Relief Program. But it said most of the $23 billion initially provided to General Motors Corp. and Chrysler LLC late last year is unlikely to be repaid.

That is merely abuse. The other symptom of battered person syndrome is the refusal to resist. They try to abuse us here in Italy, too, make no mistake. Here’s the difference:

US and European Tax Rates and Compliance

United States	84.00%
United Kingdom	77.97%
Switzerland	77.70%
France	75.38%
Austria	74.80%
Belgium	70.15%
Netherlands	72.84%
Portugal	68.09%
Germany	67.72%
Italy	62.49%

And why not kick the American taxpayer in the ribs while he’s lying in the fetal position? Here’s some insult to add to the injury:

Screen capture of "http://www.chryslergroupllc.com/en/" from 9/9/2009 (Today).

As I said, there is no better description of the American taxpayer than “battered person.”

Thoughts on Indoctrination of the Youth

How do people who can't draw get jobs as cartoonists?

This week’s brouhaha between the socialists (liberals) and the people who don’t realize they themselves are also socialists (conservatives) was the battle over Obama’s decision to speak to public “school” children in a nationwide address. As usual, conservatives were laughably upset for the wrong reasons and liberals were laughably wrong while mocking the conservatives. I shall endeavour to make sense of it for you.

The conservatives are, of course, right that the leftist school system is indoctrinating the youth. High school graduates of the American public school system are barely literate, if at all, can’t write, can’t speak, can’t make use of basic mathematics, and have no working knowledge of history or economics. What they can do is cut leaf patterns out of green construction paper, add a grossly misspelled epistle about the horrors of global warming to it, and present it to their teachers so that it can be sent to captains of industry begging them to stop killing the planet. No, no indoctrination there…

Given that government “schools” serve as propaganda warehouses rather than places of learning, what response ought one to expect from conservatives, then, were one to say that such institutions should not exist? Well, that anyone who makes that claim is a kook, of course. See, for all their railing against socialism and indoctrination, conservatives are as bad as liberals on both. Tell a conservative that the Pledge of Allegiance (break it down: pledge of allegiance) has no place in schools and that it’s purely mind control, and you’ll probably have a fight on your hands. To the conservative, there’s nothing wrong with mandating that school children take a blind oath of loyalty, not only to their government, but also to its flag (!). Mark Twain is laughing in his grave. Better yet, burn the American flag in front of a conservative and see what happens. These idiots favor a very strong central government capable of: imprisoning millions of people for non-crimes like smoking a plant; mass murdering people in countries they can’t find on a map who never attacked or even threatened them; propping up companies which are “too big to fail”, all while condemning the very socialism they don’t realize they’re practicing.

The liberal on the other hand is the jerk who believes that opposition to indoctrination constitutes indoctrination. For instance, try presenting a liberal with scientific arguments against the existence of global warming and see what happens. Or try arguing that there is evil in the world (in places other than the GOP headquarters). For the liberal, the only true evil is passing a moral judgment that someone is engaging in it. It takes a villiage to raise a child, mankind is killing the earth, and socialism is utopia (except when communism is). But they’re not indoctrinating the youth. They are arrogant and smug without realizing that not only are they wrong on every single economic issue, but that their policies cause (and make worse) every problem they try to solve. Their hubris knows no bounds. Just how stupid are liberals? Consider that they think like this:

Liberals should leave economics to intelligent people.

(By the way, if you need me to explain to you why the above comic constitutes total and complete FAIL, you’re part of the problem.)

So while conservatives who pray to their American flags argue with liberals who pray to Gaia, I like to have a glass of Sicilian wine and enjoy the political entertainment.

Titans

Dr. Ron Paul visited Loyola University, New Orleans, a few nights ago. My father was in attendance as was Dr. Walter Block, the Greatest Living Libertarian. The three of them and a couple of other people had a private dinner before the talk. Pictures from that forthcoming.

The Greatest Living Economist and the Greatest Living Statesman meet at Loyola University, New Orleans, September 2nd, 2009.

Here’s Part 1 of his talk; it’s broken into 6 YouTube clips:

Sorry for the dearth of updates lately, but one of our partners was in town for some strategic planning for the launch of our new brand, so things have been hectic. I’m not really going to discuss my personal life much in this blog because I’d prefer to discuss politics, economics, and culture; however, once in a while I’ll relate pertinent information in the interests of context and clarity.  I should have more time to devote to commentary about the collapse of the United States this week.

Thoughts on Economics

Something I’ve been meaning to share for a while:

What I have written of von Mises provides only the barest indication of the intellectual content that is to be found in his writings. He authored over a dozen volumes. And I venture to say that I cannot recall reading a single paragraph in any of them that did not contain one or more profound thoughts or observations. Even on the occasions when I found it necessary to disagree with him (for example, on his view that monopoly can exist under capitalism, his advocacy of the military draft, and certain aspects of his views on epistemology, the nature of value judgments, and the proper starting point for economics), I always found what he had to say to be extremely valuable and a powerful stimulus to my own thinking. I do not believe that anyone can claim to be really educated who has not absorbed a substantial measure of the immense wisdom present in his works.

Von Mises must be judged not only as a remarkably brilliant thinker but also as a remarkably courageous human being. He held the truth of his convictions above all else and was prepared to stand alone in their defense. He cared nothing for personal fame, position, or financial gain, if it meant having to purchase them at he sacrifice of principle. In his lifetime, he was shunned and ignored by the intellectual establishment, because the truth of his views and the sincerity and power with which he advanced them shattered the tissues of fallacies and lies on which most intellectuals then built, and even now continue to build, their professional careers.

Von Mises’s books deserve to be required reading in every college and university curriculum—not just in departments of economics, but also in departments of philosophy, history, government, sociology, law, business, journalism, education, and the humanities. He himself should be awarded an immediate posthumous Nobel Prize — indeed, more than one. He deserves to receive every token of recognition and memorial that our society can bestow. For as much as anyone in history, he labored to preserve it. If he is widely enough read, his labors may actually succeed in helping to save it.                                              -George Reisman (Ludwig von Mises: Defender of Capitalism)

That pretty much sums it up.

I’m Weary of Racial Constructs

Over on Wikipedia, there’s a tireless debate about President Obama’s race. Is he black? Is he white? Why do we have to call him “African-American”? It never ends. Because I’m an idea man, I’ve solved this problem for humanity. It’s time to move past the inauthentic human construct, the fiction we call “race”. Here’s how to do it.

Computer graphic arts programs are capable of using what’s called an “eye-dropper” to sample the color of any part of a digital image. It doesn’t return values like “African-American”, “Black”, “Caucasian”, or the like. Instead it returns a code, a precise code, which takes the form of the number sign (#) followed by a 6-digit combination of letters and numbers, as you can see here. This is an objective result, a dispassionate measurement, without bias or prejudice and with no preconceived notions or life experience to discolor the samplings.

Now, obviously, every skin traverses some array of color and some people’s skin can change hue over time. My method can accomodate that. Simply determine fixed sampling skin points, perhaps the nose, the shoulder, and the knee, or whatever scientists decide, and take readings at regular time intervals, perhaps at the midpoint of each Earth season. Results would be returned as ranges, for instance “#000000 to #010101″ for the President (I have no idea if this is correct, because I haven’t sampled his pictures yet), or in the case of Michael Jackson, we could say he was #000000 as a child but by the time of death was #FDEEF4.

Why not use the tools science has provided for us and put end an end to unproductive bickering? You’re welcome, humanity, for yet another gift from me.

#955F53 and proud!

o/~ I Can’t Quit You, Baby (Bernanke) o/~

Bring it on home, Bernanke

Hey fellas have you heard the news? You know that Bernanke’s back in town? Here’s the Bloomberg article announcing that President Obama has nominated Ben Bernanke to remain as Federal Reserve Chairman for another four-year term. (When I read the words that it told me it made me sad, sad, sad.)

Obama inherited a nightmare from Bush, although I hate using the word “inherited” to describe the situation since no one forced Obama to run for President. So a better way of putting it is that Obama’s hubris put him in a very unenviable position. Up to a point he can blame Bush’s catastrophic policies for the ensuing collapse, but that point is now, officially over. By nominating Bernanke for a second term, Obama no longer has Bush as cover. It’s his apocalypse now. He’s decided to go down with the dirigible helicopter.

It’s remarkable that this allegedly brilliant man serving as President of the United States chose to nominate a man who didn’t see the collapse coming even as he helped engineer it, instead of choosing someone who not only predicted it was coming but explained why, well in advance. I’m speaking of course of Ron Paul. (Of course I could be speaking of  any Austrian School economist worth his salt.)

Compare these two videos. The first is Ron Paul from before the stock market peaked in 2007:

Clearly this man understands economics and has a clear view of reality. Instead of Ron Paul as Federal Reserve Chairman though, you get Bernanke:

Honestly, Bernanke’s reappointment would be funny if I didn’t have any family or friends still living in the United States. I’d simply point at laugh at Americans and engage in schadenfreude-filled rants while profiting from the imminent destruction of the dollar. (I’m doing the latter anyway.) It is pretty funny, after all, that the Chairman of the Federal Reserve is a clueless fool, just like it was funny that the President of the United States before Obama couldn’t even speak in complete sentences. But as funny as it is, it’s also dangerous, and in fact it’s more dangerous than funny. So even though I’m making Led Zeppelin quips, don’t get the impression that I approve of this utter insanity. I don’t. It makes me sad, sad, sad.

Banking Fraud

Professor Mark-to-Market grading the exercise...

Fraud is a term which often gets bandied about inappropriately. When I use it to describe the accounting practices of the banking industry, understand that I am using it correctly. Back on March 12th of this year I wrote in my LiveJournal blog:

The story: Wall Street Extends Rally on Hope of Relief for Banks; Dow Jumps 623 Points in 3 Days

Investors have been clamoring for months for a bit of good news. On Thursday, they got a load of it. The Dow Jones industrials shot up about 240 points, bringing its gains over the past three days to more than 600 points. It is the index’s biggest three-day jump since last November. The gains came as an accounting board told Congress it may recommend a let-up in accounting rules for troubled banks.

The translation: They’re going to get rid of mark-to-market and other accounting methods geared toward ensuring banks are solvent. See, banks have to have capital when they lend money, because they need to be able to protect themselves against loan losses. What the banks have been using as capital turned out to be worthless — in the strict sense of the word — in that the market for that junk dried up and ceased to be. No one wants it. So using intelligent rules of accounting, if your capital is worthless, you can’t realistically absorb loan losses, therefore, you can’t possibly loan out any more money (best case scenario) and more likely, you’re insolvent. Now, instead of having to mark their capital at the market value of it, banks are going to be allowed a lot of leeway to declare a fictional price for it, thus giving the impression that their balance sheets are not nearly as horrific as they are, and worse, allowing them to lend more since they now apparently have capital to back new loans.

Today there’s an excellent essay on seekingalpha.com by Jeff Nielson which describes in detail how much worse the fraud is now than it was last year. He explains:

The bankruptcy of Colonial Bank (CNB) was the largest bank-bankruptcy in the U.S. since several large, U.S. financial institutions collapsed last year – with the most recent being Washington Mutual, last fall. However, there is one huge difference between the mega-bankruptcies of last year and the collapse of Colonial Bank a week ago.

During the large bank-failures of 2008, the acquiring institutions wrote-down the “assets” on the books of these banks by an average of 18% - according to a Bloomberg article. However, when BB&T Corp purchased Colonial, it immediately wrote-down Colonial’s assets by 37%, double the amount of discounting done last year.

What has changed between now and then? The legitimizing of fraudulent accounting, when the supposed “watch-dog” of U.S. accounting, the Financial Accountability Standards Board brought in new “mark-to-fantasy” accounting rules in the U.S. this spring ( see “FASB strong-armed into mark-to-fantasy accounting”).

Believe me, I didn’t have any special insight; many pundits and analysts explained that changing the accounting rules just changes appearances not reality. It’s no different than if you’re told going into an exam that a score of 90-100 will be an “A”, 80-89 will be a “B”, 70-79 will be a “C”, 65-69 will be a “D”, and 64 and below will be an “F”; the teacher grades the papers and the highest score is an 85 and most of the scores are in mid 60s, so he changes the scale and says that 80-100 is an “A”, 65-79 is a “B”, 55-64 is a “C”, etc. Well you’ve got a better grade now, but you’re every bit as ignorant as you were before.

My dad always told me, "Profits are opinion, cash-flow is fact."

The reality hasn’t changed, only the presentation has. This sort of clownishness is typical of the solutions being sold to Americans for staving off the inevitable (at this point) economic collapse. If you want to see a glimpse of the sinister forces marshaled against you, check out Mark Sunshine’s call to kill mark-to-market “before it eats us alive”. Ironically, it’s from the same website, seekingalpha.com.

I cannot recommend the essay by Jeff Nielson enough. It’s a must read.

It’s not all Gloom and Doom

Since it’s Sunday, I won’t discuss either of these items of note:

• With 97% of Companies Reporting Q2 Earnings the PE Ratio of the S&P 500 is Now at 129.


Lambs to the slaughter.

• China aggressively reducing us debt.


Guess who is making up the difference? (Hint: Bernanke is its chairman.).

Sure, I could go into a long exposition about what it means when the Federal Reserve prints the money to buy the Treasury Department’s debt which funds the government’s expenditures; And I could explain at length why companies with plummeting earnings (or with losses) at the very onset of a depression should not be trading at 30 times earnings, much less at 129 times earnings; but, like I said, it’s Sunday, so I’d rather just mention that using the watered down, deceptive, fudged government statistics:

• Vegas jobless rate hits all-time high of 13.1%.
• California hits record 11.9%.
• NYC is at 9.6%.

Let’s just say that I’d rather be Jack Lambert’s tackling dummy than be holding US Dollars or equities.

Investment Advice: I’m not giving any

I do not have any credentials whatsoever in financial planning. I’m not certified in anything relating to the field. I am simply an economist. I just want to throw that out there because I get a lot of mail from people who want advice on what to do with their money. I used to give advice — you can find dozens of posts of mine all over LiveJournal dating back to 2001 telling people to buy gold to preserve their earnings. That was an easy call for an Austrian economist to make, but times have changed. I really don’t know what advice to give to people who plan to remain living in the United States.

Chaos mangles your ability to make sound plans.

We’re in the first stages of an unprecedented collapse and the government is a wildcard in a way it’s never been to this point. Clearly those in power feel completely unconstrained by the Constitution (as opposed to times past where they at least acknowledged its existence and tried not to violate it too savagely). Every possibility is on the table as government tries to “save” the economy. There are literally no policies whatsoever that I would put beyond them. This means that all of those methods for protecting yourself in times of financial chaos which worked in the past might not be available to you going forward. One simple answer used to be “buy gold and precious metals”, but who knows what limitations will be placed on owning and trading those as this collapse accelerates? In just the last year we’ve seen Congress and two presidents nationalize the entire financial sector (banks, brokerages, insurance companies, etc.) and the automotive industry, and transfer trillions of dollars to Wall Street. Currently they’re working out the details on how to complete the nationalization of the health care sector which is currently about only two-thirds nationalized. The Federal Reserve… well, no outsider knows for sure exactly what it’s up to, but just from what’s made available to us, it’s obvious that they’re playing radical, panoptic, outlandish games with monetary policy. As long as Bernanke or one of his minions appears before the Congressional alleged oversight committees and pretends to answer questions, the Federal Reserve is given a green light to play God with the economy. So they’re trying to blow bubbles in some markets, disguise insolvencies, suppress the price of precious metals, monetize the debt, and institute a variety of policies all of which are guaranteed to end in disaster. All of this while the federal government and various state governments are hopelessly insolvent.

Gold is great to own during times of economic chaos… unless the government steals it from you.

Given such a climate, what possible advice does one give? Buy gold? Sure, but what if the government outlaws private holdings of gold, again? (Oh yes, they’ve done it before.) Well, that would be a disaster for gold horders. Buy land? Surely, if you buy arable land you can put it to productive use and generate an income with it, right? Plus, you own something tangible and real instead of paper bills which are going to lose most of their purchasing power in the next few years. Well sure, except I wouldn’t own land in the United States right now. Mark my words, property taxes are going to skyrocket as governments seek to find revenue from any possible source. If you can’t pay your property taxes, you will lose your land. (Some states protect the homestead from being seized in bankruptcy proceedings, but I am quite sure that tax deliquency will still result in its loss.) In fact, I feel the same way about trading dollars for any major physical asset in the United States — I wouldn’t do it because the liklihood of losing such an asset to the government is greatly increasing.

What’s that leave, the equities markets? Gamble at your own risk. I don’t know what to tell you to do, so I’m not going to. I will just tell you that the way I see it, if you’re not going to move out of the United States, you’re going to be subject to a system of financial chaos for many years to come. This may still be the case if you move, but at least you’ve got a chance to live under a sane system. These are the crazy times all the “kooks” have been predicting for years. There are no easy answers and there’s no chance of things improving any time soon.

President Approval Ratings

That didn't take long. (It never seems to.)

President Obama’s approval ratings are tanking so I decided to see how other presidents have fared. I found this informative chart on Wikipedia.

Historical Gallup Poll approval highs and lows for each President since 1937:^[7][8]

Order	President	Highest Approval	Lowest Approval	Average Approval
44	Obama[3]	69 1/22-24/09	51 8/16-18/09	62.0[1]
43	Bush (G.W.)[9]	90 9/21-22/01	25 10/3-5/08	49.4
42	Clinton	73 12/19-20/98	37 5/26-27/93	55.1
41	Bush (G.H.W.)	89 2/28/-3/3/91	29 7/31-8/2/92	60.9
40	Reagan	68 5/16-19/86	35 1/28-31/83	52.8
39	Carter	75 3/18-21/77	28 6/29-7/2/79	45.5
38	Ford	71 8/16-19/74	37 3/28-31/75	47.2
37	Nixon	67 1/26-29/73l	24 8/2-5/1974	49.0
36	Johnson	79 2/28-3/5/64	35 8/7-12/68	55.1
35	Kennedy	83 3/8-13/62	56 9/12-17/63	70.1
34	Eisenhower	79 12/14-19/56	48 3/27-4/1/58	65.0
33	Truman	87 6/1-5/45	22 2/9-14/52	45.4

Unlike the cartoonist, I don’t think Obama’s problem right now is any one policy. It’s the general novelty and euphoria wearing off as people realize that Obama, like every other president, is a disaster. If you look at the average approval ratings for the last 12 presidents shown above, you’ll note two encouraging consistencies (other than the Bush family is a catastrophic failure):

1. Eight of them finished their terms with an average approval percentage in in the 40s and 50s. Obama is not one of those… yet.
2. Ten of them had their low approval rating under 50%, 9 of those being under 40%, and 5 of those being under 30%. Of the two who didn’t, one is Obama and the other was assassinated.

Americans definitely weary of their presidents. What’s perplexing is given the long history of disappointment, why do Americans continue to vote?

What happens in Sicily stays in Sicily, until I break the code of silence…

As you might imagine, I get a lot of questions about expatriation from the United States and my choice of Sicily as a destination. I’m not planning to use this blog to discuss my personal life much at all, but in this case I think it’s worth explaining my situation and mindset. So let’s start with my decision to give up on the United States.

The day we decided for certain that we were going to leave the United States was the day this story broke: Children herded like cattle into Maryland courthouse for forced vaccinations as armed police and attack dogs stand guard. Crystal and I had just recently learned that we were going to be having a baby, and I did some serious contemplation about this paramount question: Do I have the means to protect my woman and my child from the onrushing economic and social collapse and the rise of the police state in the United States? I’m quite convinced that as a mere bachelor I would face many inconveniences yet still be able to protect myself against the Barneggedon. (That’s the term I use to describe the state of affairs I’ve been predicting for the United States since I first started blogging in 2001. I used to get a lot of grief for predicting a collapse, but now not so much. What a difference a few years make.) With a family to look after, however, the dangers are markedly increased. I answered the question “no”.

As I explained to my readers at the time:

The police state is here. The cops are armed and dressed like soldiers and you have no rights. There’s still a decent level of comfort to be achieved here provided you’re willing to blend in and submit to authority — sure, you can write or say anything you want for the most part, just don’t back up your writings or speech with real disobedience. There are three classes in this country: ruling, enforcement, and subservient.

I’m sure I’ll be giving up a lot by leaving, but I’ve never been good at genuflecting to authority. I can’t stand to be dominated. I loathe being lorded over. I can’t live like that. No hard feelings, America. I am not too resentful. Let’s part amicably.

We had a major connection in Sicily from Crystal’s modeling days in Italy, where she shot quite frequently, and after discussing it with him and lining up a good job for myself, we pulled the plug on the United States. Let me be clear about something. My argument has never been that Italy has a better economy than the US. My argument is merely that when the collapse comes, my family will be better off in Sicily than in the US. The collapse in the US will be Biblical. The balkanization has already started, and when the welfare checks don’t get sent out, or worse, they’re printed using inflation and can’t buy anything, your crime rates there, bad as they are already, will make Hurricane Katrina’s aftermath look like Singapore.

Iliana is safe here in Sicily. The government of Italy is too poor and too unsophisticated to effectively oppress us when we have the ruling families of Sicily keeping the pace of change on this island so very slow. Life on this island isn’t going to change drastically when the global collapse comes — we’re pretty self-sufficient and homogenous here. Food will not be scarce and is grown/raised next to the people who consume it. The same with energy. This island has its own oil and natural gas and even a refinery. Crime is and will remain relatively low and non-violent, especially as these immigration crackdowns continue. I know that’s not a libertarian policy, but I don’t make the rules.

The US has militarized police and jack-booted thugs with limitless resources, and the only alleged check on their behavior come from — the communists in the ACLU? That’s a recipe for disaster. Europe is a disaster, make no mistake. So is most of Italy. Sicily, however, is safe and stable and will remain so. We will get a little poorer when the you-know-what hits the fan, but we will not have serious interruptions in food or energy and we won’t have crime waves.

However, I don’t want to give you the wrong impression: I definitely do not recommend Sicily for most people. The economy here is lousy and you won’t find a decent job as a foreigner unless you’re connected. I recommend Sicily in the following cases that I can think of only:

You have significant wealth; don’t need a job or can do what you do on the internet; want to enjoy the mediterranean lifestyle.; have family or connections here; already speak Italian; have skills which make it easy to find employment anywhere. Some combination of these would make Sicily a choice worth looking at. If none of these describe you, I would tell you to steer clear.

Mediterranean Lifestyle: dinner at a great restaurant in Mondello Beach.

If you have questions about life in Sicily, ask me and I will endeavour to answer them as best I can.

Sympathy for the Foreclosed

Why did so many people make the same mistake at the same time?

I’ve always been a proponent of personal responsibility and it’s a rare instance indeed when you find me cutting some slack for people with terrible judgment, high time preference, or who consistently make poor decisions. Teen pregnancy, living beyond one’s means, and smoking are all examples of behaviors for which I offer no sympathy. However about a year and a half ago when I was still blogging on Livejournal, I explained why I have some sympathy for some of the people who are in underwater mortgages or are general casualties of the credit/housing collapse. Libertarian guru Wilt Alston posted on Lewrockwell.com an email I sent him outlining it in rough terms here. Now I’m going to elaborate somewhat on my premise.

When it comes to assigning blame for mistakes, I assign the majority of the blame to the party most responsible for the mistake. Most of the time that’s the individual or individuals who made the mistake. Once in a great while, I assign it to the party who duped the individual or individuals into making that mistake. In the case of the credit/housing collapse, I’m assigning the lion’s share of blame to the Federal Reserve and the government. Note that this does not mean I condone the foolish behavior of so many individuals who are now foreclosed on or in underwater mortgages. I merely have some sympathy for them because I can see the causal chain which led to their bad decisions, and they are far less responsible for those bad decisions than you might initially think. So, what happened?

To start with, the Federal Reserve has been devaluing the currency since its inception in 1913. Prior to the Federal Reserve, and this is going to be very hard for anyone born in the last 100 years to believe, the purchasing power of the dollar was rising. Unlike what you’re used to, which is paying $1.50 in 5 years for something which costs $1.00 today, before 1913 you would pay $0.95 in 5 years for something which costs $1.00 today. If you don’t believe me, and I can surely understand your skepticism, go to measuringworth.com and there’s a calculator which will allow you to input initial year, end year, and initial amount of money. For the first value, put the year 1800; for the second, put $1; for the third, put 1913. You’ll get a message which reads: “$0.79 in the year 1913 has the same “purchase power” as $1 in the year 1800.”

Yes, that’s what happens when the government’s ability to print money and create credit out of thin air is severely constrained — money increases in purchasing power over time. Here’s what happens when government has few constraints on its money and credit production:

It's not counterfeiting when the government does it.

That’s what the government does to the money supply (please, no arguments that the Federal Reserve is a private entity). When the Federal Reserve holds interest rates artificially low — at say, 0%-1%, there are two serious consequences, one obvious, and one not so obvious but much more sinister.

The obvious consequence is that an indicator is being sent out to the marketplace about the price of money, namely that money is cheap. The interest rate is the price of money, and in the free market the interest rate reflects the supply of credit and the demand for credit; in this way, it operates in same as any other market price. The supply of credit comes from savings, for instance, when you deposit your money in a bank. The demand for credit comes from all of the individuals and entities seeking to borrow money, for instance, when you go to the bank for a loan. The interest rate reflects the point at which borrowers and lenders are willing to transact. Simple enough. So what happens when the Federal Reserve overrules the market rate of interest and sets interests rate far lower? Well, the same thing which happens were the government to go into a Mercedes-Benz dealership and change the price of a CLK 63 AMG from $90,000 or so to $40,000. You probably weren’t in the market for that car at $90,000, but at $40,000 you very likely might be, and even if you’re not, plenty of other people will be at that price. It’s no different with the interest rate: at 14% interest you probably aren’t in the market for a loan; but at 1% interest, borrowing becomes much more appealing.

The sinister consequence is that your incentive to save money when the Federal Reserve drops interest rates to next to nothing has all but disappeared. Given the explosion of the money supply and the corresponding price inflation, if you’re only drawing a couple of percent interest on your savings, you’re not keeping pace with inflation; savings are being devalued. So what are you going to do, leave your money in a bank where it will lose value every day? Probably not. You’ll look for an investment which will return a higher rate than inflation. Here’s where it gets really ugly. Joe Sixpack goes to work all day — let’s say as a lawyer, or maybe he works in a cubicle at some IT company or in an administrative office at a university — he comes home and eats dinner and spends some time with his kids, maybe reads a little or watches some television, plays around on the internet, goes for a jog (ha, unlikely), and goes to bed. He doesn’t know a whole lot about finance, economics, or accounting, and doesn’t necessarily have the time to learn those subjects. Even if he does have the time, he doesn’t know what to read or watch about those subjects. Does he watch CNBC? Bloomberg? Read the Wall Street Journal? Some website? Some book? There are thousands of treatises and and millions of articles about economics, much of it contradictory. Here’s the dilemma: he has no idea about speculative investments yet he has to do something with his money since he can’t leave it in the bank for reasons already described. So he finds a broker maybe. Or he gets an Etrade account or similar and buys mutual funds maybe. Or worse, he gets the signal that now’s the time to borrow money and he starts speculating in the housing market, buying property to flip with money being so cheap. What the Federal Reserve has essential done is transferred a massive amount of wealth to the financial sector from the regular Joe who probably would just have saved it. That’s insidious.

When Austrian School economists talk about a “cluster of errors” this is what they mean. An unusually large amount of people all making similar mistakes at the same time. It’s very unusual for this to occur in a free market. Misleading indicators, for example “bad prices”, are corrected very quickly unless some entity prevents it, which is the case when we’re talking about the Federal Reserve. Look at the money supply graph again and match it up against the Dot Com bubble and the housing bubble. Those weren’t the results of a whole bunch of idiots falling prey to some kind of market frenzy. Those were the result of the government introducing misleading indicators which sent the wrong signals to people causing them to adjust their behavior. I’m not saying everyone who bought a house in the last 8 or so years has no culpability; for instance, unless you’re really wealthy, I think it’s incredibly stupid to get an ARM. But what I am saying is that a lot of people were fooled and wouldn’t have even thought about speculating in the stock market or housing market (or even collectibles markets like art, coins, stamps, comic books, toys, what have you) if the government hadn’t ensured that savings would be eroded.

And couple all of that with the fact that with the exception of Peter Schiff, Jim Rogers, and Marc Faber, almost all of the analysis and advice on every financial show and indeed everywhere in the public sphere was wrong. I’ve linked that Peter Schiff Was Right video a couple of times already — the people he’s debating are actually laughing at him. There’s a guy named Don Harrold who has done a great job of taking apart the financial pundits and holding their feet to the fire, showing how they duped the public. His YouTube channel is here. His favorite target is Jim Cramer.

Anyway, that’s why I have some sympathy for many of the people who are now financially insolvent. My siblings and I were very lucky — our father is an Austrian School professor of economics. I knew enough to avoid those mistakes, but I recognize that had I been someone else, I likely would be in the same boat they are; therefore, since it’s only through no doing of my own that I’m not in that boat, I am treading lightly on those who are.