Beware-This vid is pretty graphic

Other governments have slaughtered their own. The African continent is full of dead bodies that perished because government’s killed their own. Rwanda comes to mind, but there are others. The US has not done much to stop the killing in Africa.

After America was attacked, Bush started a war to overthrow Hussein. It made him unpopular and we are still mired in it. Hussein had tortured and killed his people for years.

During the Clinton administration, there was a genocide in Serbia, Croatia, and Bosnia. Eons old rivalries surfaced after the fall of the Iron Curtain. Clinton took awhile to act, but when he did he acted decisively and put an end to the genocide. Really was a memorable part of his administration.

Pol Pot killed millions in the Killing Fields in Cambodia back in the late 1970′s early 1980′s. America had left Vietnam and didn’t have the stomach to stop it. Plus, we were still in the Cold War and Cambodia wasn’t a big strategic item for the US.

China under Mao, and Russia under Stalin murdered plenty of innocents. North Korea starves it’s people and kills thousands more. Communism is just an excuse for brutal dictators to assert power and kill innocent individuals. The US really couldn’t go into China or Russia and put a stop to it. That would have lead to World War Three, Four and probably Five.

Of course, the most systematic killing was during World War Two with the Nazis and Jews. It’s ironic how many Holocaust deniers that exist today. Thank goodness Eisenhower recorded it and made sure evidence was preserved for history. We were lucky that Hitler made some boneheaded strategic decisions so that we could stop it. Of course, Roosevelt knew about the concentration camps but did nothing to stop it prior to 1944.

I don’t know the answer to Syria. Obama had no compunction and went into Libya when Ghadafi was murdering his own in the Arab Spring uprising. He stayed out of Egypt-but the Egyptian army stayed pretty quiet when Mubarak was overthrown.

NATO and other countries will not do anything. Only the US has the ability to go into Syria and stop the killing. The founding ideals of America carry us forward. Unlike the old Romans or other empires, we go in and clean up messes and then rebuild. We pretty much leave them alone.

It always surprises me how much faith people put in government. Governments take away your freedom, they infringe on your rights, and they oppress sectors that are opposed to them. I prefer the Founders’ view that people grant government certain rights so that they can be governed and prosper in a decent society.

There isn’t a lot of strategic/political/world value in stopping Syria. Only the human ones.

What do you do?

“Rather than dole out that $150 million to one big company, how about this: Give $30,000 to 5,000 small companies to encourage them to locate in Illinois. By comparison, a successful Chicago-based accelerator — Excelerate Labs — funds 10 companies per year to the tune of $25,000.”

This is the wrong framework to look at tax breaks. Sears was going to leave the state. They would have taken 6,100 jobs with them. Those are taxpayers, not only on the state level but on the local level. Businesses like Sears create jobs slower than a successful start up might, but they offer a platform for start ups to build around. Viewpoints is a start up that is built around the Sears infrastructure.

It also assumes an economic fixed pie. Economies aren’t fixed. Like dark matter in space they can grow forever and in all directions if you don’t constrain them. It’s not a zero sum game. Also, the calculation of tax breaks related to the budget are always looked at with accounting numbers and not economic ones. Economic numbers are dynamic, and a tax break has been shown to have a 1:3 multiplier effect. For every one percent in the decrease of taxes, there is a corresponding 3% bump in GDP. Illinois ought to be cutting taxes to increase economic growth. Instead, they raised them.

Sears is also a likely acquirer of start up companies. Many companies like to invest in their own backyards. They want to invest in the local start up community. I know because I have spoken with corporations that are looking to make it happen. Additionally, having a big bell cow in one industry creates a lot of native industry DNA. Employees of Sears that discover unsolvable problems are likely to create an entrepreneurial company, or assist in the creation of one. It is most probable that they will do that in their own backyard. Employees don’t generally move to create start ups, although they can.

The real outrage in Illinois is over the total mismanagement of state and local finances. Democratic Cook County is an utter mess. The City of Chicago, a mess. The state has a pension nightmare. Last year, they raised corporate and individual taxes. They didn’t cut spending, and this year they don’t cut spending. Illinois needs to slash all kinds of programs and reconfigure their pension system from defined benefit to defined contribution-much like Indiana.

Illinois is losing established business because of the high taxes, and onerous regulatory environment. I am glad that the state extended tax breaks to CME($CME), Caterpillar($CAT), John Deere($JD), Sears and others to keep them in the state. If you lose the big businesses, the mom and pop lifestyle support businesses that exist because of them will go out of business too.

Then, there will be no start up ecosystem. No one will be left to start it.

While attention has been paid to Treasury Secretary Geithner’s admission last week that the Obama administration does not have a long term plan to address the deficit, he also provided a view into the administration’s beliefs regarding the effect of Obamacare on the deficit.

When asked why, under his budget, the deficits skyrocket after the 10-year budget window:

Treasury Secretary Tim Geithner: Let’s ask ourselves why they take off again. Why do they do that?

Congressman Paul Ryan: Because we have 10,000 people retiring every day and healthcare costs going up.

Treasury Secretary Tim Geithner: That’s right. We have millions of Americans retiring every day and that will drive substantial growth rates for healthcare costs. We’re not becoming before you to say we have a definitive solution to our long-term problem.

It is a remarkable statement because it reveals that Geithner understands, and admits as such, that the Obamacare legislation does not “bend the cost curve” of healthcare costs. After all, this is the White House’s own budget, and they have the ability to make numbers conform to their narrative, as they have with other issues. That they cannot show a positive effect on the deficit trajectory is striking enough on its own, but the admission that this is due to growing healthcare costs is startling given the certitude that the health reform legislation would positively manage costs.

An intriguing part of the statement is that Geithner lays part of the blame on rising deficits on retiring workers. Everyone understands that workers retirement is an accepted part of the cyclical nature of employment. However, two points become apparent. The first is that Geithner and the Obama administration need the older workers because older workers earn more money than younger workers, and if they earn more money, then they are paying more money in income taxes.

The second is that the statement implies that the administration is not confident that the workers entering the workforce will earn enough or be of sufficient numbers to offset the revenue lost from retiring workers. Given the trend in unemployment statistics, especially among the youngest of wage earners, and the administration’s tax policies, it is not surprising that their economic models cannot provide in reality what the optimism of cost containment was used to sell Obamacare to the public.

If we are to take the administration at its word, that higher-earning worker retirements will result in funding gaps, then it paints the administration into a corner where it must either look towards middle-income earners for additional revenue or continue unsustainable deficit spending.

ADDED BY ME

And of course, in 2013 after the election, the Bush tax cuts will go away and taxes will rise on the middle class. Additionally, in Obama’s budget, he proposed tax increases on the middle class along with tax increases on the wealthy.

My presentation will last a short period of time, but via Twitter, I hooked up with a special guest that will be helping me. James Koutoulas is an attorney representing over 300 clients in the MF case. He will be talking about the legal issues, and where he thinks things are going.

There may be members of the press there, and generally, they misquote what I say so I am going to summarize my remarks here. It’s not an earth shattering presentation to anyone that is familiar with the business. However, if you don’t understand the futures industry it is enlightening.

The way this whole thing started was my friend from Blue Haven Capital was at the U Club talking with the people in their investment club. Many of them were ripping CME saying that they defrauded their customers. I texted back to him that CME didn’t. One thing lead to another, and now I am doing this lunchtime talk.

The first thing we will describe is the futures ecosytem, and the responsibilities of each player within it. That helps one frame what happened. Without knowing what each part of the ecosystem is responsible for, it’s pretty hard to lay blame. That leads to statements like, “CME defrauded customers.”, which they didn’t.

The next part will touch on the CME clearing house, and how it stands between counter parties to trade, and mitigates counter party risk. Pretty self explanatory for people in the business, but when a trade happens, the two parties that buy and sell actually buy and sell with CME, and CME nets the position. Each party has their account debited by the clearing firm for margin, and then money is added into the account or taken out depending on the settlement for the position. Money goes from the account, to the clearing firm, to CME, to the other clearing firm and into an account.

Then we will talk about how traders manage their cash. Generally, they keep excess cash in their accounts to use for margin on positions that go against them, or to take advantage of trading opportunities that present themselves during the day. In the MF Global debacle, traders that were irresponsible with their cash were rewarded. High risk takers got their positions transferred, and have their money. Stewards of cash were screwed.

The presentation will describe and define what a segregated account is and how MF chased yield. Corzine was irresponsible to his customers and had the hubris to think he was bigger than the market-and above the law.

Then we will examine the CME response. One senior manager said, “They aren’t our customers.”. Technically and legally he is right. But, CME’s attitude is misplaced. Additionally, it was revealed that on the Friday before MF went bankrupt, CME never finished the audit, shirking it’s responsibility to the marketplace. CME injected counter party risk into a transactional marketplace that shouldn’t have any.

After walking dead for at least two weeks, CME began to react and take measures to stem the damage. The company continues to try and stem damage to this day. But it took a long time for CME to get on the same page as its end users.

At the end, we will do an overview on the regulatory environment for exchanges in the US. Then James will take over.

Finally, we will do Q+A then go back to work.

For Lent, I am actually going to give up something this year. First, I am going to give up sweets. My daughter is giving up sweets and I am with her. Yesterday, I had my first Paczi. Apricot. At the French Market in Chicago. Was good, but goopy. I imitated a bomber pilot and put an apricot bomb on my shirt.
Next I am giving up listening to all political programming on radio and tv. Ace makes a good case why. I don’t listen to Rush Limbaugh every day. Quite frankly, since I live in the city I rarely listen to the radio at all. But, when I am in the car and it’s the right time of day sometimes I listen. He can be entertaining. He sometimes makes some really good points. However, if you are a conservative in this election, it can’t be a line in the sand. It has to be about winning and many conservative bedrock points, especially economic ones, can only be won over time. Reagan was a great conservative, but compromised a lot to get broader things passed.

Since America is moving south to take advantage of the better economic conditions, y’all better learn the language.

I didn’t know Ernest Angley was running for President.

You have to love Chris Christie.

Friend of mine said SELL $CAT.

Caterpillar Stock Chart by YCharts

Land prices are rising across the corn belt.

Obama might be lucky.

Namaste. I can’t believe how sore I was Monday.

Video from the lastest Santorum campaign stop

Ernest Angley: ‘potenza’ di Do from Giacinto Butindaro on Vimeo.

The only thing they don’t ask Republican candidates about much is economic questions and debt questions. Instead they ask horribly slanted, often irrelevant questions designed to make them look bad and help Obama. We’ve heard questions about contraceptives, religion, Newt’s angry ex-wife, Cain’s employees, Romney’s personal wealth, Gardasil, etc. Newt’s rise was because of the way he attacked the media and Obama in the debates because of the stupid and obviously planted questions.

So, what would happen if the mainstream media treated Barack Obama the exact same way they treat Republicans? The questions might sound a little something like this.

1) Numerous Mexican citizens and an American citizen have been murdered with weapons knowingly provided to criminals by our own government during Operation Fast and Furious. If Eric Holder was aware that was going on, do you think he should step down as Attorney General? Were you aware of Fast and Furious and if so, shouldn’t you resign?

2) In 2010 you said Solyndra, a company that donated heavily to your political campaign, was “leading the way toward a brighter and more prosperous future.” Today, Solyndra is bankrupt and the taxpayers lost over $500 million on loans that your administration knew might never be paid off when you made them. How do you respond to citizens who say this is evidence of corruption in your administration?

3) Unions invested a lot of time and money in helping to get you elected. In return, unions gained majority control of Chrysler, the taxpayers lost $14 billion dollars on General Motors, and General Motors received a special $45 billion dollar tax break. What do you say to people who view this as corruption on a scale never before seen in American history?

4) Through dubious means you and your Democrat allies in Congress managed to force through an incredibly unpopular health care bill that helped lead to the worst election night for the Democrat Party in 50 years. Since the bill has passed, many of your claims about the bill have proven to be untrue. For example, we now know the bill won’t lower health care costs and despite your assurances to the contrary, big companies like McDonald’s say they may drop health care because of the health care reform. Congress has exempted themselves from the health care reform and instead has their own taxpayer-funded premium health care plan. Many large companies (that donate to Democrat political campaigns) have received special exemptions from the health care plan. Since the majority of the American people have rejected your health care reform and it doesn’t do what you said it would, shouldn’t you work with the Republicans to repeal it?

5) When you took office, the national average for one gallon of gas was $1.89 per gallon. Since then, you’ve demonized the oil industry, dramatically slowed offshore drilling, blocked ANWAR, and rejected the Keystone Pipeline. Now, gas is $3.54 per gallon and rising and is expected to reach $5 per gallon by May of this year. How much higher do you anticipate driving gas prices?

6) Occupy Wall Street has been protesting against Wall Street and the richest 1 percent in America. You are in the top 1 percent of income earners in America and you have collected more cash from Wall Street than any other President in history. So, aren’t you exactly the sort of politician that Occupy Wall Street wants to get rid of?

7) How do you decide which foreign leaders to submissively bow towards and why do you think that’s appropriate for an American President?

If they could, don’t you think the Nobel Committee would take back the Nobel Peace Prize that you were awarded after serving just one month in office?

9) You made bipartisanship one of the central themes of your campaign in 2008. Yet, you’ve worked to push bills through Congress with almost no Republican support, spent much less time negotiating with Congress than George Bush did, and you’ve said things like, “But, I don’t want the folks who created the mess to do a lot of talking. I want them to get out of the way so we can clean up the mess. I don’t mind cleaning up after them, but don’t do a lot of talking.” Why did you decide to break your campaign promise to pursue bipartisanship?

10) America lost its AAA credit rating for the first time under your watch. What do you think you should have done differently to have prevented that historic failure?

11) You cut more than 500 billion dollars out of Medicare to fund your wildly unpopular health care reform bill. Given that Medicare is running in the red already, don’t you think it’s irresponsible to cut money out of one entitlement program, that millions of seniors depend on — to put it into a risky new entitlement program?

12) Back in July, you said, “Nobody’s looking to raise taxes right now. We’re talking about potentially 2013 and the out years.” Since you plan to raise taxes if you’re elected and you’ve had kind words for a value added tax, shouldn’t every American expect a tax increase if you’re reelected?

13) Why should the American people reelect you when your 10 year budget saddles America with more debt than all previous Presidents combined?

14) Your stimulus bill cost more in real dollars than the moon landing and the interstate highway system combined. Many prominent economists have concluded the stimulus plan was a total failure. What do we have to show for all of that money spent?

15) Members of your administration promised that the trillion dollar stimulus would keep unemployment under 8 percent. Instead, we’ve had 35+ months of 8% and above unemployment. Doesn’t that mean we wasted a trillion dollars on nothing?

thanks for the link Free Republic.

Start ups are sexy. They are fun. Good ones have a hip culture that politicians want to align themselves with, and people want to feel apart of. They are creating something. Creating, that’s cool.

Since entrepreneurs create jobs at a marginal rate a lot faster than big companies, governments at all levels are looking really hard at how to create a start up ecosystem in their community. Start Up America is a byproduct of that examination, and is more politically motivated than it is essential to an entrepreneurial movement. The sentiment behind Start Up America is the correct one. However, I fear that government spending on a program like this simply creates an immovable bureaucracy that will hinder entrepreneurship not help it.

To fully comprehend what is evolving, look at America. We have gone from an agrarian society to a society that had big companies promising jobs for life to what we have today: the gig society. Very few of us will have lifetime employment. That’s why learning how to be and creating an environment for entrepreneurship is so important.

In the desperate attempt to create this society, we are beginning to utilize government. In fact, Israel’s success at creating an entrepreneurial society is cited as a template that we can export here. However, that logic is very simplistic. Israel has a lot of social networks simmering under the surface that contribute a lot more to the development of their ecosystem than the government. John Clarke of the University of Illinois did some research on Israel and found things like compulsory military service and other social structures created the ecosystem much better than a government program did.

Walter Russell Mead writes,

“But the weakening of the ties between employer and employee is another way to speak of the “entrepreneurialization” of the American labor market. In the 19th century, most Americans were entrepreneurs: operators of family farms. In the 20th century, most were employees, often of very large companies. In the 21st century we are likely going to become more entrepreneurial again, only instead of selling the produce of our farms, we are going to be selling the services we produce based on our skills and our imaginations.”

This is why labor unions are so passe. It’s why corporate welfare designed as government policy is stupid. Instead of encouraging the entrepreneur lifestyle, we have hindered it. As a person who has been self employed since 1986, I know. The cold water hit me in the face after I did my first tax return as a self employed individual. Mead writes” But the weakening of the ties between employer and employee is another way to speak of the “entrepreneurialization” of the American labor market. In the 19th century, most Americans were entrepreneurs: operators of family farms. In the 20th century, most were employees, often of very large companies. In the 21st century we are likely going to become more entrepreneurial again, only instead of selling the produce of our farms, we are going to be selling the services we produce based on our skills and our imaginations.” Virtually all government programs and regulations are designed for a 19th or 20th century workforce. The internet has blown that all to pieces.

That’s why “targeted” policies never work the way they are designed. Economic marketplaces simply don’t operate that way. It’s the actions of individuals making decisions in their own interest that aggregate to a greater sum. Private individuals and groups can create the necessary forces for an ecosystem to grow a lot faster and more efficiently than a government program. Government’s role is simply to apply correct broad policy that applies to everyone equally, let the entrepreneurs sort out the rest.

Instead, we have people calling for an entrepreneurial safety net. It’s one of the most ludicrous things I have ever heard because if enacted it will screw up the risk/reward ratios for entrepreneurship. Putting government programs in place to catch failed entrepreneurs will increase costs, increase friction to start businesses, and codify bad business practices.

Anyone can be an entrepreneur today. We don’t need targeted programs designed for one group or another. The problem isn’t that entrepreneurs fail. They always fail, and they always have. The problem is that we aren’t teaching them the right skills to have a better chance at success. Instead of math, science, economics and probability theory we teach them social justice and guilt.

Instead of beating up the wealthy, we need to be encouraging them to make investments, start businesses and taking risks. They have the built in safety net to go forward. The jobs they create will create new entrepreneurs. We always find that successful entrepreneurial companies create more spin off entrepreneurs that create more successful companies that create more spin off entrepreneurs. The cycle repeats.

There is more access to private capital today than there ever has been before. Entrepreneurs just need to go find it. It’s also important to note, the private capital invested is taking huge risks. They make decisions on what to invest in based on what they perceive as the risk/reward ratio and probability of success. Not every idea out there is a good one. Not every idea deserves a chance. Entrepreneurship isn’t some kind of democracy. It’s a meritocracy. Everyone gets a chance, but only the people that can come up with a good idea an execute it are successful. The rest fail.

Silicon Valley didn’t start with government assistance. Other ecosystems in the US won’t be self sustaining and start up unless governments recognize their role and get out of the way.

Eat some Paczi’s, gorge yourself. Ash Wednesday is tomorrow.

From the American Catholic:
“Mardi Gras literally means “Fat Tuesday” in French. The name comes from the tradition of slaughtering and feasting upon a fattened calf on the last day of Carnival. The day is also known as Shrove Tuesday (from “to shrive,” or hear confessions), Pancake Tuesday and fetter Dienstag. The custom of making pancakes comes from the need to use up fat, eggs and dairy before the fasting and abstinence of Lent begins.”

They will be partying all over the world today. If you can’t be there, have a little private party where ever you are. As Forrest Gump said, “Life is like a box of chocolates. You’ll never know what you’ll get.”

The global warming story breaks down even more. Scientist confesses it wasn’t “science”. The debate on global warming is very corrupt. It’s being proven to be a political movement designed to build a bureaucracy and hold power, rather than to discover things we didn’t know about the planet. Great summation of the tawdry affair here.

How Twitter produces business results.

Blowing Moore’s Law to smithereens.

Can your Facebook profile predict your job performance?

Good summary of a Santorum strategy. He shouldn’t lead with social views, but he ought to put others on defense about them. My problem with Santorum is less about social views, and more about being a big government conservative.

If you are touting (and pandering politically to) big manufacturing, you are in the dark ages. However, small nimble niche manufacturing can make big gains in the US.

Greece is like a bad penny. Supposedly, they have it solved this time…..

It’s not always smart to be cheap.

Sweden finds HFT effects are limited. I think the biggest line in the article is the supervision is “insufficient” line. Long time traders see the effects of the algo’s. Regulators don’t. Exchange officials don’t care because of the volume.

It’s not just the President’s fault. However, his policies have gone a long way in running up the price of gas because they have constrained supply. $8 per gallon gas, here we come.

Another reason to trust the market over government. Government regulation and rules are stuck in 1900.

The future is data.

The small stocks might rally. Course, they are up 26% since October.

Russell 3000 Stock Chart by YCharts

5 blogs every start up should follow.

Fama on Efficient Market Theory.

Big Government anti-capitalistic President Obama heard that Big Government/social conservative supporter Rick Santorum was ahead and gaining steam.

Look at this 6 year linked chart to gas prices. Traditionally they make their highs in the summer.