Hawks5999

ObamaCare is a Health Insurance Corporate Bailout

noreply@blogger.com (Anonymous) — Thu, 28 Jun 2012 17:59:00 +0000

Put aside all the questions of Constitutionality and all the election year angst and see ObamaCare for what it is... another taxpayer funded bailout.
The Baby Boomers who have been paying health insurance premiums for the last 30 years for themselves and their families are leaving the system rapidly. Primarily they are all going to Medicare and that leaves a HUGE hole in the future premiums for United HealthCare, Aetna, Cigna, Humana and so on. Generation X is a relatively small cohort thanks, in part, to the rise of "family planning services". There aren't enough of us GenXers to replace the massive cohort of Boomers leaving the private insurance market. So the only way to patch up the future balance sheets of all the insurers is to force the young, single and healthy to buy premiums. This is just another taxpayer funded bailout being passed on to younger generations to make up for the Boomers getting older and dying.
Everyone cheering the the ruling today on grounds of "fairness" or "compassion" or some such "liberal" trope are just deluded dupes cheering on greater corporate profits at the taxpayers expense. ObamaCare is to the health insurance industry what TARP was to Wall St. The difference is that ObamaCare is like TARP being repeated every year indefinitely.
So congratulations to the all the "liberals" out there. You are cheering for the corporatism you no doubt decry. You are celebrating the triumph of corporate profits and fascism.

Waiting for the GULAG Act...

noreply@blogger.com (Anonymous) — Wed, 23 May 2012 13:00:00 +0000

When are we, as a nation, going to offer our apologies to the former Soviet Union for calling them an "Evil Empire" and "the focus of evil in the modern world." Honestly, a mere 30 years after Reagan's speech we have become what we excoriated in communist Russia.

It's like we took their "totalitarian darkness" as a blueprint for our own "supremacy of the state", complete with roadside checkpoints, indefinite detentions of citizens without trial, and violent crackdowns on dissidents.

Now we get the obscenely Orwellian (or oddly illiterate) Ex-PATRIOT Act (see below). Somehow this law, complete with the most bizarre acronym of a name, was produced in mere days after the story of Eduardo Saverin's renunciation. I tend to be very wary of conspiracy theories, but this has all the markings of an orchestrated propaganda play. Saverin filed for expatriation nearly 18 months ago. He was approved over 6 months ago.

Yet, somehow, it became headline news just before the Failbook IPO. The hue and cry that arose on social networks and in the press was blood curdling and blood thirsty. Something must be done to stop these people from evading taxes!! Only Saverin wasn't motivated by evading taxes. To wit, he hasn't lived in the US for 3 years, so what should the IRS feel entitled to his earnings. After all, Saverin helped make 850 new millionaires for the IRS to feed upon.

No matter, the public sentiment was set. Introducing a Soviet style law to stop those filthy rich from paying their fair share became totally acceptable. Now, all those people can either love America or learn to love it. Because leaving it... that's out of the question. Does no one remember the recent experience of Chinese dissident Chen Guangcheng? Where will our future dissidents turn for freedom? Who is going to be the "shining city on a hill" when the full effects of this Ex-PATRIOT Act come to fruition.

I'm sure the Government will have a place for all trying to get out from the "totalitarian darkness.".Look for the details in the upcoming Government Undesirables Lodging And Guarding Act

From Zerohedge:

Guest Post: US Citizens Now One Step Closer To Becoming Permanent Tax Slaves:
Submitted by Simon Black of Sovereign Man
US Citizens Now One Step Closer To Becoming Permanent Tax Slaves
This week, the universally stupid brainchild of US Senators Chuck Schumer and Bob Casey known as the Ex-PATRIOT Act inched a bit closer towards becoming law.
‘Ex-PATRIOT’ is an absurd acronym that stands for “Expatriation Prevention by Abolishing Tax-Related Incentives for Offshore Tenancy”. I call it the Tax Slave Act… and it proposes three key provisions:
1) Individuals who are deemed, in the sole discretion of the US government, to have renounced US citizenship in order to avoid US taxes, will be permanently barred from re-entering the United States.
2) Such individuals will also be required to pay a 30% capital gains tax to the United States government on ALL future investment gains derived from the US. Currently, non-citizens who do not reside in the US pay no US capital gains tax.
3) These proposals are RETROACTIVE, and, if passed, would apply to anyone who renounced his/her citizenship within the last 10-years.
During a Sunday interview with ABC News, House Speaker John Boehner threw his support behind the bill… certainly a big step towards its eventual passage.
Let’s pause briefly for a little history lesson–
Dart Container Corporation was founded in 1960 by William F. Dart, the man who first perfected the design of styrofoam. Dart Container is today a multi-billion dollar family-owned company with thousands of employees and operations around the world.
In the early 1990s, brothers Kenneth and Robert Dart, heirs to the family fortune, renounced their US citizenship and became citizens of Belize and Ireland, and set up residency in the Cayman Islands.
Around the same time, several other wealthy Americans renounced citizenship, including Carnival Cruise Lines founder Ted Arison (who obtained Israeli citizenship), Campbell Soup heir John Dorrance (Irish citizenship), and fund manager Mark Mobius (German citizenship).
President Clinton was furious, and in 1996, he pushed Congress to pass a series of financial penalties for people who renounce citizenship. At the time, a ‘renunciant’ had to continue filing US tax returns for 10-years after renouncing.
Effectively, though, this penalty was a tax on worldwide income, not an exit tax on assets.
Fast forward to the mid-2000s, a time when the asset bubble was at its peak; the stock market was at its all-time high and real estate prices kept going up.
The Bush regime passed a series of changes to expatriation rules, dropping the income tax filing requirements in lieu of charging a one-time exit tax on assets.
In this way, the government was able to derive a much larger payment up front based on total assets rather than chasing around a former citizen for a piece of annual income.
In the years since the exit tax on assets was established, two things have happened:
1) The number of Americans renouncing US citizenship has risen steadily, from 235 people in 2008 to 1,780 last year (according to Schumer’s office).
2) The asset bubble has burst, and assets are worth much less than just a few years ago. As such, the government isn’t collecting as much revenue from the exit tax.
My sense is that the government has been watching the number of expatriates rise over the years, and simultaneously watching the value of the exit tax fall… and they’ve been looking for an excuse to make sweeping (i.e. retroactive) changes.
Eduardo Saverin is the perfect excuse. The Facebook co-founder’s recent renunciation of US citizenship has become a rallying cry for politicians to go back in time and steal money from former citizens retroactively…plus establish a larger base for future tax revenues.
This is a truly despicable thing to do considering that these former citizens followed the appropriate rules at the time, paid the tax, and moved on with their lives. Now Uncle Sam wants to go back in time to unilaterally change the deal, and expect everyone to abide even though they’re not even citizens anymore. The arrogance is overwhelming.
More importantly, this bill is also a major deterrent for people who are thinking about renouncing US citizenship today.
The passage of this law will undoubtedly cause many people who were considering expatriation to abandon the idea altogether as the thought of being permanently barred from entry is too much to bear.
It’s truly extraordinary that the Land of the Free has deteriorated to the point that the government must now resort to threats, coercion, and intimidation in order to keep its most productive citizens inside.

Mr. Bernanke, China Disagrees With You

noreply@blogger.com (Anonymous) — Wed, 23 May 2012 12:30:00 +0000

Ben Bernanke says that Gold isn't money, but rather just an asset. It appears that China may disagree with the Chairman...

Will China Make the Yuan a Gold-Backed Currency?:

If China Backs Its Currency with Gold, It Could Have Profound Effects for Investors … and Consumers

Larry Edelson – - writes today:

I know for a fact that Beijing wants its yuan to eventually become a gold-backed currency,
much like the Swiss franc was originally. Backing the yuan with some
gold will certainly help it become a major international currency.

Edelson
is a financial adviser who travels frequently to Asia, a former
high-volume gold trader who is interviewed a lot in the mainstream
financial media.
I have no idea whether Edelson is right or not. But he’s not the first to make the claim.
Doug Casey says that if one country – such as China – switches to a gold-backed currency, the dollar will be toast:

All it will take for the world to realize that U.S.
dollars are nothing more than hot potatoes is for one country (Doug
postulated that maybe China would be first) to introduce a gold-backed
currency. If China introduced a gold-backed yuan, for example, who on
earth would want anything to do with U.S. dollars?

Similarly, SafeHaven points out:

Suppose a large exporter, such as China, which
undervalues its currency and runs a large trade surplus as a result,
takes a huge radical step and goes all the way to a 100%-reserve gold
currency. The ultimate hard currency. If this succeeds, China is the new
England – the financial capital of the world, forever. Everyone else’s
money? In a word: pesos. Hard currency is Chinese currency. China’s
natural supremacy over the barbarian kingdoms of the West is restored.

Goldcore argues:

China is clearly trying to position the yuan or renminbi
as the alternative global reserve currency. The Chinese likely realise
that they will need to surpass the Federal Reserve’s official, but
unaudited, gold holding of 8,133.5 tonnes.

***

World Bank President Robert Zoellick recently mooted the possibility
of a return to some form of gold standard. It seems extremely likely
that senior and influential Chinese policy makers, bankers and
government officials may be having similar thoughts.

Simit Patel writes:

China’s central bank continues to aggressively accumulate
gold. Is this a setup for making the renminbi a gold-backed currency?
Many have speculated that this is the game plan. Certainly a currency
that is gold-backed will have appeal as a reserve currency capable of
storing wealth; indeed, the reason why the US was able to position
itself as a reserve currency is largely because it was once pegged to
gold.

MaxKeiser says:

China is clearly trying to position the yuan or renminbi
as the alternative global reserve currency. The Chineselikely realise
that they will need to surpass the Federal Reserve’s official, but
unaudited, gold holding of 8,133.5 tonnes. China is the sixth largest
holder of gold reserves in the world today and officially has reserves
of 1054.1 tonnes which is less than half those of even Euro debtor
nations France and Italy who are believed to have 2,435.4 and 2,451.8
tonnes respectively.

***

[This]
game theory article is great because it points out that China does not
need to amass a gold stock similar to the US, it can simply go to a gold
standard now and effect a simultaneous devaluation against the dollar
(as game theory dictates that the US and all other CB’s would be forced
to follow China’s lead, or risk losing all their capital as investors
buy the only gold backed currency in the world).

And Wikileaks noted several reasons for China’s stocking up on gold. ZeroHedge summarizes:

As the following leaked cable explains, gold is, to China
at least, nothing but the opportunity cost of destroying the dollar’s
reserve status. Putting that into dollar terms is, therefore,
impractical at best, and illogical at worst. We have a suspicion that
the following cable from the US embassy in China is about to go not
viral but very much global, and prompt all those mutual fund managers
who are on the golden sidelines to dip a toe in the 24 karat pool. The
only thing that matters from China’s perspective is that “suppressing
the price of gold is very beneficial for the U.S. in maintaining the
U.S. dollar’s role as the international reserve currency. China’s
increased gold reserves will thus act as a model and lead other
countries towards reserving more gold. Large gold reserves are also
beneficial in promoting the internationalization of the RMB.” Now, what would happen if mutual and pension funds finally
comprehend they are massively underinvested in the one asset which
China is without a trace of doubt massively accumulating behind the
scenes is nothing short of a worldwide scramble, not so much for paper,
but every last ounce of physical gold…

From Wikileaks:

3. CHINA’S GOLD RESERVES

“China increases its gold reserves in order to kill two birds with one stone”

“The China Radio International sponsored newspaper World News Journal
(Shijie Xinwenbao)(04/28): “According to China’s National Foreign
Exchanges Administration China ‘s gold reserves have recently increased.
Currently, the majority of its gold reserves have been located in the
U.S. and European countries. The U.S. and Europe have always suppressed
the rising price of gold. They intend to weaken gold’s function as an
international reserve currency. They don’t want to see other countries
turning to gold reserves instead of the U.S. dollar or Euro. Therefore,
suppressing the price of gold is very beneficial for the U.S. in
maintaining the U.S. dollar’s role as the international reserve
currency. China’s increased gold reserves will thus act as a
model and lead other countries towards reserving more gold. Large gold
reserves are also beneficial in promoting the internationalization of
the RMB.”

Were the Mayans Predicting the Dollar's End?

noreply@blogger.com (Anonymous) — Wed, 23 May 2012 00:00:00 +0000

I'm going to go out on a limb and say that December 21, 2012 isn't the end of the world. However, it could easily be the end of the world as we know it. And how have we known it? Well, for all my life and all of my parents' lives the world we knew was a world where the Dollar was the world reserve currency. Since the Bretton Woods agreement in 1944, the Dollar (or at least the Federal Reserve Note posing as the Dollar) has been the reserve currency of the world. What that has meant for us citizens of the USA is that we enjoyed world dominance when it came to importing things we need... oil, food, labor, etc. And that has meant we paid the best prices for all the things we needed or wanted to consume. And consume we did.
Now we are entering a time when the Dollar's world reserve status is threatened due to manipulation and devaluing of the Dollar by our Central Bank, the Federal Reserve. Brazil, Russia, India, China and South Africa (the BRICS) have entered into agreements to conduct trade without the Dollar. They represent an amount of economic activity nearly equal to the US. Population-wise they represent 40% of the world (the US represents 4.5%). Chief among this bloc of countries is, of course, China. China, who holds 25% off all the foreign US debt in the world and nearly 10% of all our debt. China, who sells us massive amounts of their resources and labor for Dollars that buy less and less throughout the world. China, who has been granted special direct access to our Treasury. And now... China who is tired of the Dollar's special treatment and thinks there currency should be the most favored currency in the world.
This doesn't look good...

There Can Be Only One: China Sovereign Wealth Fund Says Renminbi Will Become Reserve Currency:
First the CIC stirs havoc in Europe, saying it would rather invest in Africa than in Brussels finmin summit caterers, which at this stage in the business cycle are the most profitable corporation imaginable... and now this:

CIC'S JIN SAYS RENMINBI WILL BECOME GLOBAL RESERVE CURRENCY

Naturally, to parahprase titles of cheesy 80s movies, there can be only one.

So what would happen to the current one? Maybe the same as what happened to all the prior global "reserve" currencies:

Living Fathers Contribute More Than Dead Soldiers

noreply@blogger.com (Anonymous) — Mon, 21 May 2012 23:58:00 +0000

From The Tacoma News Tribune story 2 JBLM soldiers killed in Afghanistan:

"They were sons, husbands, fathers and Soldiers who contributed immeasurably to their families, communities, our unit and the nation. Our thoughts and prayers are with their families."

This sort of trite genuflection to families enrages me. Widows and orphans don't need thoughts and prayers. They need husbands and fathers. The United States has created more widows and orphans through military adventurism over the last decade than terrorists did in all acts against the US up through 9/11. In Iraq and Afghanistan there have been 5,073 killed in action since 2003. Another 1,380 have been killed on duty in these theaters. A total of 6,453 soldiers - sons, fathers, husbands - killed for what increasing looks like pointless aggression (source: DOD Casualty Status Report). They leave behind 3,549 widows/widowers and 4,646 orphans. (source: TAPS Fact Sheet)

Now as two soldiers from our local base have been killed, we are reminded of how they "contributed immeasurably" to their families, communities, their unit and the nation. I daresay a better contribution to their families would be to continuing living as sons, husbands and fathers.

“Mike was a soldier through and through and you just couldn’t ask for a guy that’s more loyal to our country and to my daughter, and then to my granddaughter,”

The 9 month old girl who will grow up never knowing her father would be better served by having her father nearby than she was served by his death 7,000 miles away. When she speaks her first word, has her first day of school, loses her first tooth, encounters her first bully or boyfriend, what contribution will her father have to offer her from the grave? When she feels alone, questions her identity or aches for belonging, what contribution will her father be able to make? Thoughts and prayers are little consolation at that point. That he died in service to his country will not comfort that little girl in those times.

Let me be clear. I mean no disrespect to the men and women who seek to serve our nation through the military. To the contrary, I greatly respect them. I value their lives and their service. I can't help but think of them as husbands, wives, fathers, mothers with families who will be without them. And with plans for keeping a military presence in Afghanistan for at least another 10 years and military contractors in Iraq indefinitely, we will continue to see contributions to families cut short in the service of military goals that contribute very little, if anything, to our nation.

Do Americans Want Smaller Government and Lower Taxes?

noreply@blogger.com (Anonymous) — Mon, 21 May 2012 18:39:00 +0000

Aziz examines the difference between what Americans say they want and how they actually vote. Are we all just confused or are we not being given real choices.

Choice is an illusion created between those with power and those without.

Americans Want Smaller Government and Lower Taxes:
From Rasmussen:

A new Rasmussen Reports national telephone survey finds that 64% of Likely U.S. Voters prefer a government with fewer services and lower taxes over one with more services and higher taxes. That’s unchanged from last month and consistent with findings in regular surveys since late 2006.

In fact, a plurality of Americans have called for small government and lower taxes ever since the days of Reagan.
But it has never worked out like that:

So what’s the difference? Is it that voters outwardly claim to be in favour of smaller government, and then when it comes down to it choose the advocates of big government? I don’t think so — I think it is that voters aren’t being given a real choice.
Here’s the increase in national debt by President:

The reality is that — with the exception of Obama — Americans have again and again opted for a candidate who has paid lip-service to small government. Even Bill Clinton paid lip service to the idea that “the era of big government is over” (yeah, right). And then once in office, they have bucked their promises and massively increased the size and scope of government. Reagan’s administration increased the debt by 190% alone, and successive Presidents — especially George W. Bush and Barack Obama — just went bigger and bigger, in total contradiction to voters’ expressed preferences.
The choice between the Republicans and Democrats has been one of rhetoric and not policy. Republicans may consistently talk about reducing the size and scope of government, but they don’t follow through.Today Ron Paul, the only Republican candidate who is putting forth a seriously reduced notion of government, has been marginalised and sidelined by the major media and Republican establishment. The establishment candidate — Mitt Romney — as governor of Massachusetts left that state with the biggest per-capita debt of any state. His track record in government and his choice of advisers strongly suggest that he will follow in the George W. Bush school of promising smaller government and delivering massive government and massive debt.
As Libertarian presidential candidate and former New Mexico governor Gary Johnson put it:

Pick Obama, pick Romney, government’s going to be bigger. Government’s going to be more intrusive.

So will the American people eventually get what they want? To do that, they have to ditch the hierarchies and orthodoxies of the past. Ron Paul and his tireless band of youthful supporters look set to achieve a strong showing at the Republican convention, as well as so far winning party chairs in Iowa, Colorado, Alaska, and Virginia. The Republican party — currently dominated by ageing tax-and-spend boomer Republicans — is being taken over by the libertarian youth who crave small government at home, as well as a smaller foreign policy. Ron Paul has taken the majority of youth votes in a plurality of states in 2012. And even if Ron Paul is not on the presidential ballot, Gary Johnson — a consistent advocate for lower debt, lower taxes, and smaller government — seems set to take a large slice of the vote in November.
As the mainstream parties continue to defy a majority of voters’ will and accrue more debt and make government bigger and bigger (while failing to address problems of unemployment and underemployment) it seems natural and inevitable that more and more Americans — especially young Americans (who tend more and more to be unemployed and underemployed) — will abandon the sclerotic big-government Republicans and Democrats.
Trouble is, things may go badly wrong before Americans get the chance to put a practitioner of smaller government into power. Already a majority of Eurasian manufacturing and resource-producing nations have ditched the dollar for bilateral trade. Dollars and treasury bonds have long been America’s greatest export — and the greatest pillar of support for growth in spending and welfare. With the dollar’s downfall, smaller government may not be a choice.

Does Jamie Dimon Even Know What Hedging Risk Is?

noreply@blogger.com (Anonymous) — Fri, 11 May 2012 21:09:00 +0000

Aziz goes straight to the heart of the problem with bailing out anybody. The moral hazard created with JP Morgan has set them up to think they can just break the rules without repercussion. JPM knows that they are too big to fail and can suffer losses like this because the Fed or the Feds will bail them out. So they break laws and rules without the hint of regard. If JPM is acting like this, you better believe others are too. The bailouts of 2008 didn't fix ANYTHING and they only exacerbated a problem. The only thing accomplished was buying enough time for highly connected people to get out of the system and hand the bag off to others... primarily taxpayers.

===========================

Does Jamie Dimon Even Know What Hedging Risk Is?:
From Bloomberg:
J.P Morgan Chief Executive Officer Jamie Dimon said the firm suffered a $2 billion trading loss after an “egregious” failure in a unit managing risks, jeopardizing Wall Street banks’ efforts to loosen a federal ban on bets with their own money.
The firm’s chief investment office, run by Ina Drew, 55, took flawed positions on synthetic credit securities that remain volatile and may cost an additional $1 billion this quarter or next, Dimon told analysts yesterday. Losses mounted as JPMorgan tried to mitigate transactions designed to hedge credit exposure.
Having listened to the conference call (I was roaring with laughter), Jamie Dimon sounded very defensive especially about one detail: that the CIO’s activities were solely in risk management, and that its bets were designed to hedge risk. Now, we all know very well that banks have been capable of turning “risk management” into a hugely risky business — that was the whole problem with the mid-00s securitisation bubble, which made a sport out of packaging up bad debt and spreading it around balance sheets via shadow banking intermediation, thus turning a small localised risk (of mortgage default) into a huge systemic risk (of a default cascade).
But wait a minute? If you’re hedging risk then the bets you make will be cancelled against your existing balance sheet. In other words, if your hedges turn out to be worthless then your initial portfolio should have gained, and if your initial portfolio falls, then your hedges will activate, limiting your losses. A hedge is only a hedge if it covers your position. That is how hedging risk works. If the loss on your hedge is not being cancelled-out by gains in your initial portfolio then by definition you are not hedging risk. You are speculating.
Dimon then stuck his foot in his mouth even more by claiming that the CIO was “managing fat tails.” But you don’t manage fat tails by making bets with tails so fat that a change in momentum produces a $2 billion loss. You manage tail risk by making lots and lots of small cheap high-payoff bets, which appears to be precisely the opposite of what the CIO and Bruno Iksil was doing:
The larger point, though, is I think we all know damn well what Jamie Dimon and Bruno Iksil were doing — as Zero Hedge explained last month, they were using the CIO’s risk management business as a cover to reopen the firm’s proprietary trading activities in contravention of the current ban.
Personally, I have no idea why the authorities insist on this rule — if J.P. Morgan want to persist with a hyper-fragile prop trading strategy that rather than hedging against tail risk actually magnifies risk, then there should be nothing to stop them from losing their money. After all, these goons would quickly learn to stop acting so incompetent without a government safety net there to coddle them.
The fact that Dimon is trying to cover the tracks and mislead regulators is egregious, but that’s what we have come to expect from this den of vipers and thieves.

A Vote For Romney Is A Vote For Obama

noreply@blogger.com (Anonymous) — Sun, 11 Mar 2012 09:12:00 +0000

Recently, a friend statused the following on Facebook:

Remember during the election for pres on nov 12 a vote for Ron Paul is a vote for Obama. I think Ron will be voting for the republican candidate himself because he does not like Obama either. I am just saying make ur vote count and don't pencil in Ron Paul and waste a vote to get Obama out of office.

My response to this status turned into my previous post on how the GOP can't win without a Ron Paul nomination. My conclusion: "If, on election day, Ron Paul has to be written onto the ballot by voters then the GOP has already lost." Furthermore, a vote for Mitt Romney IS a vote for Barack Obama.

Many people are under the illusion that Mitt Romney has the best chance to beat Obama. If you believe the latest Rasmussen poll, 51% of Republicans think that Romney is the best bet for beating Obama. There are plenty of lies, damned lies and statistics in this report, but that's no surprise. What is noteworthy, however, is that 56% of Republicans think "best chance to beat Obama" is the most important factor. The correlation between people who think "best chance to beat Obama" is the most important thing and people who think Romney has the best chance confirms what I said previously: "The only positive trait that Mitt Romney has is that it is believed he can beat Obama." This belief is purely a statement of faith though. It is devoid of any knowledge of history. And as if to prove the old saying, the GOP is hellbent on repeating history. Mitt Romney is just the next candidate in the growing line of moderate, neo-Conservative Republican losers.

In 1992, George H. W. Bush was the first of the modern moderate neocon losers. Sure, he talked "family values" but everyone knew from his record that he wasn't actually socially conservative. During his Vice-Presidency, and before, he was pro-choice, and his fiscal policies were moderate, at best. He won in 1988 on the momentum, albeit fading, of the Reagan Revolution and because he was running against a Massachusetts Governor named ~~Romney~~ Dukakis. But during that campaign, Bush famously promised "Read my lips: No New Taxes." But his moderate core got the best of him, and during his first term he raised taxes. Not only that, he introduced the whole globalist concept of a New World Order and signed NAFTA. No amount of family values could save him once his true moderate neocon side had been revealed.

In 1996, Bob Dole was the next moderate trotted out. Only this time he was running against an incumbent Democrat who had a mildly rocky first term and whose party lost big in the mid-term elections. That doesn't sound familiar at all. Bob Dole inspired zero enthusiasm in the Republican party getting 22% fewer votes than George W. Bush did 4 years later. The Dole nomination, like the Romney candidacy, had an air of inevitability to it, as if it was finally his turn. Nobody was excited by him. But Dole's claim was that he had the best chance to beat Clinton. Here is some news coverage from the time:

"The results boosted Dole's claim that he has the best chance to beat Clinton as 3,400 delegates and hordes of national media prepared to gather in Orlando this weekend for Presidency III, the Florida Republican straw poll."

"For some, it was truly love at first sight for Pat Buchanan. Others admitted affection for Lamar Alexander and Steve Forbes but figured only Bob Dole could beat Bill Clinton."

And the GOP voters fell for it. Dole lost by almost 10% in the popular vote and 40% in the electoral vote. It was a resounding defeat.

The GOP changed their strategy somewhat in 2000 and ran on a far less moderate, less neocon platform. George W. Bush promoted a "humble foreign policy", a pro-life agenda, reduction in the size of government, across the board tax cuts and so on. And while it was a close race, he ultimately prevailed. Unfortunately he turned out to be one of the biggest spending, big government, military adventurists of a generation after 9/11. During his administration, the neocons became the dominant force in the Republican party. Their rise to power culminated in the nomination of John McCain in 2008.

I don't need to spend much time on McCain. Most people can remember back 4 years and the dismal failure that was McCain-Palin. The bottom line is that he was very moderate, very "electable" and he lost by 10,000,000 votes to Barack Obama. The worst defeat in electoral votes by any presidential candidate (including a politician from Massachusetts named ~~Romney~~ Kerry) since Bob Dole's humiliating defeat.

So back to the Facebook status at the top. The message is that if Ron Paul is written in on a ballot, it is a vote for Obama. The exact opposite is true. Writing in a vote for Ron Paul, if it comes to that, is a vote against Obama. It's also a vote against the moderate, neo-Conservative candidates that the GOP keeps trying to push forward that can't win. In the last 20 years, they've proven time and time again, that going with the moderate, the guy with the perceived Best Chance to Beat the incumbent democrat or the guy who whose turn has finally come is the way to lose. But somehow we are supposed to believe that this time is different. It's not. A vote for Mitt Romney is a vote for Barack Obama.

-Addendum: I didn't talk about Ross Perot (what is it with Texans bearing the initials RP?). But in the case of the Dole defeat, you could move every single vote for Perot over to Dole and he still would have lost the popular election and the electoral vote. In the 1992 race, Perot likely did change the outcome. However, his biggest issue, NAFTA, captured a lot of typically Democrat union votes, so it isn't totally clear that Bush would have won. You could make an argument that Perot could have defeated Clinton if he had been the GOP nominee. But with Bush being the incumbent and pushing Perot to a third party, he didn't stand a chance for victory. Paul is not going third party and there isn't an incumbent Republican. So, I would argue that a Romney nomination splits the vote that would otherwise go to Paul.

Why The GOP Can't Win (and how it will lose BIG) Without A Ron Paul Nomination

noreply@blogger.com (Anonymous) — Thu, 08 Mar 2012 23:50:00 +0000

If the GOP nominates a candidate other than Ron Paul, Obama is guaranteed a second term.

Neither Mitt, Rick or Newt can beat Obama and this is nearly indisputable. Newt needs no explanation: he is absolutely unelectable. He hasn't had a good showing except his home state of Georgia and its neighbor South Carolina. He is only getting weaker with each state and is not a serious candidate, no matter how good a debater his followers imagine him to be. Santorum cannot beat Obama as shown in every national poll and by the fact that he alienates every single voting bloc of the Republican coalition except for the religious right/Christian conservatives. And while they may have admirable aims, they do not represent a bloc of voters that can win an election. If they did, Pat Robertson would have been President already. Mitt Romney inspires absolutely zero enthusiasm in the Republican base or in any of its composite blocs except for the country club/wall street Republicans. But it is precisely their enthusiasm that makes every other segment of the Republican party feel blasé about him. The only positive trait that Mitt Romney has is that it is believed he can beat Obama. This is wrong. In fact, take away "Mitt can beat Obama" and what do his supporters have? Nothing.

Ron Paul, on the other hand, has an enthusiastic, energetic and very importantly, young following that would walk across burning shards of glass for their candidate. The vast majority of these supporters are Republicans. But whereas the other candidates are ONLY attractive to one segment of one party, Ron Paul attracts the following non-traditional GOP voters: civil libertarians who might typically vote democrat but refuse to support Obama because he signed the NDAA (and note only Ron Paul in the GOP race opposed it on its indefinite detention grounds); independent non-party followers who tend to be less conservative but view Obama as no better than any of the GOP candidates and view Paul as a party outsider who speaks to their concerns; the anti-war movement types who are typically democrat but again see no difference between Obama and the rest. But Paul's main foreign policy message of "bring our troops home" resonates with them; disaffected democrats that don't fall in any particular group but feel that Obama is a failure for not following through on campaign promises to: 1) close gitmo 2) prosecute wall street 3) end bush tax cuts 4) change the tone in Washington (hope and change!) and so on. There are many democrats who feel sold out by Obama for his cozy (crony) relationship with Wall Street and his continuation of Bush's foreign policy and domestic fiscal policy. These people will never consider any of the other 3 GOP candidates because what they hate about Obama is his similarity to Republicans.

However, Ron Paul is not similar to any of them. He actually does represent hope and change and will create a whole new generation of what used to be called Reagan Democrats who defected to Reagan after the abysmal Carter administration. But this is a double-edged sword. The GOP has a chance to establish its base for the next 20+ years by embracing a Ron Paul candidacy or it will lose a generation of voters to the Democrat party. Those young, enthusiastic and energetic Paul supporters were in large part Obama supporters 4 years ago. Paul is the only chance to bring them into the GOP tent and deprive the Democrats of their numbers for years to come. But if the GOP stubbornly sticks to its marginalizing tactics and dismisses these voters they will likely swear off the GOP for life. The GOP will then face its own extinction since its current base is quickly aging and dying off.

I would be remiss if I didn't mention that it isn't just the "blue democrats" or independents that make up the Ron Paul support base. It's also lifelong Republicans (like myself) who are completely disenchanted with a party that massively grew the size of government for the 6 years they controlled all branches. The "small government" party that added Medicare Part D, grew the size of the Department of Education, created the monstrous Department of Homeland Security and the anti-Constitution Patriot Act. The "free market" party that bailed out the Too Big to Fail banks, bailed out the auto industry and "abandoned the free-market system" (to “save” it) as George W Bush said in 2008. For those of us Republicans who believe in a limited role for Government and free market principles, we see in Ron Paul a return to the values of Republicanism that made this country the shining city on a hill that Reagan spoke of. And for those who would say Reagan's values were "family values", you must understand that the term didn't even rise to prominence until the second campaign of George HW Bush in 1992. The platform that Reagan ran on is more closely aligned to Ron Paul than any other candidate.

To paraphrase a quote: Republicans have been subnormal for so long that when they finally act normal, people think they are abnormal. Ron Paul is a normal Republican. The GOP can't win without Ron Paul's supporters and it can't survive if it shuts them out. If, on election day, Ron Paul has to be written onto the ballot by voters then the GOP has already lost.

Manufacturing Ain't Rosy

noreply@blogger.com (Anonymous) — Tue, 24 May 2011 22:50:00 +0000

Krugman's attempts to lipstick our current pig of an economy are way off mark recently. When he's not advocating for yet another disconnect between CPI and inflation (ie real prices paid by real people for real things), or saying there is no inflation due to no wage growth, he's been trying to paint some rosy picture of manufacturing's rebound in our "recovery". The reality is he's just running cover for his pals at the FED and the DNC.

Krugman bases his ideas on what appears to be one rose-colored chart that he concocted... this one:

The quote that immediately follows it: "The weaker dollar really has made a big difference."

Wait, what?

Since he doesn't give much backing other than to talk about how he technically derived the data for the chart, I'm a little confused at what Krugman is seeing as "a picture of the recent improvement in the US manufacturing trade position." Is it that tiny uptick at the end of the chart from -2.4 to -2.0? Or is it that huge uptick beginning in Q406? And why is the weaker Dollar getting credit for a big difference?

The Dollars been getting weak for a long time.

2002-2005 was a period of severe weakening of the dollar - to the tune of 30% weakening, yet during that time, the manufacturing balances plunged. Since the momentary rise in 2005, the Dollar has weakened by about only 16% and QE2 has been about neutral on the Dollar despite the FED's efforts to debase it away. So what "big difference" are we seeing from a "weaker dollar"?

That's all really a sideshow, though, to the main thing Krugman is trying to do here. He takes whatever movement he's seeing in that manufacturing balance and makes a case that "America’s industrial heartland is now leading the economic recovery." And " the U.S. auto industry, which many people were writing off just two years ago, has weathered the storm."

Ford Casting Plant - Cleveland Ohio (closed 12/2010)

Ford Motor Plant - Detroit Michigan

General Motors Plant - Muncie Indiana

Some weathering. And how did the US auto industry come out so ahead in this game? Oh right... Government stimulus and bailout.

Now, Krugman has to be the only person in the world who sees anything positive in the manufacturing sector. Let's check:

Wall Street Journal: US Stocks Pare Gains After Weak Manufacturing Data - May 19
BusinessWeek: Industrial companies down on lower production data - May 17

And now, this from today:

Those worried about a slowdown probably focused Tuesday on a report by the Richmond Federal Reserve showing a decline in manufacturing activity in May. The Richmond Fed index fell to a negative 6 after a reading of 10 in April, as shipments and new orders declined.
"When you combine this report with the Philadelphia Fed and New York Fed manufacturing reports, the odds are stacking up that we’re going to see some softening in the national ISM report that comes out on June 1," Sheldon said.

Softening anyone?

So two final things:

Where did Krugman go wrong and why is he being so blatantly wrong?

The first part takes a little critical thinking. The lower GDP we are experiencing led by lower consumption has meant some fewer imports. It's not that manufacturing is picking up and going great, it's that we just aren't consuming so voraciously now that our homes have become dwellings and not ATM's. So the trade imbalance is not so wildly out of whack. Therefore, the manufacturing balance is less negative than it has been. Krugman's chart looks less correlated to the Dollar's strength then it does to the economies strength as a whole. This is very basic, but very bad, lying with charts.

The second part (why is he doing this?) is easy. With a double-dip recession on the way (and in spades), Krugman is building his case for more fiscal stimulus and more bailouts. He'll point back to green shoots in manufacturing that came about by Government bailout and spending and weep that the Republicans killed it out of their sheer hatred for unions and "the little guy." We'll hear sighing and mumbling coming from the NY Times pages over how the recovery was just taking hold when it was destroyed by hostage taking congressmen. This also sets the stage to ravage the Dollar. If the weak Dollar has done these great things, what can we get with a weaker Dollar?

As currencies begin to devalue around the world, I can almost smell the hyperinflation.

QOTD: "Ok, I'm a Nazi"

noreply@blogger.com (Anonymous) — Thu, 19 May 2011 19:55:00 +0000

You have to feel bad for Kirsten Dunst in this clip of Lars Von Trier declaring his affinity for Hitler and his own, sorta, Nazi status.

I imagine Dunst is getting paid through some sort of knock on royalty for the film Melancholia. A film that we get to observe lose distributors in real time during this interview. Time to start shorting the odds that Dunst gets to play love interest for a super hero in America again.

"Riefenstahl and Goebbels give it 2 Thumbs UP!"

"Five Swastikas" - Der Stürmer

"Von Trier's Triumph of the Will!" - Das Schwarze Korps

The Paul Ryan Defense

noreply@blogger.com (Anonymous) — Thu, 19 May 2011 16:48:00 +0000

Many thanks go out to Representative Paul Ryan for giving everyone in America a valid excuse to be late on all debt payments.

Me: Hello, Wells Fargo?
WF: Yes, how can we service you?
Me: I'm going to be late on a mortgage payment, but it's in order for me to get into a materially better position to pay the rest of mortgage. Cool?
WF: Oh, absolutely!
Me: I mean, you won't penalize me with any fees or record a late payment or anything right?
WF: Oh, no. We just want what's best for you and are happy to accommodate whatever repayment works for you.

Somehow, I don't think so.

FICO Declares: We're Still Relevant, Really!

noreply@blogger.com (Anonymous) — Thu, 19 May 2011 14:00:00 +0000

The Austrians over at Mises are covering a MarketWatch story about the damage of strategic default to your Credit Score. There are so many layers of B.S. here I don't even know where to begin.

I guess I'll start with the Fair-Issacs scaremonger warning everyone of the dangers of strategic default because of the credit score hit. The scary begins with a <gasp> 140 point drop in your score followed by a stern warning about how discriminating banks are these days.

Fannie, please!

Banks aren't discriminating. They just aren't lending. The halcyon days of securitizing unlimited loans are done. It's easier for banks to just keep money in their reserves and make interest, risk free, from the FED. Then there are the cherry fees they are collecting from distressed checking customers. They don't have to put anything at risk for those billions each year. The 720 or 580 credit score is irrelevant at this point. Everyone is too risky for a measly 3-4%. Fair-Issacs is trying to convince us that they matter. They need more $12/mo credit monitoring customers and $29.95 triple score buyers.

It's a waste of time. The FICO is screwed because banks don't need to lookup and when you got choose between eating and paying the mortgage (let alone credit monitoring) - you are buying the food. Especially when 20% of mortgages are now underwater. FICO needs us to believe that we'll be eligible for more debt if we keep our number looking good by not being one of the strategic defaulters.

But haven't we basically figured out that we don't really want all that debt? Didn't the housing-bubble/mortgage-backed/non-modifying-modification/robo-foreclosure/forged-document/fraud-flash-crash leave a lot of Americans deciding to get off the debt game? So what difference does a FICO score make? Mises makes the point:

So, even if you had to pay another $10 a month for phone and a little more for insurance the thousands saved each month not feeding an underwater mortgage is still worth it.

And this is where I scratch my head with the Austrians. Their whole piece seems to be an encouragement for people to up and walk away from their homes and mortgages. They've been recurring this theme for a while now. I don't have a problem with strategic default, per se. But I'm not going to argue for it in an open forum. It's a decision that shouldn't be made cavalierly. Encouraging anonymous readers toward it just doesn't make sense for a blog representing one of the foundational figures of Austrian Economics. It's the kind of thing the Keyensians would point to as a sign of the unseriousness of the other side.

But then again, the Keyensians want to inflate away those mortgages. In either case, FICO is an anachronism from the era of personal debt bubbles.

April FOMC Minutes Word Picture

noreply@blogger.com (Anonymous) — Thu, 19 May 2011 06:12:00 +0000

Six times in 21 pages, we get everything bad in the economy soft peddled as transitory. Ya know, FOMC... you keep using this word. But I don't think you know what it means. Seriously, they use the word "transitory" sorta like a doctor might say a malignant tumor is "transitory" right before giving you 6 weeks to live.

If you drink, consider yourself to have found a new drinking game. I've embedded the whole document below, but lifted out the transitory quotes for your convenience.

"Participants viewed the weakness in first-quarter economic growth as likely to be largely transitory..."

"Participants revised up their projections for total inflation in 2011, reflecting recent increases in energy and other commodity prices, but they generally anticipated that the recent increase in inflation would be transitory..."

"Participants generally anticipated that the higher level of overall inflation would be transitory..."

"Significant increases in energy and other commodity prices had boosted overall inflation, but members expected this increase to be transitory..."

"Increases in the prices of energy and other commodities have pushed up inflation in recent months. The Committee expects these effects to be transitory...."

"Participants raised their forecasts for overall inflation this year; however, most expected that the increase would be transitory..."

Fomc Minutes April

Schiff on Our Relationship With China

noreply@blogger.com (Anonymous) — Wed, 18 May 2011 22:30:00 +0000

This morning, I wrote the following in my Wrong Wage post:

To me, the implication is that as wages rise in the "Chi" half but stagnant in the "merica" half of Chimerica, we will be increasingly paying more for Chinese made goods AND have more demand for those goods by the emerging Chinese middle-class themselves. So from a supply side and the demand side we will have pressures driving up the cost of our goods while US wages stagnate.

Now, Peter Schiff is saying something very similar at this point in an interview on RT:

http://youtu.be/hkEthqUEKA4?t=6m12s

"People keep saying that China has an export economy. They don't. They have a production economy. The fact that they export their production is their loss. If they simply let the dollar fall and their own currency rise, they would still produce. Except it would be the Chinese that would enjoy the products that are being produced instead of Americans. And the Chinese economy would be much stronger."

The whole interview is worth watching, so I embedded it here. I think it's notable that we are starting to hear more of the idea that China doesn't need to export to the US to sustain it's economy. This goes against a lot of the conventional wisdom on our relationship to China. Interesting times ahead.

More on Fort Knox

noreply@blogger.com (Anonymous) — Wed, 18 May 2011 17:30:00 +0000

What we're likely to find if we try to sell the gold in Fort Knox:

http://youtu.be/Ewy6Jvb6h_k?hd=1&t=3m14s

Debt Limit Solutions by Friz Freleng

noreply@blogger.com (Anonymous) — Wed, 18 May 2011 15:00:00 +0000

When I see headlines like:

Selling Gold at Fort Knox Emerges as Next Big Question in Debate on Federal Debt Limit

I have to wonder if Friz Freleng is now considered the main idea guy at the table?

And now for something just as serious:

Hopefully, Yosemite Sam never succeeded in getting that gold out of Fort Knox. Would be a shame if we actually didn't have any to sell.

You know, this video is sorta ironic if you picture Yosemite Uncle Sam or maybe Yosemite Ben Bernanke.

Looking At The Wrong Wages

noreply@blogger.com (Anonymous) — Wed, 18 May 2011 13:00:00 +0000

Paul Krugman is adamant that there is no inflation risk in the US Economy. One of his recurring arguments is that labor costs are not rising and therefore a wage-price inflation spiral is impossible. From his recent The Inflation Monster post highlighting Average Hourly Earnings of All Employees:

First, do you see any sign that workers are about to (or are even able to) demand higher wages to compensate for the higher prices of gas and food?
Second, do you any sign that employers are getting ready to make more generous wage offers?

These rhetorical questions Krugman, of course, answers as "No" and therefore inflation is not going to happen.

Now, I'm no Nobel Prize winner, but it seems to me that we are looking at the wrong wages. The chart above captures US employees. But how many goods are being produced by US employees anymore? Sure, US workers are facing 9% unemployment and can't demand higher wages but they aren't making anything Americans buy.

So what's happening in the places where our goods are created?
China announced a 21% wage increase in December to go into effect starting this month. Even before that increase, SFGate reports:

The pay of the migrant laborers who fuel China's export industry rose by 40 percent in 2010, according to Credit Suisse's Tao. It will continue climbing 20 percent to 30 percent in each of the next three years as Chinese leaders pump up domestic demand.

And looking further out, we can expect our manufacturing base to have wage increases of 84% over five years.

So to answer Krugman's questions considering the full working population of Chimerica the answer becomes a resounding "YES!"

To me, the implication is that as wages rise in the "Chi" half but stagnant in the "merica" half of Chimerica, we will be increasingly paying more for Chinese made goods AND have more demand for those goods by the emerging Chinese middle-class themselves. So from a supply side and the demand side we will have pressures driving up the cost of our goods while US wages stagnate.

The result will be, at best, '70s style stagflation.