In the Dark

Romney Man Song

2012-01-13T16:45:00.001-08:00

We've got a great parody song for you to check out calles "Romney Man" set to the tune of "Solitary Man" by Neil Diamond in the style of Johnny Cash.

You'll get a laugh and probably sing along!

Warren Buffett Says: Stop Coddling the Super Rich

2011-08-15T09:31:00.004-07:00

Warren Buffett had an op-ed piece today in the New York Times where he addresses taxation of the very wealthy. While he makes a few good points, his main argument, at least to me, has been flawed since he first started making it long ago. The idea that these "coddled" super-rich must await an act of Congress to give money to the government is simply wrong. Most Americans, politicians, and perhaps Buffett himself do not know that the Treasury actually has a bureau already set up to take donations "from individuals wishing to express their patriotism to the United States." That's a direct quote from the Treasury's Financial Management Service Bureau's website: http://www.fms.treas.gov/faq/moretopics_gifts.html . Another fact is that this special bureau has existed since 1843. So instead of piling on more legislation, tax code, and regulation, how about we use the legislation we've already had on the books for 168 years. You know, if we did that, maybe we wouldn't have to spend so much money each day just to keep the doors of the government open.

So, I say to Mr. Buffett and his "coddled" friends, please remit your donations to the FMS as soon as you are ready and able.

Is Health Care A Right?

2011-04-21T22:52:00.003-07:00

Two levels on which I don't agree that health care is a right. The first level is that, if it is a right, it is definitely not a protected right under the constitution. If we as a nation define it as a right by adding it as an amendment or addition to the Bill of Rights, then it would become protected. When the Bill of Rights was written as a compromise for those who questioned the Federalist notion of a constitution and a central government, hospitals and doctors existed. If the non-Federalists had felt that healthcare was an inalienable right they would have asked for its inclusion into the Bill of Rights, because they basically asked for everything else they could think of. Good thing they did; Imagine being without the Bill of Rights, which is what the Federalists wanted until it was obvious they needed a compromise.

The second level is on what constitutes a right. What are rights, and where do they come from? I have always questioned that, and recently questioned it again in regards to whether I should think health care is a right or not. If it is, I want to be behind it as a defender of rights. If it is not, I want to explain why not.

Fundamentally:

A right is rooted in, and constituted of, principles defining the ability to act.

Rights come from the obligation of others to keep themselves from violating your ability to act. In other words, rights are negative obligations - weighty responsibilities.

What we know:

The need for health care in a time of sickness is not an act.

Society has only defined certain obligations of doctors in times of emergency, sickness, or need - and complete health care is not one of them.

So, health care is not a right, but a privilege given to us unvoluntarily (i.e., at a price) by others who possess (which is a right) and have obtained (which is a right) the skills necessary to do so.

True rights do not infringe on another person's rights. My right in the pursuit of happiness, freedom of speech, freedom of religion, right to an attorney, right to a fair trial, or any other, should not and do not take away from another's same rights.

If health care was, or could be, a right, how could it be so without taking away the rights of others?

As stated above, I currently have the right to an attorney, but I have to pay for it out of pocket or request one (the act), and the right is given to me to defend me from accusation of my peers (The People, who are under that obligation). If the People of my State decide to accuse me, I should (and do) have the right to defend myself against them.

However, in the case of a medical need, it usually occurs by natural cause. The People did not inflict the medical need upon me, so I have no right for a doctor to be provided (there is no act and no obligation). But I do have the right to hire (a right) one and receive treatment if I have obtained the ability (a right) to do so.

Of course, there are always a few exceptions and further explanations and arguments to these types of philosophies which would take much more time to write than I have. Such as what happens when The People do inflict harm on someone - then does that person have a right to receive care? Most judges or juries would rule yes and I agree with that. Notice, however, that the right is usually alienable, meaning it can be taken away, or it is only for the duration of the treatment of the harm caused. It normally would not include any and all medical care, as the alienable right was given because The People infringed on that person's right to be left alone. (See Francis Hutcheson)

One last example, my right to legal representation can still be exercised (therefore it is inalienable) even if all of the lawyers were to leave the world, and none were available to represent me. In that case, I become my own advocate and represent myself. The right has not been taken away from me based on the lawyers' decisions to leave. On the other hand, if all of the doctors were to leave the world, how would I exercise my right to health care, beyond the rights I already have to take care of and make decisions for myself?

The fact that health care is not a right does not mean we should not be charitable and help where we are able. It means we should be careful about what types of weighty responsibilities we add to the burdens we share as Americans. Balance is a notion that we tend to forget about but is symbolically everywhere in the foundations and inner workings of our country. I believe there is good wisdom in that.

Follow-up: How To Short Sell The Oil Companies

2011-04-13T22:30:00.004-07:00

In a previous article, I wrote about how we can collectively work against the oil companies to help improve gasoline prices. (See the previous article before reading further if you haven't read it already. Then come back to this article.) We should keep doing that, as now traders and firms like Goldman Sachs are seeing that demand might not be meeting with supply, and oil has been off its highs so far this week. Keep it up America!

In full disclosure, I am not currently short on oil. In fact, I am actually long DBO ETFs in one of my portfolios, and have no plans to change my position anytime soon. I think energy long term is a good play. But gasoline prices are too high, and unsustainable (in my view) at these levels, and I believe could impact the economy come summer time (like we saw in the perfect market storm of 2008). I do have another interest in seeing fuel prices decrease, and that is I need to book some flights to Hawaii soon and would love to see some benefits in reduced airfare from lower aviation fuel prices. Long shot, I know, but I can hope!

I also have seen other researchers write similar things about other commodities, such as food related goods. Below is what Smartmoney.com had to say on the topic of stockpiling (which is what are doing in effect when we fill our tanks to the brim instead of just filling with a half tank more frequently).

Consider this example. There are over an estimated 247 million registered vehicles in the US. The average tank size is around 20 gallons. That means, if we are keeping our tanks above half full, we are storing between 4.94 billion (at full) and 2.47 billion (at half full) gallons of gasoline, at our cost, not the oil companies' cost. We are storing billions of gallons of gasoline for FREE, so that we can drive around town for a week without filling up (even though most cities and towns have a plethora of fueling stations along the routes we drive). Imagine what would happen if we were storing a half tank or less of gasoline (less than or equal to 2.47 billion). We would immediately stick almost 2.5 billion gallons of product back on the oil companies' "shelves", since their numbers are set to meet the demand at that rate of draw. How's that for some perspective?

Smartmoney.com:
...

There's also an unintended consequence of stockpiling, says David Bell, a professor of marketing at the University of Pennsylvania's Wharton School of Business: You'll actually end up using more of what you've stockpiled than you would otherwise. In theory, doubling the number of soda cases bought would result in a supply that lasts twice as long, but it's more likely that you'll go through it faster, or simply be less frugal about its use with extra on hand. You could even end up throwing out food that expires, rejecting out-of-fashion items, or simply forgetting about the cans of corn stashed behind the hats and mittens in the basement.

Still, buying before prices rise can be smart – in small doses. Most supermarket and drugstore items go on sale just once every 10 to 12 weeks, says Teri Gault, founder of The Grocery Game. If you're loyal to a certain brand, buying extra when you spot a sale is smarter than paying full price the following week when you're actually out. On fashion, retailers sneak in bigger price increases on trend items because consumers can't easily monitor cost like they do for wardrobe staples such as trousers and T-shirts, says Tennant. Many of those items are available now at end-of-season clearances, and can be picked up for a song. And avoiding hyped-up eBay ( EBAY: 29.98*, -0.46, -1.51% ) prices on discontinued items by stocking up is usually a sound strategy, too.

Ultimately, the decision may come down to cash flow. If charging six months worth of dry goods means paying extra interest charges on credit card debt, it's not worth the savings, says Randy Allen, an associate dean for The Johnson School at Cornell University.

Read more: Will Stockpiling Save You Money? - SmartMoney.com http://www.smartmoney.com/spending/budgeting/will-stockpiling-save-you-money-1298583519761/#ixzz1Gm8Ox5Y4

Additional notes: When gasoline is sitting in your tank, it is evaporating. Why pay out of your pocket just to let more droplets of gasoline disappear on your dime. Make the oil companies pay that expense themselves by buying less gasoline at each fuel-up, which forces them to store more gasoline and worry about their own storage tanks' evaporation rates. While many articles show that the evaporation rates are pretty negligible (less than 1 gallon per year at 60 degrees Fahrenheit), I still need to do some more research on what the rates are like when it is over 90 degrees like most of America is during the summer months. Also, when liquids slosh around, there is more evaporation. There are also arguments about cars that have evaporation collection systems which reuse gasoline that might help mitigate your losses. Additionally, E10 or higher Ethanol gasoline is said to evaporate even more due to the alcohol content.

However, even if you are not benefiting from less evaporation, you may stand to benefit from increased gas mileage by not hauling around so much liquid in your tank. As the power of your engine increases (4 cyl, V6, V8) the benefits decrease: meaning you'll see better gas mileage for half tanks in a 4 cyl than you will in a V8. But remember, these are just added benefits, so if you don't receive these benefits because your car is bigger or has cool vapor catching gizmos, it doesn't matter. The bigger benefit is short selling the oil companies, over-supplying them with excess inventory, by not filling up a full tank when you go to the pump. They will soon see that they have too much gasoline product on hand and reduce the price to get rid of it.

If interested, you can read more on efficiencies here:

http://www.creditinfocenter.com/wordpress/2008/07/24/increase-mileage-gas-tank-full-or-half-empty/

Economics of Gasoline - How To Short Sell The Oil Companies

2011-03-31T22:53:00.001-07:00

High gas prices are back. It's time to review ways to save money on gas.

But I don't intend to talk about conserving gas through substitution to biking, running, or riding the bus to work. The problem of high fuel prices goes far beyond that, and could easily cause setbacks in the US economic recovery - if there really is one.

Let's start with good ol' reliable supply and demand. Prices are higher right now because the traders who buy oil on the commodities exchanges are saying with their pocket books that the supply of safe, reliable production of oil is heading lower relative to demand. Whether we agree with their assessment is irrelevant. But what is clear is that we need to shift the supply curve to the right to get prices to come down. If the traders won't do that, how can we as consumers do it?

Before I go further, I'll point to some interesting info regarding the last time oil had a huge run. In 2008 saw oil a peak price at $145.29 on July 3. Just 10 days later, President George W. Bush announced a repeal of the offshore drilling ban, and oil made a steep and steady decline (along with the economy) to well below $50 per barrel by December 2008. I don't believe for a second that Bush intended to allow drilling - it was simply a bluff, an ace in the back pocket. Even if he did intend to allow drilling, it would have taken years to get production on line. However, the mere chance that more supply could be coming on line in future years was enough to help the price come down; way down.

Remember, oil is traded in futures contracts. The futures are trying to predict what the price of oil should be in the coming months.

So, again, how can we as consumers get the price of oil to fall? Answer: we can use the properties of distribution models and futures trading against the oil companies, and force them to sell gas at lower prices.

Distribution models are everywhere, and these days they are run with high efficiency. Imagine a tanker filling up with oil right now at a port in Alaska. There is a port somewhere in Texas expecting that tanker to come to port in the near future. At that port in Texas, there is a pipeline company expecting to transport the oil from the tanker, and eventually route it to an oil refinery somewhere in the mid-west. That oil refinery is expecting the oil to come in so they can make gasoline and other products. There is a distributor expecting to haul that gasoline to nearby stations, and stations that are expecting to sell the gasoline at a certain volume per week. All of this is done with "just in time" precision to ensure that enough gasoline is on hand to the members down the chain at a time when it is needed.

That's where we come in.

Instead of filling our cars full of gasoline every time we stop to fill - and hauling it around while using it slowly, meanwhile letting the oil companies take our money for gasoline we will not use until sometime in the future - fill up with a half tank of gas, or better, a set dollar amount (that is at or below a half tank), keeping more of your money in your pocket, and paying less upfront for future consumption. We will be placing "puts" on their future price of oil by paying less in advance for gasoline we'll burn in the future.

Our tank shorting will do two things immediately. One, it will immediately increase the amount of gasoline inventory every station has on hand relative to their normal draw rates. When the distribution company comes to fill the tanks for the station, they will not dump as much gasoline off their tanker trucks. With less gasoline leaving the storage tanks of refineries, they will have to slow production (or pay money to someone else to store the excess gasoline). Reduced production would mean less oil draw from their pipelines, which would mean the pipeline companies would have to store more offloaded oil from tankers (or pay someone else to store it). Rather than do that, they offload less oil from the tanker. The tanker sits in port longer now, since the offloading rate is slowed. Meaning the tanker company now starts a dispute with the purchaser of the oil over who will pay the costs of the extended stay at port. Meantime, another ship is already on its way to port with more oil. That tanker arrives while the other tanker is still docked. Now the tanker company has to pay to dock the second tanker, effectively "storing" the oil.

Two, rather than allow this backlog to happen and disrupt the supply chain, the oil companies will try to entice us back to the pump by reducing the price of gasoline in an attempt to ease the onslaught of higher inventories. This action would effectively take some wind out of the sails of the futures prices of oil, which would further reduce the price of gasoline over time.

Let's get started America.

Response In Favor of Utah's Immigration Compact - Specifically HB116

2011-03-15T21:15:00.002-07:00

The title of this article includes a link to a youtube post I did were I talk further of my support for the Utah Immigration Laws that were passed today. Be sure to listen to parts one, two, and three. In case you need them, each of the links are also provided below.

I will say this as a lead in to the discussion. The Utah Republicans had better think before they cause an uproar within the Utah Republican Party over this by using the primaries to oust politicians that supported this bill. The last time something similar happened, and on a national scale, was when the Immigration Reform Act created a huge divide within the Repubs in May of 2006. That fall, the divided Republicans couldn't overcome their stronger Democratic counterparts, and lost big time. The momentum carried into the Presidential Election, and Obama was elected in.

If Utah Republicans are not careful, we may see something similar happen where less-conservative-more-moderate people like me relinquish support of the party as these party line delegates push their ultra-right candidates through the primaries. That would likely lead to our first Democratic governor in quite some time, and possibly a Democratic legislature.

But beyond that, this issue is about doing what's right and an enforcement policy mixed with a guest worker program is a great solution, and says to Washington, wake up, or let the States decide on the issues you fail to take up!

Taco Bell's Hellish Heat

2011-01-28T18:02:00.001-08:00

Some have jokingly called Taco Bell "Taco Hell" for some time, and now it seems like the company may be in trouble as litigation over the question of "what beef is" catches America's attention.

But before we get all riled up about something corporate, I want to pose a question. Is it really that big of a deal? Allow me to explain my reasons for questioning.

It's not that I think fast food is great and that people, restaurants, and food producers shouldn't do more to ensure that there is nutritional value to food. That is especially the case now that we have the real possibility of universal health care. If we all have to pay in, I want to be sure that Joe Plumber is eating foods that will sustain him and his health so that he's not overusing the health system.

But the question is, does Taco Bell's beef, or lack thereof, really pose a health issue? Or a false advertising issue at that? Take a minute and think about it. How many mom's since the invention of meatloaf have used "extenders" when making meat based foods? How many restaurants initially used "french" in french fries, french toast, etc. to make the food name sound exotic when it wasn't. Isn't that false advertising?

Meatloaf itself has all kinds of stuff in it, that isn't meat, but you don't see lawyers lining up to say that it can't be called 'meat' loaf anymore. Think of the ingredients: eggs, milk, butter, bread crumbs, seasonings, oils, etc., none of which are even close to the meat department. Sounds like it should be called breakfast-for-dinner loaf instead. Isn't all Taco Bell is doing with things like maltodextrin (sweetener), and soy lecithin, isolated oats similar to what your mother does with meats she prepares?

So the plaintiffs want Taco Bell to have to call their whatever-you-call-it something more like "Taco Meat Filling" instead of beef. Sound's appetizing doesn't it? I knew that fast food menu's took after the Chinese menu, but I thought it was the numbering part, not the bad way of explaining what it is you're eating part.

I think most Americans are thinking along the same lines... at least non-scientific polls seem to be showing that. It also seems that Taco Bell knows that as well, and is adding some humor to the situation by releasing this ad.

Come on America, let's focus on other issues at hand. Sure, we need to be healthy. But food is one of those things that man has been experimenting with for a long, long time. And the whole point of it is to mix things together that make the prepared food much better than it was naturally. Humans have been eating "badly" by our current definitions for millennia, but we've gotten to this point, haven't we? Lets move on.

Craziest Campaign Speech of the Year - Phil Davison

2010-09-13T22:14:00.001-07:00

Wow, I had to post this transcript I made of Phil Davison's words to the Executive Committee, and infamously to the rest of us through video. What a crazy speech that was. It was like watching Matt Foley turned Treasurer Candidate from his normal role as a motivational speaker...in other words, like watching a train wreck. But it makes for some good entertainment now, thanks to YouTube! If only Chris Farley were still around to have seen it.

If you've yet to see it, click the YouTube link (the article title), and follow along in the text.

Phil Davison's words on September 8th, 2010:

Ladies and gentlemen,
of the Star County Republican Party Executive Committee,
good evening,

And thank you,
not only for your attendance,
but for allowing me the opportunity to speak.

My name is Phil Davison,
and I am seeking our party's nomination,
for the position of Star County Treasurer,
on November 10th...November of 2010 excuse me.

In terms of my background,
I am from the village of Minerva,
where I am serving my 13th year of elected service,
as a Minerva council member.

In terms of education,
I have a bachelors degree in sociology,
a bachelors degree in history,
a masters degree in public administration,
and a masters degree in communication.

In terms of elections across Star County,
I have represented our party twice on the county ballot,
in both the primary and the general elections,
when I ran for Star County Clerk of Courts in 1996,
and Star County Commissioner in 2000,
and I will not apologize for my tone tonight.

I have been a Republican in times good,
and I have been a Republican in times bad.

Albert Einstein issued one of my most favorite quotes,
in the history of the spoken word,
And it is as follows:

In the middle of opportunity...oh...excuse me...
"in the middle of difficulty lies opportunity..."
I'm going to repeat that so I have clarity tonight:
"in the middle of difficulty lies opportunity."

This is the opportunity we've been waiting for,
The Star County Treasurers Office is a mess,
It is in dire need of structure and guidance
And now is the time to seize this opportunity,

With an aggressive campaign,
and an even more aggressive campaigner.
If nominated tonight I promise each and every person in this room,
I will hit the ground running,
come out swinging, and end up winning!

Let's send the message tonight
To the people of Star County,
and to the people of the Star County Democratic Party,
We're tired of business as usual.

Drastic times require what?...
Drastic measures! YES! Who said that??
Thank YOU!
Drastic times require drastic measures!

We will not tolerate incompetence,
and irresponsibility any longer,
Now is the time to snap
the democratic stranglehold on the treasurers office. ?

And I hearken back to what my friend Alex just said.
He ran against the Treasurer in 1996,
It was a problem then,
Its a problem now.

Infestation

Politics is not touch football,
Politics is winner take all.
It always has been,
And it always will be.

If nominated tonight, I want to develop and expand my campaign,
For what I believe is the greatest strength of the Star County Republican Party,
and that is its people.

I believe, in the axiom,
That all politics is local.
And because of this belief,
I want to harness the thoughts and ideas,
That individuals in our party have.

Concerning Star County and its political subdivisions...
and use that to its fullest extent.
Knowledge is power.

Lets tap into this knowledge,
and use it as a tool to win the Treasure's Office.
Lets use this knowledge not only as a tool,
but as a weapon.

We must win this election,
If nominated tonight I will win this election,
And I'm going to say that again so there is no miscommunication tonight,
If nominated tonight I WIN!

Tell your Friends
Tell your neighbors,
Tell Randy Gonzalez,
I'm coming, both barrels, guns loaded.

I believe in the entities in the principles,
of the National Republican Party,
The State of Ohio Republican Party,
And the Star County Republican Party.

And if nominated I will not hide those beliefs,
On my march to victory on election day.
If nominated today I can guarantee with 100% certainty,
that what you are seeing from me tonight,
Is what everyone else outside those doors is going to get over the next eight weeks.

I used to be an idealistic figure,
I am now a pragmatic figure.
Government may be about service,
politics is about winning.

Tonight as a candidate, seeking the Republican nomination for the position of Star

County Treasurer, I humbly ask for your vote as members of the Star County Republican

Party Executive Committee.

Thank you!

Java Wars: The 20 Year Saga

2010-08-04T09:20:00.001-07:00

James Gosling

         On April 12, 2010, the father of the Java Programming Language, James Gosling resigned from his position as the Chief of Technology at Oracle, citing his reasoning as “just about anything I could say that would be accurate and honest would do more harm than good” (Time To Move On). Oracle had recently completed its acquisition of Sun Microsystems where Gosling had worked as the creator of Java for over twenty years. Why was the creator of one of the most important computing technologies of the last thirty years leaving his post at such a critical time for the technology, a technology even Larry Ellison, founder and CEO of Oracle, heralded as “the most important software that we have ever acquired”? (Mr. Ellison Helps Himself)
         Gosling’s departure is sure add increased pressure to its growth and affect the direction Java moves in the next few years. Java has recently been transitioning from a “server side” technology to become increasingly viable as a “client side” technology (The Future of Java). Part of that transition is due to Google’s usage of the Java technology to drive its Android phone platform. As the pressure increases, the Java of today will become much different tomorrow, for better or for worse. Why does the future of Java matter? If history is any indication, the direction Java takes will forecast where computing technology as a whole will end up.

Java Logo

Java was derived from the powerful computing languages of C and C++, known generally as Object Oriented Programming Languages or OOPLs. Gosling felt that OOPL programmers could benefit from getting rid of painful programming procedures of the other two languages, as well as introducing a fast Virtual Machine to compile the code and create increased interoperability. This started the intellectual warfare between C++ boosters and Java junkies that still rages on today (The JVM Spec). Yet Java is so widely used, it can be found powering everything from DVR machines to DVD players, to computer applications and cell phones, to some of the most advanced high-transaction server farms, datacenters, and web servers. The control and advancement of such an important technology platform as Java, the training and needs of its programmers, and the applications built on the platform, should bring Larry Ellison household recognition that rivals that of Bill Gates or Steve Jobs; or will Google’s Eric Schmidt cloud out Larry Ellison’s eclipse of Sun?

Eric Schmidt

In 1983, Eric Schmidt joined none other than Sun Microsystems, at nearly the same time as Java author James Gosling. From the beginnings, Sun was setting up to be at the forefront of technological change and importance, a position they would hold for almost three decades. Schmidt’s first role at Sun was that of a software manager and would later work with Gosling on Java. Gosling was assigned, among many other things, to development projects such as the WYSIWYG editor (What-You-See-Is-What-You-Get) that kicked off desktop publishing, a software platform called NeWS that was implemented in the early Macintosh systems to rival Windows. In the early 1990’s, he worked on the Oak programming language (The JVM Spec), and when Oak failed to gain much traction by 1995, Gosling and others at Sun decided to rewrite Oak as an Internet technology. When they introduced the rewritten platform as Java, it caught on like wildfire. At the end of its debut year in 1995, it had been licensed by almost every major corporation, including IBM, Oracle, and Microsoft. Gosling was an overnight success story, and in 1995 Schmidt and Gosling were put in charge of pushing Java into the mainstream and overseeing its development. In one short year, Java had revolutionized computing by allowing software to be developed and run on any computer on the Internet (Kilbane, Doris).

Cross Platform Logo

         Before the cross-platform capabilities of Java were introduced, software had to be developed in consideration to the operating system it would run on. However, in an increasingly networked world, this fact was becoming extremely burdensome for many computers trying to communicate yet running different operating systems. With Java, websites could deliver content in less development time and without specialized programming in relation to the operating system of the computer accessing the site. Before long, programmers everywhere were developing applets, applications, and websites that could freely run on any system imaginable, especially on Apple and Microsoft machines. Among the first major applications to spring from the Java frenzy was the Netscape Navigator web browser that quickly became the de-facto browser for the net. Interestingly, the Netscape Navigator software was the central reason the US Department of Justice began the antitrust case against Microsoft. Therefore, Java was at the very root of the largest antitrust case in US history that once again demonstrated the surprising power it now held over Silicon Valley, the newly founded Information Age, and Microsoft.
        Microsoft was an early adopter of the Java technology. Yet almost immediately, the behemoth was internally troubled by the idea that its flagship product –Windows– could be pre-empted by software written in Java. Software could now be independent of the Windows Operating System, and better internet browsing could be done on a Java based browser. As Microsoft began to demand more input on the specifications for the Java language, it also began rewriting parts of it for their own language called J++, marking the first time an attempt was made to fragment Java. Lawsuits began to fly, further evidencing just how important Java had become. Whoever controlled it would gain major market share in the Internet space, whether it be servers, browsers, or applet support for the millions of websites that were being created. And Microsoft wanted just that.
         Sun was well aware that Microsoft coveted their Java platform, shown by Gosling’s disdainful testimony in court against Microsoft, saying “I just don't trust them. The planet is littered with companies that did deals with Microsoft expecting to win big but ended up getting totally screwed,” and proposing further that the Microsoft rewrite of Java was “…analogous to adding to the English language words and phrases that cannot be understood by anyone else" (Leaders of the Information Age).

Bill Gates

         Microsoft, and their patriarch Bill Gates, had very little ground for a counter-argument. In fact, in a parallel case to that of Sun vs.    Microsoft, the prosecutor in the People vs. Microsoft case uncovered evidence that Gates had written an email to another Microsoft executive with the scheming words of “…how do we wrest control of Java away from Sun?” (Videotaped Disposition 69) To which Gates affirmed, reluctantly under oath, that he had discussed the issue with others in the company through email. Microsoft’s solution to the suits in part was to simply write their own Java language, known as C#, which is part of the .NET platform and represents the first official and highly successful rewrite of Java, though the naysayer will claim that C# was not a rewrite. If it wasn’t, whatever happened to J++? Many also argued that Java would now be doomed, since the .NET platform would surely spread everywhere Windows went.
         However, Java and its developers were resilient and were not about to let Java disappear into the catacombs of computer science; continuing to fight for its success –they very well changed the course of the 1990s, and they would very well change the course of the 2000s. Eric Schmidt, who had manned the post of CTO at Sun from 1995 to 1998, and helped lead the expansion of Java into prominence, soon left to work for Novell as their CEO. Novell was like a bright pulsar in business terms, entering into the game with huge amounts of flair and potentially groundbreaking technologies. Their mainstay was producing software for networks, which at the time, wasn’t normally built into an Operating System. But like any typical pulsar, Novell’s business was rapidly fading. Schmidt was determined that he could right the ship and save the company, and use a major network software component – Java – to do so.
          Fortunately for many of us today, the plan didn’t go as Schmidt had planned, and customers were still wary of purchasing products from Novell. Moreover, when the roaring economy of the nineties was about to become terminal in 2000, Schmidt decided to leave for greener pastures.

Google Logo

          Mountain View, California is lushly green in foliage and money, and it was there in 1996 that Sergey Brin and Larry Page were coding up a revolution for the Internet that no one saw coming. As their new technology continued to prove promising in test labs and small releases at Stanford University, its popularity flourished rapidly. By the year 2000, Google was its own company and was becoming a key player in the search engine role, and expanding daily. Brin and Page tapped Schmidt to take over as the CEO of Google in 2001, who brought along with him the personal networks and relations to the people at Sun Microsystems, especially the people working on Java (Current Biography).
         The resurgence of Java in the early part of the last decade can arguably be attributed to its adoption by Google. While it is hard to affix a date or exact time that Google decided to use Java as one of its core technologies, there can’t be much doubt that Schmidt’s move to Google in 2001 had a lot to do with it becoming central to their operations. We also know that Google played a major role in advancing Java to the popular Java 5 release in 2005, when it already powered most of their platforms and APIs (Application Programming Interfaces) during which time Google had also become the world’s dominant search engine. Responding to Robert Eckstein’s question “How does Google use Java technology”, Google Software Engineer Li Moore explained that “Google makes extensive use of the Java platform. Large parts of popular Google products are written in Java. We also use Java in many internal systems and products under development” (Sun Talks With Li).
          Through Google’s continual use of Java for internal development which pushed the language to new frontiers, developers of non-Google and non-web related platforms also stood to benefit from the advancements being added to the language, such as JavaFX, enumerations, and other key features that had been requested seemingly since its release in 1995. This, along with the later Java 6 release, helped to buoy the attractiveness of the Java platform for nearly the entire last decade, and only recently was it surpassed in search engine popularity by the C language (‘Rudderless Java’). Some will say that is an indication that Java is beginning to lose relevance; yet, it would seem otherwise with a broader viewpoint that C is the base of the language used to program for the iPhone, a language Apple calls Objective-C, which naturally would drive its popularity in search engines as developers look to create apps for the exploding iPhone app market. Nevertheless, Java is close behind and will retake the top spot as the Android platform races to overtake the iPhone platform’s popularity – unless war ensues.

Larry Ellison

Since its reinvention as a core programming language in 1995, Oracle has been another key player in the Java story. The company founded by Larry Ellison, and one that thrives on acquisitions, has subtly made Ellison and his investors tens of billions of dollars in wealth. Their main customers are mid-to-large size businesses in need of database architectures and powerful business software such as PeopleSoft. Since Java has always been a major player in the world of business and enterprise programming, Oracle’s support of the language makes quite a bit of sense. Beyond pure Internet technology, one of Java’s main usages in businesses is running enterprise applications on remote servers, and serving up the data from those applications to client computers. By supporting Java, Oracle has banked on the idea that Java programmers would use the powerful Oracle DB (database) platform which their Java code could access and use seamlessly (Interview With Dan McDonald).
That mission for seamless integration of Oracle DB with Java has largely paid off, with only the MySQL database platform as a rival in implementation with Java. Additionally, Oracle has made their database platform fully programmable using Java, making it the only database system to use an object oriented language in conjunction with SQL. Database administrators and programmers normally have to rely purely on SQL (the end-all of database scripting languages) to write to and access the database information, and a modified version of procedural languages such as C to program stored procedures and operations for the database (Interview With Dan McDonald). This is usually very tedious and is prone to human errors since there are few ways to debug the code and the language itself is limited. Implementing an OOPL like Java creates powerful opportunities for data warehousing and applications administration; which is what Oracle wants.

Oracle Logo

Being a software conglomerate like Google, Microsoft, and Apple, Oracle rules the business space in many aspects, and seems to be constantly driven by acquisition and seeking a bigger share of the business computing arena. Since a massive portion of the business enterprise software and internal applications in the world use Java, having control over the language gives Oracle some leverage to wield more power over business operations that have been programmed in Java into specific directions. Having exposure like that to business needs has definitely got to have significant value, not necessarily monetary value, rather value in creating vertical market share for Oracle’s other open source and proprietary products. Don’t imagine for any small amount of time that companies like Microsoft weren’t completely blindsided by the thought of a powerhouse such as Oracle garnering that type of command through Java. “I am very surprised. I have to think about it,” was all Microsoft CEO Steve Ballmer could say about the Oracle announcement in April of 2009 (Mr. Ellison Helps Himself). Such a short, fragmented statement by one of the industry’s sharpest corporate leaders shows he must have been pale-faced when he said it. What was Oracle positioning for? The next software empire? Some sort of software federation with Google to double team Microsoft and its virtual fortress?
The answer to both questions is yes. In an interview with Dan McDonald from the Eccles School of Business on the future of Java, he explained that “Oracle has a much better track record [than Sun] at actually creating usable products in Java. So, while they may not be as good of a language steward from the theoretical standpoint, Oracle may just produce a more functional result” (Interview With Dan McDonald). Many businesses that develop applications in Java do so independently and for the most part in-house. If Oracle can start developing software applications for businesses that are both distributed and customized for customers using their own development teams at Oracle, they will gain a huge advantage in the business software space. So is Oracle going to make office software for client release to compete with MS? No, because the movement of software is toward what they call “the cloud”. Cloud computing is the idea that everything should be stored and run through the Internet by accessing remote servers in co-located and clustered server farms. The advantages to this are long uptimes, centralized maintenance, and defense against disasters and crippling data loss to business operations. This is something that Java should excel at, since it is mainly a server-side platform.

Cloud Computing

The antagonist would argue that cloud computing requires huge investments in server infrastructure, and not just software languages and platforms like Solaris, Java, and MySQL. Recall, nonetheless, that Sun Microsystems was mainly a hardware company, selling server clusters and powerful mainframe computing systems, and also hosting them in server farms, as their core business. Those assets and technologies are all on Oracle’s books now. Furthermore, Oracle is expanding their data center space beyond what they inherited from Sun, which is a key component to growing a cloud based business model. In an article announcing the resumed construction on their extensive data center project in the greater Salt Lake City area, industry analyst Ray Wang forecasted “A good amount of everything new [at Oracle] is going to go in that direction…It wouldn't be inconceivable to see 50 percent of Oracle's business in the cloud by 2014." (Kanaracus, Chris)
And why wouldn’t they? With Google applications as an exception, Java hasn’t been used as much for cloud computing applications like email, web documents, Twitter, etc. This has mostly been left to JavaScript (which has no relation to Java at all), PHP, Ruby on Rails, Python, and other similar languages. Oracle will want to change that by moving in on the cloud computing space with Java as a key component, just like Google has done. As Oracle positions Java to lead the cloud movement of software, what will happen to all of those legacy cloud applications written in JavaScript and the like? The good news for those applications is that Google and other Java proponents have already made it possible to write code in Java, and have the JVM create perfectly accurate JavaScript. The creators of cloud applications who want to move into Java once it is optimized for cloud computing will not have a hard time doing so, meaning programmers who know and develop in Java will be able to move right in to those development teams, only increase the momentum of Java’s adaptation into cloud computing (Schalk, Chris).

Android Logo

The one thing that could impact that momentum would be a severance of ties between the major backers of Java. Fragmentation of the Java Platform is a real possibility for a few specific reasons. The Dalvik VM developed by Google for Android is yet to be accepted by the Java community –under the control of Sun –as real Java. If Google continues to develop new technologies into their platform, those features will not necessarily be adapted into Java, and vice versa. In software, this tends to create issues where the diversions between the branched code are too wide to merge back together, causing a fork in the code. Google prepared for this scenario, evidenced by recent complaints from them that Java has not advanced fast enough under Sun, and by sponsoring their own adaptations of the platform. Oracle also has not been forthcoming enough about their direction and plans for Java, which leaves many who rely on the platform nervous about its prospects. If Google forks the code, an epic exodus of programming minds and skills would ensue, leaving Java devoid of the needed ingenuity to keep it relevant.
Some within Google insist this will not happen, and that in fact Oracle will be a better company for Java than Sun was. Google’s Chief Java Architect, Josh Bloch, made the diagnosis that “The king is not dead. The king is alive and well. He has a slight cold" (‘Rudderless’ Java). Even still, Loch conceded that a fork in Java is not unlikely if a shift in direction is not made soon; a shift in Google’s favor and to their demands. Will the strange bedfellows of Google and Oracle join together, with Google expanding Java within the mobile space, and Oracle expanding Java in the business services space, and both of them working in parallel on cloud services? Or will the allies turn on each other now that the diplomatic mediator and near hippie-like philosophic viewpoints of Sun are gone?

Java Sandbox

We should hope that they both get along in the sandbox. A union or pact between the two would fuel the next decade of information technology and keep Microsoft in check. The advancements that would occur and the relentless storm of cloud based software that would arise would revolutionize our connected world many times over. Tools once relegated to desktops and mainframe systems would become feasible for use on mobile devices as Java drives the communication between them and the supercomputer-like cloud servers. Business or government executives would be able to access a myriad of organizational data on the fly. There is no telling where Java’s momentum could carry it, or how many other big players would join in its development even if it means jettisoning support of other languages. But no matter what happens, whether Java becomes an a-la-carte mixture more like a mocha or a latte than a straight coffee, Java will find a way to continue on. HP’s Vijay Seetharaman touted that “Java will remain a dominant platform in the enterprise space" (‘Rudderless’ Java), meaning the “king” of computer programming languages will continue to drive business as it has for a decade and a half. Indeed with a new fusion of brilliance, and with Sun gone the way of the Death Star, the world could be made to revolve around Java.

Works Cited
Eaddy, Marc. Dr. Dobbs Journal: C# Versus Java (2001): 1-13. Print.
Eckel, Bruce. Thinking in Java. Upper Saddle River, NJ: Prentice Hall, 2006. Print.
Eckstein, Robert. "Sun Microsystems Talks With Li Moore of Google." Developer Resources for Java Technology. Web. 23 July 2010. .
Gosling, James. "Time to Move On... : On a New Road." Time to Move On. 12 Apr. 2010. Web. 27 June 2010. .
The H. W. Wilson Company. "Schmidt, Eric." Current Biography (2008): 1. Biorgraphy Reference Bank Select Edition. Web.
How The JVM Spec Came to Be. Prod. InfoQ. Perf. James Gosling. How The JVM Spec Came To Be. 28 Oct. 2008. Web. 27 June 2010. .
"Interview With Dan McDonald." E-mail interview. 6 July 2010.
Jackson, Joab. "Google Exec Worries Over 'rudderless' Java - PCWorld Business Center." Reviews and News on Tech Products, Software and Downloads - PCWorld. Web. 23 July 2010. .
Kanaracus, Chris. "Oracle Resumes Construction of Massive Data Center - PCWorld Business Center." Reviews and News on Tech Products, Software and Downloads - PCWorld. Web. 23 July 2010. .
Kilbane, Doris. "From Sneaking Into Computer Labs To Sneaking Out Java." Electronic Design: 49. Academic Search Premeir. Web. 25 June 2010.
The H. W. Wilson Company. "Gosling, James." Leaders of the Information Age (2004). Biorgraphy Reference Bank Select Edition. Web.
Lyons, Daniel. "Java in jeopardy." Forbes 163.1 (1999): 110-111. Academic Search Premier. EBSCO. Web. 19 June 2010.
"Mr Ellison helps himself." Economist 390.8628 (2009): 65-66. Academic Search Premier. EBSCO. Web. 19 June 2010.
Niemeyer, Patrick, and Jonathan Knudsen. Learning Java. Sebastopol, CA: O'Reilly, 2005. Print.
Ricadela, Aaron. "Sun Mulls Deeper Open-Source Dive." BusinessWeek Online (2007): 1. Academic Search Premier. EBSCO. Web. 19 June 2010.
Schalk, Chris. "A Java Developer's Guide to Google Technologies - Google Code Help." Google Code. May 2007. Web. 20 July 2010. .
Tennant, Don. "Q&A: McNealy Defends Sun Reliability, Personal Privacy Views - Computerworld." Computerworld - IT News, Features, Blogs, Tech Reviews, Career Advice. Web. 9 July 2010. .
"The future of Java." eWeek 25.33 (2008): 27-30. Academic Search Premier. EBSCO. Web. 19 June 2010
US Department of Justice. "Videotaped Deposition Excerpts of Bill Gates." Welcome to the United States Department of Justice. Web. 2 July 2010. .

Cramer: Obamacare Will Topple the Market

2010-03-17T10:01:00.001-07:00

All,

Take a look at this article published today by Jim Cramer. Although he's a democrat and was a supporter of Obama in the beginning, he has reversed course over the last year after viewing the destructive attitudes of the democrats (and some republicans who have gone along with them) in power. Then read my comments after the article:

Cramer: Obamacare Will Topple the Market

Either the market doesn't care that the health care bill will pass -- and it will -- or it doesn't think that the proposal will cost that much -- something I think is nuts. Which brings us to a very tenuous crossroad: We have to wonder if this is one of those occasions, like in 2008, where the market doesn't see the coming catastrophe. Or perhaps the market sees any resolution as positive.

>>Here's Your Portfolio If Obama's Agenda Wins

I don't. I think when the health care bill passes -- and it will pass, I believe, because Nancy Pelosi has worked diligently behind the scenes to bend the anti-abortion foes, the key votes, to her will -- the president will get a second wind. That means the whole agenda -- cap-and-trade, Card Check for easier organizing (something that Wal-Mart's (WMT) inability to move even on its dividend boost tells you is coming) and amnesty for immigrants who are currently not citizens -- will quickly come to pass, perhaps even before the election. To pay for these items I see a dramatic increase in ordinary tax rates and perhaps capital gains and dividend tax rates in 2011 either reaching or exceeding those ordinary income rates as this current version of the Democratic Party believes that only rich people own stocks. (That's been a hallmark from Day 1 with this administration.)

Given those hurdles, which include a suicide pact with financial health for small businesses that obviously can't afford health care without risking the capital formation necessary, I think you have to put the double-dip recession back on the table.

Those who have read me here and watch "Mad Money" know that I was out there early thinking that 2010 would not produce a double-dip, despite ample commentary that it would. But if health care reform passes, I am going to revise my thinking -- and you know I think it will -- especially because immigrant amnesty will cause the health care system to be overloaded and our taxes to soar.

The stakes seem so high while the market appears so complacent, perhaps because none of the levies will pass until 2011. To me that's around the corner. It's been slightly more than a year that I have been bullish. That's hanging by a thread this week.

Obamacare cuts that thread. Even if the market doesn't seem to know it.

At the time of publication, Cramer had no positions in the stocks mentioned.

I have had this sentiment for a while, and back in January began scaling down positions, moving to cash. I will continue to do so ahead of this vote, especially with the Dow now sitting at 10,700. This seems like a good level to take some money of the table and wait to see what congress decides to do.

My dad recently asked me what direction the market might be going, and to be honest, I don't know any big professionals that I read who have much to say on it right now either. That being said, while it is hard to get any direction in most sectors of the economy as we await the decision in DC, I think one sector that will do well regardless of what happens is the energy sector. So if you still want to have some money in play, I would think investing in mutual funds, ETFs, or stocks in the energy sector might be a good idea. In my view, if Obama wins and gets health care, he'll probably get Cap and Trade, which will make energy stocks go up. If he loses, energy should still go up because the economy should improve.

And anyway, Energy stocks, especially those with direct holdings in the commodity, gain value the longer the Fed keeps the interest rate depressed. As well, OPEC is not backing down on supply restraints, so oil should hold up and increase in price as demand continues to increase, and production continues to fall. One big player in the price right now is the drilling failure rate which is up dramatically over the last year. That makes oil more expensive to produce, making the future price go up, meaning if you hold a share in the actual fields producing oil the value of that oil in the field increases.

My favorite energy stocks right now are Royalty Trusts and Master Limited Partnerships, or basically anything with either direct holdings in oil or gas reserves or companies that own the pipelines for distributing it. Royalty Trusts and MLPs also pay very nice returns that have tax benefits, so their values hold up better even if the market moves against you. Right now some RTs are distributing about 1% per month (12% annually) which is a great return.

Mutual funds and ETFs in this sector are also a good idea, just be sure they have exposure to natural gas and good oil companies like Devon Energy, Enbridge, and MLPs and RTs as part of their overall holdings.

Good luck out there. And don't wait for Obama to mess things up market wise. Right now the markets are showing no true direction and that is always a good time for some profit taking regardless of your overall market sentiment. But as I said, a lot of the pros are becoming worried there might be a pullback, or worse, a double dip recession. And cash is always nice to have to buy the dip when it happens.

Tijs Limburg

Blogs:
http://phystrings.blogspot.com/
http://getoutofthedark.blogspot.com/

Ben Bernanke Named Time Magazine Person of The Year

2009-12-16T10:47:00.001-08:00

Ben Bernanke has been named as the Time Magazine person of the year. And I have to agree wholeheartedly with this nomination! After reading the article, I found once again that I am much in line with the way he thinks about economic policy and disaster mitigation in the wake of the biggest economic crisis in 75 years. He was the man for the moment.

Here is the article: http://www.time.com/time/specials/packages/article/0,28804,1946375_1947251_1947520-1,00.html

While I take issue with much of Keynesian economic policy, which is where my persuasions differ from those of Bernanke’s, I have long considered the actions of the Fed over the past year as absolutely necessary, though troubling and unprecedented. I had always been taught that the biggest factor in the Great Depression was inaction and massive blunders by the Federal Reserve.

Recently, there has been a lot of Fed bashing, and craziness, even from pundits like Glenn Beck, all slandering the Fed as some kind of money-printing-inflation-happy-mind-trust. But let’s remember how absolutely reluctant Bernanke’s Fed was to take action in the first place. It doesn’t seem like the about-face actions of the recent Fed could all be part of some planned conspiracy to doom the economy or be some sort of power-grab for the greedy like Ron Paul would have us all believe. Wall Street enthusiasts like Jim Cramer were crying foul and screaming at the top of their lungs that Bernanke’s inflation worries and tentative, hands-off policies were causing massive problems before the bog meltdown in 2008. Bernanke stood by, almost to his own undoing and disaster, because he obviously believes more in hands-off policy than that of Keynesian ways. But when it was inevitable that action be taken, he took it and dramatically changed the landscape of the financial world.

Since the disaster started in 2008, I have thought of the collapse and ensuing ‘bailouts’ as being similar to a fire. Why do cities and communities pay for a fire brigade using tax revenue? Why isn’t it corporations, such as insurance firms, that use their revenues to fund the fire brigade as part of your insurance policy? I’ve come to a plain conclusion that city governments know what their assets are: property. That is a large source of their revenues. They can tax the properties, they can tax the businesses that operate on those properties, they can tax things that are stored on those properties, and they can tax the individuals that live in those properties. Indeed, it is property that is the most important asset to a city’s revenue stream.

Recall the great fire disaster of the Chicago Fire of 1871. 34 city blocks, or more than 2,000 acres encompassing some 17,500 buildings and $222 million in property – one third of the city’s valuation, were destroyed by a fire that started in a small wood shed on a small alley in the city. The city made fatal errors in not responding soon enough, and lost a substantial amount of its assets, and the ensuing revenue streams.

Where are most of our assets as Americans? Housed in financial institutions. Securities, bonds, cash reserve, mortgages and titles, insurance policies, loans, etc., are all housed in these firms. Why, when one of them catches fire financially, would we not use taxpayer funds to send the fire brigade and put out the financial fire just like we do with real fires? Would we really want to cling to a wait-and-see policy and allow ’34 blocks’ of financial institutions that hold our hard earned assets to burn to the ground? Interestingly, that number above, the one third of Chicago’s value, is similar to the number of banks that were allowed to fail in the Great Depression – one third.

While it is still early, and hard to tell where the crisis will end, everyone on this email list still has a job, and has not had to endure bread lines and bank runs to the extent that they were endured in the 30s. As 2009 comes to a close, a year who’s beginning was laden with fear, I for one am very grateful for that fact. And I can’t help but think that Bernanke’s academic preparation and professional action had a lot to do with it.

TIJS LIMBURG
tijs.limburg@3-form.com
Associate Software Developer
3-FORM.COM
2300 South 2300 West
Salt Lake City, Utah 84119
T	801.994.8045
F	801.649.2699
C	801.680.6369
3form Technical Support 877.649.2670

Health Care Rights

2009-07-28T09:01:00.001-07:00

In response to this Forbes article, I sent the following to Senator Hatch and will also send a similar letter to each of my other representatives, and hope you will do the same.

http://finance.yahoo.com/insurance/article/107408/5-freedoms-you-would-lose-in-health-care-reform.html?mod=insurance-health

To The Honorable Senator Orrin Hatch,

Firstly, thank you for taking time to read this letter. I believe it to be one of the most important aspects of the American life to be able to be represented and give our trust to those we elect to make the proper decisions in our behalf. However, at times I believe it is also important that the representatives ensure that when their constituents cry out loudly for or against something, even if they believe differently, that they vote in a way to represent the majority of their constituents.

Senator, you have served our great State respectively, and I am proud of the freedoms we enjoy in Utah. As a 25 year old working class citizen who is also attending schooling at the University of Utah and working a full time job as a software developer, I am very concerned about the health care issue.

I strongly believe and advocate that health care issues such as those being debated in Washington should really be left up to the individual States to be decided, and should not be mandated federally. If a State decides that they want a Universal Health Care program, such as Massachusetts did, they should be able to decide within their State whether that is right for their population. But other States should have the option of electing to keep things as they are if they like. No one population is the same, and trying to govern in such ways when it comes to health care I believe is highly inefficient, and will prove to be dysfunctional. As always, the larger populations will win out against the smaller ones, and we will be forced to follow policies which for example may be necessary for larger, highly urbanized populations, but are not necessary for us.

And as you know, the Senate was instituted for that reason. To protect the interests of the smaller States and give them an equal voice to the larger States in a governing entity.

Utahns are self-reliant. We understand the need for employment, good health care, participating in the system of government, and being good citizens. We have different healthcare needs than Californians, New Yorkers, and others. We should be able to set our own policies within our State on how we want Health Care to operate. For instance, we have a higher rate of birth here, and a younger population. Therefore our Health Care policies should be reflective of that and our Insurers should be able to work their policies around those facts. I fear that a nationalized, or Universal and federally mandated system like the one being proposed at the least would be either too general or too specific in how it goes about making laws regarding even just those two aspects of the Health Care system for Utah.

Please vote against the health care plans being proposed in Congress, and tell them, as well as the President, that this is a State issue and that this debate should be sent to the 50 State legislatures to decide upon for their own populations.

Respectfully,

Tijs G. Limburg

TIJS LIMBURG
tijs.limburg@3-form.com
Associate Software Developer
3-FORM.COM
2300 South 2300 West
Salt Lake City, Utah 84119
T	801.994.8045
F	801.649.2699
C	801.680.6369
3form Technical Support 877.649.2670

I Just Scared Myself

2009-07-16T16:00:00.001-07:00

You are now my nominee for Federal Reserve Board Chairman! And you know a hell of a lot more than Barney Frank who proclaimed one year ago that Freddie and Fannie were in good shape.

I was just googleing myself to see if there are links to my Facebook artist page and found this review I had written a year ago on my Updown stock account.

Stock Pick by Tijs Limburg

FNM: Analyst Consensus: Sell (Short) Stock

Posted 366 days ago on 7/14/08

Market call:FNM will go DOWN
Target: $6.00 on 8/14/08
Current: $0.61 (-93.87% from time of market call)

Goldman Sachs analyst Daniel Zimmerman just announced this morning he expects the stock of Fannie Mae to drop about another 35%, and I highly disagree with all of those who are saying that a Fed "Financial Stimulus" will fix the stock. The only way the stock can benefit short term from the Fed in my mind is if the Fed were to buy out the company's shares. We have at least a few weeks before the Fed would take such action if necessary. Right now, the only thing that they can do is flood the company with cheap money at the discount window and help them raise capital through bonds. But we must remember that while that may help the company balance sheet, stocks are somewhat disconnected from the companies they represent. Right now, sentiment is very much against this stock -especially in the powerful and large investment firms- meaning that, short term, no one is going to start heavily buying this stock, meaning the short sellers are going to prevail. There is so much more money going into shorts right now that it would take large sums of money to get the stock to move against the pressure. Take for example Jim Rogers, who says he is keeping his short position open on this stock, and will sell more stock short with any run up in price. As the chairman of Rogers Holdings, I will take his word for it that he will put a lot of money behind that short position, especially with analysts saying the stock could see another 35% taken off. Any aid given to this company will take a while to get the money flowing again. An over-the-weekend bypass to the insolvent company will not immediately solve the problems. But don't get too greedy here, once you have a large gain, take it, especially if you start seeing declining short interest.

And after I had gotten bombarded with messages about how negative my analysis was, I posted this response on 7/14/2008. Looking at this statement a year later with everything in perspective is kinda scary:

We're in a bear market, so get over it. It's only negative to the buyers because they're on the other side, buying the stocks everyone else is selling short. These financial companies, especially Fannie and Freddie, have been mismanaged for years and are finally getting what they deserve. The confidence in the financial sector has turned to the sellers. We are confident that the market will get worse for financial stocks. It's only July. Just wait till September and October roll around. People are already shifting their money to stronger banks, and dispursing money across multiple FDIC ensured accounts. That means there is actual fear (not media generated), and fear is what drives bear markets. We've already seen one bank fail...

I made a 93% gain to date on that call, but I wonder what Jim Rogers made…

Tijs Limburg

Re: Utah Tea Party CALL TO ACTION!

2009-05-12T08:20:00.001-07:00

Joe, are you ready to join the State's rights movement? ;)

I'll be there for sure. The Patrick Henry Caucus is one of the most important developments since Roe v. Wade. Many activist judges and progressive politicians will be put in their place as states supporting the caucus pass legislation to take back authority over non-interstate items. To me, State power is one of the most important Constitutional rights and I believe it is the only way to keep the nation from further division and chaos. Let's take this opportunity to remember what our nation stands for and what the name of our nation is: Not merely the USA, not merely the US, not just America, but the United States of America.

Tijs Limburg
Chairman and CTO of DMX - Digital Media eXceleron, Inc.
Get eXcited!
www.dmxed.com

Blogs:
http://phystrings.blogspot.com/
http://getoutofthedark.blogspot.com/

The "Don't Tread on Me" Flag: The First Navy Jack is enjoying renewed popularity these days thanks to an order from the Secretary of the Navy that directs all U.S. Navy ships to fly the First Navy Jack for the duration of the War on Terrorism.

On Tue, May 12, 2009 at 8:55 AM, Eric Limburg wrote:

See below...Looks like we know where we are having lunch on the 20th. Those who can let's get together. Hopefully I don't have to fly that day.

---------- Forwarded message ----------
From: Utah Tea Party <saltlaketeaparty@gmail.com>
Date: Sat, May 9, 2009 at 11:50 PM
Subject: Utah Tea Party CALL TO ACTION!
To: dmx311@gmail.com

CALL TO ACTION!

TEA PARTY RALLY WEDNESDAY 20 MAY 2009--12:00 NOON--UTAH STATE CAPITOL--WEST STAIRS (INSIDE, 2nd FLOOR)

Many of us in the Tea Party Movement (and MANY other groups) have spent countless hours speaking to our local representatives about States' Rights and now they are listening!

Utah legislators are forming "The Patrick Henry Caucus" (Founding Members: Keith Grover, Chris Herrod, Stephen Sandstrom, Ken Sumsion, and Carl Wimmer) and are holding a press conference on Wednesday at 12:00 noon on the 20th of May 2009 at the State Capitol. The Patrick Henry Caucus will focus on introducing legislation to take our States' Rights back. Laws are being drafted now! We will be celebrating this historic event with a TEA PARTY RALLY in support of this cause.

This may be the most important Tea Party Rally we will attend to date. This is what we are fighting for; this is what we rallied for. This is the first effort in what will be a long struggle to reign in the federal government. Please come and stand with our Utah Legislators who are willing to take a stand for all of America. This is how we take our country back to the principles it was founded on.

Bring your favorite (family friendly) States' Rights signs. This is so important I secured the permit today!

Please see yesterday's Glenn Beck Video so you can see how important this rally is!

Part 1 of 2
http://www.youtube.com/watch?v=mV_Mlmamy70&eurl=http%3A%2F%2Flogisticsmonster.com%2F2009%2F05%2F03%2Fthe-montana-gun-law-you-will-never-hear-about%2F&feature=player_embedded

Part 2 of 2
http://www.youtube.com/watch?v=GHwPHvkrGrg&eurl=http%3A%2F%2Flogisticsmonster.com%2F2009%2F05%2F03%2Fthe-montana-gun-law-you-will-never-hear-about%2F&feature=player_embedded

THE TEA PARTIES ARE WORKING!

Please forward this to all your friends. Have them sign up at saltlaketeaparty@gmail.com for further updates.

Thank you all so much!

David

David Kirkham
Utah Tea Party Organizer

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The Fed's Money Printing and Quantitative Easing

2009-05-02T23:16:00.001-07:00

I've heard a lot of complaints over the spending bills, bailouts, etc. from the recent Tea Parties and most of it I agree with. However, I disagree with the popular idea of Tea Party participants that the Federal Reserve's Quantitative Easing policy is the problem - hardly so. Quantitative Easing, or "Printing Money" in simplistic terms, is doing two things for the economy that investors and businessmen LOVE. Just like a tax cut, QE reduces the interest rate, and thereby distributes wealth from the powerful banks and investment institutions to the businessmen and entrepreneurs. Or should I put it differently as diverting wealth from the powerful banks and investment institutions and into the businesses they own. Lower interest thereby reduces the expenses on businesses and consumers. It also reduces inflation - in the short term - by keeping prices moderated (businesses don't feel the need to increase prices when their expenses have been reduced), but at the same time stems deflation - which is absolutely the end all of economic disasters.

You may wonder how QE policy can put the spending power in the hands of businesses rather than banks. Steve will know the answer to this one. Businesses and businessmen look at the interest rate as an opportunity cost standard for whether a business should simply earn interest on a bond investment, or whether they should make a capital investment and wait for a future return. By reducing the interest rate (called "Printing Money"), the opportunity cost of capital investment is reduced, and the incentive to invest in a bond for future interest payments is reduced. Therefore businesses would rather spend money upgrading. It also has to do with present value of money. By reducing the interest rate to zero as the Fed has done, the future value of money in nominal terms will be the same as the present value. This is based on the equation Pv=S(1+r)N Where Pv is present value, S is the principle amount invested, n is the time in years, and r is the current interest rate.

Here's an example. The value of 10,000 dollars in three years at a 5% interest rate is:

=10000((1+.05)^3)

=11600

So in 3 years at a 5% interest rate, the value of 10,000 is 11600. So if your expected ROI on a 3 year investment is less than 11600, you should just put it in a bond at 5% and forget investing in capital. Also, this means that if 10,000 is worth 11600 in 3 years, it will theoretically take 11,600 to buy something that was worth 10,000 in today's current money value. But if the interest rate is closer to zero as it is now, 10,000 today is still 10,000 tomorrow, both in quantity and money value. This theoretically gives enormous incentive for investment in capital goods. And capital goods are the core drivers of our economy.

So this easing policy is much like a tax cut, but from the Fed rather than the government. However, the government should also be reducing taxes and expenditures while the Fed does this over the long term. Short term it may make sense for the government to spend more, since they can get cheaper bonds. The problem is the government already had enormous debt BEFORE the crisis. So spending any money they don't have is dangerous.

The only caveat to Quantitative Easing is that you have to be very good at judging when inflation is back to normal from zero, or when GDP is positive from negative. If you don't time it right, inflation will be more than normal. This is based on the Fed's money calculation MV=PQ. Increases in GDP raise the PQ side, and therefore to remain proportional, the Fed needs to increase the money site proportionally. V is a constant velocity of money, and P for prices in the economy normally should stay the same to avoid inflation. However, if GDP (prices or quantity) are decreasing, the fed can theoretically increase MV to force an increase in PQ. It is leaving the large amount of money on the table for too long that increases P too much, causing inflation.

Also, one has to take into account Gregory Mankiw's new theorem (Mankiw is a conservative economist at Harvard) that inflation is only a problem if it outpaces average raises in wages. Think of this: Businesses normally don't give raises based on performance. They have bonuses and promotions for that. Most raises are usually "in line" with or a bit above the interest rate. This means from year to year, the average worker maintains the same buying power, while GDP increases the quantity of selection as more and better products and services enter the market. This means that you have more to purchase tomorrow or next year with the same purchasing power (because the quantity of dollars available to you increased through a raise).

Currently, raises (if your company hasn't suspended them yet) are still outpacing inflation, which is somewhere near zero, or even slightly negative. Even if you got no raise, it is still in line with inflation since it is at zero. Once the economy recovers, most companies will give raises that are larger than normal to "make up" for the previous suspension, while hopefully the inflation rate stays below or around 4%, which will maintain a slight increase in purchasing power that we have been used to since Reagan.

Maintaining a 4% or lower inflation is the trick the Fed has to ensure.

Check out Mankiw's blog: http://gregmankiw.blogspot.com/ or this other blog by James Hamilton http://www.econbrowser.com/archives/2009/03/quantitative_ea_1.html

Now I want your dissertations and dissentions!

Tijs Limburg
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The "Don't Tread on Me" Flag: The First Navy Jack is enjoying renewed popularity these days thanks to an order from the Secretary of the Navy that directs all U.S. Navy ships to fly the First Navy Jack for the duration of the War on Terrorism.

Wow, There Really Is Totalitarianism Brewing

2009-04-15T08:42:00.001-07:00

If I were able and not working full time today, I would definitely be participating in the tax protests, or Tea Parties, that are occurring today. But since I am not, I am simply reading about it. I came across this article, which goes into some background on the planning that the Obama Administration is doing to deal with the protests around the nation, and especially in DC. Interestingly, the story has the following information from a document issued by the Administration to the Department of Homeland Security. Nevermind the threats of terrorism and Illegal Immigration, as it seems Homeland Security now has better things to focus on:

"The Obama administration clearly wishes the TEA protests weren't really happening, but it is certainly taking the threat of right-wing extremism seriously. (They call a protest like the Tea Parties 'extremism'? What? Its part of our history and a tool that Americans have the right to.) The Department of Homeland Security has produced a nine-page document warning of "right-wing extremist activity."

Radio host Roger Hedgecock and United Press International's sister publication The Washington Times were the first to report on the secret April 7 internal DHS report, which was tagged "advisory."

The report said issues such as illegal immigration and gun control are central points. However, it also claimed that the extreme right's anger was further fanned by the election of the United States' first African-American president.

"The economic downturn and the election of the first African-American president present unique drivers of right-wing radicalization and recruitment," the report said.

It is easy for someone like me to think, "well, I'm not an extremist", or "I don't consider myself 'right-wing'", or whatever. But it seems the Obama administration considers you all of the above if you "reject federal authority in favor of state or local authority" - Seriously, that's what the document says. Uhmm, have they ever read the Bill of Rights? What happened to the 10th Ammendment?

Don't Mess With Texas.

Of course, the one state that absolutely believes, and prides themselves in that belief, is already taking action. Here's what the article says the Texas Legislature is doing:

"The Washington Times reported that Homeland Security is now defining "right-wing extremism in the United States" as including not just racist or hate groups but also groups that reject federal authority in favor of state or local authority.

Does that include the government of the state of Texas? For the Lone Star State's Republican Gov. Rick Perry has thrown his support behind a state House of Representatives resolution reminding the federal government of the 10th Amendment regarding states' rights.

"Millions of Texans are tired of Washington, D.C., trying to come down here to tell us how to run Texas," Perry said.

House Concurrent Resolution 50 asserts some federal proposals are not within the scope of the federal government's constitutionally designated powers and impede the states' right to govern themselves. It also calls for all compulsory federal legislation that requires states to comply under threat of civil or criminal penalties, or that requires states to pass legislation or lose federal funding, be prohibited or repealed.

In normal times, this kind of talk would provoke national derision and a landslide rejection at the next election. Americans at least since the post-Civil War period have repeatedly confounded foreign observers by talking extremes in their politics and then voting in overwhelming numbers with remarkable moderation."

Go Texas!!! Is it any wonder the State of Texas has produced so many leaders on the national scale?

To me, such a federal policy to somehow make those who fight for state powers - or even the talks of such a policy - show that totalitarianism is brewing. It flies in the face of constitutionality. It creates centralized control. It creates unrestricted power. It does not tolerate parties of differing views. It seeks subordination of the states and citizens. It creates a governing elite, rather than a local power that can balance with the Union government.

I did a quick search on the Google Definitions tool to see what differing definitions would pull up, check them out: http://www.google.com/search?hl=en&defl=en&q=define:totalitarianism&ei=h_3lSc6wNqGctgPFotmhBA&sa=X&oi=glossary_definition&ct=title

To see the rest of the article, go here:

http://www.upi.com/news/issueoftheday/2009/04/15/Obama-faces-tax-protest-anger/UPI-45571239804861/

Our Infrastructure is Prone to Threats

2009-04-09T21:36:00.001-07:00

This event in Silicon Valley, where someone wishing to wreak havoc on the communications systems there can simply sever AT&T fiber lines and knockout service, proves my theory that our infrastructure is very prone to threats of vandalism and terrorism. I've thought that traffic signaling, electrical infrastructure, and communications lines are way too exposed to the public. Imagine how easy it would be to gridlock an entire city simply by knocking out strategic traffic signals, or shutting down power infrastructure.

Natural disasters do this all the time. I've wondered why Federal recovery grants don't include provisions that force electric and communications companies to underground a certain percentage of their transmission systems over time in order to receive recovery money. How many times have we as taxpayers funded repairs on the South's electric grid from Florida to Texas due to Hurricanes? Whereas the infrastructure that is underground in these areas is usually less affected.

Think about our own surroundings. How each winter, there is at least one big power outage here in Salt Lake, mainly affecting areas served by overhead lines.

Some problems don't require huge complex fixes like a GE proposed "smart grid" or billion dollar battles. But unfortunately the people who are supposed to govern continue to spend money on nothing making it seem to evaporate, and constantly "overhauling" laws - like the tax law - than fixing real problems. I sometimes wonder what would happen if we told congress we don't want any new laws and we'd rather that they go home and not "fix" anything for a while, and how much the country would be able to get done during that time of true certainty - that congress won't 'fix' or 'change' anything for a while.

http://www.msnbc.msn.com/id/30139776

Tijs Limburg
Chairman and CTO of DMX - Digital Media eXceleron, Inc.
Get eXcited!
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Blogs:
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The "Don't Tread on Me" Flag: The First Navy Jack is enjoying renewed popularity these days thanks to an order from the Secretary of the Navy that directs all U.S. Navy ships to fly the First Navy Jack for the duration of the War on Terrorism.

Google Launches Venture Capital Firm

2009-03-31T08:09:00.001-07:00

Google has launched a new Venture Capital firm called Google Ventures. Google says that this new venture firm will fund startups in many different industries, and will do many different types of funding from seeding to full partnerships. They also say that they will fund and partner with companies that already have other partners. This seems like an interesting way for them to have exposure to new growth and ideas, while not necessarily acquiring new companies. It also means that some very lucky businesses will get backing from Google's empire. I imagine that claiming that Google is a main supporter of your company will go pretty far in helping you make business deals just about anywhere.

Check it out. The site is pretty simple for now, but I wouldn't put it past them to add more features in the future: http://www.google.com/ventures/index.html

Tijs Limburg
Chairman and CTO of DMX - Digital Media eXceleron, Inc.
Get eXcited!
www.dmxed.com

Blogs:
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The "Don't Tread on Me" Flag: The First Navy Jack is enjoying renewed popularity these days thanks to an order from the Secretary of the Navy that directs all U.S. Navy ships to fly the First Navy Jack for the duration of the War on Terrorism.

Once Again, Democrats are Failing as Regulators

2009-03-18T17:18:00.001-07:00

So they go out and stir up a frenzy about AIG, which I am sure every American and Non-American alike has now heard. But the dirty secret always follows, and unfortunately never gets heard by the general public who continue to vote in these people who are asleep at the switch or so happy-go-liberal they just can't help themselves to the spending banquet table enough to realize they continue to sign away everything - or they just don't care.

The dirty secret: The 'Spendulus Bill' was signed after being written behind closed doors with no opposition input. A clause was inserted that protected businesses recieving government TARP funds from being held liable for paying bonuses to executives and employees that had already been contracted. And yet now all these Dems come out, including Obama - who was so gung-ho happy to sign the bill he must have forgotten to read it, and villanize the replacement CEO for AIG for paying the bonuses (guaranteed there would have been lawsuits if they didn't pay them, they were contracted). All while putting a cover of 'rage' and other rhetoric over the fact that they - the Dems - allowed it! If AIG had more say - which they don't because they now have a major position owned by the government - they should sue the government and keep those bonuses in the pockets of those who recieved them. I for one would much rather have that $150 million dollars spent by even the most pompous of executives before allowing it to be spent by Frank & Co.

And the really bad part of it for AIG stems from this statement by Barney "the-man-who-always-has-something-to-say" Frank: "I think the time has come to exercise our ownership rights."

May the Capitalism we knew and enjoyed Rest In Peace. All I can hope for is an advancement to Pure Capitalism. Come on Ben Bernanke, you're our only hope.

See the article for more details:

Democrats' Tacit Bonuses Approval May Undercut Rage (Update1)

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By Ryan J. Donmoyer

March 18 (Bloomberg) -- The outrage expressed by President Barack Obama and Democrats in Congress over $165 million in bonuses paid to American International Group Inc. may be undercut by their tacit approval of the payouts only a month ago.

The $787 billion economic stimulus bill approved by Congress Feb. 13 and signed into law by Obama three days later contains language that effectively authorizes bonus arrangements at companies receiving taxpayer bailouts as long as they were in place before Feb. 11.

The provision, on page 404 of the 407-page law, carves out those arrangements from new restrictions on pay at bailed-out companies that took effect with Obama's signature. Now Obama and many of the same lawmakers who voted for the law, such as New York Senator Charles Schumer and Banking Committee Chairman Chris Dodd, are demanding AIG employees surrender their bonuses.

Dodd told CNN today he put the provision in the final version of the stimulus measure at the insistence of the administration, which was worried about lawsuits if existing compensation contracts were revoked.

"The administration had expressed reservations," Dodd told CNN. "They asked for modifications. The alternative was losing the amendment entirely."

The provision has proven awkward for Democrats who have led expressions of outrage in Congress this week, because most of them voted for the stimulus last month. No House Republicans and only three Senate Republicans voted for the stimulus measure.

Closed Doors

"The fact is that the bill the president signed, which protected the AIG bonuses and others, was written behind closed doors by Democratic leaders of the House and Senate," Iowa Republican Senator Charles Grassley said in a statement today.

"There was no transparency, so the only way the public will ever know who added the language to protect bailout company bonuses is if someone from the small group of Democrats in the room says so," Grassley said.

Schumer yesterday sent a letter to AIG Chief Executive Edward Liddy warning him to return bonuses or face confiscatory taxes on them. The letter was signed by Senate Majority leader Harry Reid and seven other senators.

Brian Fallon, a spokesman for Schumer, said the senator "supported a provision on the Senate floor that would have prevented these types of bonuses, but he was not on the conference committee that negotiated the final language."

Final Negotiations

Dodd spokeswoman Kate Szostak said yesterday the exception to Dodd's executive-compensation restrictions was added during lawmakers' final negotiations with the Treasury Department over the stimulus.

She rejected Republicans' suggestions the date was included to exempt the AIG bonuses. "Senator Dodd was completely unaware of these AIG bonuses until he learned of them in the past few days," said Szostak. "To suggest that the bonuses affecting AIG had any effect on Senator Dodd's action is categorically false."

Other Democrats who voted for the stimulus bill have ramped up criticism this week of AIG's bonuses, including Massachusetts Representative Barney Frank, the chairman of the House Financial Services Committee, who told reporters, "I think the time has come to exercise our ownership rights."

House leaders including Speaker Nancy Pelosi and Majority Leader also criticized AIG.

To contact the reporter on this story: Ryan J. Donmoyer in Washington at rdonmoyer@bloomberg.net

Last Updated: March 18, 2009 19:25 EDT

Tijs Limburg
Chairman and CTO of DMX - Digital Media eXceleron, Inc.
Get eXcited!
www.dmxed.com

Blogs:
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http://getoutofthedark.blogspot.com/

The "Don't Tread on Me" Flag: The First Navy Jack is enjoying renewed popularity these days thanks to an order from the Secretary of the Navy that directs all U.S. Navy ships to fly the First Navy Jack for the duration of the War on Terrorism.

Frank Seeking Redemption?

2009-03-10T11:28:00.001-07:00

Is Barney Frank seeking redemption? Did anyone notice how quiet it has gotten around the SEC since Christopher Cox was removed and Schapiro was instated in his place. Looks like both congress and the Fed want to restore some order to trading and reverse one of the worst decisions of the decade.

To me the uptick rule is more important in today’s style of market trading than it was for the first 50 years of its existence. That’s because before April of 2001, stocks used to trade in ‘spreads’ or fractions. Depending on the market and period of time, those fractions were either 1/8ths or 1/16ths (12.5 or 6.25 cents respectively). So a stock could not price at, say, $10.30, or $20.22 like they can now. The closest you could come to those prices would be 10.25 or 10.375 and 20.25 or 20.125 on an 1/8ths market. So you already had some spread control over prices of short sales. Because of the price spreads, getting your short pressure in on a trade was much harder and took much more patient trading than it does now. Add in the fact that you had to wait for an uptick to place an order, and you are talking about a large difficulty, as the only way a uptick could occur would be for the price to increase 12.5 or 6.25 cents so that a uptick trade could execute.

Today, our markets trade on a point basis of 100, so we can trade in cents. Now, an uptick occurs at any cent value above the current trading price. So shorting is much easier. Take away the uptick rule, and now shorters can add hundreds of thousands of dollars worth of pressure at ANY price tick, up or down! Meaning that if a short position trader thinks that the price has hit a peak, they can buy in at any price even if the prices are continuing downward. And then once the stock does fall sharply, as long as it falls past the price of their last buy in price they have made money on all of their positions. That is something a short trader couldn’t do over a year ago. So it’s no wonder shorters are adding massive amounts of downward pressure to stocks as they fall. They can make hoards of money that weren’t possible to make a year ago, and even especially 9 years ago.

To me it is no surprise the markets are way off their highs. The SEC let it happen. Take a look at a chart from the day that the SEC undid the uptick rule, and the markets have had a hard time trading above the closing value of that day, July 6^th 2007. And volatility has been enormous.

I’m glad they are finally revisiting the idea of reinstating the rule. I think the only reason we did not have a “crash” last year was because in September, shorting bank stocks was completely banned for a few weeks, allowing banks to refinance some much needed cash positions through increased stock sales. If you consider it, many companies fund expansion through stock sales. If the stock price continues to be compressed downward due to shorts, companies will find it hard to fund expansion, and will begin to cut back. Which is what has happened. Maybe Bear Stearns would have been able to refinance with the help of stock sales to shareholders. But when the stock declined basically to $0 in a week’s time, that would be impossible, as was proven. And no wonder it could decline so fast – uptick rules had been removed, so you could continue borrowing stock (shorting) and selling it lower the whole way down.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a6pBZZrZtxm4&refer=home

Tijs Limburg

Jim Cramer not a Conservative - But Rethinking Support for Obama

2009-03-04T14:09:00.001-08:00

All,

There has been an interesting development on Wall Street lately, and it is interesting to me because I remember watching an episode of Jim Cramer’s “Mad Money” last summer where Jim told us he was supporting Obama, even though he agreed with McCain on Nuclear Energy policy.

It seems from his recent statements he is completely reversing that support:

This from Monday’s edition of RealMoney:

“I don't know about you, but I felt it this weekend. I felt it with friends at dinner on Friday. I felt it during my walk on Saturday and my dinner with friends at Blue Smoke on Saturday night.

I felt it when someone whispered in my ear before the Van Morrison concert that I was right and we elected a Leninist. I felt it at brunch on Sunday, and I felt it as I watched Slumdog Millionaire Sunday afternoon. I felt it when I tried to go to sleep on Sunday night.

I felt the prices, the screen, the action, the sense of a vortex down that can't be stopped, of stocks going worthless, of savings being tattered, of equities without bottom, but this time in slow motion, not like 1987…”

Wow. A Leninist? That is a freakish notion.

It doesn’t stop there. Take a listen to what he said recently on Today (He sounds as sane and reasonable as I have ever heard him sound):

http://www.msnbc.msn.com/id/21134540/vp/29478113#29478113

And I like how he doesn’t let Erin Burnett get away with her ‘happy talk’.

And then this from his show a few days ago:

http://www.wowowow.com/post/jim-cramer-barack-obama-mad-money-amateur-hour-our-darkest-moment-video-226443

I love the fact that he actually has a quote from Lenin that sounds so close to what Obama said last week to back up his comparison.

I’ll let this speak for itself, from the Wikipedia article on Leninism:

In his pamphlet What is to be Done? (1902), Lenin argued that the proletariat can only achieve a successful revolutionary consciousness through the efforts of a vanguard party composed of full-time professional revolutionaries. Lenin further believed that such a party could only achieve its aims through a form of disciplined organization known as democratic centralism, wherein tactical and ideological decisions are made with internal democracy, but once a decision has been made, all party members must externally support and actively promote that decision.

This may go down as one of Jim’s better judgments. Last September I felt that the capitalist system we had known since the 1940’s had gone, and that we would need to come together and create a new one, because luckily, capitalism has a way of destroying itself and creating itself anew. Now I wonder if that will be possible to do in the time-span we would all like it to occur. The question I have is: Are we in for a 1982 deep recession and relatively quick recovery, or an 1870’s depression with a recovery period after 5 years, or a 1930’s Great Depression which took well over a decade to correct. My one hope left is that Ben Bernanke can master a recovery on his own – as the sole student of the Depression – as it looks like the new administration and new congress will not be able to help. Will Uncle Ben be the Morgan or the Eccles of 2009?

Tijs Limburg

RE: WALL ST. PANS BAM

2009-02-18T18:10:00.001-08:00

Thanks Steve,

This chart is very troubling. Look at all of those years since 1929 of running deficits! Imagine if that were a business. They would have gone out of business a long time ago. I did a little research over the weekend on Novus Ordo Seclorum, which is printed on the back of the dollar bill. And while the mythical translation that is proposed in the book Angels and Demons is not fact, I guess FDR got his wish of his Novus Ordo Seclorum, which is now an order that continues to leech of the backs of its own. Unfortunately, the original Novus Ordo Seclorum as declared by our lesser known Founding Father Charles Thompson is being taken away from us, and in a day in age when both parties will effectively elect an Obama with little experience, that has become more apparent to me than ever.

Clearly defined in the context of the mantle which rested upon the founders of this nation, George Washington proposed: “The foundation of our Empire was not laid in the gloomy age of Ignorance and Superstition, but at an Epocha when the rights of mankind were better understood and more clearly defined, than at any former period."

And in a seemingly prophetic exclamation, Thomas Paine riveted the Colonial unions with his statement of vision in his writings in Common Sense: “The cause of America is in a great measure the cause of all mankind... 'Tis not the concern of a day, a year, or an age; posterity are virtually involved in the contest, and will be more or less affected, even to the end of time, by the proceedings now.”

Well, maybe we can judge how near we are to the “end of time” by reading those words and judging whether or not our “posterity are virtually involved in the contest”. It seems to me the day, which appears to be looming ever closer, when the effects of the proceedings of founding our nation can no more be realized by future generations (whether it be because of defeat from enemies, secularism, disintegration of the pursuit of happiness, or a profound weight of debt by the government to its people and other nations) will spell the end of the “New Order of the Generations”.

In the old days of the British Empire, they used to hail and sing “God Save the King”.

God Save America.

TIJS LIMBURG

Garth,

I took the liberty of re-formatting this article as a pdf for further dissemination.

Powerful to note that even “intelligent” demon-crats are starting to figure it out. Obama had an opportunity to show true leadership and stop the pork-barreling in this spendulus bill. He instead chose to pay off his political cronies and put our nation at even greater risk. Another 10% loss in the market in a week’s time? Who do they think they’re fooling?

Regardless of his “campaign-style” rhetoric, blaming our current woes on the past eight years of Bush – only part of which time Congress was controlled by Republicans – Obama could have and should have shouldered the responsibility that is his. HE is the President and can use his position to do what’s right or what is politically expedient. His weakness, cowardess, and shallowness is now made plain. Forget giving him 100 days. In 100 days, it may be too late to ever return to the freedom and independence the country was founded on. Have you heard the talk about the fairness doctrine? Have you heard the proposal to take the last six months of 401k contributions from 2008? The enemy is not at the gates, he is inside the keep and the treasure of the nation is being pillage before our eyes.

And who is really to blame for the better part of a century of government expansion and deficit spending? I think the following chart gives a pretty clear picture. What’s even more revealing but not easily displayed is that the margin of deficit spending increases dramatically when demon-crats control both houses and the presidency. Surplus occur when the demon-cratic margins are small or Republicans have control, up until the last few years when supposed Republicans threw in with demon-cratic philosophy and tactics.

Year	Congress	President	Senate (100)	House (435)	Deficit
2009	111^th	D	D - 55***	D - 256	Y
2007	110^th	R	D - 51**	D - 233	Y
2005	109^th	R	R - 55	R - 232	Y
2003	108^th	R	R - 51	R - 229	Y
2001	107^th	R	D*	R - 221	Y
1999	106^th	D	R - 55	R - 223	N
1997	105^th	D	R - 55	R - 228	N
1995	104^th	D	R - 52	R - 230	Y
1993	103^rd	D	D - 57	D - 258	Y
1991	102^nd	R	D - 56	D - 267	Y
1989	101^st	R	D - 55	D - 260	Y
1987	100^th	R	D - 55	D - 258	Y
1985	99^th	R	R - 53	D - 253	Y
1983	98^th	R	R - 54	D - 269	Y
1981	97^th	R	R - 53	D - 242	Y
1979	96^th	D	D - 58	D - 277	Y
1977	95^th	D	D - 61	D - 292	Y
1975	94^th	R	D - 60	D -291	Y
1973	93^rd	R	D - 56	D - 242	Y
1971	92^nd	R	D - 54	D - 255	Y
1969	91^st	R	D - 57	D - 243	Y
1967	90^th	D	D - 64	D - 247	Y
1965	89^th	D	D - 68	D - 295	Y
1963	88^th	D	D - 66	D - 259	Y
1961	87^th	D	D - 64	D - 263	Y
1959	86^th	R	D - 65	D -283	Y
1957	85^th	R	D - 49	D - 232	Y
1955	84^th	R	D - 48	D - 232	N
1953	83^rd	R	R - 48	D - 221	Y
1951	82^nd	D	D - 49	D - 235	Y
1949	81^st	D	D - 54	D - 263	N
1947	80^th	D	R - 51	R - 246	N
1945	79^th	D	D - 57	D - 242	Y
1943	78^th	D	D – 57	D - 222	Y
1941	77^th	D	D – 66	D - 267	Y
1939	76^th	D	D – 69	D - 262	Y
1937	75^th	D	D - 75	D - 333	Y
1935	74^th	D	D – 69	D - 322	Y
1933	73^rd	D	D – 59	D - 313	Y
1931	72^nd	R	R – 48	R - 218	Y
1929	71^st	R	R – 56	R - 267	N
1927	70^th	R	R – 48	R - 237	N
1925	69^th	R	R – 54	R - 247	N

Yellow years mark Presidential inauguration.

Why Banks Should Be Investing in Corporate Inventory

2009-02-18T06:53:00.001-08:00

The world markets got a little scarier today. Plunges across the globe are fairly rare and cannot go unnoticed or be treated lightly - as if only a passing storm.

The question in everyone's mind is, where is my money going to be safe? Treasuries? Gold? The mattress seems to be gaining a tempting popularity. And while I don't think it is wise for consumers to stockpile large amounts of money, it may, however, be prudent to invest in inventories. Inventories of needed supplies - food, clothing or other items - that we may need in the future for schooling, work, job changes (or worse - layoffs), and emergencies. Physical, tangible, non-monetary items that even the deepest recession cannot take away or devalue.

And why not? These types of goods are cheap right now. Merchants are begging you to buy them. And the investment will go a long way when you need to draw on it in the future. And if in some miracle the economy suddenly changes course, the goods will return you the pleasure of knowing that you are consuming something in the present that cost you a lot less money in the past.

And so we begin to cycle into a physical goods inventory investment period. Other than the reasons stated above, why is this better than stashing away money?

First and foremost, it keeps some revenues flowing through the economic system. Purchasing an increased supply of Campbell's soup keeps them in business and it keeps you from going hungry should the future not look so bright. Plus, just as on any futures market, you are locking in your prices today for goods you will consume in the future, which is never a bad idea.

So what is something the government 'spendulus' package missed entirely? It is something that is never mentioned, and never allocated in the vast and deep gulf of $800 Billion dollars that is supposedly headed our way. Any wonder, then, why banks are not loaning the $350 Billion already given to them? There was no suggestion or directive given by the Federal Reserve on how that money should be loaned. A huge blunder in Uncle Ben's thinking and philosophy. Let me first start with a well known parable:

"And unto one he gave five talents, to another two, and to another one; to every man according to his several ability; and straightway took his journey.
Then he that had received the five talents went and traded with the same, and made them other five talents.
And likewise he that had received two, he also gained other two.
But he that had received one went and digged in the earth, and hid his lord's money.
After a long time the lord of those servants cometh, and reckoneth with them.
And so he that had received five talents came and brought other five talents, saying, Lord, thou deliveredst unto me five talents: behold, I have gained beside them five talents more.
His lord said unto him, Well done, thou good and faithful servant: thou hast been faithful over a few things, I will make thee ruler over many things: enter thou into the joy of thy lord.
He also that had received two talents came and said, Lord, thou deliveredst unto me two talents: behold, I have gained two other talents beside them.
His lord said unto him, Well done, good and faithful servant; thou hast been faithful over a few things, I will make thee ruler over many things: enter thou into the joy of thy lord.
Then he which had received the one talent came and said, Lord, I knew thee that thou art an hard man, reaping where thou hast not sown, and gathering where thou hast not strawed:
And I was afraid, and went and hid thy talent in the earth: lo, there thou hast that is thine.
His lord answered and said unto him, Thou wicked and slothful servant, thou knewest that I reap where I sowed not, and gather where I have not strawed:
Thou oughtest therefore to have put my money to the exchangers, and then at my coming I should have received mine own with usury."

The banks simply dug a hole and stored up the money for a hopefully brighter day, and largely because the fearful Investment Bankers at those banks would rather show a 3% return than a loss and be fired. Simple enough. They did not "trade with the same" and therefore in my opinion should return the money that we as taxpayers might find our own way to "receive mine own with usury".

But what if the Fed would have done something I don't recall ever being done during my lifetime? What if the Fed would have required that the banks themselves "purchase" inventory from businesses? Not for consumption, but merely for stashing away the inventories for better times. Production levels could be somewhat maintained, and then once the inventory was sold, the company would return the loaned money to the bank and repay the loan. This would be like the bank purchasing a future in inventories from companies in many different industries. Banks working in partnership with companies in this way would ensure that money was flowing into the system where necessary - at the corporate and small business levels, and would ensure that the businesses themselves were using the loans to maintain production. By maintaining production, the business would be able to continue similar or current levels of production, while the bank would be aquiring inventory assets. Assets, which unlike other futures or investments, are not traded on day to day markets and would be aloof from catastrophic market swings.

In fact, the actual production would not necessarily have to occur. The future could be an option that gets exercised later, just as we have with some futures traded on the MERC. It could be a contract that at some point the product will need to be produced, however current staff still remain with their jobs. However I like the idea of physical inventory production because it is more immune from the failures of futures contracts and options.

By adding to stockpiles now when prices are lowered, with funding coming from partnered co-operation with banks, the US would be preparing itself for the future turnaround, and would stave off the seemingly downward circular spiral of Corporate Capital Management. That idea follows the normally prudent logic of the following:

The Firm: company orders are down, spending must freeze
The Household: firm spending is frozen. I must save.
The Economy: Production is down. Consumer Spending is down.
The Firm: company orders are continuing downward, layoffs are in order
The Household: I lost my job, I have no money to spend
The Economy: Layoffs abound, Consumer spending plummets
...

Eventually following this senario, the economy will depress, and both prices and values will continue downward even as currency deflates.

The above scenario is the main emergency issue in our economy today. Forget for a moment the bad mortgages, failed institutions, and trillions in lost equity. That to me is not the emergency of the moment. That is the damage that will require the tools of surgeons. Right now we need to stop the bleeding. And the above scenario points out two main factors to me as I see it:

Production and Consumer Spending, both of which, when viewed with the goggles of ceteris paribus, seem to be directly proportional.

So, invest in building up inventories, and production will be maintained. Maintain or increase production, maintain or increase consumer spending. And as any futures investor knows, a big sign of future confidence and possible growth is seeing a business increase their inventory. And the last added benefit is market-enabled price stabilization. Since stockpiles are increasing, prices will be moderated. Especially if most of the inventory is put in reserve where it is not available to go to market. (putting it all available to market will simply create a firesale - which is the opposite of what we want). This is similar to what oil companies do when they cap a well. They are putting those daily barrel production numbers in a reserved inventory, where it is not available for purchase until a later date. And we all know that oil companies spend hundreds of billions of dollars buying these oil reserves, so this idea is not unfounded. And since they seem to be some of the only companies making money or even coming close to breaking even, the logic would be good for banks - and the Fed for that matter - to follow.

Higgins somehow pulled this idea off with much of his own capital. During nearly the entire Great Depression, while asking the military for a contract to purchase the Higgins boats, he produced and stockpiled thousands of boats that he hoped he would sell to the military in the future. 10 years later that date finally came, and his stockpile singlehandedly won the war. For 10 years he never saw a return on most of his inventory, even while maintaining production, costs of materials, and business costs. Yet the booming profits that came from being ready to meet the military's enormous demand for higgins boats paid Higgins unfathomable sums of money and success.

Savvy capitalists have done it before.

Maybe 'spendulus III' will get it right.

Tijs Limburg
Chairman and CTO of DMX - Digital Media eXceleron, Inc.
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Re: FW: KEYNESIAN FALLACY

2009-02-06T09:50:00.001-08:00

Thanks Steve, that was a great response. I hope you don't mind these discussions as I think they are extremely stimulating and educational. I am reminded of the letters that traversed between Newton and Leibniz and contributed to the advent of calculus. I may not have been as clear as I thought in my letter (lunch breaks are only so long), but I am a staunch advocate of the theories of Adam Smith, and heavily disagree with Keynesian Economics. However, I do not believe government should have the power they seem to think they have at manipulating the "invisible hand" Smith used in his theory. I think Smith's ideas would work much better if the capitalists of the world would be able to take back some control over the economy. Not necessarily through laws or laissez faire poicies, but through the pure power of capital. It is Adam Smith himself who said "It is not by augmenting the capital of the country, but by rendering a greater part of that capital active and productive than would otherwise be so, that the most judicious operations of banking can increase the industry of the country." Unfortunately, even institutions advocated by these same capitalists who oversaw great capital expansions, such as J.P. Morgan who helped institute the Federal Reserve, have been infiltrated with too much government control in my belief to render the optimum productive use of this capital toward the increase in industry.

I apologize for my philosophizing, but I have always been attracted to and fundamentally rooted in philosophy, which is my prime motivation for learning and innovating. My favorite lectures in any subject are always the ones involving theory. My personality then leaves the execution of those theories to others who are better executors. I know you will all agree that is true.

Tijs Limburg
Chairman and CTO of DMX - Digital Media eXceleron, Inc.
Get eXcited!
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Tijs,

I've written two responses to your email, one focused on the technical aspects of your economic analysis, and one on the philosophical foundations and ramifications. I hope our dichotomy of views is helpful to others who read these emails as well as beneficial to each of us in our pursuit of knowledge, independence and freedom.

Technical response:

The use of Keynesian economic theory whenever there is a recession or depression is an attempt to provide a modulus for changing not only the current economic situation but the cultural and political foundations that created the economic situation in the first place.

Keynes' first and most fundamental assumption is that the Adam Smith concept of the individuals "self-interested invisible hand" is at fault for the chaotic cycles in economies and is insufficient to maintain or bring about equilibrium. As the son of an economist and a brilliant intellectual, Keynes was well-schooled in the social philosophies of the early 20^th century. As a result, he held the belief that government, particularly big spending government, could have a more positive effect on smoothing out the cycles of economic expansion and contraction, cycles that wreaked havoc on social and political stability. Government could accomplish this by deficit spending to generate consumption and thereby employment during an economic contraction. To this end, modern liberal economists, who typically have a strong socio-political agenda, propound this theory not only as valid but critical to the survival of the nation. Unfortunately, it is effective at appeasing the fears and appetites of the "special interest" class while placating the desires for fairness among the middle class. But is it valid? The clear answer is no.

Nature provides the clearest reproof of the theory by the simple responses to negative environmental factors by all flora and fauna. Built into all successful life forms (whether you believe in evolution or God) is a mechanism that enables them to store up reserves in times of plenty and to consume those reserves in times of scarcity. In the macro-economic environment, people will acquire material goods, homes, car's etc., when times are good and shed them when times are bad, or at a minimum refrain from purchasing them when times are tough. We add the concept of payment over time for the acquisition of goods to the equation and it gets a bit more complex as now we have the ability to anticipate an upswing in prosperity and get what we want ahead of time and stave off the wolf at the door by trying to pay off debt when times get tough. But in all of these systems, there is a limiting factor: the ability to acquire and store reserves and the time it takes to consume and shed them. And economic history shows that the same thing impacts the Keynesian concept of government consumption: the amount of time it takes for government to impact or change the fundamental structure of the economy in terms of production and consumption far exceeds the typical cycle times for expansion and contraction. As a result, we become saddled with government programs that arrive too late, do too little, cost too much, last too long, and saddle the future with the debt of the past. Talk about trickle down economic theory!

So why so many advocates of the Keynesian theory? Because, at its core, it provides a roadmap not for economic recovery but for socio-political change. It posits that government will know better than the individual how to control and influence the economy and, therefore, should involve itself not only in consumption but production and distribution. And remember, "He that controls Arrakis, controls the Spice, and he that controls the Spice, controls the Universe." It empowers those who govern with an intellectual supremacy that masks their real agenda, thereby allowing them to indulge their political ambitions without obvious exposure to the electorate. In a word, economic deception. Not unlike the shenanigans of Wall Street and their bogus securitization of mortgages.

Now onto the trickle-down tax rebate theory. It is, in fact, not trickle down at all but a flood. The most effective way to win a war is to overwhelm the enemy. This implies that arming every available citizen will give you the best chance of killing the enemy. The problem is that, once armed the citizens will shoot what they believe is the enemy, which may or may not be what the real enemy is. In the case of the tax rebate and the nonsensical assumption by government that everyone would go out and spend it on durable goods, the people clearly showed exactly what they thought the enemy was - their debt. Everyone knows that if you don't pay your bills, somebody's going to come and take your paycheck, take your car, take your house. And business is the same way. Amazing that people are smart enough to use an umbrella to keep the rain off when it's raining instead of using it to balance on a wet tightrope. But it has a silver lining – lower debt now means greater purchasing ability in the future. All economists need to do to know what people will do is to get out of their ivory towers and note whether or not it's raining! But, you say, this doesn't stimulate the economy. Well congratulations, you're right. Throwing money around doesn't stimulate anything but greed. Economic stimulation always comes as a result of market demand regardless of whether you're a Keynesian, Smithite, or Luddite. The trick is how to create the demand, which leads us to a review of your fearful consumer.

The concept of consumer and investor control is based on the assumption that neither party can control themselves. Smith weighed this concept in his Theory of Moral Sentiments and concluded that man can make choices beneficial to society precisely because he can see in the mirror that society will benefit him. In today's economic environment, the consumer is fearful not out of ignorance but out of experience. He is reminded every day of the woes of the stock market, of the ever increasing unemployment, of the incredible escalation of national debt. Everywhere he looks, he sees the onset of winter and this is his last chance to gather in the harvest. It's interesting to note that seasons significantly impact consumer confidence. I believe it is built into our genetic code. But I digress. When analyzing how to reconcile the fearful consumer or investor with the need to increase market demand, we have to look simply at what motivates a man. At his core, he has a need for food, shelter, and sex (reproduction, technically speaking). If he is fearful of loosing any of these three things, he will go into survival mode, storing and stashing whatever he can. If, however, we can reduce his fear and help him to see that the rain will stop, we can motivate him to venture out of the nest again to indulge some of his higher desires. The biggest problem is that it is still raining and government spending is a big part of the storm. The reason for the tax deductions on home mortgages is because we have to compete with the government for available credit and it was a Keynesian incentive to increase home ownership in the post WWII economy. I believe that, if the government would reduce it's consumption, reduce it's taxation, and reduce entitlements, the consumer would be instantly encouraged and would literally come out of hiding, along with the investors.

But I don't see that happening, do you?

So what about your analysis of Expenditure based GDP? We're probably in agreement as to the status of the first two items, Consumption and Investment, although I believe we diverge on their cause and effect. And the initial discussion of Keynesian vs Smithian economic theory pretty well establishes our differences on the Government Expenditure part. So let's investigate the Net Exports concept. While you spent a good deal of time discussing globalization, game theory, and Nash's equilibrium, you appear to have missed the most fundamental part – our economy is no longer based on the exportation of goods but on the consumption of goods. This has come about because of the transfer of technology and industry developed in the US to other countries who are not bound by the same socio-eco-political rules (and that's eco as in ecological, not economical) nor have had to pay the price for industrial revolution in terms of time, capital outlay, or environmental impact. As a result, they are able to produce oil, durables, etc., far cheaper than we can, even if we were to choose to return to an export based economy. The upside is that we have steadily increased our standard of living. The downside is that, in our pride, arrogance, and self adoration, we have put ourselves into environmental and political straight jackets that are all but impossible to get out of. And just like the Chinese who lost the silk trade to thieving Indians who stole their great secret of the silk worm, we have yielded our industrial strength to the competition in order to appease our environmental guilt. As a result, the ability to rapidly increase exports as a correction to the economic downturn is virtually impossible. But that is a global view. If we look internally, we still possess the ability to produce and trade internally in a way no other country can. Freed from government restraint and the ridiculousness of the sue-happy eco-extremist left, we could produce all of our own food, fuel, and shelter far cheaper than any exporting country. And we could do it with reasonable conservation and environmental stewardship. And from this most stable of all economic bases, we could do some of what you suggest – export value added goods and services. But don't kid yourself, the export genie is out of the bottle and has returned home to its master – China, the worlds greatest exporter for more than two thousand years.

So, what can we do now? I believe that the first thing we need to do is to stop pretending that some grandiose economic theory justifying outrageous government spending and expansion will in anybody's universe result in improved economic stability and prosperity. The second thing we need to do is reduce the size of government at all levels and give economic power back to the people in the form of earnings retention, resulting in the triggering of the first and strongest pillar of the expenditure based GDP - consumption. The next thing we need to do is to allow the recession to do it's job – collapse of businesses that are inefficient and outdated, reduction of extravagant salaries, bonuses, and dividends, smaller meal portions at restaurants, over-stocking in stores, general consumer wastefulness, political pay-offs and paybacks, a return to thrift and self-reliance, pain and suffering sufficient to change hearts and minds, etc., all of which I refer to as the leaning and weaning of America. And lastly, but most importantly, the re-education of the American people as to both the rights and responsibilities of constitutional governance and individual agency. Is this an economic theory? I believe it is – it is the theory that good people, when left to their own devices and with full responsibility and accountability, will do good things not only for themselves but for their neighbors, their country and their God. Not because they are forced by might or compelled out of fear, but because they choose good over evil.

Philosophical Response:

Don't warp out at me but you're at it again. Over intellectualizing the theories leads to getting caught in the trap. As you've heard me say before, regardless of what a man says or claims to think, watch what he does and where the money, power, and sex go.

The attached article by Dick Armey from the Wall Street Journal yesterday is one of the best "exposures" to the reasons behind the current use of Keynesian Economic Theory to justify the "stimulus" mentality sweeping the nation. As with most theories, one must look carefully at the motivation behind the developer of the theory and his associated proponents.

I've also included an article by Robert Reich on Keynes that gives you background on the man and his philosophies from one of the most liberal, interventionist, and, I believe, evil men in modern political times.

As I analyze Keynes economic theory and his life experience, two very powerful views come together and into focus. Keynes firmly believed in the idea that an intellectually independent mind could throw tradition, experience, and history to the wind and come up with some better solution than the old tried and true. He also believed that those so "enlightened" intellectuals should be given authority over other men's assets and lives in order to provide greater social harmony and put an end to both the economic and war cycles that plagued Europe for a thousand years.

The current use of his theories is not because they are correct in the slightest but because, as Dick Armey so clearly puts it, it gives those who gain power from politically motivated spending the intellectual cover to dupe the middle and "special interest" classes into believing them. As with all intellectual deception, it is insidious, contagious, and damning because, at it's heart, it is an attempt to usurp the agency of man, co-opt his future and dreams, and garner power, glory and honor (and thereby money and sex) unto the deceiver.

I recommend reading both articles and then the following:

Moses 4:1-4

And I, the Lord God, spake unto Moses, saying: That Satan, whom thou hast commanded in the name of mine Only Begotten, is the same which was from the beginning, and he came before me, saying—Behold, here am I, send me, I will be thy son, and I will redeem all mankind, that one soul shall not be lost, and surely I will do it; wherefore give me thine honor.

But, behold, my Beloved Son, which was my Beloved and Chosen from the beginning, said unto me—Father, thy will be done, and the glory be thine forever.

Wherefore, because that Satan rebelled against me, and sought to destroy the agency of man, which I, the Lord God, had given him, and also, that I should give unto him mine own power; by the power of mine Only Begotten, I caused that he should be cast down;

And he became Satan, yea, even the devil, the father of all lies, to deceive and to blind men, and to lead them captive at his will, even as many as would not hearken unto my voice.

The acknowledgement, ennoblement, and empowerment of the agency of man, along with the requisite accountability and responsibility, in our constitutional form of government is what has made us powerful, wealthy, independent, and resistant to the political machinations of other nations and peoples.

Unfortunately, we (as a society, not necessarily individually) have abused that agency of late and have taken more than our share while selling our birthright for a bowl of pottage. As a result, we are faced with accepting and dealing with the consequences. To remove the consequences and the associated pain is to deny society the opportunity to repent, change, and improve and to ultimately usurp the agency that we have suffered so long and fought so many wars to obtain and defend.

From the macro economic view, getting government out of the way has a much more powerful effect than getting them more involved. I think that if you carefully examine the results of government consumption to stimulate the economy in terms of the increase in the size of government and the loss of individual control, you will find exactly the opposite of what you claim. In every case, the recessions have been prolonged due to governmental "stimulation." To use your medical analogy, we treated the pain caused by a cancer but failed to remove the cancer infecting us. And as a result, the cancer has grown with each successive cycle to the point that we are now facing a global economic collapse.

And what is that cancer? The cancer of covetousness, gluttony, self-indulgence, and self-centeredness.

And what is the cure for us in the US? The purging fire of suffering, loss, and humiliation, coupled with the most powerful redemptive construct in government ever know to man – bankruptcy.

This is what has enabled Americans to take risks, fail, and try again. Is it tough? Yes. Is it uncomfortable, Yes. But it enables us to keep the hold of the greatest source of growth, liberty, and prosperity – our individual agency.

This is also what will most effectively turn the political tide. If those who have robbed the middle and upper class, who would rob from our children and grandchildren to pay for their political promises to the "special interest class" are cut off from their drug supply and can no longer feed the habit, the "special interest class" will turn on them like a shark to a bleeding swimmer. And who will be there to take care of the reasonable needs of the "special interest class?" Hmmm, let me think. Would it be those who already give 3 to 1 over their liberal counterparts? Indeed, it will be those whose self-reliance has made them prosperous, who know the struggles of life first hand, and who have suffered enough that they would that no one else should suffer. It is they who will feed the hungry, clothe the naked, visit the sick and afflicted because they will have the desire, prosperity, and agency to do it.

If you're still with me and have read the article by Dick Armey, I think you will see that putting the needed recovery in the hands of the individual by reducing taxes – and the requisite REDUCTION in federal spending – is far faster, powerful, and lasting than anything the government could possibly spendulus. Yes, people will conserve, pay off debt, and save instead of spending but that is what we should have been doing anyway. And in the end, we will return to what has made us the greatest nation in history – a nation of individuals who can not only provide for themselves but willingly for their neighbors, who can rise from the ashes of defeat to try again and again, a people who will individually and collectively grow and learn, innovate and expand, protect and defend, live and let live.

It's not just a dream, it's the true path and where we need to be.

Individual agency, my friend, is not just an inalienable right, it is the key to true economic freedom and stability.

Thanks,

Steve Dupaix

Re: FW: KEYNESIAN FALLACY

2009-02-05T12:55:00.001-08:00

My Two Cents

Interesting that Dick Morris would bring up John Maynard Keynes in his article. We just discussed Keynesian Economic Theory last night in my Macro Economics class. What I find interesting about Keynesian Economic Theory, is that the focus is more on demand management than the Smith-like theories of self-interested consumers being the drivers of the economy.

One must ask, why does Keynesian Economics crop up every time there is a recession or depression, and why do we always return to the long debate between "trickle-down effect" and Compensatory Government Stabilization policy during these times?

In my opinion it is largely due to the fact that spending effects of "trickle-down" tax rebates to consumers are extremely hard to predict. Economists can no more say that one person will put their check into a purchase of a durable good (tv, refrigerator, car, etc) than into savings (bank accounts, paying off debts, or investing in stocks). And the effects of Compensatory policies can take years to evaluate and have very few control features for the measurement of success. Take a look at the recent tax year of 2008. We've had opportunities to examine both types of policy. We had a tax rebate for consumers and an additional tax deduction for Capital Investment from businesses. Neither has worked much in the way of stimulus to this point. Most Americans used their stimulus check to pay down debts as did most businesses.

We had 350 Billion (and much more injected from the Fed) of Government spending, which all of the analysts are saying ended up in savings as well, not in stimulus. I think Paulson made a huge error in bypassing the heart attack by purchasing equity in the banks rather than stinting the arteries to remove the blockage by purchasing and holding the bad debts. That's where Reganists got the S&L issue in the 80's correct.

In other words, the way I'm evaluating the current situation is this: While normally consumer and investment control are the best policies, putting too much control in the hands of a fearful consumer equates to increased savings. Putting too much control into semi-nationalization of firms and investments equates to increased savings. Expenditure GDP is based on four components: Consumption, Investment (Capital Investment), Government Expenditures, and Net Exports. We've discuessed the first two and found the net result to be toward savings. There are only two parts left in the overall GDP equation: Government Expenditures and Net Exports.

We've used government consumption in one form or another in nearly every economic downturn including the Great Depression, and the results are arguable as to their success; I am one to believe they mostly worked in each case, some more than others (I believe the Republican based expenditures worked better than their Democratic counterparts).

So why don't we figure out a way to do something untested, and revitalize our Net Exports? To me, that is the part of the equation that has gone unnoticed, yet in my mind has great untapped potential to energize the economy, create jobs, and transfer large sums of wealth back into the US economy. In my mind, there is a key difference between our situation now and the situation in the early 1930's. In that time the economies of nations were not nearly as global. Today they are, and if you look around, all of the economies in the world are trying to lean on government spending to increase GDP and swing things around. Today's globalized economies are all after one thing: economic equilibrium. All of which is a good self-interested ideal, but in the context of game theory, this "co-operation of nations" to spend their government capital would be something close to Nash Equilibrium. Nash Equilibrium does not always stand to benefit the whole group, and if one player finds a strategy that can break from this equilibrium, they can usually make the biggest gains. So, if every player in the global economic game has tried and is trying manipulations of the first three GDP components, naturally I think that everything we do in an effort to remake our economy should focus either implicitly or explicitly on increasing the Net Export number - beat the competition to increased exports, and we win the game. Somewhat of a Net Exports "Arms Race". Who really cares right now how much we sell to each other domestically. We can sell insurance to one another all day but if there is nothing to insure it profits no one.

How can we increase the Net Exports component of GDP? Create a revitalized financial system that foriegn investors are attracted to investing in (import currency holdings (not loans), export financials), produce and use more domestic energy (decrease energy imports), export energy resources, aquire foriegn companies (exchange of currency, export of business processes), help "manufacture ready" products and projects get to market (export products other nations need but don't have), create new breakthrough technologies (export US made technology), create and export US made media demand, export "Value Added Products" (especially ones that use materials that can be created easily within our own economic borders), etc., etc.

I think the biggest component of Net Export revitalization would be to export energy and energy resources that are new and high tech, and that are produced by technology that only the US has, or harvesting energy resources from places (such as space) that the US has superior control over.

Here's to winning the GDP race of the 21st century.

Tijs Limburg
Chairman and CTO of DMX - Digital Media eXceleron, Inc.
Get eXcited!
www.dmxed.com

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On Thu, Feb 5, 2009 at 11:31 AM, Limburg, Garth <Garth.Limburg@slcgov.com> wrote:

-----Original Message-----
From: Dick Morris Reports [mailto:subscribers@dickmorris.com]
Sent: Wednesday, February 04, 2009 1:32 PM
To: Limburg, Garth
Subject: KEYNESIAN FALLACY

KEYNESIAN FALLACY

By DICK MORRIS

Published on TheHill.com
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50aGVoaWxsLmNvbS8%3d&x=be99d77b> on February 3, 2009

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There are very few economists who really buy into Keynesian theory
anymore. Instead, the idea of "rational expectations" has taken its
place. The difference between the two approaches is essential to
understanding why Obama's stimulus package won't work.

Keynes felt that people would react automatically to a few dollars in
their hands. Consumers would run out and buy new products, and
businessmen, seeing the uptick in sales, would rush to open new plants
and hire new workers who would, in turn, generate more demand.

But that's not the real world. In reality, consumers, knowing there are
hard times ahead, save any money they get either by salting it away or
by paying down their debts and bills. That's why the personal saving
rate in the last quarter of 2008 was the highest in six years and
spending on residential construction was down 22 percent over the past
year. And the savings rate rose from 2.8 percent in November 2008 to 3.6
percent in December as the storm clouds grew grayer. And, in the real
world, banks hang onto their money for fear of making bad loans, no
matter how many bailouts or stimulus packages Washington passes.

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According to the Federal Reserve Board of St. Louis, the Fed is now
holding upwards of $1.7 trillion for American banks, more than twice
what it had in its vaults at the start of 2008. How did the Fed get the
money? Congress voted the Troubled Asset Relief Program (TARP) package
of bailout funds. The Fed purchased bank assets to get liquidity onto
their balance sheets. What did the banks do with the money? They gave it
right back to the Fed to hold in its vaults. They didn't lend it out.
They didn't use it to stimulate the economy. They are using it for a
nest egg to tap when times improve. Just like the theory of rational
expectations says they would.

If banks, suddenly awash in capital, don't decide all is fine and rush
to lend money; and consumers, given a tax cut or a pay raise, don't rush
to buy a flat-screen TV, then what good will the stimulus package do?

Not much. It is not until there is evidence that the underlying problem
-- massive personal and corporate debt -- is being solved that any
degree of confidence will return. And, without confidence, the rational
expectation theory means people sit on their money.

But the package will do a whole lot of harm by piling up capital that
people won't spend, banks won't lend and businesses won't invest. When
confidence rises and the money comes out of hiding, watch out for the
massive inflationary pressures all that extra cash will unleash.

Obama's stimulus package won't stimulate much except inflation down the
road, which will, in turn, mean the onset of another round of high
interest rates and renewed recession to check the inflation.

Republicans should defeat the stimulus package and then negotiate a much
smaller bill that emphasizes tax cuts and avoids the pork-barrel feeding
frenzy Obama has unleashed. You can see the stimulus package rotting
away before our very eyes.

People are turning against it as they see the things on which government
will now be spending money, just as they turned against Clinton's more
modest $35 billion stimulus package in 1993. Republicans should stay
away in droves. On this issue, they can recapture something they have
lost over the past eight years -- the mantra of less spending and
smaller government.

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