Right Condition

Dr. Benjamin Carson's speech causing quite a stir from the Left and the Right.

2013-02-12T20:43:00.000-05:00

Ever heard of Dr. Benjamin Carson? If not, you will, although the calls for this man to run for political office are a bit premature. The big buzz behind this man is a speech he gave at the National Prayer Breakfast and what makes this particular speech so "controversial" is that he is appearing to lecture President Obama who is sitting right next to him. Supposedly the content of the speech was too political for the venue.

The Left is absolutely frazzled by this and called the speech shocking.

The Right believes they found their next presidential candidate.

As always, both are wrong.

Firstly, there is nothing shocking about anything this man said. Supposedly it is offensive to the President, but Carson does not once call out any particular or specific policy. He simply talked about the deficit, education, tax policy and health care. He provided some suggestions and genuinely hoped that the two political sides in America can come together and solve the country's biggest problems.

Unfortunately, another deeply religious man who is recycling old Republican concepts of HSAs and flat taxation is nothing unusual. In fact other than his skin color, he is no different than Huckabee.

However the speech was funny, moving - as he talked about his impoverished childhood and full of well laid out logical points. If he gets involved in politics, we will be better for it, but the emotional reaction that is coming from the Right is silly and premature. If he does not, then he is already an extremely accomplished individual. Not only does he already have a movie based on his accomplishments, but his work with scholarships and promotion of education in America are aready massive accomplishments in their own right.

Below is the speech in its entirety. Enjoy.

Deval Patrick and MA legislators introduce new gun restriction proposals.

2013-01-19T12:59:00.001-05:00

After we watched in amusement Governor Cuomo shove a hasty gun restriction bill down the throats of NY citizens many wondered, is he doing this for political gain or is this a part of a broader coalition of gun legislation? Looks like we have our answer, Massachusetts did not hesitate to follow suit and proposed extremely similar restrictions:

It reduces access to high-powered rounds of ammunition.

It better tracks weapon sales by (1) requiring dealers at organized gun shows to connect to the Massachusetts Instant Record Check System (MIRCS) when conducting a sale of a firearm; and (2) requiring private sales of firearms to occur at the business of a licensed dealer so that the sale can be tracked electronically.

It limits gun buyers to one firearm purchase per month and prevents the furnishing of a machine gun to any person under 21 years of age.

Finally, this bill would allow a rebuttable presumption that an individual charged with a felony involving firearms and physical force is dangerous for purposes of pretrial detention.

The language above comes from the Governor, similar legislation was filed by Representative David Linsky:

Having one standard of the issuance of all gun licenses, giving local police chiefs the ability to evaluate all aspects of an application for a gun license.

Requires proof of liability insurance for possession of a firearm, rifle or shotgun.

Requires that all large capacity weapons and grandfathered assault weapons must be stored at gun clubs or target ranges.

Requires live shooting as part of the curriculum for a basic firearms safety course; this is not a current requirement.

Requires all applicants for gun licenses and FID cards to sign a waiver of mental health records for review to be destroyed after decision.

Imposes 25% sales tax on ammunition, firearms, shotguns, and rifles; dedicates funds towards firearms licensing, police training, mental health services, and victim’s services.· Brings Massachusetts into compliance with the National Instant Criminal Background Check System (NICS).

Limits gun buyers to one firearm purchase per month.

Even though Massachusetts is already considered to be one of the toughest States to obtain, buy and own guns the politicians have decided to crank down even further. Connecticut incidentally is also an extremely difficult State and yet the Sandy Hook tragedy unfolded anyway.

The idea is that by imposing the following restrictions we will have a reduction in gun violence, but lets examine the restrictions and determine whether something like Sandy Hook would have been prevented. After all, most legislation IS reactionary, but in this case the proposals are so badly off the mark as to wonder what the ulterior motive here is.

1) 25% excise tax on all purchases. Due to various restrictions, rules and laws, on average all purchases in MA are extremely expensive. Slapping an extra 25% tax on that acts as a direct punishment for gun owners under the guise of community aid. There are 300 million registered guns in the United States, that means that 99.99% of all guns are never used in malicious manners. Why should responsible gun owners looking to protect themselves be responsible to pay for licensing, police or mental services. These are NOT related. This will do nothing to stop mass shootings, it just makes it more expensive for responsible people. One good way to restrict anything is to inflate the price artificially, politicians are doing just that.

2) Restricting magazine capacity. By randomly and arbitrarily reducing the magazine sizes the politicians are rendering the entire point of the gun useless. What good is it for me people to pay money and spend time training, learning and practicing when in real life they may never have enough ammunition to protect themselves. Why 7 rounds? Where did this number come from? Where does it stop? The next proposal can be 5 or 3. Why not? Meanwhile, lunatics like the Sandy Hook shooter will just bring multiple guns or more magazines. Those looking to defend themselves are compromised, those intent on evil will just work around it.

3) Reduction to high powered ammunition: This is vague and unclear, but presumably something like hollow points will be harder to get. Studies upon studies show that ammunition makes a huge difference in stopping power. If you have a 9mm and want to stop 250lb man busting in your home you can fire several standard 9mm rounds and still fail to stop the intruder. You must be an excellent shot and have plenty of ammunition to be successful, or you can get ammunition that is designed to stop a human. By making the purchase of this illegal or difficult the politicians are further compromising the millions of RESPONSIBLE gun owners. The lunatics will just get it illegally anyway, much like criminals do these days anyway. Because you can have 1,000 laws of the books or 10,000 laws, criminals could care less.

4) Require all large capacity to be stored in a club. This is extremely scary and unclear, but because the term "larger capacity" is a term that is defined and redefined by politicians it can currently mean that 75% or more of all current handguns CANNOT be stored at home. Anything ranging from the standard police issue Beretta or M1911 is now suddenly illegal. By not being able to store it at home, people are now defenseless. Not sure how this can be viewed as anything, BUT wholesale disarmament and whether this is even legal after recent supreme court decisions. Presumably, since the Sandy Hook shooter stole the guns from his mother that something like this would be prevented? Again, this is a very serious punishment of responsible individuals and a massive restriction of over 75% of all handguns that are currently in people's homes. A gun stored at a range, is of little use to anyone and defeats the purpose of having guns in the house.

5) Limiting gun purchases to once a month. Why? What does that accomplish? Other than a massive inconvenience more red tape and more politicians - who does this benefit? A mass shooter will either steal the guns anyway or wait a bit longer to carry out the crime. This is just random central planning that looks good on paper, but provides zero practical assistance.

6) More complicated background checks. These are all good in practice and theory and in a sense they worked in Connecticut. After all, the lunatic tried to buy a gun from a store and was told he would have to wait for two weeks - at which point he killed his mother and used her guns. So how do more complicated background checks solve the problem? They do not. The side effect is that more and more guns are purchased and/or obtained in hard to track ways. By reducing the complicated check system more guns would be obtained in straight forward fashion and would actually be more easily tracked, but that is not the kind of logic I expect politicians to understand or embrace.

The list really goes on and on. The take away is this.

We had a crisis, a very serious crisis. Our Government, in a predictable fashion responded to this crisis, by clamping down and punishing those that are not responsible. In the case of Massachusetts, a group is being targeted and discriminated. This discrimination imposes unfair, expensive and time consuming restrictions on gun owners. Gun owners in this state are already akin to sexual offenders, as the only other group of people who must announce their presence upon moving into a new town. Yes, even though 99.99% of gun owners who move into a new town/city actually bring law, order and safety - they must, like a lowlife sexual offender register with the local police action.

Yet that is not enough, soon waivers of mental stability, extra liability insurance, crushing excise taxes and obnoxious restrictions are coming down the pipe.

The end result will be the following:

- Black market activity: If a 25% excise tax comes through, instead of pursuing legal avenues to purchase and obtain gun parts/ammo/etc people will seek other mechanisms. I can't even predict how many will buy ammunition from NH. Ammunition already costs an arm and a leg, it can take 30 minutes to go through 150-200 rounds at a range for practice. That can cost 60-80 bucks depending on grade! Slap a 25% extra tax on that and suddenly gun owners are paying up to 20 dollars in taxes just to practice?!?

- People will either give up guns in MA or move. This State is already bleeding people and losing its Congressional voice, but now the State will be more disarmed. How many more studies do we need to see to confirm, that YES, an armed population is a safer population. Don't believe? Looks at Kennesaw, Georgia where gun ownership is mandatory. Just like Switzerland, more guns apparently made the place safer and is considered to be the top 10 best towns for families!

- Mass shooting will continue. Why would they stop? Mass shootings are not a function of guns, or video games or Hollywood or whatever other idiotic explanation. Mass shooters are sick and disturbed people, as long as those exists, there will be tragedies. IN fact, America's gun ownership is #1 in the world. Yet over the past many decades gun violence and violence in general has gone down and down and down. America is less violent now than it was in the 70s, 80s, 90s. According to FactCheck.org: gun ownership and production is up, but gun murders/assault and robberies are down. Until we solve the problem of why we have seen a rash of crazy people come out and murder innocents, we will not solve the problem.

The solution.

The solution has to be thee-fold.

First, stop disarming responsible civilians. The police cannot be everywhere! There are thousands of laws on the books, it is a massive ball of red-tape that does not and cannot stop criminals. An armed society is useful until the following is solved:

- Drug war. How many illegal guns and murders occur because of the drug war? Countless. End the drug war and legalize all drugs, this action alone will eliminate a massive portion of the guns on the streets. This will make gun ownership less necessary.

- Mental illness: Crazy and violent people should be either treated or locked up. Instead of having our prisons overflowing with folks who sell marijuana, we should house individuals who pose a threat to our society. Removing lunatics and violent people from the streets will make gun ownership less necessary.

- Apply the same gun restrictions to the police and military as you do to civilians. The history of the United States is quite specific. It is the protection from tyranny. While gang violence and would-be robbers attempting to kill and steal private property is tyrannical, so is a legally armed group of men who are capable of destroying your life. As long as we are on equal footing, gun ownership is less necessary. The police of course will resist, after all, they need to protect us from criminals. But if criminals will always exist, then civilians should be armed as well. This is a catch-22 that cannot be solved. The truth is, most gun owners would rather NOT carry. Most gun owners would rather NOT use their guns. Who wants or needs that? This is just a function of our society.

Make our society safer and gun violence will drop.

Fiscal cliff, perhaps it is best to go over?

2012-12-28T13:05:00.000-05:00

What are your thoughts on the fiscal cliff? This has been the primary topic of conversation in the media and it focuses on whether or not the Republicans or Democrats can come together and forge a deal.

We should be wary of compromises, the end result is generally beneficial for the deal makers and disappointing for the rest of us. As George Carlin once said: "Bipartisan usually means that a larger-than-usual deception is being carried out."

USNews has a very broad summary of what happens if our esteemed politicians fail to reach a grand compromise:

"— Some 2 million jobless Americans may lose their federal unemployment aid. Obama wants to continue the benefits extension as part of the deal; Republicans say it's too costly.
— Social Security recipients might see their checks grow more slowly. As part of a possible deal, Obama and Republican leaders want to change the way cost-of-living adjustments are calculated, which would mean smaller checks over the years for retirees who get Social Security, veterans' benefits or government pensions.
— The price of milk could double. If Congress doesn't provide a fix for expiring dairy price supports before Jan. 1, milk-drinking families could feel the pinch. One scenario is to attach a farm bill extension to the fiscal cliff legislation — if a compromise is reached in time.
— Millions of taxpayers who want to file their 2012 returns before mid-March will be held up while they wait to see if Congress comes through with a deal to stop the alternative minimum tax from hitting more people."

That is just a sampling and does not include the inevitable tax reversion as the Bush cuts and the Obama payroll cuts expire.

So lets start with the last and most painful, tax increases. Everything from the AMT patch to the payroll cuts to the various levels of Bush cuts (depending on income) are all a Frankenstein of Congress. Don't you find it amusing how agonizing Congress finds all these complicated tax rules to be, when they themselves created it. We have one of the most complicated tax codes in the world, except maybe for Germany, and it grows more complex each year. Thing like AMT and its subsequent patches were just previous attempts at collecting more money from wealthy folks. Now we have reduced our entire tax conversation over whether $250,000 makes someone rich or not.

Problem: The entire tax conversation is idiotic. Let the taxes go up. Lets see what happens when you take capital, which is what income is, and shift it to the Federal Government. A tax is nothing more than a shift in private property from a decentralized source into a central source. There are many painful aspects to this fledgling economy, but come April there will be no question as to who is not helping. The solution for the tax problem is to flatten and simplify, not this laughable Kabuki theater that results in petty class warfare.

Proposal: Now is a great time to do away with a whole slew of these expiring/strange/exotic/senseless tax provisions. Switch to a 13-17% flat tax on all income that is twice the State's poverty line. Done. The working poor have a chance to get on their feet and the social engineering aspect of taxation melts away, along with the lobbyists, cronyism and Congressional power to hold the economy hostage every year.

Going back up to the summary, unemployment. The idea that USNews lists 2 years of expiring unemployment as a problem is laughable.

Problem: It has nothing to do with unemployment, that is just a word game. Unemployment insurance is paid out through employer/employee contribution, hence the term insurance. If you lose your job, the previous sacrifices that everyone has made through lower wages acts as a backstop until you find another job. What we have here is a mockery and a total perversion of the concept. Any money beyond that which is covered by insurance is called welfare. Welfare is a direct money transfer and is a subsidy. Subsidies distorts markets and creates perversions in behavior and price points. They ruin the market and grant power to the institution providing the subsidy, subsidies have never ever been a good idea, regardless of what emotionally appealing name they are called.

Proposal: We need to end Federal subsidies for work related reasons. This is a policy that began during the Great Depression under FDR, known as direct relief. It has obviously morphed into something far bigger and more complex since then (largely thanks to LBJ), but the idea that our Federal Government should provide any incentive NOT to work is offensive to anyone who believes or supports the free market. States should be in this business, not Washington DC. Our Federal Government spent over 450 Billion dollars in welfare alone last year, this is not sustainable.

Social Security, which is not actually part of the fiscal cliff - if we were to go over - is being discussed because the Government is thinking of modifying payment calculation. This is a problem that I have mentioned numerous times and it is one of the major flaws of the Social Security system, the mechanism of depriving people of their money is too easy to implement and too alluring to let go of.

Problem: SS payments are increasing and while not as threatening as Medicare/Medicaid will pose a significant budgetary burden in the coming decade or two. Japan will probably melt down due to their Social Security liabilities, but they are having a population crisis unlike us. The main issue is that SS payments are calculated based on cost of living, hence the cost of living adjustments. However they are calculated from Gov't derived metrics, the CPI, a grossly distorted joke of a number. Now there are talks of using chained CPI which will further lower the liability. It works very simply, the Gov't simply asserts that prices are not going up all that much and thus fail to raise the annual SS check. Done. You have effectively ripped off an entire generation of people.

Proposal: We need to stop using Gov't derived metrics to determine what to pay people, people from whom you have taken money without asking. In some cases forcing people to sacrifice 15% of their pay (employer + employee) their entire lives only to be told later "oops, changed my mind about some of the math". Use a combination of objective third party price calculations (shadow stats, MIT price index, etc) to create an average. Stop stealing from senior citizens. Next, introduce some competition back into the realm of retirement and make Social Security VOLUNTARY. We want to live in a free society and operate in a free market, why are we being forced to participate in a retirement program? It is absurd. If SS is so awesome, then continue it by all means, just give me an option to opt out. Oh, what is this you say, but SS will fail if it is not voluntary, well then my friend, it should not exist.

The price of milk will double. This has got to be the most amusing of all fiscal cliff problems to have. Considering we have 16 Trillion in debt and running trillion dollar deficits, the idea that milk prices is of some gran importance is rather comical.

Problem: Again, we have subsidies at work. The one in play is the Dairy Price Support Program, which is a stepchild of Farm Security and Rural Investment Act of 2002 and the Milk Income Loss Contract that kicked in when the 2002 statute expired. Both of those pieces of legislation created a price minimum, in other words, the Government would pay dairy farmers some amount of money (from our tax dollars) to promote the manufacture and sale of milk. Fundamentally, this is no different than "unemployment" welfare that has been going on for the past two years and will probably continue. More specifically speaking, it throws a giant monkey wrench into the dairy business. Lets assume that if this crap expires, then prices will double. What does that mean?

It means that TRUE cost of milk is twice what it needs to be! Will the price doubling hurt a lot of people? Of course it will, but truth always hurts, always easier to perpetuate a lie, no? If I told you that your actual mortgage is twice what it should be and that eventually you will have to pay it, would you rather know sooner or later? We are so far gone in this country that instead of examining why we are subsidizing dairy farmers we bemoan how awful it would be if dairy prices go up.

Proposal: There is nothing wrong with prices going up an down, they simply reflect production costs. Clearly dairy production has some serious costs, we need to expose them so that consumers can properly adjust their behavior. Yes it will impact ice cream makers, pizza makers, baby formulas, etc, and yes they will complain and make end of the world predictions. This is what happens when you implement subsidies, this happens every time regardless of industry. Think about that when you advocate subsidies for your pet industry (wind, solar, sugar, etc). In the end, everything just becomes more expensive.

We need to END all farm and agriculture subsidies immediately. Not only will that prevent billions of taxpayer money going to special industry groups, it will cut down lobby efforts significantly and will restore true prices. Once true prices appear the consumer will drive all future demand. Ultimately, dairy producers will have to expose to us why their manufacturing costs are so massive as to justify asking 8 bucks for a gallon of milk. Perhaps their taxes are too high? Perhaps cost of regulation is prohibitive? There could be a slew of reasons, but providing subsidies is not a solution.

In conclusion, going over the fiscal cliff is like lifting the band-aid off a rotting festering wound. It is badly infected, perhaps some sunshine can help.

The 2009 credit boom is coming to an end.

2012-11-21T01:26:00.000-05:00

The credit expansion boom of 2009 will eventually go down as yet another period of credit expansion promoted by the Fed that will have lead to another predictable bust. Today, it will be interesting to examine how the various levels of production are behaving under years and years of artificial interest rate suppression. It will also be helpful to look at charts and graphs examining the business cycle theory and the impact of time preference as taught by Mises.

For starters, those new to the concept - a very brief paraphrasing of the general idea.

Under a healthy functioning market people's consumer patterns impact their savings. More consumption equals less saving and less consumption more saving. In order to progress the society must save such that it can make investments in machinery, equipment, technology, etc if it hopes to increase the capacity of production. Sure ,you can harvest 10 coconuts a day, consume them by night and repeat the process. You can also defer consumption, save a coconut and once savings are sufficient build a coconut harvesting tool that will yield 20 coconuts a day while using those coconuts saved to sustain development.

In the world of money this behavior can be witnessed through interest rates or time preference. If the consumer begins saving, then he has suggested that the current goods are not as valuable to him now as they would be in the future. This increases the supply of resources, the cost of borrowing these resources will invariably drop as the supply becomes more and more abundant. Thus, once again, in a normal and healthy market the drop in consumption leads to saving thus leading to lower interest rates.

Why is this important? Just like one would be tempted to build a coconut gathering machine when sufficient coconuts can provide for such an investment, low interest rates send a message to business (wo)men that a large amount of resources is available for consumption. Thus, the further away the investment from the immediate consumer good the more interest rate sensitive it becomes - as the big investments require a lot of time (and thus interest payments). So investment heavy industries like mining and raw materials are considered early stages of production, while wholesaling, services and retail are late stages of production.

Or as Mises explains ever so succinctly in required reading for every human being:

Technological conditions make it necessary to start an expansion of production by expanding first the size of the plants producing the goods of those orders which are farthest removed from the finished consumers' goods. In order to expand the production of shoes, clothes, motorcars, furniture, houses, one must begin with increasing the production of iron, steel, copper, and other such goods.

But what happens when the interest rates are incorrect? What happens to all the business (wo)men that mistakenly considered the phenomena as an indication of resources that simply do not exist? They will at some point literally run out of money as the amount of resources available were far lower than the manipulated rate suggested. The false rates can come from either a central bank policy or the expansion of too much credit from large banks that have no fear of going bust (bailed out by the Fed or State like the wild cat banking days of the 1800s).

So indeed, if the entire theory that the banks and their expansion of credit cause the booms and busts , a scourge on humanity for the past hundreds of years, then I should be able to either prove or disprove the theory right here and now.

So my assertion is that the artificial credit boom from 2009 has sent the wrong signals to the economy and the amount of resources actually available is lower than meets the eye. This means that farthest removed industries should be struggling, while the easy credit should be juicing the consumer and consequently boosting the retailers and service. This is of course very dangerous and very wrong, because it violates the basic premise we outlined earlier. If the interest rates are this low, it would suggest that the consumer is NOT spending and the system is awash with resources (money).

So is it?

Stages of Production

In order to visually demonstrate the various levels of production I have stacked stock indices representing the levels of production. Highest is mining (furthest away), followed by basic materials, so on and so on finally ending at retail. These are indices or baskets of stocks, while not a perfect measurement due to the lag effect of stocks, it should serve pretty well for our demonstration. At the bottom of the charts is the federal fund rate, the interest rate set by the all knowing Federal Reserve.

The years are from 1999-present.

Take a moment to absorb the charts. Now lets walk through from furthest to consumer, to closest to consumer.

Right off the bat, the worst performing sector is mining, virtually at multi-year lows not far from its 2009 bottom!
Basic materials while doing better, has put in a top and is showing a visible downtrend.
Wholesalers, positioned somewhere in the middle in the production chain are still at the highs, but the trend has slowed down dramatically. So far, all three failed to exceed the tops made in 2008.
Next is consumer services, which not only is at new highs but has now exceeded the 2008 top!
Lastly, very similar to consumer services enjoying the hell out of Bernanke's funny money.

This suggests that tough times for the economy are ahead as investments and expansions into production are beginning to dry up and retract. Recession is straight ahead as the poor investments realizing a shortage in resources begin to undo the mistakes forced upon them by artificial rates.

One other critical point to glean from this exercise is the utter refutation of the entire Keynesian "animal spirits" philosophy. We are told even today that booms and busts are natural, simply humans acting irrational and then suddenly curtailing their rabid spending habits causing contractions and recessions. Except that if that was true, then 2008 would look very different. Instead if you look at the charts again, you see the following:

Mining: Decline of 65%
Basic materials: Decline of 64%
Wholesalers: Decline of 41%
Services: Decline of 42%
Retailers: Decline of 40%

So if the animal spirit theory was true, how come the consumer related industries contracted the least and the furthest away contracted the most!?

Simple, because that theory belongs in the waste basket along with your copy of General Theory. Instead we have an elegant, logical and impervious explanation. The industries thought there were more resources, they were wrong, the investments were bad, the contraction must begin. In fact the faster the contraction begins the better everyone will be!

The 2008 crisis

Now there are two "oddities" about the chart that some of you may be noticing.

First is the observation that the 2007-2008 decline in the consumer facing sectors started earlier than the miners, materials, etc. This is strange for two reasons: First, the current patterns look very different and second, it seems like a contradiction in the assertion that the consumer is being driven by credit.

Second is the abrupt fall of miners/materials/etc after posting new highs. The explanation to both is below.

First the consumer:

Consumer non-revolving credit, on a year by year basis. As you can see, in 2005 credit began to shrink reaching one of the lowest points in the past 12 years.

So what happened?

Scroll up again and look at the fed fund rate from 2005 to 2007 and you will see a rapid increase in interest rates from 1% to 5%. That shut down the credit happy consumer, an unfortunate reality of America - a country's whose economic purchasing ability is just a function of its ability to go into debt.

You can see the massive spike in credit accumulated in 2010-2011. This was achieved by zero percent interest rates that began in 2009. For those wondering, yes, revolving also shot up - but not as much.

The economy is literally being pulled into two opposite directions at once. Low interest rates are SUPPOSED to mean people are curbing consumption! Welcome to the Central Bank Fun House! Is it really a surprise that the early stage industries are declining? We can't have it both ways.

History and logic suggest that banking and the supply of money must be severed from the State entirely. Beating a dead horse here, but centrally planned rates and supply of money is not working.

Hostess bankruptcy: Blame Bernanke and then the unions.

2012-11-16T12:29:00.003-05:00

Today Americans woke up to the news that Hostess, the manufacturer of products like Twinkies, Wonder Bread and other "food" items is shuttering. The explanation provided is that their unionized strikers crippled production to such a point that it triggered an automatic contract clause. To be sure, Hostess was already on the ropes and under private equity management due to filing for bankruptcy in January of this year (their second bankruptcy in a decade), but the death knell most certainly came earlier than expected.

The closing of Hostess is actually quite tragic, because the job losses are in the many of thousands:

The closing will result in Hostess' nearly 18,500 workers losing their jobs as the company shuts 33 bakeries and 565 distribution centers nationwide, as well as 570 outlet stores. The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union represents around 5,000 Hostess employees.

"We deeply regret the necessity of today's decision, but we do not have the financial resources to weather an extended nationwide strike," said CEO Gregory Rayburn in a statement.

What exactly were the unions striking over? Hostess attempted to extend the company's life by lowering benefits and wages:

The new contract cut salaries across the company by 8% in the first year of the five-year agreement. Salaries were then scheduled to bump up 3% in the next three years and 1% in the final year. Hostess also reduced its pension obligations and its contribution to the employees' health care plan.

In exchange, the company offered concessions, including a 25% equity stake for workers and the inclusion of two union representatives on an eight-member board of directors.

The company is citing mounting medical and pension costs for crippling their margins. I assume this is true, but there is something far more insidious going on.

Regardless of what you think about their "food", something I find dreadful and can only refer to as food after stretching my definition of the term far and wide, the basic free market mechanics exist. Company H, created product T because of demand from customer C.

Due to raised awareness of how harmful trans fats are (twinkies have trans fat), HCFS and other chemicals, the American consumer is most likely curbing their appetite for enriched white flour products and sugary carbohydrates. However this decline in demand is perfectly normal and something all producers grapple with on a daily basis. Hostess still outputs millions of products annually, so someone is buying, even if they are buying less.

Now Hostess finds itself squarely between two massive forces and both are threatening to pull the company apart. The two forces are: contraction of demand and inflation of higher order goods.

The first is rather simple, people are buying less product. We can chalk this up to recessionary pressure, behavioral changes, consumer awareness, etc. Does not really matter.

The company has exactly two choices: lower operating costs or lower final price.

This is where the infinite liquidity pumping of our central bank and the Keynesian/Monetarist wizard known as The Bernank comes in. Ben Bernanke has been on a kamikaze mission of pumping the American economy full of funny money for years, because we all know that adding more debt and more cheap money will provide wealth, prosperity and growth. Oh wait, it does the opposite, who cares, Bernanke has a PhD in economics and I am just an idiot blogger.

This unpleasant experiment known as QE (Quantitative Easing) has caused a bit of damage on commodity prices. More dollars, but same amount of goods equals rising prices.

What are the two primary ingredients of most Hostess products? Wheat and corn (corn syrup).

Observe:

Commodity wheat prices. Second highest in 12 years, surpassed only by the 2007 credit induced bubble.

Commodity corn prices.

You have to ask yourself, how is it that in a global recession (or weak recovery if you prefer) that we have the highest corn prices in the past 8 years?

This increase in cost of higher order goods puts immense pressure on the Hostess bakeries. In order for Hostess to cope with the loss of consumption, they can fix the problem by lowering final price. However if they lower final prices while getting squeezed on raw ingredients they will lose money, back into debt they go. So they do what is the most natural and obvious thing they can do, adjust final price in concert with rising raw ingredient prices. This in turn discourages more consumers from buying the now more expensive product and the losses continue.

Meanwhile Time magazine slams Bernanke's mug on their cover and announce him to be the next best thing since sliced Wonder bread.

Lowering final price is out of the question, can they lower operating costs? Most of the operating costs are labor. Because the workers are unionized the labor costs are higher, on top of that there are numerous pension obligations and rising medical costs. This where knowing the Great Depression helps.

In the Great Depression, prices were falling across the board however both the Hoover and FDR administrations gave political juice to big labor and legislation that propped up wages. You would think this is utterly ass backwards since in an environment of falling prices, wages should follow suit, but they did not. When we have state and federal minimum wage laws it creates an artificial floor for employers, if profits begin to shrink due to lowered consumption then the only way to solve the problem of labor costs is to fire people. This is how price fixing of wages results in rising unemployment.

In the case of Hostess, the management team proposed the only remaining alternative, lower wages and benefits. Now, of course the unions should take a price cut, a job is better than no job, but we can be sympathetic to their plight. This is where The Bernank comes in to play yet again. Unions are fighting the same price war that can be felt on the higher-order goods side! Instead of grappling with rising wheat and corn costs, the average worker represented by the union is fighting rising costs everywhere; supermarkets, gas stations, clothing stores, etc.

Since the CPI is always slightly undervalued to absolve our Government of certain responsibilities, the MIT price project is more illuminating.

As can be sadly observed, priced paid are now substantially higher than they were even during the 2008 boom. So if you are a union representative and your job is to ensure that your workers are getting paid adequately, what choice do you have? Without demanding raises, in the face of rising prices the workers are essentially getting a wage cut. The corollary of the Great Depression, is that with prices dropping the Government enforced minimum wage laws were giving workers wage increases.

So while in the Great Depression case there was a gross violation of free market wage rules, in today's word we have a gross violation of pricing. Under a healthy free market with the money supply remaining stable prices DROP. They have to drop because humans are always evolving and becoming more efficient. So while we can blame the unions for many things, blaming the unions for trying to keep up with the Central Bank inflation is out of bounds.

The root cause remains the expansion of cheap money and artificial interest rates. Policies of the Federal Reserve is hitting Hostess on the higher order goods side AND simultaneously forcing the union's hand on the wage side as they desperately try to compete with rising prices. In an environment where capital formation and redirection of resources to healthy sectors is so badly needed, our central bank is continuing to suppress rates and expand credit thus choking off recovery and prolonging the pain.

Now that is food for thought.

P.S. For those worried that their beloved junk is going away, rest easy, the company will be broken up and pieces of it will be sold off without the heavy weight of labor costs.

A tale of two countries: France and Denmark, an example of sin tax foolishness.

2012-11-14T23:04:00.001-05:00

I present to you two examples from Europe that continue to demonstrate unequivocally that no matter how often fundamental economic principles are violated, the result is the same. A corollary lesson is that Governments will pursue these violations thinking naively that previous errors do not apply to them.

Today's subject: sin tax.

The idea of a sin tax continues to be popular on both sides of the proverbial political aisle.

Even among those that generally accept that taxation deprives the private sector by transferring capital to the less efficient public sector favor the sin tax. They justify this error by suggesting that people should not be engaged in sinful practices like: smoking, drinking, gambling, prostitution or the multitude of other offensive actions and raising revenue from these sinful things is acceptable.

Then there are those that are constantly harping on the "common good" and social welfare. They justify the sin tax on the grounds that regardless of how much revenue is raised, the social benefit conferred from stamping out these activities is a worthwhile effort. The reasoning is often convoluted and predicated on layers of presumed public spending that this same crowd foisted upon us in the first place. For example the idea of banning smoking is perfectly reasonable because smokers inflate health care costs and since we are now in one giant health care pool the goal of snuffing out smoking is justifiable and worthwhile.

So while the sin tax is not an overt ban, it is common sense that a large enough tax can become prohibitive enough such as to stamp out usage or at the very least significantly alter social behavior. The alternate social behavior can cause two predictable reasons: First, it can spur and activate a robust black market where the taxed goods are now traded through unofficial exchange channels thus depriving the Government of any sales tax revenue. Second, it can cause, depending on logistical practicalities for the buyers of these goods to seek them from more hospitable areas. If New York for example over taxes their cigarettes, the beneficiaries may be Rhode Island or New Jersey where the tax is lower.

Both the black market and the purchasing of goods from other locations proves to be a great source of frustration to the authorities implementing the sin tax in the first place. Not only are they deprived of revenue, but the behavior appears to fly squarely in the face of the regulators and taxers. Don't people understand that these sin taxes are for our benefit!? If only the stupid sheeple would just do what is good for them then we would not be having this problem.

Tale of two countries.

Several days ago I came across an extremely pleasant and surprising story from Denmark. Apparently the economic reality of human behavior caught up with Danish regulators and their "fat tax" implemented one year ago is now relegated to the ash heap of history:

The measure, introduced a little over a year ago, was believed to be the world's first so-called "fat tax".
Foods containing more than 2.3% saturated fat - including dairy produce, meat and processed foods - were subject to the surcharge.
But authorities said the tax had inflated food prices and put Danish jobs at risk.
The Danish tax ministry said it was also cancelling its plans to introduce a tax on sugar, the AFP news agency reports.
The ministry said one of the effects of the fat tax was that some Danes had begun crossing the border into Germany to stock up on food there.
According to the Danish National Health and Medicines Authority, 47% of Danes are overweight and 13% are obese.
The tax was introduced in October 2011, in an attempt to limit the population's intake of fatty foods.
The measure added 16 kroner ($2.70; £1.50) per kg (2.2lb) of saturated fats in a product, increasing the price of a 250g pack of butter by 2.20 kroner.
The decision to get rid of the tax was agreed as part of the centre-left minority government's budget negotiations.
Several supermarkets have reportedly said they will reduce their prices once the tax is abolished.

Bold emphasis is mine. So without even mentioning that attacking saturated fat is foolish, another relic of a concept made popular by Department of Agriculture based on faulty science, the Danes learned a few painful things.

People will continue to do what they want, regardless of how you try to punish them. You would think that the prohibition of the 1920s would have put the issue to rest. Worse yet as Danes went to Germany to buy the taxes products the local producers get hit. This reduces profits and potentially places jobs in jeopardy as the entire production chain begins to contract as demand reduces.

So why is this a tale of two countries? Are you expecting France to follow suit? Unfortunately a country that is dominated by Socialists determined to centrally plan not only the economy, but all economic behavior, wilfuly ignore not just history, but examples from their European neighbors. Introducing the Nutella tax:

PARIS — The French Senate approved Wednesday the so-called Nutella amendment that would quadruple the tax on palm oil, a key ingredient in the chocolate spread, to discourage consumption of the oil rich in saturated fat.
The amendment which would take the tax on palm oil from around 100 euros ($128) now to 400 euros was approved by a vote of 212 to 133 despite protests from major palm producing nations Malaysia and Ivory Coast.
Socialist deputy Yves Daudigny said "palm oil is the most rich in saturated fats and its harmful effect on health has been established."

The "Nutella tax" would affect any foods made with those oils and bring in about €40 million ($51 million). Whether the French want to regulate consumption of fatty food or raise revenue is unclear, but it is extremely hard to believe that the French believe the saturated fat nonsense. Considering the French paradox has been a wonderful example of how eating rich fatty dairy products and meats appears to carry no correlation with heart disease.

Chances are the economic ignorant French politicians are figuring that this will not affect French industry as the palm oil is primarily imported and thus they can wash their hands of it. An additional 40 million euro in a rapidly shrinking French economy is nothing to scoff at, presumably this is viewed as a "free lunch" and they can use the health benefit to justify their actions if need be

Unfortunately what the French are doing are two things. First, like the Danish demonstrated just a year ago, the French interested in palm oil products will just go to other countries and stock up. The tax sounds large enough to alter social behavior and so this result is guaranteed. Secondly, this will hurt local sellers and bakers using these products as their operating margin will shrink. This will further reduce the tax base and could even translate into job losses and contractions.

We have a beautiful example of how two countries, geographically close enough to each other pursuing entirely opposite strategies despite the demonstrable failures. A smart man learns his on own mistakes, a genius learns on the mistakes of others and Socialists never learn.

Revisiting the deregulation that caused the 2008 housing crisis.

2012-11-13T11:35:00.000-05:00

It has been four years since the world economy took a dramatic nose-drive from which we are still recovering from and like many historical economic events the perceptions and interpretations vary from person to person. Even in the midst of the 2012 elections cries about reverting to failed deregulation policies were commonplace. What will be ultimately be taught in schools, will be very similar to how the Great Depression was historically analyzed and taught. How the historical analysis gets laid down could potentially build a slippery slope foundation for those relying on that text.

Imagine thousands of years ago a historian with religious inclinations observing the destruction of Pompeii. Those reading the history later would be convinced that the sinners of the city angered the gods and were punished for it and immortalized in liquid magma. A seismologist would for instance have a very different take on the situation.

Economic calamities are no different, like the Great Depression. Students and casual hobbyists have been "taught" for decades that speculation, greed and the collapse of the stock market somehow caused an eight year slump in America while bringing international financial markets to their knees. It took many decades for economists to begin breaking down the true causes through the works of people like Friedman and far more accurately, Murray Rothbard, but the damage had been done.

To that end, while the wounds are still fresh, it helps to revisit this very crucial historical event despite the fact that legislation like Dodd-Frank has already been rushed out to supposedly fix what was broken.

So what is the number one cause for the 2008 Housing crisis as far as the layman is concerned? Well of course it is deregulation. So many have written about it, movies have been made about it and the conviction is so unshakable that even disputing it seems like lunacy. You would think that the accusers would provide a lengthy list of legislation that proves their case, but alas, there is only one offending piece.

The notorious Gramm-Leach-Bliley Act. That is it! So let us take a look.

The Wiki cites several criticisms:

Many believe that the Act directly helped cause the 2007 subprime mortgage financial crisis. President Barack Obama has stated that GLB led to deregulation that, among other things, allowed for the creation of giant financial supermarkets that could own investment banks, commercial banks and insurance firms, something banned since the Great Depression. Its passage, critics also say, cleared the way for companies that were too big and intertwined to fail.[22] Economists Robert Ekelund and Mark Thornton have also criticized the Act as contributing to the crisis. They state that "in a world regulated by a gold standard, 100% reserve banking, and no FDIC deposit insurance" the Financial Services Modernization Act would have made "perfect sense" as a legitimate act of deregulation, but under the present fiat monetary system it "amounts to corporate welfare for financial institutions and a moral hazard that will make taxpayers pay dearly."[23]

The critics range from the standard Leftist talking points (including economic laureate Barack Obama..oh wait) to more nuanced observations from Thornton that suggest we simply could not afford a free market because we have too many broken things in our system. Interesting thought. Let's work with that.

So supposedly GLB is such a reverse to free market principles that America simply was unable to cope. Really?

Are we supposed to believe, that a bill that was signed by then president Bill Clinton and supported by 155 House Democrats (out of 206) and 38 Democrat Senators (out of 45) was a massive lurch to deregulate and bring back the free market?

So what exactly did this giant deregulation bill do? I am going to refer to Golden State blog, an economist who reviewed the movie Inside Job:

The best they can do [Inside Job narrators] is to cite the partial repeal of the Glass-Steagall Act in 1999, and even this argument weakens on examination. The repeal (known as Gramm-Leach-Bliley) merely eliminated a provision that prohibited commercial banks and investment banks from existing under the same corporate umbrella, a provision that exists nowhere else in the world; other elements of Glass-Steagall, including those prohibiting commercial banks from underwriting or trading in securities and those prohibiting securities firms from taking deposits, were left intact, and other laws exist to prevent investment banks from unloading toxic securities onto commercial affiliates.

So all it did, was remove that one provision and allowed the merging of the banks. Bill Clinton stood by that provision and cited that without it, it would have been impossible in the wake of the 2008 crisis for distressed companies to be purchased by each other. More importantly, that provision was largely being circumvented anyway. I remember looking at this information back in 2008 and found revealing information from Cato to suggest that the point was truly moot:

Even before its passage,investment banks were already allowed to trade and hold the very financial assets at the center of the financial crisis: mortgage-backed securities, derivatives, credit-default swaps, collateralized debt obligations. The shift of investment banks into holding substantial trading portfolios resulted from their increased capital base as a result of most investment banks becoming publicly held companies, a structure allowed under Glass-Steagall.

going on to say

Second, very few financial holding companies decided to combine investment and commercial banking activities. The two investment banks whose failures have come to symbolize the financial crisis, Bear Stearns and Lehman Brothers, were not affiliated with any depository institutions. Rather, had either Bear or Lehman possessed a large source of insured deposits, they would likely have survived their short-term liquidity problems.

This is incidentally, exactly the same debate that was had in Congress in the 1930s! The passage of Glass-Steagall as far as it separated the commercial and investment banking was never ever explained. It was simply stated that it needed to be done and became one of the many provisions of G-S. As I have researched the matter previously, I shall link to my own previous article, but the fact remains:

Interestingly enough, unified banks (those with investment arms) from 1927 to 1930 greatly increased their issuance of bonds, solid proof their businesses were strong and more trusted than just purely commercial or investment banks alone. Another study quoted in Tabarrok's research suggested that unified banks simply issued higher quality securities than exclusive Investment banks. So if there was no empirical reason for separating the commercial and investment banks, then what is the explanation behind Glass-Steagall?

I encourage you to read the history of G-S as it exposes how large private corporations can influence and write regulation, regulation that is then deemed to somehow be beneficial to the consumer, but in reality is used as a bludgeoning tool for one private entity against another.

Lastly, I have one last piece of evidence to present. Presumably, if this was truly a lurch to deregulate and a move to a free market as many claim, then at the time of passage it would be logical to assume that the one Congressman who constantly beat the drum for the raw free market would support it. However this lone Congressman opposed it and although his original letter has been lost, a copy can be found here:

CONFERENCE REPORT ON S. 900, GRAMM-LEACH-BLILEY ACT
------------
HON. RON PAUL
OF TEXAS
[Page: E2297]
Madam Speaker, today we are considering a bill aimed at modernizing the financial services industry through deregulation. It is a worthy goal which I support. However, this bill falls short of that goal. The negative aspects of this bill outweigh the benefits. Many have already argued for the need to update our financial laws. I would just add that I agree on the need for reform but oppose this approach.
...
Such a scenario would put added pressure on the financial bubble. The growth in money and credit has outpaced both savings and economic growth. These inflationary pressures have been concentrated in asset prices, not consumer price inflation--keeping monetary policy too easy. This increase in asset prices has fueled domestic borrowing and spending.
Government policy and the increase in securitization are largely responsible for this bubble. In addition to loose monetary policies by the Federal Reserve, government-sponsored enterprises Fannie Mae and Freddie Mac have contributed to the problem. The fourfold increases in their balance sheets from 1997 to 1998 boosted new home borrowings to more than $1.5 trillion in 1998, two-thirds of which were refinances which put an extra $15,000 in the pockets of consumers on average--and reduce risk for individual institutions while increasing risk for the system as a whole.
...
The better alternative is to repeal privacy busting government regulations. The same approach applies to Glass-Steagall and S. 900. Why not just repeal the offending regulation? In the banking committee, I offered an amendment to do just that. My main reasons for voting against this bill are the expansion of the taxpayer liability and the introduction of even more regulations. The entire multi-hundred page S. 900 that reregulates rather than deregulates the financial sector could be replaced with a simple one-page bill.

I have removed a few unrelated paragraphs for brevity, bolded text is mine.

There are three critical takeaways here.

First, Ron Paul in 1999, already warned that the economy is accumulating a lot of risk and that people are chasing assets - a natural consequence of easy credit expansion promulgated by our central bank and policy makers.

Second, and more importantly, is that he saw the bill as MORE regulation. Not LESS. He identified a moral hazard and realized that taxpayers will be on the hook in case of failure. This is precisely what was happening with all attempts to rein in Fannie and Freddie, two agencies that were strong armed by the Government to facilitate loan processing. However the "American dream" was not to be derailed, even if it required massive social engineering to achieve it.

Third and MOST important, he identified and spoke of an impending bubble and bust. What did he see and what he was warning about? Why did he believe that this bill would exacerbate the existing financial bubble. This is precisely the root of the entire problem. This is what the economists who criticize GLB by suggesting that our markets cannot handle the legislation are trying to so poorly convey. We have a very serious structural problem. I would argue that band-aids like Glass-Steagall and Gramm-Leach-Bliley are nothing more than weak attempts at solving distortions created by centrally planning interest rates and forceful expansion of credit.

As Ron Paul said in his closing statement, if Congress were truly to repeal the bill, it would take one page. Instead, GLB is huge clocking in at over 140. Curiously enough, Glass-Steagall is 37 pages.

So, the narrative goes something like this.

Crazy free-market libertarians passed a 140+ page bill that repealed 37 pages of Glass-Steagall (insert confused face here) with the help of 155 House Democrats and 38 Senate Democrats signed by a Democrat president. Only to be opposed at that time, by the only self-proclaimed libertarian in the House on the grounds that this was not deregulation, but simply new regulation.

Do you now see the absurdity of it all? But of course it is easy to understand the allure of it all.

Something like 2008 and the Great Depression and all seismic collapses are difficult to fathom and understand. Especially when you consider just how illiterate most are on Economics, combine that with the fact that even economists themselves blame GLB and you got yourself a very explosive scapegoating situation. People always look for the easiest and simplest solution to their problems.

Sure you can point to this bill and you can point to the greed of Wall St (apparently greed never existed before 2008) and pat yourself on the back for a job well done, but it requires far more time to appreciate why the collapse occurred and what to do to prevent it from ever happening again.

America and the 2012 elections, what did the elections tell us? Winners and losers.

2012-11-07T18:27:00.001-05:00

The dust is beginning to settle and everyone is coming out to survey the damage. On the surface, one would think nothing happened. House is controlled by the GOP and the Senate and the White House are in Democrat hands. Numbers appear to be largely the same, was there even an election? One would think by the cries and wails of Romney supporters that the end is near.

However upon closer inspection one sees some very interesting dynamics at play. There were visible winners and losers yesterday. Do not accept the explanations and excuses that are rapidly coming down the pipe from those with serious egg on their face, like Dick Morris and his assertions that the electorate changed or that no Republican could have won this election because Romney was so perfect. Morris is blind, his blindness is punctuated by his closing statement:

We must stop Obama’s socialist agenda. That’s our job for the next four years. We cannot allow Obama to magnify his narrow victory into a mandate for larger government, bigger spending, and less freedom.

Indeed, Morris simply prefers his brand of Republicanism execute the business of larger government, bigger spending and less freedom. Precisely what Romney represented.

George Will who days before the election predicted a Minnesota win for Romney offered similar and equally meaningless conclusions citing electorate shifts and the amusement that Americans chose to elect Obama again despite him being the most Leftist president since LBJ. He, however cannot square the contradiction of the self-identified conservatives.

Self-identified conservatives outnumber self-identified liberals 2-to-1 in a nation that has reelected the most liberal president since Lyndon Johnson and his mentor Franklin Roosevelt.

Ahh, but here lies the rub. It was not Obama's Statism that won yesterday, it was Romney Statism and his backward philosophy that lost. I have asserted that there is no difference between the Democrats and Republicans outside of specific personal issues and it is precisely the Statist similarity and the personal issue difference between Romney and Obama that gave Americans a very simple calculation. Why would they choose Statism AND a slew of other unpleasant additions when they can do without them?

To that end, lets quickly examine the winners and losers and see if we can make sense of what America has concluded.

Winner: State Rights

Yes, you read that correctly. Despite the gross overreach of our Federal Government over the past many years and decades, the fight continues. In THREE States the 10th Amendment flexed its muscle on the matter of health care.

Montana, Referendum 132: Giving choice to Montana residents of whether to buy health insurance striking at the heart of the ACA's individual mandate.
Alabama, Amendment 6: Prohibiting mandatory participation in any health care pool
Wyoming, Amendment A: Amending the Wyoming Constitution to ensure that health care choices are the right of the individual.

In all three cases the margin of victory was massive. To see States challenge Federal law is precisely how the Republic was designed to function. Since the State laws do not violate the Bill of Rights and do not overtly harm anyone's natural rights the Federal Government is going to have to accept this - one way or another.

That is not all. Two States have gone boldly where none have gone before, a direct challenge to the Federal Government's ban on Marijuana.

Colorado, Amendment 64: Legalization and regulation of up to 1oz of Marijuana.
Washington, Initiative 502: Legalization and regulation of a small amount of Marijuana (size unknown).
Massachusetts, Question 3: Medicinal Marijuana. While not bold per-se, as it joins 17 other States in ignoring the Federal laws.

In both cases, the victory was not even close. Oregon tried to follow suit, but surprisingly failed. Still, despite all the problem that California has been having with federal raids on their dispensaries two States decided for a full frontal attack. Incidentally, the best and only way to stop federal raids is for as many States as possible to legalize the substance thus making enforcement impossible.

A special mention is New Hampshire and CACR 13, where a majority of its residents voted to ban the income tax. The measure passed 57-43, but it is unclear at the moment as to whether that is a big enough margin for the purpose of amending the NH Constitution.

What is fascinating is that despite Colorado, Washington, Massachusetts and New Hampshire all voting for Obama they also all voted for State rights and freedoms. You can easily throw your hands up in despair and assume that Americans are stupid in voting for Obama and more taxes, yet how do you reconcile that with 57% of NH residents voting to ban all possibilities of new taxes on one hand and Obama on the other?

Loser: Social issues

Social issues were on display.

Maine, Maryland and Minnesota all voted to extend and enhance same-sex marriage rights. This is another giant step in the right direction as it takes marriage out of the federal political discourse and plants it exactly where it belongs, the States. While marriage should not be a government issue regardless of what level, the best way to solve the issue of differing morals, values and religious sentiments is to localize the issue and handle it among the communities.

States extending same-sex rights while breaking down barriers of the abysmal failure known as the 'war on drugs' is a sign. It is a sign that the electorate is shifting their stance on these issues. Yet the Republicans are failing to get the memo.

Defeat of Todd Akin: Todd Akin was supposed to handily defeat the very vulnerable Missouri Senator Claire McCaskill. But he decided to let the world know what he thought about abortion and specifically abortion as a result of rape. He turned an easy victory into a decisive loss. No one other race showed quite as clearly how out of touch "family values/social conservatives" are. If you are a Republican and social conservatism is important to you, then simply accept the fact that your views are not being shared by the majority.

Defeat of Richard Mourdock: While not clearly as obvious as the Akin defeat, Indiana's tea party choice of Richard Mourdock was comfortably leading his Democratic opponent in most polls until he commented on abortion and rape. While his wording was not as offensive as Akin, the immediate shift in polls and his ultimate defeat followed promptly after. Whatever he meant is not important, the idea of not allowing abortions after rape is simply too offensive for a majority of the people.

When taken in context with the movement to legalize Marijuana, promote same-sex marriage and the defeat of two Republicans who were going to win if not for their abortion comments the picture is clear. Things, they are a-changin'.

Winner: Limited Government and Libertarians

Gary Johnson finished with 1% of the national vote yesterday. This is a historic finish considering he was only bested by the Clark/Koch ticket in the 1980s (by .06%) which was financed heavily by the Koch fortune. Note: Gary Johnson was only on 48 ballots.

While 1% is pitifully low, it is twice as much as the average Libertarian haul.

Now it is true, Gary Johnson is not a pure libertarian by any stretch of the imagination. His economic views are more aligned with Chicago style Friedman policies and his knowledge of Austrian economics is non-existent, but for the purpose of selling the message he did a fine job.

Over 1 million Americans cast their vote for: a greatly reduced Government in size and funding, flat consumption tax, end to the war on drugs, end to the war on people, end to violations of civil liberties and serious reform of entitlement, education and health care spending.

Loser: Big Government Republicans

Republican Senate losses combined with their inability to take the majority (something believed a month ago to be certainty) should give everyone pause. Yet despite the GOP Senators's inability to accomplish much yesterday, the House remains intact. This suggests, quite plainly I believe, that Americans are quite tolerant of the Republicans to continue handling the budget. In fact more and more liberty minded candidates like Justin Amash (who won by 9 points) are joining the fray. Republicans who want to cut military spending, oppose the Patriot Act and put social issues aside. Those Republicans who continue to propose Romney-style spending with unpopular social issue positions will continue to lose.

Winner: Liberty

The loss of Romney, as I wrote yesterday paves the way for a 2016 that has the potential to offer a real distinction. The lessons of 2012 are loud and clear. Adapt or die.

Whichever candidate emerges in four years will need to deliver a very simple proposal to the American public.

A proposal of social tolerance, reduced military spending and intervention, civil rights, liberal drug policies and a true endorsement of a real free market unhampered by monopolistic money, the Fed, crony capitalism and regulations written by-and-for large corporations. If the Republicans learn this lesson then they will be embraced, otherwise 2008 and 2012 will repeat.

Give Americans a real choice, a choice of liberty and freedom.

Then and ONLY then, if America chooses otherwise can you begin to worry.

For the time being, the future is bright and hopeful.

2012 post-election thoughts; Why Republicans should rejoice and Democrats should worry.

2012-11-06T23:17:00.000-05:00

The election is over, it was over before it even started, but for many of you this is a very bitter pillow to swallow. I understand that and I am not looking to tout the "I told you so" line, but instead to explain why Mitt Romney losing is the best thing that can happen for the long term.

There are three distinct camps in America right now. The red jerseys, blue jerseys and those that are fed up with both. Clearly the third camp is tiny and has no way of influencing change so the only way real change is going to come is due to some kind of crisis causing major jersey defections.

Given that Obama won re-election despite:

- One of the most anemic recoveries since the Great Depression

- Sticky and persistent unemployment

- A very unpopular health care legislation

- Polarized and partisan House/Senate/Electorate

- Creeping inflation, high gas prices and stagnant wages.

This suggests that as far as the majority of Americans are concerned, things are not so bad. Truth is, despite the occasional ISM, ADP, Consumer Confidence numbers and elevated stock prices the internal fundamentals are quite rotten. They have been rotten for a long time, but Bernanke's zero interest rate policy and never ending liquidity has allowed the administration to kick the can down the road for quite some time. However kicking the can has its limits and someone will need to pay the piper soon.

So while I have been suggesting that some kind of fiscal calamity would have occurred in 2009, 2010, 2011 and 2012 - it was impossible to determine just how much creativity the central bank and DC would come up with. After many trillions of additional debt and a THIRD round of Q.E. it is quite clear that creativity was kicked up a notch.

However there is a limit to this madness and at some point two options will play out: Either the liquidity will stop and another fierce recession will take over or the liquidity will continue causing inflationary misery upon the public and an eventual uptick in the bond market yields putting massive pressure on our debt servicing costs. The likelihood this will happen in the next four years is very high. Which ever president presides over this calamity will be blamed. Pain or malaise is what lies ahead.

The other undeniable aspect, and one that needs acknowledging is that Mitt Romney was a very poor candidate. While Romney was representing the "opposition" his positions regarding: debt, spending, taxation, foreign policy, health care and entitlement were so poor and so similar to the existing administration that one is forced to wonder whether America is simply so far gone as to always prefer Statism over a free market or simply yearning for a real choice.

While it is impossible to predict what would have happened if Mitt Romney had actually won in the next four years, but one thing is for certain: For those who voted for the lesser of the two evils or wished for a different legitimate candidate you would have waited for at least another eight or twelve years! Because a President Romney would have sought reelection in 2016 and given the high likelihood for a financial calamity would have likely lost to someone Hillary Clinton thus not having a worthy candidate for a very long time.

At this point in time, the wounds are still fresh for those wishing for change or were hopeful for something new and exciting - and you are not going to accept this explanation. I get that. But in four years you are guaranteed to be presented with another choice. For those that spent time and money supporting a poor candidate like Romney this time, learn from your mistakes and choose wisely in four years.

If a recession takes hold in the next four years then Americans would be far more partial to examining the really painful decisions that we should have been looking at now, but decided to forego. Real entitlement reform, real examination of harmful Government policy, real considerations for legitimate spending and an adult conversation regarding debt and deficits.

For those who are celebrating the Obama victory, be mindful that just like the lurch that happened in 2008 after eight years of disastrous Bush policies sent America reeling to one extreme, eight years of Obama could cause the same reaction in 2016.

For the camp that was relegated to voting for a candidate we knew was going to lose, today represents a victory. For the Republicans who are lamenting the loss, do consider the implications of choosing a candidate that represents the status quo - a status quo that must be changed. For the Democrats who are cheering the Obama victory, keep in mind that nothing has been fixed over the past four years and when the pain comes, fairly or not Obama will be held responsible. The next four years are going to be riddled with hardships and extremely difficult decisions.

Hey, at least the drug war is starting to dissipate as local state issues are starting to break down Marijuana barriers. Washington has "legalized" Marijuana, albeit in their limited and dangerous way, Massachusetts joined 17 other states in allowing medicinal Marijuana and Colorado is on the brink. Alabama appears to have embraced the 10th Amendment and passed an initiative directly challenging the individual mandate portion of ACA. Not a bad night after all!

Stay vigilant my friends.

My 2012 Presidential prediction

2012-11-05T13:45:00.001-05:00

I find myself in a very different philosophical, theoretical and physical mood today than I found myself 4 years ago on the day before elections. Last year, I was a nervous wreck and considered the impending election a critical juncture in America's history. While I found myself objecting to much of what McCain had to offer and ultimately chose to vote third party, deep inside I longed for his victory. My rationale at the time, heightened by the mysterious nature of Barack Obama, was that someone as Left as Obama will be devastating for the country. I look at that thought process now and laugh.

See, I am not laughing because I was wrong in my assessment of Obama and his propensity for damage, especially armed with a like-minded Congress, I was very wrong for another reason. I foolishly thought that if McCain had won, our economic and financial health would somehow be different. I am sure at this point, you - regardless of political persuasion - are annoyed with my calculus. "But what of ObamaCare" you are probably thinking or "It takes a long time to clean up the GOP mess". What of it and so what? Sure the policies may have looked and sounded differently and it is a fool's errand to argue of what may or may not have happened, but looking over the past thirty, forty and maybe eight years it seems rather clear that the color of the jersey is irrelevant.

You can call them GOP policies, democrat policies or what they really are - Big Government policies. The end result is the same. There is nothing in the history of mankind that has benefited humanity more than the naturally evolved and organic free market. A system that requires no coercion, no directives, no central planners and no highly paid and politically entrenched officials. It is an offspring of humanity, a purely logical evolution of (wo)man - and it has been under constant attack. Man is a powerful creature, it has the capacity to create so much, but the corollary is also true, man has the capacity to destroy. It is this destruction of the natural market that has been taking place in this country for years and the speed of this destruction has demonstrably picked up.

It took me a while, but it is finally clear - that in order to solve our biggest and most ailing problems, we need to stop the destruction and reverse course. Just like a body riddled with drugs, alcohol and tobacco we have to stop and let the natural healing process take place. It will, I am sure of it, but the destructive elements must be eradicated. These elements come from the Right and the Left, both parties promising to fix what ails you, while continue to feed you a deadly poison. The end result is a rotten corpse that slogs through life in a zombie state whose survival depends on the continuation of a lethal cocktail, a cocktail that represents a continuation of policies that constantly destroy and erode the market place.

Enough philosophy, besides, for a vast majority of the people everything written above is nonsensical garbage. We have us to blame for this of course. We can certainly blame politicians and the political process for reducing something as critical as civics and governance to the 30-second sound bite stupidity that dominates our airwaves, but that would be a premature scapegoat. The political process, like any other business advertising is purely a function of what the public responds to. It is the public, the mob, that politicians cater to and it is entirely responsible for the quality and quantity of what we see and hear from our politicians. A catering to the least common denominator is unavoidable and tragic. There ARE other choices, there have been for over forty years, but the public is simply not interested.

Thus, whatever happens tomorrow will be of little consequence in the grand scheme of things. If I were to allow my emotions dictate my writing for a while; it would be great to see that smug arrogant bastard of a president be removed along with his obnoxious and nasty wife who might suddenly lose pride for her country and the entire riff-raff comprising the administration....but why? So that another arrogant smug bastard settles in? Someone who can't even articulate a tax plan? Someone whose job creation past consists of strategic financial moves? Someone who will just as quickly wipe his posterior with the 2nd Amendment as he would with any other portion of the Constitution that he pretends to uphold?

There is an upside to having Obama stay in power. The upside is simple; if you are insistent on voting for a winner, then your choice is continued destruction of the market. You are guaranteed to be given another choice in four years, it may be a better or worse choice, but it will be another choice. If Romney wins tomorrow, then your guarantee vanishes instantly.

You need to ask yourself a question; are you willing to endure another four years of Obama for the chance that in four years, there will be a possible candidate that will favor creation and have the possibility of winning. While I will always vote for creation, I think I am willing to wait another four years.

That being said, my prediction:

Every major pundit from Karl Rove, Dick Morris, Michael Barone, George Will and others are predicting a Romney win. I disagree.

Here is why (source Rasmussen):

Despite all the hardships and damage, Obama is enjoying an amazing pickup in approval. How someone can pass the 830 Billion Stimulus, ObamaCare, Dodd-Frank, NDAA and flub foreign policy after foreign policy decision and enjoy such a strong approval is beyond me.

The trading odds, while not always accurate (they flubbed the individual mandate SCOTUS decision) are looking grim for Romney.

I am also ignoring the national numbers and focusing on the states, to that effect, here is my prediction of what the EC map will look like tomorrow:

The two states I am not sure about are Virginia and New Hampshire. Both of those could go to Romney, but that would not make a difference and so it is just a guess.

My boldest prediction is this: On November 7th, the day after, people will wake up and collectively wonder - how were all the professional pundits so wrong!?

That is all. Now it would be great to get back to things that actually matter.

--arkady

RightCondition voting guide for Massachusetts 2012

2012-11-03T14:49:00.005-04:00

This is a light post that will provide some insight into how I am voting and perhaps can serve as a recommendation for some of you who are undecided. Naturally, brevity is key at this juncture and if you are concerned about the lack of content then it should be found elsewhere. Naturally, you can just trust me and run with it. My philosophy on voting is quite simple; always vote and always vote for the BEST candidate.

President:

So, contrary to popular belief there are SIX candidates running for President of the United States in 2012. There are technically more, but only six can actually collect enough electoral college numbers to become president. The six are as follows:

Barack Obama (incumbent), Mitt Romney, Gary Johnson, Jill Stein, Virgil Goode and Rocky Anderson.

For MA residents, the choice is made for you. Barack Obama will win this State by as much as 20+ points. Therefore your vote will only be one data point in the great sea of votes, still, keep in mind that every vote is a voice and if the voting process is to be compared to the market then your vote is supposed to be a message to the provider of goods, in this case the major parties.

Please see my previous post regarding voting and the infamous "throwing away your vote" nonsense that you hear every day. The truth is, if you are voting Mitt Romney then you are throwing your vote away and there is no denying that. Incidentally to a lesser extent if you are really annoyed with Obama, but hate Romney then you are also throwing your vote away.

My take is simple here. Obama is a terrible president on anything that actually matters. While I admire his work on what he has done with gay rights, his handling of the economy was utterly abysmal, his escalation of foreign intervention was criminal and his trampling of basic rights was unconstitutional. He simply does not understand, does not believe and utterly disregards anything that resembles the free market economy. He shamelessly parrots the tired cliches emanating from Socialists about the failures of the market economy and has done everything in his power to compromise whatever is left of our market. The drone strikes in Pakistan, standing with Islamist jihadists during the Arab Spring and his handling of Benghazi are shameful. While his handling of Osama Bin Laden was strategic and handled well at the time, the spiking of the football and the death of many of the Team Six members shortly after dwarfs his accomplishment. Finally, his signing of the NDAA and his support of SOPA and PIPA show without a shred of a doubt that he does not care about the Bill of Rights and does not view the Government as a protector of natural rights. He views the Government as a mechanism of distribution and equalizer.

Romney is the same. Period. Anyone who thinks otherwise is utterly clueless, with all due deference to my friends hell bent on throwing their vote away on Willard.

So if you care about personal liberty, winding down foreign spending and involvement and want to liberalize the market instead of saddling it with more useless regulations then only two choices remain:

Gary Johnson or Virgil Goode.

Problem is, Virgil Goode thinks that prohibition of drugs makes perfect sense and wants to stop immigration because he believes this will improve the economy. Unfortunately these are misguided and populist views that are economically flawed.

This leaves one choice and the best choice, vote for Gary Johnson

Senate

There are two choices:

Scott Brown (incumbent) and Elizabeth Warren.

Not much of a choice I must admit, but Warren really deserves a special mention here. Never has a candidate said so much wrong in such a short span time. Her understanding of how to help the middle class and restart our economy is nothing short of idiotic and borderline Marxist. Her insistence on public spending to emulate China is embarrassing and shows her utter lack of awareness of what is actually happening in China. Her involvement in the key fixture of Dodd-Frank is enough to disqualify her for any political post as she once again wants to do nothing more than impose a giant nanny state with more red tape, more officials, more high-level Government officials and more paperwork. She is Orwellian. She is a liar. Her policies and actions will directly damage the working poor and the middle-class and yet somehow she has half of the State believing her. It is sad.

Brown is a far better choice. Vote for Scott Brown.

Ballot Questions

Question 1: This is a confusing and weird ballot question On the face of it, it appears that it offers the consumer more choice which is a good thing by giving repair shops access to proprietary information. On the other hand forcing someone to provide or disclose information they are not naturally disclosing is suspect. There also appears to be a conflict with some existing legislation that is going to become law. The MA State Senate passed a right-to-repair bill which appears to be very similar to Question 1, so this was just a matter of timing.

Boston Globe is against it. AAA is for it.

The major difference between the ballot and the legislation is the timing, as the ballot forces compliance quicker.

The problem is this, what does this try to fix and what will be the cost and lastly, who benefits?

This legislation has been around in some form or another in US Congress for 20 years, MA is the first state to make it a reality. That is already strange and suspect. It is trying to fix an information gap. This letter sent to Congressman Dingell from the FTC suggests that the information gap simply does not exist. Based on a sample of complaints there are only a handful that deal with inability to access information. The National Automotive Service Task Force has already setup a mechanism as early as 2001 to deal with the information, which may explain why the FTC can barely find any incidents where repairers were unable to access relevant information. A piece in NYT on the same issue confirms:

"The poll of 1,005 repair shops found that on average shops turned away six customers a year because the shops did not have the information needed to make the repair."

Who benefits? All the auto parts and shops. Losers appears to be the car manufacturers. How this avoids raising costs is unclear to me as this will invariably cause compliance and paperwork that did not exist before.

This feels to me, like many other bills in Congress, a late reactionary bill that throws a heavyweight solution to a little problem. It will probably help the few cases where this matters while imposing extra hidden costs on the majority. This happens all the time.

Unfortunately if Deval Patrick signs the bill, MA is going to be a Right-to-Repair state. Still, I am against this top level enforcement of compliance for a matter that affects a tiny portion of the vehicle base in this country.

Vote NO on Question 1.

Question 2: Not going to spend much time on this, because it is utter common sense. The "Death with Dignity" question brings up the old Dr. Jack Kevorkian debate back to Massachusetts. Should terminally ill patients have a choice to end their life with the help of a physician? There are many complicated religious and moral cross currents here and this can debate can get out of hand quickly. Therefore I am going to keep it economically simple.

A person is FREE TO CHOOSE, that choice happens to involve living or not. Regardless of where one ends up in the circle of Dante's inferno, suicide is a choice. For those who are expected to die within months, it is a simple choice. To spend untold millions of dollars on patients to extend their lives when they do not want it and will die anyway is one reason why health care costs are through the roof. Medicinal intervention should always be requested, not foisted upon people just because it seems like the right thing to do. It is cruel to treat and medicate someone against their wishes just because you are upholding some religious conviction or thousand year old oath. The right to a peaceful death set forth by the individual is a basic right and if we can help them achieve this without legal consequence it should be done so. The fact that this is even a question is strange and bothersome.

Vote YES on Question 2

Question 3: This is the question that has the attention of many Americans and one that will prove to be important in future legislation of this type. This question attempts to legalize medical marijuana in this state.

Again, I find the question to be easy, but it does tackle a few controversial points.

First of all, if this passes will this lead to legalization? Considering there are 17 other states with medical marijuana as law, there has yet to be a precedent. There is an enormous amount of literature to suggest that the drug can be used to alleviate pain and suffering. If it helps just a few people, then it should be legal, period. Why is it that a few people who cannot get the car repaired at some shop can get entire legislation behind them, yet the thousands who claim that marijuana helps them are ignored. This is the double standard of our idiotic legislation policy.

I am not even going to waste time showing how important medical marijuana can be for people with certain ailments, or how the California system has paved the way for exciting research and exploration into the field of using herbs (*shock face*) to help people. We humans are capable of much destruction, we can destroy cities, we can destroy basic rights, we can destroy the free market. The idea that we should be restricting individuals from using whatever it is that the Earth or humanity has created is absurd on its face. We are restricting natural rights and this is no different then preventing someone from voting, or speaking out or practicing a religion. Government has ONE purpose and ONE purpose only, to PROTECT rights. It does not grant, give or allow anything. It simply protects. The idea that a Government should protect us from ourselves is a perversion of the highest order, a slippery slope that can only be endorsed by people like Castro, Stalin or Pol Pot.

Our prohibition policy of drugs in America is a violation of everything that it means to be free and prosperous. Just like the idiotic prohibition of the 1920s on Alcohol it has had one effect; Make organized crime wealthy and the prison population massive. It has also created a giant Federal and State compliance body that hunts down and punishes citizens for practicing a natural right. To that end, let us see, just for fun who is Opposed to Question 3.

- Massachusetts Police Chiefs: I know you are stunned by this, really. I mean, why would the police ever endorse something that may actually reduce crime? After all, anyone with a functioning brain knows that violence related to drugs is because the drugs are illegal, not because they are legal. Organized crime does not magically appear to smuggle legal products, they organize and get violent to fight the police. So just like the rest of the big government nanny state advocates in this country, the police decided, since we are too stupid to think on our own - that making marijuana accessible for medicinal purposes it simply too much. This is my favorite quote:

The experience of law enforcement professionals in other states where similar efforts have been tried has shown that the public safety problems created far outweigh any benefits to the very few individuals that potentially benefit from smoking marijuana. It sends the message that smoking marijuana is legal and healthy.

I am not going to bore with you statistics showing how patently absurd this comment is regarding public safety, as there is plenty of research on the matter. I will just simply tell you this, the police are unionized. Just like any other public unions they are looking out for the bests interests, which always involves expanding their job numbers and security. If Marijuana ever becomes legal, the number of local, state and federal cops who will suddenly find nothing to do other than watch traffic crossings will skyrocket. That can't happen, because their purpose will be questioned and they might be forced to join the private economy and actually produce something. That is unacceptable. Therefore they will fight this to death and all mentions of drug legalization will be met with Nostradamus-like end of the world predictions. This is one very good reason to support Question 3, break down the union choke hold.

- Doctors. To protect their own interests the idea that a herb can treat some ailments and these braniacs cannot simply does not jive with their intellect. Worse yet, they fail to acknowledge the disgusting hypocrisy of their actions. Doctors are legal drug pushers, they subscribe medicines that can kill you without batting an eye lash. Great portions of the time their recommendation is wrong and based on faulty research that changes year after year. Take, Lipitor, one of the most over prescribed medications - ever. They do that without even thinking, as long as your LDL levels are above a certain number, bam, you are on Lipitor, a drug that has KNOWN symptoms of causing memory loss and joint pain. Not to mention the aging population whose counters look like recreations of local pharmacy. Prescribing drugs with crazy symptoms is fine, giving people a choice to ingest marijuana, not fine? Great.

The answer is simple my friends. If you care about personal responsibility and choice while reducing crime, then let this question be a pathway towards this goal. Full legalization should be the ultimate destination and question any motive or action behind anyone that actively tries to undermine your freedom to choose.

Vote YES on Question 3

State Races

Unfortunately this State does not offer much in the way of choices as almost all Congressional races are a lock for the Democrats and provide little in the way of interesting candidates. However district boundaries changed in 2010 because people are fleeing the lack of freedom available in MA.

Few notables.

MA-7: Michael Capuano is now representing this district, formerly owned by Markey who represented since 1976. Considered to be one of the most Democratic districts in the entire country That is why I support Karla Romero. She is independent, not tainted with politics and will a fantastic choice to represent Massachusetts. Capuano is a Statist of the highest order and should be removed. He wont', such is life.

MA-4: This is only interesting because Barney Frank finally decided to retire. The race is between another Kennedy, Sean Bielat and an independent David Rosa Beilat ran against Frank two years ago and got the attention of many, but for reasons unknown to me. Bielat is a standard MA Republican whose stance on the issues is for the most part wrong and misguided. Sadly, I cannot find anything on Rosa, not even a webpage. That means for all technical purposes it is between Bielat and Kennedy. Regardless of how bad Bielat is, he is better than Kennedy. That is enthused as I am going to get about Bielat.

MA-9: Because of the way this district is partitioned, this is probably the most interesting race in Massachusetts as it can potentially go "either" way. Race is between Keating (D), Sheldon (R) and Botelho (I). Of the three, only Botelho offers any kind of real change from the status quo. While his website is rough around the edges and filled with spelling errors (eeeeek!), his desire for a flat tax outweighs that. For anyone living in this district, I strongly recommend looking into Daniel Botelho.

DO NOT FORGET TO VOTE ON NOVEMBER 6th.

Why voting third party is exactly the opposite of throwing your vote away.

2012-10-30T21:15:00.000-04:00

It is a well known phrase around this time of the year, "you are throwing your vote away". This is a canned response from anyone who discovers that you, *gasp*, are not voting for the major party. It will take you all of 10 minutes to realize that these words are absolutely wrong and in fact, with the help of the electoral college chances are that voting for a major party *is* throwing away the vote.

Let me explain.

If you live in a non-battleground state, that is the majority of you, but live in a State with a very definitive shade of blue and red then your vote is decided for you. Now if you are happy with the decision, then all is well and I envy you, as they say - ignorance is bliss.

What about the many of you who are NOT happy with your choice, but you are going to vote anyway? Let's say you live in Massachusetts and you really dislike Obama. Sorry to burst your bubble, but a vote for Romney is a waste. What about if you live in Georgia and really dislike Romney? Again, sorry for the bad news, but your vote for Obama is a waste. Yes, a complete and utter waste - it simply does not matter, you might as well not vote for the President at all....or should you?

Are you tired of the two party system? Are you tired that every 4 years the choice becomes less and less obvious? Are you tired of voting for the same big spending, big military, big prohibition, less rights and more intervention party? Do you even believe that there are two parties anymore? Unless your entire political concern lies somewhere in the abortion/religion/homosexuality triangle then you are probably yearning for more.

So there is a little know fact that I want to share with you. According to the Federal Election Commission your vote DOES matter. In fact your vote matters far more if you vote third party, then if you vote major party while living in a State where the EC has determined the outcome.

Why does it matter? If a third party candidate like Gary Johnson or Jill Stein obtains 5% of the total vote, two things happen. First, they become instantly eligible to be a candidate on all 50 ballots. As of now, neither GJ or JS have made it on all 50 and claim that they are being blocked by the major parties. Secondly, and probably more important than anything they become eligible for federal funding matches.

Since no third party candidate received 5% of the vote in 2008, only the Republican and Democratic parties are eligible for 2012 convention grants, and only their nominees may receive grants for the general election when they are nominated. Third-party candidates could qualify for retroactive public funds if they receive 5% or more of the vote in the general election.

Because the major parties have become so wealthy they are now declining the grants, but for someone like Johnson or Stein these grants are crucial. Since money is information and information is the key in the political process, getting 5% becomes imperative. With each additional % gained the eligibility of the federal funding increases. That means each vote helps the minority party secure more money and more access come 2016, this is exactly the opposite of a wasted vote.

So that end, I have created a very simple to follow flowchart that can be passed around to those individuals whose vote can make a huge difference in breaking down the ~~two-party~~ one-party choke hold.

Note: I am sticking to Gary Johnson and Jill Stein as third-party candidates, because Rocky Anderson and Virgil Goode are similar enough (Rocky to Jill and Virgil to Gary) that advocating for them would for the moment, at least, be entirely counter-productive.

So the next time some Republican in Connecticut or Democrat in Tennessee mocks you, remind them that they are ones throwing their vote away.

Presented without further commentary:

Live blogging the 3rd party debate

2012-10-23T20:34:00.002-04:00

Tonight is the 3rd party debate sponsored by Free and Equal and moderated by Larry King.

Again, just like the two previous debates I live blogged the content will be reactionary and live. However the format will be somewhat different due to the debate having four individuals instead of two. The format is also unknown, but presumably it will be broken down by the questions and the answer that is the most interesting/odd/intelligent/whatever will be discussed. Trying to address every candidate might result in carpal tunnel.

Watch the debate here: http://live.freeandequal.org/stream.html

The four candidates:

Gary Johnson (Libertarian)
Jill Stein (Green)
Virgil Goode (Constitution)
Rocky Anderson (Justice)

The format: Two moderators, streaming online and the audience is allowed to voice their pleasure. Not sure how I feel about the audience chewing up pressure time, but so be it.

The opening rant by the Free and Equal representative Christina Tobin, was bit nauseating and sounded awfully populist, ranting on and on about private interests controlling our elections. Obnoxious. When Larry King announced Jill Stein, she visibly cheered and said "yay". Nice to see have blatant bias from one of the moderator.

Opening Statements

(These were delayed because King kind of screwed up)

Stein: Very pleasant, calm, smiling and composed. Immediately launched onto the rich, war for oil (sigh) and tax breaks for the wealthy. Calling for a New Green Deal. Medicare for all. Bailing out students. Good god, utter disregard for economics and history, pure populism.

Anderson: Brought up the tired old and foolish income inequality fact, despite the fact that this inequality has entirely been a function of the Fed as I have demonstrated previously. Apparently not satisfied with ObamaCare because not enough people will have essential coverage. Climate change is a greater threat than terrorism.

Goode: Lovely accent, quite the Virginian. Balanced budget, cool. Moratorium on green cards and foreign workers. Ugh, poor idea. Ending super pacs and term limits.

Johnson: Angry, very angry. Ending all wars, end drug war, legalize marijuana, repeal patriot act, against the NDAA, balanced budget a 1.4 Trillion reduction, threatening monetary collapse End income and corporate tax,abolish the IRS and introduce the fair tax.

Arkady: Rough around the edges, but that opening statement clearly defined the candidates right off the bat.

Question 1: What is your position on the top-two primary system?

Stein: She opposes it because the top two contaminates the party label and the Green party is pure. Then attacked corporations.

Anderson: Not a fan because it restricts choice. Railed against Republicans/Democrats for their failed war on drugs and poverty. Hmmm. So war on drugs is silly because it failed and so we should stop it, but despite war on poverty failing we should continue battling it. Beyond silly.

Goode: Does not favor top-two. Against public financing, cited wasteful spending 100 million on RNC/DNC. Pointed out that two-party is a State issue and does not want Federal intrusion into this matter, but opposes it. Against PACs or Super PACS and correctly pointed out that unions also give money to the pacs and not just private companies. Unlike Stein/Anderson.

Johnson: Cited his experience as coming from the outside and joining the New Mexico Republican party, but failed to answer the question in reality. Seems angry and animated...very different than his Republican primary performances. Jabbed at Medicare and the police state and a pending monetary collapse. More anger.

Question 2: How does the 'war on drugs' impact America? How do we deal with this?

Everyone wants to end the war, except Goode pointed out that the federal expenditure is a tiny fraction of total federal spending and is not for legalization. I think he might be missing the point, because the costs are not easy to quantify since many people are rotting in jail for no good reason. Dr. Stein used her medical background to state that Marijuana is not dangerous, that seems like a very dicey assertion.

Johnson brought up a point that I have brought up many times. If cocaine were legal, perhaps Meth would not exist? Hmmmmm.

Question 3: Excessive defense spending is now an agreement between two parties. What would you do?

Johnson stressed defense and a 43% spending reduction and that we must stop with intervention. Before people freak out, that means that we will still be spending 450~ Billion on defense, not too shabby.

Stein suggested we ban usage of drones. Not sure why that makes any sense, but so be it. Then proposed that we fight climate change not wars on oil. Except that war on oil is a myth, perhaps Stein can look at the price of oil.

Anderson is upset about the military because he wants to spend money on education and health. Right. So politicians screw up the military, but they will be great at something as complicated health? Hopeless.

Arkady: Although King kept asking for rebuttals, nobody is rebutting. Just spitting out policy points. Kind of a shame.

Question 4: College education is potentially over priced, is it worth it? How would you provide the opportunity of college to everyone?

Johnson: Federal guaranteed student loans have driven up costs. Yes, yes they have.
Stein: Time to make higher education free. Marx would be proud. Compared it to the GI bill and giving education to troops coming home. Terrible analogy and who is to say that doing so did not drive up costs in education?
Anderson: We must provide education for economic competitiveness. What a lovely notion!
Goode: We can't afford more Pell grants and subsidizing education. We must balance the budget and reduce the debt.

Johnson then rebuts: "That "free" comes with a cost. Free is debt. Free has gotten us to monetary collapse." Good rebuttal.

Anderson: Sooooo disagrees with Johnson, because we cannot afford NOT to provide free education. Maybe he can throw in unicorns while he is at it?

Stein: Agrees with Anderson and also does not care where it comes from or who pays for it.

Question 5: Where do you stand NDAA's ability to detain Americans indefinitely.

Stein stood up for civil liberties and wants to repeal everything related the Patriot Act, NDAA, etc. Anderson echoed the same sentiment. They see civil liberties as important because it is a defense against tyranies, but have no compunction about expanding federal intrusion into green spending, education, health, etc. This is the price we pay for economic ignorance my friends.

Goode and Johnson would both veto NDAA as well. All four candidates agree. Johnson talked about his awesome record from the ACLU and called Ron Paul his hero. The audience exploded on that comment, interesting.

Question 6: If you had the chance to write one Constitutional amendment and guaranteed ratification, what would you amend?

Anderson: Equal rights including sexual identification. I am fine with that, but an odd choice given our economic climate.

Goode: Term limits. Believes it will end a lot of the money problems in DC.

Johnson: Term limits. The root of all evil.

Stein: Money is not speech and corporations are not people. Asserting that we the people deserve Constitutional rights. Pray tell, where in the Constitution is free education, green spending and class warfare mentioned? Duh?

Arkady: This is a shame, economic amendments such as limiting borrowing and spending seem far more sense.

Closing Statements

Goode: Same as the opening statement. Kind of cerebral.

Johnson: Talked about his history where he started a business and job creation, real creation. Made a real pitch to the people and despite the anger, oozed with passion. Wish he mentioned immigration being solved by ending welfare, not visas or paper work.

Stein: Pitching to students and promising a bailout for student debt and free education. Jobs for everyone through a Green New Deal! Hey, why not free cars, food and clothing? Are people really buying a platform that borrows half the plans from the Communist Manifesto? I do not think I am being hyperbolic.

Anderson: Pretty much the same as Stein, in fact, he seems to be more concerned about global warming than Jill Stein. Quite remarkable!

Arkady: Interesting debate. Quite rough and a bit disorganized, but not bad for a first debate. There was not enough actual debate, not enough rebuttals and some of the questions were way too specific. Otherwise in terms of candidates, what can I say. Stein and Anderson seemed very similar on platform, although Anderson is probably the strongest speaker of anyone on stage. Too bad he is a Socialist, just like Stein. Goode is just odd, got odd ideas and platforms and was not engaged. This is strange because he served in the US House for so long. Johnson made the most sense, but gave off a "weird vibe", still his economic positions are sound and grounded on strong logic.

Live blogging the 2012 Vice President debate; Paul Ryan and Joe Biden.

2012-10-11T21:00:00.001-04:00

Just like the previous presidential debate, I will be blogging the VP debate. I will approach this debate purely from a substantial standpoint and certain preconceived notions; Paul Ryan is a fraud and Joe Biden is clueless as always. I am interested in whether or not anything will be said that will benefit America and those that are interested in freedom.

The conventional wisdom is that Paul Ryan being an awesome wonk will crush the "gaff-machine" Biden. I disagree, never count out a skilled politician and orator.

Here we go....

Segment 1: Libya. was the embassy attack, which is now confirmed (duh!?!??) a pre-planned attack a massive intelligence failure?

Arkady: There is a loaded question!
Biden: Skilfully pivoted, did not answer the question and blasted Romney as a war monger while highlighting how great Obama was at handling our existing wars. If Ryan is good, he should skewer him on this non-answer.
Ryan: Probably as good as its going to get, humiliating Obama on the stupidity of mentioning the YouTube video is important because Libya continues to be a cover-up. It a short-lived cover-up, but that is what it was. When the Obama administration through Rice and Clinton spent days convincing us that attacking Islam through videos caused the death of our ambassador they were taking a massive gamble. This gamble backfired, it is still unclear why they chose this path considering they knew within 24 hours it was an obvious terror attack. The rest of the time Ryan spent reciting the usual Republican talking point about projecting strength. This is no doubt a double down on the idea that Romney wants to spend more and more on our military.
Biden: "What Ryan just said was a bunch of malarkey". Hah, good 'ol Joe.
Biden: "These guys bet against America all the time". After stuttering for quite some time. Hard to defend a cover-up. :( He has to continue to pivot, trying to answer this question is impossible without looking stupid.
Moderator: "Should America apologize for burning Korans or urinating on corpses?"
Ryan: "Yes on the peeing, whatever on the Koran". I am paraphrasing :)
Moderator: "There is no bigger issue of national security than Iran".
Arkady: What the hell? Says who???
Ryan: "Sanctions are not effective because Iran is closer to the bomb now". I disagree, sanctions are quite effective and that can be seen through Iran's hyper-inflation. They are experiencing 70% month-over-month inflation because they are printing money to get their means accomplished. In fact, it is possible that the sanctions are actually promoting Iranians to get the bomb faster. Somehow Ryan asserts that we need to do this peacefully yet endorses economically crippling sanctions? How is that any different than act of war?
Biden: "These are the most crippling sanctions ever!". According to material I have seen, I think Biden is correct. They certainly could be harsher, but the 70% inflation is proof positive that the sanctions are hurting.
Biden: "Iranians see a currency and economy in free-fall". Yup, yup.
Ryan: "Sanctions are watered down and they are closer to the weapon". Biden sounds more convincing here and Ryan is just repeating the same thing over and over.
Arkady: OK, I am tired of this back and forth. They are just arguing over whose sanctions are more effective. The policy is essentially the same, the difference being the severity. Whatever happened to the whole Libya question?

Segment 2: State of our economy, number one is jobs. The Obama administration projected a below 6% unemployment by this time this year. Level with the public, can we get unemployment below 6%?

Arkady: Who is writing these questions!? I love them.
Biden: "Sure we can!" After briefly talking about success of Obama he goes on to eviscerate Romney and Ryan even bringing up Romney's infamous 47% comment. Very forceful, but then yaps on and on and on about the tired old class warfare rhetoric.
Ryan: "We are heading in the wrong direction" "Our economy is slow". What the hell Paul? here is your chance to talk about labor participation rate!! Destroy the headline number and expose the truth about the idiotic U-3 number. COME ON. This is such a golden opportunity.
Ryan: "Regarding that quote [Mitt], the VP knows that sometimes the words do not come out the right way". I bet you 100 bucks right now that this quote was practiced in advance. This was supposed to be a zinger and it may very well be regarded as such. I expect clips and Facebook posters of this. The crowd laughed out loud and even Biden smiled. Nicely done, but not talking about the participation rate is demented.
Biden: "Romney wanted to let Detroit go bankrupt". Yeah Joe, this is what the free market does, it forces companies to fail. Instead you and Obama claim to take care of people by using tens of billions of OUR money. This is intellectual dishonesty at its finest. It is easy to spew populist rhetoric when you are using someone else's money to save an industry, much harder to make correct economic claims.
Biden: "Ryan is a big spender". Yes he is Vice President Biden, but so are you.
Ryan: Brought up early projections from Romer and pointed out that the stimulus did nothing, but feed special interests. True.
Moderator: "When can you get the rate below 6?"
Ryan: "Our plan is to grow the economy at 4%". Why? That is not their job. NOT THEIR JOB.
Biden: "Our stimulus worked."
Ryan: "No it did not".
Arkady: zzzzz.

Segment 3: Medicare: Medicare and SS are going broke. Will benefits have to change for the programs to survive?

Ryan: Absolutely! "SS and Medicare were there for our families, we must reform it to keep it". I believe him and I know he wants to keep the programs. His budget proves it too. The whole Obama story of Ryan throwing granny off the cliff is bogus propaganda. Unfortunately when you have the most "fiscally conservative Republican evaaaahhh" saying this crap it makes one wonder. What has the opposition become? It is not about reforming, it is about subsidizing! Forget SS for a moment. Medicaid is EVIL and Medicare is EVIL-light. It jacks up costs for every single person, it is an utterly flawed concept.
Ryan: "Obama wants to cut 700+B to Medicare."
Biden: "AMA and AARP endorsed what we did". No shit sherlock. Why would they ever oppose more Government spending since they are the leading recipient.
Biden: "We will not privatize SS, imagine if we did that now under Bush". Considering that the SS fund makes close to nothing and is probably being crushed now with Ben Shalom's ~~generous~~ retarded interest rate policy, I am pretty sure that the money would be jut FINE. IN a year, not so much? But that is a weak argument.
Ryan: "100% coverage for those seniors who cannot afford it".
Arkady: Biden is annoying. Laughing every time Ryan says anything, how frustrating. I am guessing he is uncomfortable.
Biden: "We will not stand for vouchers or privatizing, period."
Ryan: "Vouchers are receiving a check in your mail box, we are not doing that". That is true, Ryan's plan is not a pure voucher system at all. It is premium support and works differently.
Biden: "Come on folks, use your common sense on this, who are you going to trust". This is such a lame and bogus appeal that I cannot believe he is using it. Ryan at least is throwing some numbers around, Biden is basically throwing a populist hail mary. Ryan is looking at him with a disapproving smile and large puppy dog eyes. What a scene.

Segment 4: Who will pay more and who will pay less in taxes?

Biden: "Middle class will pay less, those making 200k more will pay slightly more". Predictable, although I fail to see how the middle class will pay less with ObamaCare taxes. Ryan should pounce on this.
Biden: "Republicans are holding hostage the middle class". Love the fear mongering. Class ware at its finest. Joe is good!!
Ryan: "Our plan is estimated to create 7 million jobs". Give me a break, these studies mean absolute shit. This assumes economic development that is entirely unrelated to tax breaks. You can fudge these numbers all day long, but Romney already said that revenues will NOT decrease. Therefore the tax reform plan takes away just as much money out of the private sector as it does now. This in turn means that Romney/Ryan tax plan has nothing to do with economic recovery, they are just hoping it will snap back. I do not expect Biden to seize on this, but it is what it is.
Ryan: "There is not enough rich people to pay for the deficit". True, true. Too bad Romney can only come up with PBS as meaningful spending cuts. Woe is me.
Moderator: "Do you have specifics on your 20% tax cuts or not?"
Ryan: "We are lowering the rates and broadening the base". Exactly what Romney said, close loop holes. Keep revenue intact. *yawn*. "Look at what Reagan did".
Arkady: Under Reagan more people paid more tax and the Feds collected more money in the long run". Wish the GOP would stop worshiping Reagan at every opportunity.
Arkady: Oh shit, we almost had another Jack Kennedy moment! Oooh so close.
Arkady: They just spent 5 minutes bickering over which tax loop holes to close. This is very sad because tax loop holes create massive economic distortions and according to both Biden and Ryan these are very important. We are so far from real tax reform it is not even funny folks.

Segment 5: Defense

Moderator: "lets talk about defense, but put the automatic defense cuts aside, nobody wants that".
Arkady: Um, excuse me!? Those auto cuts were part of a debt negotiation deal. That was the whole fucking point! No compromise, auto cuts. When that deal was formed, I wrote way back then that the Republicans would back track on that promise. Here we go.
Ryan: "Don't cut the military by a trillion dollars, our navy will be smallest since WW1". Earth to Ryan, we are spending 800B on defense. I don't care how big the Navy is going to be. There is a serious problem with defense spending. Audit the pentagon NOW.
Biden: "The sequester was part of the deal". Damn it, stop agreeing with me Joe, you are making me look bad. Or is it the other way around?
Arkady: Ryan has very nice hair.
Biden: "We do not need more tanks". He is CORRECT! Rand Paul is one of the few that got this right. Ryan is sooo wrong.

Segment 6: Afghanistan: We reached Afghani recruiting goals, why not leave now?

Ryan: "We do not want to lose the gains we have gotten". This has been the longest war in American history. Is this a joke? Watch Joe agree with me again here.
Biden: "We went to get AQ and decimated AQ-central, that was our purpose, we are leaving in 2 years, period". Hard to argue with that, very hard. Ryan will try though.
Ryan: "We agree with 2014, but we need to accommodate our commanders". Frankly, I have no idea what he means. I am skeptical.
Biden: "The only way to inspire responsibility is to stop helping Baghdad and Kabul". How odd, so doing things for other people breeds laziness? Well how interesting!!!
Arkady: They are now arguing over fighting seasons. How come it fails to dawn on both of them that after 10 years we are STILL fighting counter-insurgents. That means in two years this same fighting will continue. This will never end. Pull them out tomorrow. Christ!

Segment 7: Civil war in Syria: Why not going into Syria and prevent a massacre?

Biden: "Because Syria is large and we might destabilize the region". Hmm, that is one perspective. How about; we cannot afford it?
Ryan: "Nobody is proposing to send American troops to Syria". Really???
Moderator: "What is your criteria for intervention"
Ryan: "Strategic national interest for our country". Broad answer that does not mean much. Iraq was hardly a national interest.

Segment 8: What role has your religion played on abortion.

Arkady: Shoot me.
Ryan: "I am pro-life because of reason and science, not just religion". "Life begins at conception". That seems..contradictory. But I am not even touching this annoying damn issue. Completely and utterly distracting from serious federal issues.
Ryan: "Democrats support abortions for everyone and even want to use federal money to support it". I am glad Ryan brought that up, because paying for someone else's abortion is precisely where this matter ends being a religious matter and starts being an economic one. Subsidizing someone's reckless sexual practice is not the job of the taxpayer. Period.
Biden: "Not going to tell a woman what she can do with her body". That is a standard answer, fine, he did not address taxpayer money providing abortions. He could not, his base would eat him alive.
Moderator: "Should those who believe abortions be legal, be worried".
Ryan: "We do not believe that laws should be made by the court". Ahh, digging up the Roe v. Wade debate.
Biden: "Roe v. Wade is very close to going down".
Arkady: What chance is there that SCOTUS will take up Roe v. Wade? Realistically speaking, why would they? But assume they do, assume they overturn it. So what? So abortion finally becomes a state issue. We should all be happy as we can now reside in States that either protect or deny abortions. Let States sort it out. No longer would it ever be a Federal issue, that would be wonderful. Would it suck for those living in Alabama? Yes, but they can move.

Segment 9: This campaign has gotten very dirty, what would you say about that?

Biden: "Do Romney/Ryan have the conviction to raise the middle class". Fighting words Joe, because there is absolutely nothing whatsoever has Obama or Biden have done to help the middle class. Stimulus, Dodd-Frank and ObamaCare are all awful legislation for the middle class. That requires economic analysis though and Biden does not care about that.
Ryan: Ryan just machine gunned facts and numbers blowing away Obama's promises, that I cannot verify at this time. It sounds so convincing that this being at the closing end of the argument are sure to be effective with the public. The wonk at work, rather impressive.
Biden: The budget that Ryan/Romney have proposed is going to devastate the middle class.
Arkady: Not true, Ryan budget as examined earlier on this blog will hardly touch anything other than Medicaid. Even then Medicaid spending resumes in about 7 years. Ryan is no cutter, either is Romney.
Ryan: "That is not true, we are spending at 3 % and you at 4.5%". LOL. OK, then. At least you admit it.

Segment 10: What makes you so unique?

Ryan: "We are going to have a 5 point economic plan to create 12 million jobs". Whatever.
Biden: "I am all about leveling the playing field". Indeed, by making everyone poorer. Good plan. Worked out nicely for Cuba, N. Korea, Soviet Union...oh wait, no it did not.

Closing Statements

Biden: "Bush's fault". "Ryan and Romney are jerks" "Ryan says 30% are takers". "I won't rest until the field is leveled". What the fuck?
Ryan: "What kind of country are we going to give our kids? Obama's plan is not working!!! Our ideas are better. Romney is uniquely qualified. The choice is clear. Jobs, jobs, jobs, jobs, jobs". Spending and high taxes do not work when the Democrats do it, but it works when the Republicans do it.

Conclusion: This debate appears to be much closer than the first Romney/Obama debate. Biden is skilled at deflecting and laughing at everything Ryan said. This will give the illusion and perception that Ryan never had the advantage. I think both sides will claim victories tonight and I doubt a clear winner will be chosen. I think Ryan handled himself better and the wonky numbers were impressed. Biden's class warfare will resonate.

Scott Brown shows why compromising is a fool's errand.

2012-10-09T20:31:00.001-04:00

The race between Scott Brown and Elizabeth Warren is much closer than many have anticipated. As a resident of Massachusetts my personal observation is such that the race has been rather "civil" other than the whole Cherokee kerfuffle. However one thing that does jump is the occasional reference to Brown standing with Wall St. against the little guy.

Why is this odd?

Well, because Scott Brown was the only Republican to vote for the Dodd-Frank bill. In fact you could say he was a critical bill passing vote. This may have to do with him catering to his consistency or it may have everything to do with his principles that are built entirely on quick sand. A man who wrote a portion of RomneyCare and then beamed with pride while announcing that is not a man who views limited Government as a fight worth pursuing. Still, the reason for why a politician does this or that is best left to folks smarter than me.

So how is it that the Warren campaign effectively framed Brown as pro-Wall St. while Warren is the champion "of the little guy"

According to the Boston Globe, even though Brown voted for Dodd-Frank he also actively sought to loosen a provision and this action alone negates him voting for a bill that every Republican in the House AND Senate was smart enough to avoid. Tough crowd:

But e-mails obtained by the Globe show that Brown’s work on behalf of the financial sector did not stop when the law was passed. In the second stage, as regulators began the less publicly scrutinized task of writing rules amid heavy pressure from the banking sector, Brown urged the regulators to interpret the 3 percent rule broadly and to offer banks some leeway to invest in hedge funds and private equity funds.
Supporters as well as critics of the banking industry agree that Brown’s suggestions would mean looser regulations for banks, though specialists disagree on the extent of the impact.

The liberal blogosphere from HuffPo to DailyKos jumped at this like a bunch of starved beasts. Who can blame them though?

What is of course amusing is that people actually believe that Dodd-Frank somehow protects the average middle-class American and punishes Wall St. First of all, the amount of paper work and regulation is staggering, truly staggering:

The Dodd-Frank law has 849 pages, compared with 66 pages in the Sarbanes-Oxley Act, a 2002 law that overhauled accounting rules following the Enron scandal. The landmark Glass-Steagall Act, which created the Federal Deposit Insurance Corp. and barriers between commercial and investment banking during the Depression, was a slim 34 pages.
"Dodd-Frank is Sarbanes-Oxley on steroids. It's an exponentially greater volume of regulation," says Margaret Tahyar, a Davis Polk partner. The "sheer number of rules still in the pipeline makes it almost inevitable agencies will miss an increasing number of deadlines over the next year."

This is absolutely phenomenal and takes an already highly regulated industry, finance, and makes it a jungle of complex rules, laws and provisions. Remember, how Sarbanes-Oxley was supposed to solve corruption and protect the financial industry? As far as Glass-Steagall is concerned, I have written a post that demonstrably shows that the law was written by the banks, for the banks to punish other banks. This unfortunate fact has permeated the law writing process to such a extent that it becomes impossible to understand for whom, by whom and for what purpose any law is written.

Dodd-Frank gives more power to the Federal Reserve (asleep at the wheel in 2007 and actively involved in blowing the housing bubble) and creates a bailout mechanism for too-big-too-fail companies that creates a moral hazard by mandating that other large companies bail each other out in case of failure. That is just the tip of the iceberg.

Finally the amount of caps and restrictions on fees that banks are allowed to collect have simply been shifted into maintenance charges and other payments that will simply be extracted from the public. We are talking tens of billions here that will be made up through various checking/transaction/maintenance/etc fees that will without a doubt hurt the lower/middle class the most.

Still, image and propaganda rule the day and many Americans who erroneously believe that Dodd-Frank will solve problems or prevent a repeat of the housing collapse will be quite angry at anyone they perceive to be against this bill.

This is the legislation that Scott Brown thought was worth voting for. Despite being solely responsible for allowing this monstrosity to wreak havoc on us he is now being nailed by the liberals in MA for standing with Wall Street. This is truly a sad example of what happens when you exchange your principles for the purpose of winning a re-election, assuming there were any in the first place. The irony here is that Brown might very well lose for "standing with Wall Street". Even if he was for it before he was after it or however the saying goes.

Live blog coverage of the first 2012 presidential debate: Romney vs Obama!

2012-10-03T21:03:00.001-04:00

Here we go!

According to the moderator the role of government and the economy will be focal issues. Fantastic.

First question: Jobs. Compare and contrast.

Obama: Economic patriotism is now defined as more spending on education and green energy. How fun!
Romney: Cracking down on big 'ol evil China. Because everyone knows that protectionism and tariffs work, just like Smoot-Hawley helped the Great Depression. Oh wait...
Obama: "I want to hire 100,000 more teachers." This is despite the fact that public union pensions are absolutely crushing state budgets and have caused numerous nasty fights (Wisconsin, Chicago, California) between local Governments and teachers. So why not throw our pretty ideas and let the States the financial burdens.
Obama: "Romney wants to cut 5 trillion dollars in taxes". Really? I would love to see that.
Romney: "No I am not going to cut that much in taxes". I knew it. "We are also going to close loop holes to ensure revenue streams continue". Again, fantastic. Hey Mr. Romney - how about lower spending to match revenues irrespective of economic activity!?
Obama: "We cut taxes for middle class families". I guess our president forgot the whole ObamaCare tax conclusion? "Romney wants to burden middle class families by taxes". I am still trying to figure out how lowering taxes burdens anyone, at all, ever.
Romney: "Obama is a liar, na na na boo boo, I am not raising taxes on the middle class and I am not lowering taxes by the rich". In other words, same old tired rhetoric about closing loop holes and lowering rates. *sigh*.

Conclusion: Obama claims to have lowered taxes for the middle class as much as 18 times. He did that by borrowing from Social Security through the payroll tax which is something we will need to pay back at some point. The entire back and forth is minutia that digs up the old debate of trickle down politics vs helping the middle class. Obama's position is not new and something he ran on in 2007, Romney offers nothing new whatsoever, a plan that is similar to that of Reagan. Obama has accused Romney of spending 2 Trillion on spending which was not addressed and something that is entirely plausible. That means Romney is banking on the economy rip roaring to make up for deficits and it will not work because another recession is very likely. Neither plan will work as Obama will raise marginal rates and Romney is just going to mess with the tax system.

Second question: What to do about the Federal debt/deficit. What are the difference between the two of you and how do you tackle the deficit?

Romney: "Debt is immoral". Which is why he wants to spend money on defense and get into a trade war with China.
Romney: " I want to cut spending". "Cut ObamaCare, PBS funding, make Government more efficient, remove waste". PBS funding should definitely solve that problem. Phew, thank god for Mitt.
Obama: "When I came into office there was a lot of spending". OK, true. "Then I went after waste and make biggest cuts in discretionary spending since Eisenhower". That is hard to believe, but I will wait for the fact checkers to verify that. I call BS right away.
Obama: "We will only cut spending if we increase revenues". Fascinating. So apparently cutting a Government that has expanded non-stop since the 1940s requires additional revenues, even though as percent of GDP the Government is collecting as much as it ever has. Explain that!
Romney: "Absolutely ruling out additional revenues through taxes". Similar to Massachusetts where fees went up everywhere in order to generate more revenues. Again, Mitt has no intention whatsoever to reduce how much money our Government takes from us, which for middle class families stands roughly at 50% when all taxes are factored in.
Arkady: Somehow the question about deficits has turned to taxes again and Obama is going on and on about corporate subsidies to oil companies. Nicely done gents, nicely done.
Obama: "Romney wants to shift Medicaid to States and that will hurt autistic kids". Oh brother.
Romney: "You gave 90 billion to green energy, that is 50 years worth oil subsidies". This is very notable, even if the number is not accurate, that was a fantastic counter argument as it makes Obama look like a hypocrite.
Romney: "States are the laboratories of Democracy". Hmm...I have no objection with that.
Romney: "States can handle the poor better". Not bad.

Conclusion: Basically speaking, Romney skirted the question. Going after ObamaCare is easy, but not being able to mention substantial cuts other than PBS is embarrassing. The only conclusion is that Mitt has no real intention to cut spending other than the unpopular pieces and even in that case he plans to repeal/replace.

Question 3: Entitlements, do you see a major difference in Social Security?

Obama: "Social security is sound, but needs to be tweaked like Reagan did". So it is quite sound, except that we need to collect more money from you - otherwise it is really solid. Laugh.
Obama: "My grandmother was independent because she could rely on Medicare and SS". Really? Your grandmother was fiercely independent because she relied on people my age to pay for her? I doubt she would be happy to hear that.
Obama: "Medicare must be dealt with to lower health care costs". Which is why they created ObamaCare, but wait, no independent body has actually confirmed that OCare will lower costs and instead will raise it. Empty rhetoric. Shoving millions on Medicaid will again raise health care costs, not lower them. Terrible.
Romney: "Obama is going to cut Medicare and I want to put that money back into Medicare". What a disaster. So now the Republican candidate is actually in a live debate saying he wants to spend MORE on Medicare than the Democrat. Good lord someone save us.
Obama: "Romney wants to create vouchers and they will not work due to costs". You are right, after you have done everything possible to raise costs the idea of vouchers sure sounds unappetizing.
Obama: "AARP agrees with me". Laugh. What is next, are you going to ask GM whether bailing out the auto industry is a good idea? Give me a break.
Romney: "I want to keep Medicare in place and create another option for younger people". Except that completely ignores the entire issue with Medicare, as it drives up health care costs for EVERYONE. I think I need health care coverage right now as I am feeling sick just listening to this drivel.
Obama: "Medicare has lower administrative costs". That is actually a myth and one that has been addressed by those who study the health care costs, Medicare has a very unique accounting mechanism and they count their administrative costs differently. This is a complete BS fact.

Conclusion: The idea of a voucher system is certainly appealing, however addressing health care costs cannot be performed without addressing Medicare/Medicaid. These two programs creates millions of Americans that receive health care at below market costs. This is impossible to sustain and will devastate our health care system, it already has. Romney offers nothing substantial here.

Question 4: Is there too much Federal regulations in the economy?

Romney: "Regulation is essential, free market cannot work without regulations". That is sufficiently open ended statement as to make everyone happy.
Romney: "Dodd-Frank is bad" but "some parts are great". "I will repeal and replace". Democrat legislation bad, Republican legislation good. Right.
Obama: "Banks were making money hand over fist to make profits". This is Obama's rendition of the housing crisis and is now lauding D-F as the biggest reform since the 1930s. This is just recycled liberal talking points and as this blog has covered numerous times, simply a tip of the iceberg. Also citing the Great Depression regulation as something to aspire to is extremely ignorant and silly.
Romney: "Dodd-Frank regulation is confusing, I will make sure we will not hurt the marketplace". So again, Romney regulation is better than Democrat regulation. Understood. When you build a foundation of quicksand, you will get sucked in.

Conclusion: That was an obnoxious exchange and covered nothing other than the finance. Romney and Obama are virtually identical on their position and both tout regulation as something to aspire to. Instead of focusing on minimal regulations that prevent fraud the entire discussion swirled around little details of Dodd-Frank that most people will find unappealing. Liberals will never support Romney anyway so him sounding like a technocrat wins him no points there and anyone who knows that the free market is the solution to our problem will just wince and groan at this stumble by Romney. What a debacle.

Question 5: You want to repeal ObamaCare, why?

Romney: "Small business are dropping insurance". "Obama promised to lower health care costs and he failed". "ObamaCare cuts 700+B from Medicare". "It creates a board to control treatment". One almost wants to cheer for Romney here, but when he clearly fails to understand that Medicare/Medicaid drives up costs is just so painful that I have no words.
Obama: "Insurance companies do not want to pay". Again with the pre-existing condition crap. Someone please tell him that this drives up costs for everyone. Anyone?
Obama: "We have seen this model work...in Massachusetts". Zing.
Romney: "My plan was better than yours because Republicans worked with Democrats". Bravo Mitt, you worked together to pass socialized medicine in our state. Good job.
Obama: "Our plans is the same!". He is right.
Obama: "Companies will drop insurance, so we must figure out how to make health care more effective". Again, a beautiful opportunity for Romney to point out that ObamaCare will RAISE health care costs. Hmm, but then that would require admitting that RomneyCare is raising costs in Massachusetts. What a pickle of a situation. Then again we have two candidates that believe in socialized medicine, so what exactly do we expect??
Romney: "My plan will keep pre-existing conditions". Oh really? Which will of course result in insurance premiums going up? Good grief. Now he is ranting about the board again, of course the board is the only way to control costs through rationing, rationing by the way is what happens when one implements socialized medicine! Duh.
Romney: "My plan is a model for every State". Someone please explain to me why 50 RomneyCares is better than 1 ObamaCare? OK, OK, it is...but that is like saying that getting stabbed is better than getting burned alive. Agreed.

Conclusion: None necessary. Romney is the same as Obama on health care, other than with a shiny veneer of State rights. Bogus.

Question 6: Do you view the Federal Government differently?

Arkady: This should be a cake walk.
Obama: "First role, keep people safe". That is why you bombed the shit out of Pakistanis with drones? I see, I see.
Obama: "Gov't should create opportunities, genius of American system is the free market". "Lincoln realized that we work better together". The president thinks he is so bloody clever bringing up Lincoln, except that Lincoln used federal money to subsidize rail road construction in the North, thereby greatly aggravating the Southern states. That was never the intended role of our Gov't and it is sad to see that our current president thinks his job is to take money from people and direct them to industries that he happens to like. Hamiltonian protectionism at its finest.
Obama: "We will give States money for education for reforms". Since 1979 the Dept of Education has been spending more and more on education and every year America has fallen behind the West in all standards. Voters need to realize this and not eat up the utter bullcrap that Obama is feeding them on this. Not holding my breath on this one.
Romney: "Role of Government; Constitution and Declaration of Independence". "I believe in maintaining and strengthening our military". So how is spending 800+B on defense per year not enough? When is enough? Seeing that this represents almost 75% of all income tax revenues, what exactly is the limit here and what does that have to do with life and liberty? Last I checked, creating deficits and debt takes away from both. What a goof ball.
Romney: "Government trickle-down does not work". This is an interesting usage of the term trickle-down. I kind of like that.
Moderator: "List me specific opinions on the role of Government". Guess he grew tired of the diatribe, good job moderator. Question: Does the Federal Gov't have a role in education?
Romney: "The federal Gov't can help local Governments". Wrong answer Mitt, wrong answer.
Obama: "It has a significant role to play". Nothing surprising here.
Obama: "Ryan/Romney want to cut education budgets by 20%". Last I checked in Ryan's budget, I do not recall seeing that.
Obama: "We took out the middle man in education lending and took over lending entirely". Somehow that is supposed to be appealing? Considering that tuition is in a bigger bubble than health care.
Romney: "I am not going to cut education funding!". I figured that much.
Romney: "You put 90 billions in green energy, that would have hired 2 million teachers". OK, who is who? I am confused.
Romney: "Lets grade our schools". Hey great idea! So much for States controlling their own house eh? Now Mitt and Congress will use the Dept of Education to grade schools! What a brilliantly horrible idea. This is getting depressing.
Moderator: "Both of you talked way too much and ran out of time". I agree, but when both men have the same position one must blabber on and on about trivial details to make a point.

Question 7: Many legislative processes are paralyzed due to gridlock, what will you do to fix it?

Arkady: Frankly, the best thing for this country is paralysis since there is literally nothing in the legislative queue worth celebrating. Not sure why this is a problem.

Romney: "I will sit with Democrat leaders and talk about the issues just like I did in our State". As a reminder Romney raises fees on everything, moved billions off budget and implemented socialized medicine. So based on what he said above, perhaps his ability to get things done is worth paying attention to - because that is scary.
Obama: "Repealing ObamaCare will be tough". Agreed. Which is why it won't happen.
Obama: "We cut a trillion in spending". Utter bullshit. Reducing spending that you once promised to spend is not the same as reducing spending. Pure lies. Spending is higher than it was even in the last year of Bush Jr.
Obama: "Saying no is important". Obama defending his position on passing ObamaCare, Dodd-Frank and the Stimulus on partisan lines. Nicely done.

Closing Statements

Obama: "Four years ago there was a massive crisis, but my faith in Americans is unchanged". Which is why you passed three pieces of legislation that remain to be opposed by majority of Americans? Nicely done sir.
Obama: "I fought for the middle class". By extending this recession, by saddling us with more debt and by making health care more un-affordable. While I am not going to criticize Obama for the policies advocated by the Federal Reserve, the Fed is largely acting in a capacity that is in sync with the spending prowess of our Government. To that end, Obama is partially responsible for the diminishing value of the dollar and rising prices on all goods. Rising prices on common items hurts the low earners and the poor, thus making Obama a very poor president to those he pretends to defend.
Romney: "I am concerned about America" "It is about the course of America and there are two different paths". In a nutshell? No there are not.

Thanks for reading.

I will be blogging the first 2012 presidential debate between Romney and Obama.

2012-10-03T13:03:00.001-04:00

Live blogging this debate will give me an opportunity to pen my immediate reaction to the drivel that is surely going to be filling the airwaves of so many homes today (at least those homes not tuned in to the latest reality TV disaster).

I am reluctant to watch the debate, but feel that it is important to at least document that there is another viewpoint other than the one offered by Obaromney. There will be two distinct messages offered today:

1) We need more time to fix the economy that Bush left us and we were already somewhat successful based on a bunch of fabricated statistics. Nothing wrong with a big government, after all, look at all those jobs saved in Detroit!

and

3) We do not need more time because the administration failed, but instead we should revert to what has failed over the past many decades. Your version of big government is bad, mine is better. Lets invade Syria.

Stay tuned...

Bernanke's Bazooka, what does QE3 mean to you?

2012-09-16T13:42:00.003-04:00

The Federal Reserve undertook a very serious decision last week announcing QE3 and while the stock market and commodity market responded positively, it remains unclear what this decision means for the average American.

The seriousness of the Fed decision cannot be understated and is hinged on the following commitment:

"The Committee will closely monitor incoming information on economic and financial developments in coming months. If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability"

The actual plan consists of three primary actions. Outright purchase of MBSs, buying long term Government bonds and keeping the short term rates near zero until 2015. What is frightening is that this plan will continue until the economy improves, a plan that has been in plan since 2009 and has done very little for the economy, a fact we can be sure otherwise QE3 would not have been announced. It should worry you that our central bank and Government agencies continue employing strategies that have failed for years.

The question remains, how does this failure actually impact you?

While some clueless economists like Krugman celebrate this intervention and clamor for more, others are far more skeptical. Why the skepticism?

What the Federal Reserve is trying to do, is first and foremost induce lending. He wants Americans to borrow more. More borrowing is what fuels our credit-driven economy and for the past 30+ years this has been a cycle that most are familiar with, it is also the "business cycle" or "bubble economy" that most have become familiar with. As credit spurs bubbles form and when loans default bubbles burst. Because our interest rates are fixed and are therefore artificial and manipulated the severity of the bubbles become greatly exaggerated. Think of this as price-fixing a specific good at a price that is way below actual market value. First the good is consumed at a rapid rate and then shortages occur, but in the case of money, our central planners simply create more out of thing air. This creation unfortunately makes everyone poorer.

Allow me to present three important charts to you:

Total Revolving Credit: Starting from the 1980s you can see that revolving credit (credit cards, etc) coincide with the "boom" and contraction with the "bust". The contraction in credit happens well below the recession (marked in gray). This is what the Fed wants to stimulate and despite the trillions of dollars injected into the system the borrowing is well below previous cycles. This is because in this economy where the debt is saturated the amount of loans that can be originated is limited.

Total Non-Revolving Credit: Non-Revolving credit (fixed loans like auto, school, home) is doing much better and is responding to the low interest rates. Whether this is wise is to be determined and unless income and employment improves, this remains to be unwise.

Total Credit: Despite non-revolving, total credit in the private economy continues to decline and this is what worries the Federal Reserve. As the chart plainly shows this credit contraction is unprecedented and in an economy that requires credit, like a drug addict needing another snort, this chart spells recession. The only entity that has acquired debt is the Government (red line), which is just a round-about way for saddling Americans with more debt. Almost as if, our refusal to take on more debt is simply disregarded by our Government, a disregard that paves a path of ruin. Debt does not create prosperity, particularly when it is clear that after 30 years we need to clear the debt out of the system, not take on more of it.

What does all this debt and stimulation achieve?

There is a clear group of winners and losers in this QE crazy world we live in.

The winning group is the banking and mortgage industry. According to the Fed's own data, the outstanding MBS market stands at:

Total: 7.5 Trillion
Fannie: 2.5 Trillion
Freddie: 1.8 T
Ginnie: 600B
Private: 2.5 Trillion

As of this writing the Fed has already purchased 1.25 Trillion of this paper (from QE1) and is now planning to buy 40 Billion per month until the economy improves. Although not all MBSs are made equal, with some performing much better than others, presumably the Fed buys the worst performing assets first. His purchases are designed to stabilize the holders of this debt and prevent them from going under. The Fed owns almost 20% of the market, assets that he bought with printed money. In addition, banks were bailed out through TARP with Fannie/Freddie currently owe the taxpayers over 150 Billion dollars. This is a wealth transfer, pure and simple.

The wealth transfer occurs though creation of additional money in the system. If you were to regard credit and money as one and the same, then all these bad loans that are being rescued were once credit that entered the system. The system flushed with credit will respond by rising prices. Upon discovering that much of this credit was poor and could not be repaid through production of good and services the debt should have been liquidated, thus causing a contraction and lowering of prices. That has not happened. The originators of the loans are sitting pretty at the expense of us all.

The rising prices are showing up even in the flawed and highly skewed Government CPI data:

Biggest spike since August 11th, and yet we are lead to believe that prices only increase when the economy is doing well - which certainly begs the question as to why we need more stimulus.

By looking through the latest BLS data, you can see how this expense shows up (income ranges and percent of income spent on basics):

Rising prices across all sectors smashes the working poor to smithereens. If wealth is the formation of capital then capital cannot be formed when the poorest Americans are spending over 70% of their income of necessities. To add insult to injury, the poorest Americans are on welfare (food, housing, medicine), welfare that is a direct result of rising prices for wages never keep up in such an inflationary environment.

These policies directly hurt those that are the most in need, be mindful of those that in any way praise or encourage these kinds of policies.

MA health care legislation; dumb and dumber and how to fix it.

2012-08-23T20:32:00.000-04:00

This is an article about RomneyCare, but with the passage and upholding of ACA it behooves all Americans to pay attention. We have in front of our eyes an amazing example of politicians taking a problem, analyzing it and then proposing stupendously awful "solutions". Republicans defend Romney suggesting that universal care would have been passed in Massachusetts and he salvaged it, while Democrats criticize Romney for not going far enough and leaving the one party in power to fix up his mess. Shocker, both are wrong. Let us look at the problem and discuss a solution!

Deval Patrick recently signed legislation that will control costs for MA residents. Apparently it was a huge surprise to folks that intervention of strong-arm policies to insure everyone has lead to significant problems. A quick look at what has transpired in the State.

While there are many ways to examine quality with certain indicators being debatable, one is clear and concise. Access. The quicker you can see a doctor the better. That much is clear, this is the embodiment of prevention therapy. The longer problems go un-diagnosed/untreated the worse the patient feels while driving up costs in the long-run.

Kaiser Health News has coalesced different sources last year and the conclusion was obvious, wait times have increased across the board. MassMed.org conducted a similar study and found that although internal medicine (PCP) wait times dropped from last year it remains to be the longest at 48 days total on average. All specialties went up and family medicine jumping 7 days.

Wait times are obviously proportional to the amount of doctors we have. It is easy to insure everyone and call it a day, but increasing demand while doing nothing with supply is going to create some problems. Oh the joy of central planning. MassMed updated their proprietary index that tracks multiple indicators to determine "practice climate". The chart:

Quite notable that the practice climate in the national space has flat-lined while MA has continued to decline. This decoupling is an indication that whatever recent legislation occurred since 2007 is having a negative impact on the quality of our doctors. No worries though, after ACA is fully implemented the coupling should resume!

So what is the purpose of the recent legislation? As always, it is to control costs. Forget that politicians always pay lip service to controlling costs when proposing massive intervention we discover that after messing with the free market, costs generally go up.

Forbes provides for analysis, but this chart is notable:

Who wants to pay more and get less!? I know you do, thankfully ACA will take care of that for you.

So what was the point of RomneyCare? Well, ever since the champion of conservatism decided to shove EMTALA in 1986 down America's throats doctors have had a bit of a problem with managing ER visits. See, people kind of figured out that instead of paying for insurance is kind of stupid since they can just wait to get sick, go to the ER and be treated no matter what. This caused some squealing among hospital networks as they concluded that even jacking up health care costs for all of us still left them multi-billion dollar holes. EMTALA was the humanitarian answer to providing health care costs at someone else's expense. As so often happens when Republicans and Democrats get together, they get to give out goodies while the rest of us poor suckers pay for it dearly months, years and decades later.

So now Republicans proudly announce that ER visits have vanished thanks to Romney and Beacon Hill. Oh yeah? Reuters finds otherwise. The NCPA confirms and find that RomneyCare did not control ER visits, in fact they went up:

How utterly embarrassing. So let us sum it up, shall we?

Costs went up, ER visits went up, quality went down. It is bad enough that a bunch of new expensive bureaucracy was created, but the hidden costs of more expensive lower quality care will negatively impact us far beyond what a chart or a number can show.

So back to this new legislation that our wonderful Governor signed. In a nutshell:

The new law allows health spending to grow no faster than the state’s economy through 2017. For five years after that, spending would slow further, to half a percentage point below the growth of the economy, although leaders would have the power under certain circumstances to soften that target.

Right. Let me quickly explain what this means. In words that everyone can understand. "Because costs are out of control due to a variety of horrible policies enacted in the past 50 years and the failure of RomneyCare the current administration is going to employ price fixing to solve the problem".

This 300+ page law will achieve this economically demented goal by indexing to the Gross State Product and surcharges on hospitals. Two new state agencies — the Health Policy Commission and the Center for Health Information Analysis — have been created to punish all hospitals that fail to comply. I think we can all agree that the path to freedom and prosperity is laced with more agencies having the power to completely throw pricing mechanisms out the window.

As I have written countless times before, price fixing is one of the most favorite tools of the economically ignorant. It offers beautiful short term gains while pushing shortages through the supply chain. This way the politician looks like a hero and the market is blamed after it all blows up. It has happened every single time in history and will continue to happen. We are going to experience shortages. This means more wait times and lower quality. Yes, it is that simple.

Whenever the answer to bad legislation is more legislation, run like hell. Unfortunately after ACA rolls out there will be no place to run.

So what to do??

Shall we follow the path of the Canadians or the Brits? Well, as discussed previously if you object to an agency putting a price on your life (literally) then the NHS is not for you. If you believe that Canada is the answer, then you need to turn off Michael Moore and focus on Claude Castonguay. Who? Oh nobody special, just the father of the Canadian health care system. So what does he think after the failed socialized experiment?

“We thought we could resolve the system’s problems by rationing services or injecting massive amounts of new money into it,” says Castonguay. But now he prescribes a radical overhaul: “We are proposing to give a greater role to the private sector so that people can exercise freedom of choice.”

So after thinking socialism was the answer, Claude concluded after some soul searching that the private market is the answer. Perhaps the millions who have suffered under a system Claude ushered in can take comfort in knowing that he finally figured it out.

Does that mean we should be happy of the status quo? Of course not and the numerous health related articled I have penned demonstrate clearly that the status quo is problematic. The question is, WHY? We have a classic example of intervention policies distorting pricing and then politicians using the free market as the scapegoat. Democrats would like a single payer as it would solve the problem of greedy insurance companies (companies our Gov't created) and Republicans think that if we reform the edges we can get out of this mess. Both are hopelessly lost.

We need to lower costs, dramatically. This is my fundamental philosophy, more goods and services at lower prices is the way to prosperity. This is so easy, even a caveman can do it. The working poor of this country that eke out an existence can become the middle class if and when prices for food/housing/energy and health care drop. They can purchase more goods while saving more money in the bank (although with Bernanke in charge, maybe not the best idea). Capital formation is the key to long term wealth, there is nothing else that really matters.

We must expose true-price and party-to-party negotiation. Guess what? More insurance is exactly the opposite. When you go shopping for car repairs without insurance, you see the price upfront and you base your decision on that price. Price may just be a silly little number, but it is the quintessential mechanism that makes the entire system go round and round. Insurance hides that information. With that information hidden the consumer makes poor decisions. Compare your behavior when doing car repairs with insurance and without. There is a world of difference. So what are the major obstacles?

1) Subsidies. Tax subsidies have done massive damage to how health care is provided in America. Because companies get subsidies for providing benefits the majority of Americans get their insurance policies from the employer. This is extremely problematic for two reasons. First, a majority have no clue how much their insurance costs them as the premiums they pay is a fraction of the trust cost. Secondly, there is hidden wage suppression due to insurance increase absorption. So while we "enjoy" our benefits it could be costing us thousands in real wages! Remove this link permanently and have people buy insurance themselves. Repeal the 1973 HMO act that gave rise to the money-hungry HMOs whose only real business is to withhold as much money from payment as possible. This will also remove the moral hazard of people losing their job and their coverage. When Americans finally see how much their insurance really costs behavior changes can finally happen.

2) Government provided care. The remaining Americans who do not work are on health care plans that remove price from the equation. Medicaid is now larger than Medicare and is roping in more and more people. In fact ACA and RomneyCare heavily rely on Medicaid to solve the problem of the "uninsured". Unfortunately this pure welfare system simply increases costs for all health care procedures as the price is hidden and incentive to choose a doctor wisely discouraged. Medicaire while at least partially funded by taxes does exactly the same thing and for an age group that consumes the *most* amount of health care services in the country. While reforming these two programs is out of scope of this article, it is important to recognize that between Medicaire/Medicaid and employer provided health care virtually nobody understands or sees the price! Worse yet, Governments that run out of money go after these types of services first and foremost - with no private option to turn to this significantly disenfranchises the poorest Americans.

3) Insurance. Health insurance that we have today is a perversion and nothing more. The insurance companies have placed their fat asses squarely between the consumer and provider thus badly throwing the entire pricing mechanism off kilter. They have done so through employer provided health care, legislation that gave them teeth and exchanges like the ones RomneyCare creates. Insurance must act LIKE insurance. That is, it needs to kick in when an emergency event occurs and at no other time. This should be so obvious that I am annoyed at just having to write it. Paying for check-ups, physicals, scans, examinations and almost everything else you do on a regular basis at the doctor's should NOT be covered by insurance companies. The fact that this happens simply drives costs through the roof. The bitter tragedy is that the more insurance companies get involved, the more we need them.

By stripping away the obstacles that prevent a normal relationship between you and the doctor our entire health care system will shrink tremendously. The red tape will fall away, the insurance companies will shrink in size and power and prices will plummet. Those prices that we do currently have are a distortion and a forgery, but these prices are well above inflation rates. As a side note, whenever you see a protracted price trend above inflation be confident that something is very wrong. For visual purposes:

The rapid increase after LBJ's Great Society is not a coincidence.

In terms of reform ideas. Medicaid should become a State only system, let each State figure out how to properly administer and handle the costs. A system I favor is block grants to people under certain state poverty lines. That way instead of paying a doctor that *had* to take Medicaid, the entire system and red tape vanish. People will be given sums of money that adequately reflect health care costs in that region. If they choose to spend that money elsewhere, so be it. Catastrophic insurance will cover emergencies, but routine day-to-day costs will be taken care of between the patient and the doctor, NOT a middle man. This alone will drastically reduce wait times and costs. The block grant sum will invariably get smaller each year until some base price is established, a true real base price. However each State can decide their own approach, after 50 individual experiments we will find out exactly which idea works. Without 150+ million people getting health care from their employer the price normalization mechanism should kick in very quickly.

Yes, the first few years there will be price shocks as the true cost of our insane system come to light, but after shedding all the weight it will be the envy of the world - once again.

Mitt Romney's selection of Paul Ryan as a VP is a sign of desperation.

2012-08-11T12:35:00.002-04:00

Many folks were surprised last night as rumors began leaking that Romney tapped Paul Ryan of Wisconsin, for the prestigious VP slot. The surprise came largely because many were expecting a more mundane pick like Tim Pawlenty or Rob Portman. The reactions from the GOP base is positive overall, although the story is still fresh and drawing conclusions is difficult. The reactions from the Democrat/Liberal base are predictable and I am guessing that the Obama campaign is licking its lips over the prospect of skewering Ryan like a kabob. I have a slightly different take, my feeling is that this pick is an indication that the Romney team is struggling and sees the prospect of winning in November diminishing with each passing day. People like Pawlenty and Portman is the equivalent of swinging for a base hit - the selection of Ryan is swinging for the fences. It is desperation and an attempt to shake things up substantially in the hopes of energizing a splintered and unimpressed Conservative base.

However I prefer to focus on the economics of politics, not the politics of politics - so lets take a look at what exactly makes Ryan such a risk.

Paul Ryan, to be sure, is an impressive politician. He has a perfect pedigree, is good looking and probably considered to be the premier fiscal wonk of the Republican party. His budget is considered by many to be the boldest and most courageous attempt at tackling America's most pressing issues, entitlements. Of course there is always more than the shiny facade pimped by party loyalists and for those that have bothered to investigate Ryan's record the picture becomes a bit murkier.

For starters there is the very pressing and disturbing votes of the Bush legacy. Specifically Ryan's support of: TARP, Medicare Part D and No Child Left Behind (NCLB). All three are wonderful examples of how the Republican party only fights for fiscal sanity when they are a minority party, the second they become the majority they expand Government programs at an alarming rate. NCLB is a monstrosity that gave the Department of Education teeth, Medicare Part D tacked on hundreds of billions (half a trillion as of today per year) to the debt and was passed in the House in a manner very reminiscent to ObamaCare and TARP is an egregious disregard of the free market system and should make any citizen sick to their stomach. While Ryan may be able to justify all these votes, there are Republicans in the House who did *not* vote for these programs and quite a handful.

Then of course there is the famous Ryan budget. A budget that reminds of me the great Oz. It is daunting and impressive, but if you look behind the curtain there is a tiny little man pulling a whole lot of levers. This very budget (despite being all bark and no bite) was used to galvanize Obama and the liberal base. Remember how Ryan's policies inspired the idea that he would throw grandma off the cliff? Yet despite the proven record of the Left to make a mountain of a molehill team Romney decided to go all-in and select Paul Ryan. More importantly, for what?

In order to understand that Ryan's budget is nothing more than smoke and mirrors we turn to a detailed analysis of the budget. This interactive analysis lets you compare and contrast the Ryan and Obama budgets side by side and examine the projects for spending. Below is a series of images I selected, but I encourage to explore the interactive tool yourself.

Let us take a look:

First we got Medicaid. Clearly the difference is notable and appreciable. In fact based on this image alone it would almost invalidate all my criticism of the Ryan budget. Medicaid is pure welfare, as opposed to Medicare that is at least partially funded by FICA. Medicaid was always intended to take care of the downtrodden and unfortunate and has now ballooned into health care for all. ObamaCare functions and survives primarily on expanding the Medicaid rolls by shoving more people onto the public dime. Medicaid alone is now responsible for a quarter of many State budgets and continues to financially drain the Federal and State coffers at an alarming rate. Worst of all, it badly distorts the insurance market driving medical prices up for every single individual. So it is nice to see Paul Ryan tackle this egregious and disgusting program that does far more harm than good, but the courage and bravery amount to a spending freeze. By 2021 will be spending more on Medicaid again. Perhaps Ryan tackles the other entitlement programs better?

Next we have Medicare. What's this? Apparently Grandma is not going off a cliff, instead it would appear that she is being pushed up a hill! Ryan's plan spends MORE on Medicare than Obama. This is quite the shock considering that Ryan's plan is considered to be the most courageous entitlement reform evah! It is ironic that Obama and the Left are painting Ryan as the grim reaper chasing your granny, where instead he is slowing down Medicaid to HELP granny. Oh, you have to love politics - don't you?

Next up is Social Security. No, it is not a graphical glitch. Ryan's plan does absolutely nothing for Social Security. Yet conservative websites and pundits swoon over Ryan like he is the next coming of Barry Goldwater, more on that later.

Lastly, the national debt. This is probably not surprising, but after all the hoopla and all the bravado the end result is that the speed at which our fiscal apocalypse arrives is merely slowed down by a teeny weeny bit. Yet one would think that as grandma flies off the cliff with her belongings and rusty wheelchair bouncing off the jagged rocks that America is about to embark on the greatest age of austerity ever devised.

Not really. We have a budget from an individual who thought there was nothing wrong in forking over a blank check to Wall St, nothing wrong with expanding Medicare by half a trillion and nothing wrong with growing a department that Reagan's campaign promised to eliminate. We sure have come a long way, have we not?

Conclusion

So this of course begs the question, why did Romney do this? Why select a VP that will provide such easy ammunition for the Left with virtually no reward? The answer is quite simple. Romney and Ryan represent exactly the same problem even if one appears to be a moderate and the other appears to be an epic fiscal warrior. The Republican party fights for and pushes through the status-quo. The images you see up above and the Ryan record is the status-quo. No doubt about it.

Yet Romney is counting on the ignorance of Republican base to run with the facade of Ryan's conservatism. If that illusion holds then Ryan's image will invariably boost Romney's own image as many will view Romney's decision as courageous and bold despite Obama's willingness to distort Ryan's budget. In other words, you are witnessing a most fantastic and glamorous circus. A bad Hollywood movie, except that ending will be quite real and not something you can pause or turn off.

However we all know what happens when politicians threaten the sacred cows of entitlement spending. They get destroyed. Barry Goldwater was America's last libertarian-Republican candidate and he was obliterated because he dared to speak up against Social Security. Barry's loss paved the way for the great society and the invention of Medicare and Medicaid. How ironic. Poll after poll shows that Americans refuse to accept changes to entitlement programs, despite their clamoring for someone to fix our debt.

Romney and Ryan will lose in November and the image of the heartless Conservative killing granny will resonate with America, the tragedy of course is that neither Ryan or Romney are willing to actually cut anything! The tragedy will become even more amusing as we will witness a nasty and partisan fight further dividing Americans as they fight and defend differing policies with the exact same results.

Romney's campaign is ignoring the lessons of Barry Goldwater and going all-in on an individual that has consistently voted for awful legislation and whose budget is nothing more than smoke and mirrors. A move that can be summarized in one word: desperation.

Politics, the fringe and FaceBook.

2012-07-18T22:17:00.001-04:00

Today is a good day for a story, a story about my own personal experience - however limited - with politics. I have to share my own personal evolution for the story to make sense, so if you want to know what makes me tick - read on.

This story however underscores a lot of the frustration I have been feeling towards political acceptance in this country, again not so much from application, but from a philosophical desire to communicate with those that are of like mind. Before you cringe at my perceived desire for conformity I must say that a propensity for acceptance is quintessentially human. We want to be accepted by our friends, co-workers and family and be accepted based on who we are and what we believe. I would argue it is an established fact that those who do not wish to accept you for being 'you' are the ones to blame and not the other way around, often this measurement stick is used to judge the quality of friendship and other meaningful relationships.

As I wrote a few weeks ago I feel alone in the American political wilderness. Of course the conclusion was a bit hyperbolic as I personally know several people who happen to share my exact feelings, frustrations and ideas. However t in terms of belonging to any particular denomination the proposition is dicey at best. Everyone can be grouped by certain principles and ideas, despite the many who claim unadulterated independence the vast majority simply belong. In fact unless you are developing the next Praxeology or Objectivist philosophy you have taken your ideas from someone before you, and there is nothing wrong with that whatsoever. I digress, this is not about the merits of independence, but rather a story about the inability of conformity. Myself, I am economically Austrian, politically Jeffersonian and morally Randian. That combination does not make me unique, just a giant pain in the ass. In fact, I had no idea about my Randian morality whatsoever and always believed that my agnostic beliefs and value systems were uniquely mine, but in fact they were not. Others I learned, they made the most logical sense to me and are now shaping my ideas, thoughts and actions.

In my quest to become better informed, more knowledgeable and understand the world around me my group membership evolved, not officially, but noticeably. My early years were best described as moderate, although I remember being very proud to sit at the "Dukakis table" in elementary school. Moderates and moderation as I found out was just a secret word for ignorant. It is a cowardly position assumed by anyone who is not knowledgeable enough to take a stance and defend their position regardless of how popular or unpopular it may be in certain circles. Nothing shields one better from scrutiny as the word 'moderate' and after carrying that moniker with me for years it finally began to come off. Because our society does not like people with opinions, strong positions or a working thought process I became radicalized. It should be humorous to anyone reading this that the thought of becoming more educated is the equivalent of becoming radical. To me, Islamists willing to kill themselves for religion is radical. Believing that our Government is incapable of running a complicated "retirement" policy that is no more than a glorified Ponzi Scheme is neither radical nor moderate, but simply an embrace of reality. One man's reality, another man's extremist war on their beliefs, right? Not exactly. While certainly true that fellow Islamists see it a noble cause to die in the name of Allah - it requires little convincing that suicide and murder hardly resembles rational behavior. Where on the other hand criticizing Social System as it fails basic mathematical principles should be digestible even to the simplest of humans, regardless of how one handles the "old person problem".

So my journey has taken me through my affiliation with the Republican party, Reagonomics, supply-side economics, Chicago school of economics, conservatism and finally onto the most logical place in the journey - strict Constitutionalism and the Austrian school, most often subscribed to by Libertarians. I am convinced that anyone who truly wants to understand how some parts of how society works and functions, then the answers lie in the great advancements put forth by people like Mises, Rothbard, Hayek, Bastiat, Hazlitt, Sowell and Friedman. All have built on each other and have reached certain undeniable and fundamental truths, truths that cannot be argued with and cannot be disputed. Just like you cannot argue that a stone sinks in water, that the sun provides energy or that gravity makes an apple fall from the tree. These are the truths on which our human action must be based on, these are the truths that recognize without a shadow of a doubt the absolutely necessity of private property, trade, pacifism and a sound medium of exchange. Without these truths all other theories, ideas and approaches crumble like a skyscraper built on a fault line.

The truth shall set you free and regardless of political affiliation one always claims to be the messenger of truth. Socialists believe their truth lies in a collective, conservatives in a government that enforces morality and libertarians in the Constitution and sound economic policy. Each group is convinced that they know the truth and if only their message is heard then the world can finally come together and begin to heal. Because my own truth overlaps with that of the libertarian group, it is only logical that I affiliate with them and stand proud when this variety of truth is disseminated. I recognize the fallacy of my own idealism, but the maximum capacity of my logical ability suggests that based on the information I have gathered the "truth" that I preach is correct. I also recognize that not each preacher of their "truth" is acting in their own maximum logical capacity and so it is a justifiable action on my behalf to attempt to influence their reasoning and their maximum capacity. This involvement and interference is selfish, for nobody wants their mind to be influenced by outside forces - especially forces that they recognize as preaching a "truth" alternate to their own. However it would be equally irresponsible for me to have discovered what I find to be the fundamental truth and not attempt to spread it in the attempt to better my own self. For I am convinced that if a society embraced the principles of private property, trade, pacifism and sound medium of exchange then we would all prosper, including myself.

My political involvement reached a feverish peach around 2009 during a highly profiled US Senate run between Scott Brown and Martha Coakley. I remember feeling very frustrated with Brown's positions and voting history and wrote about it frequently. What increased my involvement was a third party candidate by the name of Joe Kennedy who spoke my brand of truth. The very first piece on the subject I penned was a combination of political impracticality with my philosophy on voting as a function of the free market. That impracticality got me banned from FreeRepublic permanently and mountains of vitriolic hate directed at me through all media formats. I created comparison pages like this table here, that Joe Kennedy used on his website and published an interview with the candidate himself. As I promoted the material I got banned from several Tea Party forums and as it turned out much later, because a persona non grata at RedMassGroup. This was all perfectly fine to me as the Republican party showed itself to be utterly incapable of thought and had the moral, logical and economic foundation of a porta potty. I am most proud of analyzing a potential Brown victory and concluding through logic that his victory would fail to prevent ObamaCare.

The end result was predictable, but I walked away with some new friends and believed that if I converted some votes to Joe Kennedy that it was worth the effort. Although I did not keep in touch with Joe, I followed some of his posts on FaceBook. This is where our story concludes. You see, despite my affinity for the libertarian group there has been a particular brand of libertarianism that never quite appealed to me, this group can be best described as the Paulbots - but their existence predates him most likely. My thoughts on the matter can be found in the post: Ron Paul supporters: a blessing or a curse? Needless to say, that did not win me many friends in the very group that I believed to belong to. Unfortunately just like I cannot in good conscience allow socialists and conservatives to preach their flawed brand of the truth, neither can I allow the libertarians to do the same if they have steered away from the fundamentals. The most puzzling paradox of the entire situation is the manner in which these folks spread their message, it is under the guise of truth. As in, that is precisely the rhetoric employed and so one would naturally assume that those constantly talking about the truth will generally possess it. Yet reality suggests otherwise. Instead of truth; theories shrouded in speculation, rumors and beliefs are cultivated and spread through the community like wildfire. Incidentally the truth is always the dissenting position of the accepted conventional wisdom, as if the mere position against the majority immediately qualifies as the truth. If it made political sense this group would argue that the sun is not the center of the universe, just by the very virtue of it being the minority position.
This way they delude themselves into believing that their truth is righteous as they belong to a minority and that their thinking is correct for it rejects convention. In the process they discard all accepted principles, approaches and even logic in order to justify their position.

And so it was this very action of truth that brings us to my story. Joe uses his Facebook as his primary soapbox, a perfectly fine tool for spreading one's opinion. He often complains how difficult it is to argue and discuss with Obama/Romney supporters and how they react to him rudely and brashly, often unfriending or blocking him in the process. My own experience confirms this as I have been unfriended and blocked by liberals, conservatives and libertarians usually in a flurry of mockery, insults and general nonsense. A few days ago some of the posters Joe was posting smacked of Trutherism, a most ridiculous and intellectually dishonest movement. Of course one knows better than to argue with a cultist acolyte, particularly because they have just enough reasonable doubt to make arguing a futility in exercise. This "evidence" is the equivalent of a believer in God asking "where did space come from" to prove the existence of God. You cannot disprove it and so they remain convinced of their truth. However two days later, Joe posted a popular picture of JFK with the quote:

"“There’s a plot in this country to enslave every man, woman, and child. Before I leave this high and noble office, I intend to expose this plot.” -President John F. Kennedy 7 days before his assassination"

This is a favorite of those who believe in the international banking cabal and insist that this quote proves JFK was murdered by the bankers. A nice story, except for two problems. First, JFK never said that, in fact he never even came close to saying that. Whenever JFK did mention the word conspiracy in his speeches, it always referenced Communism a threat that made perfect sense if one knows anything about JFK and his struggles. Second, even if the JFK assassination is shrouded in mystery the evidence to suggest a banking cartel as the mastermind behind the murder is entirely missing. To take this fake quote and use that as evidence of a secret banking organization is an insult to every thinking human being. Yet there it was, prominently displayed on the FaceBook page of a former candidate to the US Senate. However being caught up propaganda is easy and everyone makes mistakes, so I was forced to point out to Joe that his quest for truth was entirely incompatible with the dissemination of baseless propaganda that basic research can debunk in all of ten minutes. After ignoring me for two days, the conversation ensued and since I have seen this play out several times before decided to capture it. Here it is (some of it got cut off):

Within a span of several minutes, the candidate for whom I fought and voted for and then was banned, criticized and ridiculed for - deleted the conversation and unfriended me. This is the end of story.

Why liberals own the public narrative. Exceptions for me, but not for thee.

2012-06-30T19:55:00.001-04:00

Now that ObamaCare is here to stay for the foreseeable future it is worth some time to explore why the country remains so divided on a piece of legislation that seems so obviously inferior. Public opinion on ObamaCare as of a recent RCP average shows a +10.8 on the opposition, but the individual polls vary wildly. After John Roberts issued the final ruling polling shows an America quite split on accepting the largest health care overhaul in fifty years. The issue is that the manner in which the public engages on these topics lends itself nicely to the liberal narrative and the use of exceptions. Liberals utilize their inevitable egalitarian positioning to control the dialog merely through exceptions, yet curiously the reverse is not allowed or often just dismissed. The exception rule extends well beyond health care and is utilized to sway public opinion on issues like food stamps, FDA, gun control and many others. Allow me to provide some examples.

Lets look at the first and most pertinent example, health care. The crux of the argument is that those without insurance in America suffer poor health care. Without delving into the debate of whether insurance actually equates to better health care, recall the tool used to build the case for "universal coverage". This tool was utilized by the President in speeches and is exactly the exception to the rule that is so persuasive in shaping opinion. Obama invoked the example of Natoma Canfield a cancer patient whose medical bills were threatening the loss of her home (never mind that her home was never in danger). More such examples were followed and all were met with shock and awe as to deplorable state of health care in America. Granted those are tragic situations and in the case of Natoma, an income of $6,000 would never be sufficient regardless of how free the health care market is. Still, these examples are viewed as the heartless consequence of a health care system where profit is placed before life. This is what captures the narrative and many on the Left were pushing for not only a public option, but universal coverage similar to UK's NHS. However what if were to bring the exact same counter-exception to light. NHS functions through rationing, there is a specific board designed to ensure that costs are kept under control called the National Institute for Health and Clinical Excellence (NICE). NICE calculates how much money is worth spending to extend a life. As of 2009 the average maximum cost to extend life was $45,000 (regardless of age). However pointing out this obvious flaw of socialized medicine is often disregarded. When Sarah Palin mentioned the term "death panel" she was laughed and mocked at, these exceptions were considered irrelevant. Indeed according to the Time.com piece on the NHS most people are willing to accept this sacrifice: "most Britons accept NICE's rare rejections as a necessary compromise to keep universal coverage affordable in the face of rising health-care costs.". It is quite interesting that in pseudo-free-market system where some falling through the cracks is used a rallying cry for socialized medicine, but socialized medicine killing people because it is too expensive to treat them is seen as a compromise. Exceptions for me, but not for thee.

Take another example, the FDA. The FDA's sole function is to "protect" the citizens from harmful drugs. This has been accepted as an undeniable truth. The notion that the FDA is counter-productive to American health is immediately swatted down with exceptions of dangerous drugs like VIOXX getting on the market and killing people. This exception is especially amusing because VIOXX was FDA approved, but proponents underscore their point by suggesting that many more VIOXX incidents would occur without the magnanimous administration. However the FDA's harm far outweighs any harm that dangerous drugs can cause. Namely the FDA's fundamental reluctance to release medicine to the market and the untold damage this wreaks. Examples of people dying from cancer because a drug was delayed by a year or two can fit pages. FDA Review goes through painstaking detail to illustrate how FDA's expansion has hurt drug-to-market time and estimates that death from FDA's actions result in hundreds of thousands of death a year! Indeed, FDA's reluctance on one drug alone,Provenge, is estimated to kill 82,000 people annually. Yet which exception works to sway the public? The occasional visible and unfortunate incidents of drugs getting to the market or the invisible damage caused by a large ineffective bureaucracy? For the purpose of public debate the former always wins and just like the hidden abuses socialized medicine is considered reactionary or irrelevant under the scheme of compromise.

Take for example food stamps (SNAP), a program that continues to grow and ensnare more Americans into the perpetual loop of dependency. Proponents of the program will defend the need for such a vast and expansive distribution of funds in order for people to avoid "hunger" and will point out that many Americans go hungry every day. FRAC published a press release calling for expansion and strengthening of SNAP in order to stamp out childhood hunger. A mere mention that the number of people utilizing SNAP is growing at an alarming rate puts you in a very untenable situation of being against childhood hunger. So instead of pointing at growing costs and the number of Americans becoming dependent we turn to exceptions, which are quickly becoming the norm, abuses. Food stamp abuses are not only rotting a core American value, independence, but it is nothing short of theft. A local Florida reporter went undercover to report SNAP abuses in the form of recipients buying tobacco, alcohol and even lottery tickets. These abuses happen across the country on a regular basis and none of the agencies that are involved in distribution of funds care. More importantly when examples of abuse are presented to the proponents of expanding SNAP it is dismissed an exception, an aberration and simply an unfortunate byproduct of the program. However the exception of the occasional individual not having enough to eat serves as a perfectly suitable justification. Exceptions for me, but not for thee.

In conclusion it becomes rather obvious as to what is happening here. The reason examples that bolster and prove the effectiveness of the market fail is because they are either not obvious or perceived to be non-egalitarian. For criticism of ObamaCare, food stamps and the FDA is often as interpreted as being against provided health care, against stopping hunger and against safety of medicine. In order to appreciate the damage caused by programs that make health care so expensive and prohibitive, programs that make drugs inaccessible and programs that promote theft from the public one has to look past the immediate benefits the program purports to solve and look at the entire picture. Unfortunately the public is generally not interested in devoting much time and thought to the sometimes dangerous consequences of stamping out the free market and instead prefers to be enamored with emotionally satisfying exceptions to the rule.

Navigating the American political wilderness

2012-06-25T12:06:00.001-04:00

It has been a while since my last post, I have been grappling with health issues, switching jobs, moving and dealing with tenants. I have also discovered a fascinating cross-section of politics and economics in the space of nutrition. An unlikely combination you may think, but upon closer inspection it is not hard to imagine that food should play a massive role in policy. After all, a hungry population is often an unhappy one.

Still, today I would to discuss something lighter but equally important. American politics. Now politics as a whole is not something I focus on generally speaking as I prefer to explore the source (economics) not the symptoms. But even if one were to get engaged then one would get very disappointed. The political landscape has become intolerable, polarizing and dominated with emotions, stupidity and shallow thinking.

Allow me to break it down the way I see it. There are thee major groups once you begin to delve into details, with several sub-groups that stem from under them. Let me paint a picture of what a representative of this group typically sounds like or what I hear them espousing. Recognize that I am using broad strokes, but after many years of observation this is a sadly accurate portrayal.

These are just my labels and names, there are many ways to skin a cat, names/labels are not so critical.

Groups

Liberals: Constantly anti-corporation. Corporations are blamed for everything under the sun and in some cases even interrupting the sun itself. This is not an attack on corporatism, this is just an attack on large corporations. The shrieking is so loud and deafening that they border on the insane. As a secondary problem there is a focus on wealth inequality. Mind you, they are convinced they understand the source of the inequality and ignore anything that might contradict their viewpoints. Anything that might challenge their view of the world is conveniently ignored. In fact they do not care about economics at all, unless it is a brand of Keynesianism that justifies public spending at all times and for any reason. Perhaps this is due to their overflowing humanity. This humanity allows them to push for an ever growing welfare safety net despite the fact that America is now spending over 600 Billion a year on welfare alone ( a quarter of all revenues).

Modern Conservatives: Focused on three primary aspects. Supporting troops (and wars based on morality), lowering taxes (regardless of economic condition) and fighting for social causes. For the most the economic knowledge is limited to taxation and how allowing people to keep more of their money is economically sound, while recognizing Government spending as inefficient. Good start, but woefully insufficient and leads to application of the same medicine regardless of condition. They view Government as having a role to play in our lives, either by jailing drug offenders, stimulating the economy or reforming health care. They talk often about repealing big programs, but never commit to the idea, instead just propose their own variations. They say all this while still proudly announcing their love for the Constitution. Typical rhetoric and visual aides include anything from founding fathers, soldiers and anything anti-Obama/anti-liberal (to the point of derangement).

Libertarians: The counter-weight to conservatism and liberalism. Generally speaking far more into economics than other groups and favors classical liberalism. They believe in the free market and would probably show off pictures of Mises, Hayek, Rothbard and even Friedman (a debatable figure in my mind) intertwined with quotes from the founding fathers. Unlike the Conservatives the Libertarians actually care about the Constitution and know more about the document and its history. They are naturally skeptical of groups and prevailing mentalities, but their skepticism gets them into big trouble. Libertarians will also defend civil issues, stand up for revolutions like the Arab spring, bash Israel and defend Islam. Naturally they are profoundly anti-war and never ever see a reason for military aggression. They would have no problems with Nazis rampaging through Europe, because frankly, it is just not "our" problem.

Sub-Groups

Progressives (belong to Liberals): It is hard to estimate how many liberals are progressives, but I would have to say anywhere between 30-60%. Progressiveness varies and is often interchanged with Socialism. They take their anti-corporatism ranting to a higher level and often prefer to do away with privately run corporations all together. Don't call them Marxists though, they dislike that. Progressives are generally on the forefront of civil issues, a commendable position. Of course this admiration quickly fades when you realize that they are profoundly against the free market and espouse failed political ideology. Progressives will always defend big labor despite demonstrable proof that public and to a lesser extent private unions drive up costs and unemployment.

Socialists (belong to Liberals): A smaller sub-group, but one that feels to be gaining a bit of traction. If socialism was a dirty word in America, then now it is worn as a badge of honor. Disgusting, but what can you do other than shake your head in amazement. The most notable thing about American Socialists is their perverse and utterly warped view of history. For instance the Soviet Union in their eyes was actually state run capitalism and now socialism as they see it. They want a worker's paradise, facts be damned.

Religious right (belong to Conservatives): I surmise this represents half if not more of the conservative base. They are precisely what you think they are, generally spamming social media sites with images of Jesus and are railing against abortion, gay marriage, drug usage and anything that violates their religious principles. What makes them tolerable is their gravitation towards small Government, but this can often result in amusing contradictions as they have no problem funding the ATF, DEA, CIA, FBI and the DOJ to either chase tokers or Mexicans looking for work. It is embarrassing, but as long as it is squared away in their Biblical mind then it is "kosher". Equally amusing and far more fiscally damaging is that they see no bounds for military spending, for all military spending is good spending even if it is wasteful. Many even agree that it is wasteful, but simply acknowledge that this is the kind of waste that is permissible. How spending over 800 Billion on defense, more accurately to be called offense, is permissible for someone advocating small Government is anyone's guess.

Mercantilists (belong to Conservatives): I suspect that this represents 30-40% of the Conservative base. They should technically call themselves liberals and move on with their lives, but due to historical voting patterns and regional demographics prefer to wear the flag of the GOP. This group has a rich history with many names and hail from the Whig/Rockefeller wing of the Republican party. They are all about the Constitution and small Government, except that they are not at all. They are more than happy to engage in bailouts, subsidies, and abandoning capitalism to save capitalism and other nonsense. They have no problem imposing Protectionism in the name of patriotism of course because they are not super fond of free trade either. So while they quack like a conservative, they look and act like a liberal.

Nutters (belong to Libertarians): It is now extremely common to see Libertarians even of high prominence discussing everything from 9/11 Truth, Bilderbergs, Illuminati and of course, the most insidious of all conspiracies, international banking and the Fed cartel. Does not matter how shady the source or how often it gets debunked, they are the ultimate arbiters of truth. This sadly represents a large segment of the Libertarian population. They are openly spamming every website, forum, facebook page and twitter with the latest "SHOCKING TRUTH". They use the term truth as if they just discovered it in some cave and are amazed at how unique and precious it is. If you even dare to question their 'truthiness' then be prepared for an avalanche. Not only will you be instantly relegated to sheep status, but everything you say will just be laughed at. All discussions eventually end with them asking you to wake up and see the light.

So where am I?

So where do I fall into this mess? I suppose this was the point of this post, over the years I have observed interesting behavior patterns depending on who I communicate with. I can summarize it quite quickly.

This is how the groups/sub-groups see me.

Liberals: I am a Fox watching Republican with no heart.
Modern Conservatives: I am a liberal.
Libertarians: I am a neo-con. (most still have no idea what this means)
Progressives: I have no compassion for the working poor.
Socialists: I am a filthy capitalist pig.
Religious right: I am a godless heretic. (OK, that part is true).
Mercantilists: I am a radical Ayn Randian libertarian independent who has no problem with pain and suffering.
Nutters: I am a sheep and can't think for myself.

The truth? In this political wilderness, I am all alone.

Thoughts on Iowa results, what this means for Romney, Paul and eh...Santorum?

2012-01-04T13:08:00.001-05:00

Yesterday's results were a bit surprising for those not paying close attention when Santorum finished second in what can be best described as a dead heat. Paul finishing third was probably disappointing to some die-hard fans, but he had a good showing nonetheless and in line with previous polling data.

While I prefer to focus on more macro economic issues, I think it is worthwhile to at least briefly chat about the race. So what does this mean for the GOP and the candidates?

First of all, it is probably very difficult to predict based on Iowa's results how the actual race will unfold. Simply because America is a very diverse country and people's voting habits differ quite a bit based on their region. For example the folks that came out for Santorum in western Iowa simply do not exist in New Hampshire. Similarly the folks supporting Ron Paul do not exist in South Carolina, so forth and so on. Although Iowa's influence is undeniable as it propels candidates into spotlights as confirmed by Bachmann's campaign suspension, it is important to remember that the last presidential cycle had zero predictive value (Huckabee won, McCain finished 4th).

Indeed, it would appear that there is a more interesting dynamic at play here and this was the same dynamic that played out during the debate cycle. We saw an amazing number of people grab the spotlight only to flame out and be replaced by another bubble candidate. If you recall, it was Bachmann who surged ahead at first, only to be squashed by Perry who crashed and burned in the debates only to be replaced by Cain. Cain seemed to gain tangible momentum but the sexual scandals buried him and out came Gingrich. Gingrich peaked too early and gave an opportunity for Santorum to take hold and finish in an impressive second place. Why? Because a fraction of the GOP is simply not content and not ready to accept Mitt Romney as their candidate. They did not like him four years ago and they do not like him now. Hard to blame them, it is very difficult to like Mitt Romney. Romney personifies the stereotypical politician to the maximum and his track record as Govenor of Massachusetts leaves a ton to be desired. Yet Romney's finish in Iowa suggests that a certain faction of the GOP base. So it is clear that there are two distinct groups so far; Romney group and the non-Romney group. The fact that it is Santorum at the moment is not relevant at all and in fact, Santorum will cease being an important candidate by the end of January (although he might do well in South Carolina).

The question is, is there yet a third group whose leader at the moment is Ron Paul? Possibly, but hard to tell. Although Paul's performance in Iowa is commendable and he is poised to take second place in New Hampshire, it is a bit unclear as to what happens next. He could very well finish dead last in South Carolina (provided Huntsman drops out by then). There could be a very good explanation as to why Paul is polling so strongly in these states, but hovers around 10% on national polls. Paul's support could be stemming from non-Republican voters who will gladly support him in open primary states for their own personal reasons. They either want a candidate that truly represents their ideals, like ending wars and ending silly drug prohibitions or they want to sabotage the GOP by selecting what they perceive to be a weak candidate against Obama. I am inclined to believe that Paul could easily take on Obama, but liberal voters have a tendency to talk big, but act small and will invariably hold their nose and vote for Obama despite all the war mongering, civil infractions and continued drug wars.

In other words, Paul's position and support is yet to be determined. If indeed his base is real and represents a third faction within the GOP then we will have a very protracted and interesting primary season. If not, then Romney will sail into the nomination relatively easily as the non-Romney camp splinters and shoots itself in the foot over and over. Primarily because the non-Romney camp consists of a collection of candidates that have regional bases on support, but present no real threat to Romney on a national level. As I see it the regional locales will be: Huntsman in New Hampshire, Perry/Santorum in South Carolina and Gingrich in Florida. This spells good news for Romney.

This spells bad news for the rest of us as Romney represents more of the same status quo malaise that has dragged this country down into the pits. Romney's potential victory over Obama represents very little as there is no substantial difference between the two men despite all the colorful rhetoric.

Excessive force at UC Davis OWS protest?

2011-11-19T18:11:00.001-05:00

Everyone knows my high skepticism of the OWS movement as I have written previously about it extensively. However a video from what appears to be UC Davis of students being pepper sprayed strikes me as excessive, unnecessary and potentially dangerous. It is unclear as to what is happening and why, but one can glean the following:

1) This appears to be a university and the crowd consists of youth.
2) There are students who are purposely blocking a road/walkway of some kind, possibly preventing a police cruiser from driving through.
3) The students get pepper sprayed while sitting and then arrested.

I can't for the life of me understand why the police felt the need to cover students with noxious pepper spray before arresting them? As you can tell from the video the reaction of the onlookers was rather immediate and galvanized everyone against the police. While the video eventually turns into the typical OWS chanting it seemed pretty clear that there was quite a bit of tension as a handful of officers armed with more pepper spray and non-lethal weaponry were surrounded by an angry crowd.

This seems like excessive at best and potentially dangerous at worst. If this is indeed a campus and not a public street/road used for traffic then the action of the police offers is inexcusable. If the police felt the need to arrest them, then arrest them, but this is just fuel for a fire that will burn hotter and longer once the economy inevitably double dips.