Thursday, April 29, 2010

The Wheels On The Bus Go Flying Down The Street

The Market Ticker ®

Thursday, April 29. 2010

Posted by Karl Denninger in Editorial at 09:05

The Wheels On The Bus Go Flying Down The Street

We're told, of course, that the economy is improving.

The "strongest indicator" that is incessantly pointed to (and which is a part of the "leading economic indicators") is, of course, stock prices.

But who's buying stocks and driving their prices higher?

The outperformance of risk assets over the past year suggests investors appear to believe that all credit problems have been solved – but nothing could be further from the truth, says Leigh Skene at Lombard Street Research.


Surprisingly, says Mr Skene, surveys show that the usual investors in major rallies – pension funds, hedge funds and retail investors – have not been net buyers of equities. And he says the most likely explanation for this anomaly in the biggest stock market rally since the 1930s is that major investment banks are the anxious buyers.

That's a problem folks.

In fact, it's a serious problem.

There are only two possible explanations for this in terms of "theme" - first, that they believe that the authorities will be able to spur people to "lever up" again (exactly how we get into this mess in the first place, and which will inevitably create a bigger bust) or that they are "too big to fail' and thus can continue to borrow at zero from The Fed and pass these shares back and forth between one another until they can goad those traditional investors to come back in and buy from them at ever higher prices - at which point, of course, the average American is again the bagholder.

Mr. Skene posits (and I agree) that one of these possibilities ultimately means prices "revert to the mean" (ex-leverage), which is very bad, the second, if they succeed, will destroy the average American and their pension and insurance funds.

The actual result of the policies that we've seen by nations has not been to "fix" anything.  Indeed, all we've done is shift the problem from private parties (who deserve to fail when they screw up) to governments - where failures are far more serious, even catastrophic.  PIMCO's El-Erian has suggested that:

The Greek debt crisis is now morphing into something much broader. ...... The heads of the European Central Bank and IMF have made the trip to Germany that is reminiscent of the Ben Bernanke-Hank Paulson trip to Congress in the midst of the US financial crisis.

Markets are now catching up to the reality of over-burdened public finances in the aftermath of the global financial crisis.

Yeah, like ours (America's) - shall we once again post this chart?

Again, the reality is this: We have shifted the burden of economic expansion - and maintenance of final demand - from private actors to government.  This is exactly the mistake made in Greece, Portugal, Spain, Ireland and elsewhere. 

The problem with trying to paper over a solvency crisis is that you can't accomplish it.  Illiquidity and insolvency are two different things; one can be fixed with temporary sources of funds and time, the other has to be absorbed somewhere

By shifting these liabilities to governments, the absorption is forced onto the taxpayer.  This means that the taxpayer - and recipient of government services must absorb much higher taxation, much lower service provision (including government salaries, pensions, handouts such as welfare, social programs and similar) or both.

If that adjustment is not immediately made then you get a graph that looks like the above.  Effectively, the nation shifts to attempting to pay for today's expenses with its credit card, instead of with its tax receipts.

This can go on for some period of time but it cannot go on forever.

But all of the western governments who got involved in "bailout world" failed to immediately transmit the costs of these bailouts to taxpayers through higher taxes and lower service provision, most likely because they (correctly) deduced that the people would not sit for it, and if they tried to do so there was a very material risk that the people would rise and lynch someone - and it would require luck for those lynchings to be confined to the banksters who had compelled governments to bail them out through their acts of extortion.

Trichet is caught in a nasty box:

Bonds and stocks plunged across Europe in the past week as Chancellor Angela Merkel delayed approving a rescue plan for Greece and Standard & Poor’s downgraded Greece, Portugal and Spain. European policy makers may need to stump up as much as 600 billion euros ($794 billion) in aid or buy government bonds if they are to stamp out the region’s spreading fiscal crisis, according to economists at JPMorgan Chase & Co. and Royal Bank of Scotland Group Plc.

“Loans are not transfers and loans come at a cost” Trichet said today. Strict conditionality “needs to be given to assure lenders, not only that they will be repaid but also that the borrower will be able to stand on its own feet over a multi- year horizon,” he said.

Remember, Greece was supposed to be a €30 billion problem!

Suddenly it has transmuted into €600 billion, or twenty times as large?

See what happens when you lie to people folks?  When you try to conceal what's really going on?

What's worse is that just as in the US the problem over in Europe is too much debt - and the so-called "solution" is even more loans - that is, more debt!

As I have said for more than three years now you cannot fix a drinking problem with a case of whiskey, nor can you fix a debt problem with more credit - that is, more debt.

To put this all in perspective - despite the claims of Treasury and others in our government - in the 29 days thus far this month Treasury has added $113 billion to the Federal Debt.

Annualized (assuming no additions for the next two days) this is $1.36 trillion "run rate", or approximately 10% of GDP - still.

Where's the "private economy" pick-up for final demand we keep being told about?  We've had two full years now where approximately 10% of final demand has been filled by government deficit spending, and there is zero evidence that this has fallen off.  For April to post a $113 billion debt addition is outrageous - remember, April is income tax month and is a month that frequently shows surplus for this reason!

In 2008 April ran a $60 billion surplus; in 2007, $9 billion, in 2006 $6 billion, in 2005 $12 billion.  In 2004 there was a $2 billion deficit; 2003 recorded a $395 million surplus; 2002 $21 billion and 2001 $112 billion. 

Point made?  I think so.

Oh, in 2009?  $111 billion of net deficit was recorded in April.

These numbers, unlike the so-called "budget" numbers, are not subject to being gamed.  The Treasury's actual "debt to the penny" is reported to the public every day.

But for today, it's "risk on", at least for the "too big to fails" who can (and have) sucked off the Federal Reserve's ZIRP and used it to drive "confidence" by pumping stock prices - even if it hasn't created a single job and government has utterly failed to put the economy in a position where it can support the level of GDP being produced on its own.

The $10 Trillion Climate Fraud (Investors Business Daily)

Full Link to Article

Posted 04/28/2010 07:11 PM ET

Al Gore is co-founder of an investment management firm that is now the fifth-largest shareholder in the Chicago Climate Exchange. AP

Al Gore is co-founder of an investment management firm that is now the fifth-largest shareholder in the Chicago Climate Exchange. AP View Enlarged Image

Cap-And-Trade: While senators froth over Goldman Sachs and derivatives, a climate trading scheme being run out of the Chicago Climate Exchange would make Bernie Madoff blush. Its trail leads to the White House.

Lost in the recent headlines was Al Gore's appearance Monday in Denver at the annual meeting of the Council of Foundations, an association of the nation's philanthropic leaders.

"Time's running out (on climate change)," Gore told them. "We have to get our act together. You have a unique role in getting our act together."

Gore was right that foundations will play a key role in keeping the climate scam alive as evidence of outright climate fraud grows, just as they were critical in the beginning when the Joyce Foundation in 2000 and 2001 provided the seed money to start the Chicago Climate Exchange. It started trading in 2003, and what it trades is, essentially, air. More specifically perhaps, hot air.

The Chicago Climate Exchange (CCX) advertises itself as "North America's only cap-and-trade system for all six greenhouse gases, with global affiliates and projects worldwide." Barack Obama served on the board of the Joyce Foundation from 1994 to 2002 when the CCX startup grants were issued. As president, pushing cap-and-trade is one of his highest priorities. Now isn't that special?

Few Americans have heard of either entity. The Joyce Foundation was originally the financial nest egg of a widow whose family had made millions in the now out-of-favor lumber industry.

After her death, the foundation was run by philanthropists who increasingly dedicated their giving to liberal causes, including gun control, environmentalism and school changes.

Currently, CCX members agree to a voluntary but legally binding agreement to regulate greenhouse gases.

The CCX provides the mechanism in trading the very pollution permits and carbon offsets the administration's cap-and-trade proposals would impose by government mandate.

Thanks to Fox News' Glenn Beck, we have learned a lot about CCX, not the least of which is that its founder, Richard Sandor, says he knew Obama well back in the day when the Joyce Foundation awarded money to the Kellogg Graduate School of Management at Northwestern University, where Sandor was a research professor.

Sandor estimates that climate trading could be "a $10 trillion dollar market." It could very well be, if cap-and-trade measures like Waxman-Markey and Kerry-Boxer are signed into law, making energy prices skyrocket, and as companies buy and sell permits to emit those six "greenhouse" gases.

So lucrative does this market appear, it attracted the attention of London-based Generation Investment Management, which purchased a stake in CCX and is now the fifth-largest shareholder.

As we noted last year, Gore is co-founder of Generation Investment Management, which sells carbon offsets of dubious value that let rich polluters continue to pollute with a clear conscience.

Other founders include former Goldman Sachs partner David Blood, as well as Mark Ferguson and Peter Harris, also of Goldman Sachs. In 2006, CCX received a big boost when another investor bought a 10% stake on the prospect of making a great deal of money for itself. That investor was Goldman Sachs, now under the gun for selling financial instruments it knew were doomed to fail.

The actual mechanism for trading on the exchange was purchased and patented by none other than Franklin Raines, who was CEO of Fannie Mae at the time.

Raines profited handsomely to the tune of some $90 million by buying and bundling bad mortgages that led to the collapse of the American economy. His interest in climate trading is curious until one realizes cap-and-trade would make housing costlier as well.

Amazingly, none of these facts came up at Senate hearings on Goldman Sachs' activities, which may be nothing more than Ross Perot's famous "gorilla dust," meant to distract us from the real issues.

The climate trading scheme being stitched together here will do more damage than Goldman Sachs, AIG and Fannie Mae combined. But it will bring power and money to its architects.

The Climategate Investigation (American Thinker)

April 29, 2010


By Dexter Wright

Last month, while the American media were distracted by the health care vote in Congress, the British Parliament published the results of its investigation into East Anglia University's Climate Research Unit (CRU) that has been at the center of the anthropogenic global warming (AGW) controversy. It seems that many were hoping that no one would read this report, at least not beyond the milquetoast executive summary.

Buried deep within the report is a compelling piece of evidence. In volume two, there is a memorandum submitted as evidence from Lord Lawson of Blaby, chairman of the Global Warming Policy Foundation, which was in response to four very significant questions from the investigating committee. This memo confirms the claims by many global warming skeptics that the scientists at CRU were trying to hide data and silence the skeptics. The questions asked by the investigative committee are as follows:

(i) Have the CRU scientists been manipulating the raw surface temperature data in a way that is less than wholly objective and dispassionate?

(ii) Have they refused dissenting scientists and/or other outsiders with a bona fide interest in global warming access to the raw data, contrary to the proper canons of scientific research and to the demands of scientific integrity?

(iii) Have they been improperly seeking to avoid answering Freedom of information Act requests?

(iv) Have they actively sought to prevent papers by dissenting scientists, statisticians, or other informed commentators from being peer-reviewed and/or published, again contrary to the proper canons of scientific research and to the demands of scientific integrity?

Lord Lawson's response to these questions is damning:

We believe that there is compelling evidence both independent of the leaked email exchanges and arising from those emails to suggest that the answers to (ii), (iii) and (iv) above are clearly 'yes'.

However, Lord Lawson chooses his words more carefully in answering the smoking-gun question at the top of the list:

Moreover, we are disturbed by the CRU scientists' treatment of the so-called divergence problem. That is the fact that, for that period of time where both a proxy global temperature series and a recorded global temperature series are available, the two series markedly diverge. This clearly suggests either that the proxy series is unreliable or that the recorded series is unreliable (or possibly both: the point is that they cannot both be true). The CRU scientists' attempt to hide the problem by concealing the divergence demonstrates, we believe, a lack of integrity.

Integrity is at the very heart of the AGW debate -- not just the integrity of the discredited scientists involved, but also the integrity of the data used by the CRU. For many years, the global warming skeptics have been citing that the differing data sets are not in agreement and have asked the simple question "why?" Their assertion has always been that until a scientific explanation for the differences is found, there can be no definitive conclusion concerning AGW. This question was always avoided by the now-discredited Dr. Jones, who headed up the CRU. But finally, some light has been shed onto the question of integrity of the data. In this same memo, Lord Lawson clarifies some of the confusion concerning the differing data sets:

[T]here are, in fact, four (not two) other international data sets, all based in the United States. Two of them - NASA and NOAA - are neither wholly independent of each other (unsurprisingly, since they are both US Government agencies) nor wholly independent of the CRU set, as indeed some of the leaked emails indicates. The third, and fourth, which -- unlike CRU, NASA and NOAA - use not surface weather stations but satellite observations, are compiled by the University of Alabama at Hunstville (UAH) and Remote Sensing Systems (RSS). They are entirely independent of the CRU. They use the same satellite data as each other but different methodology and produce similar results to each other, which differ from those of the CRU.

It seems that the only reliable data sets are satellite-derived data. However, those data were not used in the Nobel Prize-winning U.N.'s Intergovernmental Panel on Climate Change (IPCC) Fourth Assessment Report (AR4). So the Nobel Committee awarded the Peace Prize to a report which was compiled by discredited scientists using discredited data. Does this discredit the Nobel Committee?

In recent years, when the International Olympic Committee (IOC) has made an error by awarding a medal to an athlete who was found to have cheated, the IOC demands that the medal be returned. This is to assure that the integrity of the games is not tarnished. 

Such an action has never been demanded of the Nobel Committee. When it was ruled by the Supreme Court that Nikola Tesla, not Guglielmo Marconi, had invented the radio, Marconi was not asked to return the Nobel Prize for physics. It is unlikely that the Nobel Committee will recall the Peace Prize from the IPCC.  It is also just as unlikely that the integrity of the Nobel Committee can be restored.

Page Printed from: at April 29, 2010 - 07:30:35 AM CDT

Wednesday, April 28, 2010

Be Very Afraid! (Washington Times Article)

RAHN: Financial fascism


Richard W. Rahn

The "Dodd financial reform" bill being considered by the Senate will make it illegal for 99.6 percent of the population to invest in needed new and promising start-up companies while at the same time ensuring that the 33 largest banks, which control 92 percent of all bank assets, will be required to purchase more federal government debt before giving loans to businesses and individuals. Quite simply, the government is continuing to practice financial fascism.

The new health care bill will require us to buy specified health insurance, whether it is appropriate for us or not. Government-run ads encourage people to buy tickets in government-run lotteries, where the expected value can be less than one-sixth of the ticket price. Yet the new financial reform bill will make it illegal to invest in a new venture or start-up company for anyone who does not have a liquid net worth of $2.2 million or an annual income of roughly $450,000 if single or $675,000 if married - which rules out all but fewer than 1 percent of the population. If this passes and is signed into law, Congress and the president will be saying to the American people, "Ninety-nine-plus percent of you are too stupid to know how to invest your own money." (They think the rest of us are as irresponsible as they are.)

A major reason the American economy has prospered is that traditionally it has been easy to start a new business, and new businesses account for much of the innovation and job growth in the American economy. Inventors, from Thomas Edison (who started GE, among other companies) to the modern-day whizzes behind Apple, Google and all the rest, have relied on their ability to get "angel" investors to begin their companies. An angel investor is one who is willing to invest in a new and untried business with the hope of a very large return.

It is well known that there is a very high rate of failure among new businesses. For instance, more than 90 percent of all new restaurants fail within three years - but many of the ones that don't fail become very profitable. For every new Apple, there are hundreds of failures. In the name of "investor protection," the Securities and Exchange Commission (SEC) makes it almost mandatory that entrepreneurs approach only "accredited investors" when seeking investment capital. Currently, an accredited investor is a person who has a net worth of $1 million or an income of $200,000 per year. The SEC will argue that such a rule protects "widows and orphans" from unscrupulous promoters. This is the same SEC that failed to see the Madoff Ponzi scheme when it was dumped in its lap.

In fact, the rule makes little sense and strongly discriminates against knowledgeable people who are not yet wealthy but are quite capable of making good investment decisions while doing nothing to protect the medical doctor or professional basketball player who easily might meet the definition of an accredited investor but knows little about the risks of new ventures. Under the current rule, a young finance professor at a good university business school who makes $120,000 a year and has a net worth of just $500,000 would not be considered competent to invest in a promising new high-tech start-up, while a successful country-and-Western singer with an eighth-grade education and no experience in or knowledge of business or finance would be considered competent. The proposed rule in the financial reform bill will make this absurdity and loss of financial freedom far worse.

What right do the financial fascists in Washington, who created the world's biggest financial Ponzi schemes (i.e., Social Security and Medicare) and the largest unsustainable debt in history, have to tell more than 99 percent of the rest of us what we can and cannot invest in?

Those in the same political class are ardent proponents of state lotteries, which typically give a ticket buyer one chance in 15 million of winning, with a payout of less than 50 percent of the ticket price. If one does win and decides to take a lump sum rather than a 30-year payout, the normal payment is one-third of the face amount, upon which the recipient will have to pay full federal and state income tax. Given President Obama's new tax-increase proposals, a lottery winner in a high-tax state such as California would be paying about 50 percent of the winnings in tax. Thus, a person who buys a $1 ticket can expect to receive only about 7.5 cents in return. If this is not financial fraud, there is no such thing as financial fraud, but because it is practiced by government, it is deemed OK even though any private party doing the same thing would go jail.

At the same time the government class is doing its best to fleece the poor and math-challenged by promoting state lotteries, it is doing its best to prevent middle-class Americans from investing in new businesses that might become productive. Could this possibly have anything to do with who were the big financial givers to the Obama campaign and to the campaigns of the Democratic congressional committee chairmen?

The 1,300-page financial reform bill going through the Senate will, in essence, make the biggest banks (those considered too big to fail) wards of the state - which is classic financial fascism. The Obama Treasury, not the semi-independent Federal Reserve, will decide what these banks are allowed to invest in, in exchange for an unlimited U.S. government guarantee. Since September 2009, banks have been lending more to the government than to private industry. One does not have to be a rocket scientist to see where all this is headed.

Richard W. Rahn is a senior fellow at the Cato Institute and chairman of the Institute for Global Economic Growth.

Filtering History (Thomas Sowell)

Filtering History (Thomas Sowell)
GOPUSA ^ | April 27, 2010 | Thomas Sowell

Posted on 04/26/2010 7:37:49 PM PDT by jazusamo

Many years ago, I was surprised to receive a letter from an old friend, saying that she had been told that I refused to see campus visitors from Africa.

At the time, I was so bogged down with work that I had agreed to see only one visitor to the Stanford campus-- and it so happens that he was from Africa. He just happened to come along when I had a little breathing room from the work I was doing in my office.

I pointed out to my friend that whoever said what she heard might just as well have said that I refused to go sky-diving with blacks-- which was true, because I refused to go sky-diving with anybody, whether black, white, Asian or whatever.

The kind of thinking that produced a passing misconception about me has, unfortunately, produced much bigger, much longer lasting, much more systematic and more poisonous distortions about the United States of America.

Slavery is a classic example. The history of slavery across the centuries and in many countries around the world is a painful history to read-- not only in terms of how slaves have been treated, but because of what that says about the whole human species-- because slaves and enslavers alike have been of every race, religion and nationality.

If the history of slavery ought to teach us anything, it is that human beings cannot be trusted with unbridled power over other human beings-- no matter what color or creed any of them are. The history of ancient despotism and modern totalitarianism practically shouts that same message from the blood-stained pages of history.

But that is not the message that is being taught in our schools and colleges, or dramatized on television and in the movies. The message that is pounded home again and again is that white people enslaved black people.

It is true, just as it is true that I don't go sky-diving with blacks. But it is also false in its implications for the same reason. Just as Europeans enslaved Africans, North Africans enslaved Europeans-- more Europeans than there were Africans enslaved in the United States and in the 13 colonies from which it was formed.

The treatment of white galley slaves was even worse than the treatment of black slaves picking cotton. But there are no movies or television dramas about it comparable to "Roots," and our schools and colleges don't pound it into the heads of students.

The inhumanity of human beings toward other human beings is not a new story, much less a local story. There is no need to hide it, because there are lessons we can learn from it. But there is also no need to distort it, so that sins of the whole human species around the world are presented as special defects of "our society" or the sins of a particular race.

If American society and Western civilization are different from other societies and civilization, it is that they eventually turned against slavery, and stamped it out, at a time when non-Western societies around the world were still maintaining slavery and resisting Western pressures to end slavery, including in some cases armed resistance.

Only the fact that the West had more firepower than others put an end to slavery in many non-Western societies during the age of Western imperialism. Yet today there are Americans who have gone to Africa to apologize for slavery-- on a continent where slavery has still not been completely ended, to this very moment.

It is not just the history of slavery that gets distorted beyond recognition by the selective filtering of facts. Those who go back to mine history, in order to find everything they can to undermine American society or Western civilization, have very little interest in the Bataan death march, the atrocities of the Ottoman Empire or similar atrocities in other times and places.

Those who mine history for sins are not searching for truth but for opportunities to denigrate their own society, or for grievances that can be cashed in today, at the expense of people who were not even born when the sins of the past were committed.

An ancient adage says: "Sufficient for the day is the evil thereof." But apparently that is not sufficient for many among our educators, the intelligentsia or the media. They are busy poisoning the present by the way they present the past.

Bernanke Is Getting Scared.... (From Karl Denninger)

Bernanke Is Getting Scared....

You have to love this sort of utter claptrap...

“Achieving long-term fiscal sustainability will be difficult, but the costs of failing to do so could be very high,” Bernanke said in remarks prepared for a speech today to a White House commission on the budget deficit. “Increasing levels of government debt relative to the size of the economy can lead to higher interest rates, which inhibit capital formation and productivity growth -- and might even put the current economic recovery at risk.”

Really Ben?

We need to review a few graphs again.

Let's start with this one:

This is the true deficit, measured simply by the amount of Treasury debt (including intergovernmental games) outstanding.

Of note is that it has never decreased materially since 2001.

Why is this important?  Because every dollar that the government borrows and spends is one dollar that pulls forward demand from tomorrow and spends it today.

This game continues, as it did in the housing market, right up until you can't get any more credit to do it with. 

But more importantly as you put forward this sort of distortion in the market the economy becomes habituated to that deficit spending and incorporates it into GDP!

This then turns that deficit spending into a mandate on an ongoing basis lest you have a recession - or worse.

Now let's look at how big that distortion has become, as a percentage of GDP:

This is where your problem begins.  While government deficits have varied over time, during the 2000 decade they became both embedded in the economy and at a high and continuing level of about 4-5% of GDP.

That is, the so-called "recovery" in 2003-2007 was false; it did not consist of organic demand from the marketplace, but rather it consisted of government's fraudulently inflated demand.

Contrast this with the 1990s when private demand rose fast enough that the government was able to slowly withdraw stimulus via deficit spending, to the point that it actually approached zero!  That's REAL economic growth.

But now we've gone even further, and in the last two calendar years have put up nearly 10% and nearly 12% of GDP distortions, respectively.  Let me remind everyone that in the world of economics a 10% economic contraction is the formal definition of economic Depression; ergo, we have been in one for the last two years and are today!

The Obama administration estimates budget deficits will total $5.1 trillion over five years and hit a record $1.6 trillion in the year ending Sept. 30. The $1.4 trillion deficit in 2009 was equal to 9.9 percent of gross domestic product, the largest share since the end of the World War II.

Bernanke spoke to the National Commission on Fiscal Responsibility and Reform, established by President Barack Obama to identify policies to reduce the deficit to a sustainable level. The commission’s mandate is to propose a plan to balance the budget, except for interest payments on debt, by 2015.

That cannot happen without the economy undergoing the very adjustment in matching of output and final private demand that the government has spent ten years trying to avoid.

This is the ugly truth that Bernanke doesn't want to speak of, but he knows it to be true.  But neither he, nor the government budget folks, are willing to come out and tell the people the truth - since 2003 we have managed to compound a 58% distortion to our $14 trillion GDP!

To say that the adjustment occasioned by withdrawal of that support would be catastrophic would be the understatement of the year.  We never got anywhere near this level of distortion in the 1920s and 30s - the distortion reached about 25%, top to bottom.  The adjustment produced what we call The Great Depression.

Let me be clear: We have a $14 trillion economy that has accumulated a fifty eight percent net deficit, or more than double the distortions that had to be absorbed in the 1930s.

It is obvious that sudden withdrawal of that support would lead to an instantaneous and catastrophic economic collapse.

If you're wondering why I have spent three years arguing strenuously against the policies that our government adopted to try to "stem" the crisis, you now should understand - we are now absolutely dependent on the ability to maintain this level of distortion and will be able to withdraw it only slowly, if at all.

Any event that causes us to have to withdraw it suddenly WILL RESULT in the loss of our economy and republic.

This is not speculation - it is hard mathematical fact.

The risk taken on by those who promulgated and adopted these policies is criminally negligent.  Of course since the actors who did so work for the Federal Government criminal negligence isn't punishable as it's not a felony to do this as a government employee, even though such acts in the private sector certainly are punishable.

This is the precise set of actions that has led Greece to find itself in the box it is now in.  Portugal is headed down the same road, as is Spain, Ireland and Italy.  All five are at risk of economic collapse.

We are inexorably headed for the same result if we do not accept the economic adjustment that is necessary to bring both private demand and GDP into balance.

There are means available to massively stimulate private demand but none of them include federal deficit spending.  I have covered some of these in the past, including my particular favorite, adoption of The Fair Tax.  Sadly such real reform is radically and diametrically opposed by the interests in Washington DC as doing so removes the tax system as a means of social engineering, control, and corporate lobbying.

Ben Bernanke has reason to be "concerned", as he notes.

In truth, ladies and gentlemen, he is not "concerned" - he is terrified.  He, like I, is well-aware of the above graphs and facts, and since he knows how to use a calculator (or even a paper and pencil) he also knows the extent of the economic distortion that has been built up over nearly a decade of borrow and spend politics.

Our opportunity to solve this problem will expire, and as Greece has discovered that expiration is likely to come with little or no warning, and once it arrives there will be no real options available to us that avoid a disorderly economic collapse.

Monday, April 26, 2010

Black Republican Rebukes Steele (we need this man Lloyd Marcus up here)

Black Republican Rebukes Steele

By Lloyd Marcus

RNC Chairman Michael Steele said that the GOP has not given blacks a reason to vote Republican. As a black conservative Republican, I ask, what is the GOP suppose to do -- serve soul food at Republican events?

In other words, I reject the concept of dividing Americans into victimized groups and pandering to them. Besides, the Democrats are masters of insulting the intelligence of Americans by playing the old and tattered victim, race, and class envy cards. The GOP does not need to go down the same shameful, disgusting road.

Brother Steele, how about the GOP showing a little respect for the American people by standing up for conservative values and principles? If you do this, they will come. Right-minded Americans of all stripes will join our cause.

So how do you, Chairman Steele, think the GOP should attract more blacks? Do we adopt "liberal lite" policies? Do Republicans prove that they are "down with the brothers" by embracing a lighter version of the lie promoted by the race-exploiting Democrats, by saying that racism is still somewhat of a problem for blacks in America today?

Chairman Steele, you said, "The Republican Party had a hand in forming the NAACP, and yet we have mistreated that relationship." What the heck are you talking about? When President Obama addressed the NAACP and said that racism is still a problem for blacks in America, the audience cheered as if at a baseball game where someone on their team hit a home run. They loved the affirmation of their victim status.

The once-great NAACP has deteriorated into a negative for black America. The organization sold its soul for a seat of power at the liberal Democratic Party table, betraying blacks by keeping them thinking like victims so they will continue voting monolithically Democrat. Why on earth should the Republicans pander to this organization of disgusting race-exploiters?

I am so done with "identity politics." We are all Americans. Why can't politicians simply relate to us as such rather than dividing us into victimized groups which they promise special concessions?

Remember how Superman stood for truth, justice, and the American Way? Oh, for a political party with the courage and values of the man who disguised himself as mild-mannered reporter Clark Kent -- no special concessions for any group, but truth, justice, and the American Way for all.

As a high-profile black member of the Tea Party Movement, I am constantly being asked by reporters, "Why isn't the movement doing more to attract minorities?" I say that the movement is doing exactly what it should be doing: standing up for conservative principles and values. Over time, this will attract all right-thinking Americans.

Entitlement-minded losers will be repulsed by our message, but that is OK. We are seeking to attract the kind of Americans who have made America great -- folks who still believe in American exceptionalism, who still see America as a shining city on a hill.

After traveling across America on three Tea Party Express tours, I am seeing more and more blacks at the rallies. I have begun interviewing them. They are mostly entrepreneurs or ex-military who have witnessed the negative consequences of socialism abroad. These blacks also display an air of pride, dignity, and self-confidence which comes from personal achievement. These blacks are cast from the same mold as former Secretary of State Condoleeza Rice and U.S. Supreme Court Justice Clarence Thomas, the kind of blacks hated by the NAACP.

Obama has appointed Al Sharpton as his "go-to guy" in getting his message to the black community. This is more "identity politics." Does this also imply that we blacks are too stupid to understand Obama and need Sharpton to interpret?

Admittedly, there are issues which are devastating the black community: high numbers of out-of-wedlock births, epidemic school dropout rates, and 50% of black babies aborted ( But these problems should not be dealt with from the standard Democrat "white folks don't care" or "it's whitey's fault" or "let's throw more money at it" point of view. The mess in the black community is proof of the utter failure of Democrat-enforced liberalism and not holding people accountable.

Blacks must be challenged to take responsibility for their lives. For crying out loud, this is America! A high school education is free. There is no reason other than a moral and parental breakdown for blacks not to graduate high school.

Chairman Steele, my bottom line is that the GOP does not need to pander to race, sex, or any other nonsense to win votes. Just stand up for what is right for all Americans. While I am not suggesting that you adorn yourself in a leotard, red briefs, and a cape, standing up for conservatism could make you America's Superman.

- Lloyd Marcus, (black) Unhyphenated American

Page Printed from: at April 26, 2010 - 07:16:08 AM CDT

Thursday, April 22, 2010



Gary P.

Published 04/22/2010 - 7:06 a.m. CST



Gary P.


“If presidential means being able to take the heat in the kitchen Sarah Palin has demonstrated this quality to the fullest imaginable extent.” -Professor Steven Kates

I am always amazed to read the international media, and their take on all things American. Not only does one get a different perspective on things, it serves to remind us just how biased, dishonest, and corrupt the American media have become. No longer in the business of simply reporting the facts, our media, for the most part, have become a propaganda arm for the Marxist-progressive movement, and the leading cheerleaders for the Obama regime.

Knowing this, it was a delight to read the scholarly opinion of Steven Kates from Quadrant Magazine, the leading general intellectual journal of ideas, literature, poetry, historical and political debate published in Australia.

Making Them Listen

“Suppose Sarah Palin couldn’t make the simplest public statement without a teleprompter. Just suppose. Suppose she suggested that the people of Austria spoke Austrian or that there were fifty-seven states in the USA. Suppose she really had said that she could see Russia from her front porch. Suppose she had done that, or had spelled potato with an e at the end. Well, we can all agree that any and all of those would clearly make her or anyone else unfit to be President.

“Wait, wait. Let’s have another look at the business about the teleprompter. Perhaps it would be a bit hasty to condemn someone as unfit for the presidency for using such modern technologies even in a kindergarten classroom, but should someone write notes on the palm of their hand before making a major speech, nothing would obviously make them less fit to be President than that.

“There are at least three matters that follow from this. There is first the malign influence of the established media in the United States on the conduct of American politics. Second is how we, mere citizens, can ever get to know, really know, what we need to know about the people who run for office. Finally, what do we know from her book about who Sarah Palin is and whether or not she has what it takes to be President of the most powerful nation on earth?”

This is spot on. Obama has proven he is incapable of coherent speech without his beloved TOTUS (Teleprompter of the United States). You get him speaking off the cuff and hilarity usually ensues. He either sounds like a complete idiot as he stumbles around, or if he is among “friends,” and feeling his oats, he is apt to insult the American people, over and over.

In contrast, Sarah Palin is very comfortable speaking off the cuff with only notes to help her stay on point, a technique every speaker worth their salt has mastered.

It’s interesting to note that while Sarah Palin is erroneously credited with saying “I can see Russia from my house.” (It’s become accepted fact.) Absolutely no one mentions the many gaffes Obama makes on a regular basis, such as saying on the campaign trail he had “visited 57 states, with one or two more to go.”

Look, anyone who regularly speaks in public, with or without notes, is going to say something stupid in their life, anyone. But there are varying degrees of stupid, and for someone who wants to be President of the United States to not know we have 50 states, not 57, 58, or possibly 59, is a rather high degree of stupid.

We never hear Obama kidded about that, but we hear the line that was made famous by Tina Fey, not Sarah Palin, repeated ad nauseum.

We have a tradition of poking fun at our political leaders, and frankly, it’s a healthy one. Keeps everyone humble. But our media is so in the tank for Obama, and Obama himself is so thinned skinned, that no one, not even the “edgiest” comedian seems to be able to find something they can poke fun at. They don’t dare. In fact they go out of their way to tell us that Obama is just too “perfect” and simply doesn’t provide them with any material. I call foul on that one!

“The American Media

“There is a malignancy in the American media. It has been captured by Left-liberal opinion to such a phenomenal extent that for those who do not share their perspectives, news shows on the traditional networks have become almost impossible to watch and newspapers an ordeal to read. As with the old Soviet press, one must unscramble and decode what is written to work out what may, or may not, have taken place. Sins of omission abound.

“There is still, for all that, an expectation that the media will be objective. None of us come without our biases, but there was nevertheless an imperative at one time to try to present the news straight without embedding analysis and personal opinion within the story. Or maybe that is how it looked to me and it is my own opinions that have changed over the years. It is perhaps I who have drifted away from mainstream newspaper opinion while the media is as biased as it ever was.

“But still, has there ever been a case quite the same as Sarah Palin’s? And what makes the case all that much more instructive is that her arrival almost exactly parallels the arrival at centre stage of Barack Obama. Whatever one might say about the fitness of Sarah Palin for the Vice-Presidency might just as easily be said about Obama, who was running to be the actual President. Indeed, on almost any of the criteria that one might choose on an objective basis—executive experience, decisiveness, known track record of sound decision making—Sarah Palin comes out ahead. You might like Obama’s aim to “spread the wealth around” or to end the war in Iraq, but there was nothing from his history that would have provided solid evidence that he would be capable of delivering on what he promised.

“Politics, like any contact sport, is a much more difficult practice than you might think from watching the pros. The ones who get to the top and stay there have been tested to their utter limits in a proving ground that few can survive. Obama somehow got to the very top without really having had to fight such battles along the way. In large measure he can thank the American media for that. Whatever form of testing examination they might have given to Obama during his run for the President just never happened. He remains a mystery man to this day. Just try to find out his university results. It’s easy to get Sarah Palin’s, impossible to find Obama’s. Why that is I do not know.

“Anyway, whatever lack of scrutiny there was of Obama, the media certainly made up for with Sarah Palin. For most of those the media wish to destroy, there is plenty of time. But with the American election imminent—the time between the nomination and the election being less than three months—the need for a proper and thorough character assassination became more urgent. It began on day one, never eased off until after the election was over, and has not ended to this day. The focus on the former vice-presidential candidate and former Governor of Alaska, who is now a private citizen, has been unrelenting.

“This business with Sarah Palin having written a few notes on the palm of her hand before speaking to a major gathering—the equivalent to what someone with pockets in his clothes might do on the back of an envelope—is quite instructive. The media in the USA clearly have no shame, nor an apparent sense of irony. Not to have roasted Obama for his addiction to the teleprompter shows a leniency that would never have been extended to anyone on the other side—imagine if George W. Bush never spoke without having nameless others beaming thoughts into his head. It really does speak of someone not in command of his facts or his thoughts and who needs others to feed him directives to keep on track.

“Meanwhile Sarah Palin writes a few notes on her hand and the media treats her as if she were a brainless nong, apparently demonstrating an incompetence well beneath that of Obama and his teleprompter. Does the media not think anyone will notice? Do they not even notice it themselves? It is easy to understand Sarah Palin’s take on the media: “What a bunch of buffoons“. How extraordinary it is to observe all this from the outside as the rest of us do, but how much more extraordinary it must be to be the one in the middle of such maddening criticism that never seems to come to an end.

“But what is notable about all of this is that she has not wilted. If presidential means being able to take the heat in the kitchen Sarah Palin has demonstrated this quality to the fullest imaginable extent.”

Man does he have our media pegged, or what! Barack Obama became President without most of the American people knowing anything about him whatsoever.

It’s not like the information isn’t out there. Anyone who has enough computer savvy to turn the machine on, open up an internet browser, and find Google, will be treated to a plethora of information on Obama’s radical friends, ties to domestic and foreign terrorists, shady real estate deals and even questions about his past romantic life.

Maybe the media was too busy checking out Sarah Palin. In my entire life I have never seen a person so thoroughly vetted by the press. Of course, as stressful and dishonest as it was, one thing we know in absolute certainty, if there was something even remotely shady about Sarah Palin, we would know it in full detail.

While the media were ignoring Obama’s ties to people like domestic terrorist William Ayers and his convicted cop killing wife, the Reverend Jeremiah “God Damn America” Wright, slum lord and real estate speculator Tony Rezko, and his strange ties to Larry Sinclair, they were all too happy to look into every nook and cranny of Sarah Palin’s life.

When she was announced as John McCain’s running mate, there was a mad dash to Alaska by every media outlet. Rags like the National Enquirer were offering big bucks for all of the dirt on Alaska’s successful Governor. And of course, when none was found, Obama’s own Alaska Mafia © the hand picked group of hate bloggers chosen by Obama’s campaign chief-of-staff, Pete Rouse, just made things up!

Lot’s of sick stuff, the sickest being that Sarah’s youngest son, Trig, is not even hers. Some bloggers have made a career out of furthering this hateful and disturbing nonsense.

Of course, Sarah Palin can’t be intimidated. She is absolutely fearless. That she didn’t just sit down, shut up, and fade away has caused the Obamacentric media to lose it’s collective minds. Sarah Palin is a force to be reckoned with, so with coordination from the White House, the media has been little more than an attack machine for the Obama regime.

Though they couldn’t spare a single man to check out any of the ObamaCare legislation, or the porkulus bill, or well, anything our corrupt Congress and President have been up to, the Associated Press assigned no less than eleven “fact checkers” to read through Sarah Palin’s book, Going Rogue, an America Life, the best selling non-fiction book of 2009. They found nothing of consequence to point out, so…they made stuff up.

The attacks by the media against Sarah are daily, and relentless. Frankly, I think it’s a win for her. Unlike any other potential presidential candidate in history, we know absolutely everything about her. There are no secrets, no surprises, no “skeletons in the closet” left to be probed. At this point anything negative said of Sarah Palin can be categorized as nothing more than a political attack having little or no merit.

It’s done something else positive, as well. All of the relentless attacks by the dishonest Obamacentric media have forced Sarah Palin to prove her metal. Unlike any candidate I can remember, Sarah Palin has been forced to justify her very existence, and prove her ability to handle anything.

As Professor Kates points out, if being presidential means being able to handle anything that is thrown at you: “Sarah Palin has demonstrated this quality to the fullest imaginable extent.”

‘How Can We Come to Know Our Political Leaders?

‘Clearly, one of Sarah Palin’s aims in writing Going Rogue is to tell her side of the story. If all you knew of her was what you knew from reading the papers, you would never be able to understand how she had even become Governor of Alaska, never mind the candidate for Vice-President. Shallow, ignorant, stupid, under-educated, unlettered, incapable and yet incredibly arrogant—these would be the kinds of notions that would immediately come to mind. This is the American mainstream media version of Sarah Palin. I cannot recall a single positive story about her in any of the traditional major American news outlets. Consequently, I would venture there is not a person anywhere interested in the politics of the United States who has not to some extent been influenced by these thoughts.

‘Yet the unmistakable bias of the media in the USA raises a serious question. If we can no longer depend on the media to provide us with relatively straightforward information about politics and politicians, we are heading for some very rough waters. The American mainstream press—the newsgathering agency of the most powerful nation on earth—given the evidence of their portrayal of Sarah Palin during the Presidential campaign, is a distorting lens that may make it nigh on impossible to know with anything resembling clarity what in fact is taking place. It will require an extraordinarily thick skin to put up with the invasiveness of the press for anyone opposed to the media’s own agenda, an agenda it need hardly be said that should not be part of the way news is gathered or portrayed.

‘The great equaliser is the internet, which now provides a counterweight to the mainstream media. There are also now other significant sources of information, especially Fox News and talkback radio. For the most part, blogs are merely opinion; very little news is actually generated through the web. But because of the ability to pool whatever news does show up into easily accessible reports, however obscure the origins of such stories might be, alternative sources now exist. But it is not the default position for outside observers. An effort has to be made.

‘Were Sarah Palin’s reputation solely in the hands of the traditional media her name would now be so mangled, so completely in ruins, no one could remotely suggest that she might yet be the Republican nominee for President. But her reputation is not solely in their hands and she is no farther behind today than Ronald Reagan was in 1977, three years before he was elected. Among some very important segments of the American polity, she is the epitome of excellence. And the book she has written to tell her side of the story is part of her strategy to reinforce those views on the way to becoming President.

‘That this is a tract intended to make her President I have no doubt. At this stage, so far out from the election in 2012, it is much too early to begin an official campaign which she may eventually decide not to pursue. But positioning is important, and there is a great deal of debris she must clear away. And this debris is from two sources, one the American media but the other from various officials within the McCain election bureaucracy, some of whom seem to have just as great a disdain for their own previous candidate. Her book is an answer to both.

‘The opening pages seem to be a kind of summary response to all of the major questions about her raised during the campaign. Perhaps the most infamous moment was her non-responsive answer in the CBS interview with Katie Couric about her reading habits. She writes later in the book about how her irritation with the questioning got the better of her—it was an interview many hours long and conducted over a number of days in the midst of a dawn-to-dark political campaign—but in this early section she simply states:

‘Reading was a special bond between my mother and me … My siblings were better athletes, cuter and more sociable than I, and the only thing they had to envy about me was the special passion for reading that I shared with my mother.

‘In the first six pages of Going Rogue she weaves in, through personal stories from her past, her pro-life position, her fiscal conservatism, her long-time interest in politics, her introduction to political thinking by Ronald Reagan, her opposition to rule-by-insiders, her sense of herself as an outsider, her aim to bring ethical issues into the political process, the importance of energy, the need for small government, her independence of “Big Oil” and therefore her independence of big business, her support for the military and her determination as a political leader “to act in the best interests of the people“. This is the Sarah Palin identifiable by her supporters.

‘Is this the real Sarah Palin? And if it is, is it inconsistent with her also being shallow, ignorant, stupid, under-educated, unlettered, incapable and yet incredibly arrogant? Her book has been fact-checked by the Associated Press, which found nothing in it that could be described as wrong. The “errors” they found were trivialities, matters of interpretation, so that in sum and substance it is apparently a book that, whatever might be left out, provides an accurate description of what she has done and who she would like us to think she is.’

Kates points out the real serious problem we have in America, a completely dishonest media. The amount of damage caused to society at large by the erroneous perceptions caused by biased and downright dishonest reporting (read lies) is immeasurable.

Not only did our media conspire to suppress any negative information concerning Barack Obama, thus aiding and abetting his election effort, they continually attack anyone who opposes the Obama regime or the Marxist-progressive agenda.

Our media is complicit in the destruction of America by the Obama regime, and should be consider co-conspirators in what amounts to a coup d’├ętat.

By continually attacking any opposition to the Obama regime, and just making up things about Sarah Palin out of whole cloth, the American media has failed the American people, and seriously abused it’s freedoms guaranteed in the First Amendment.

Of course, now that we know we can’t trust the American media, with a few notable exceptions, we are now more alert than we have ever been, and more apt to do our own exhaustive research on things that matter to us. In the end, even though the dishonest, Obamacentric media has sought to deceive, in fact, I think they have made the search for the truth more prevalent than ever before. By becoming know liars, the media has actually caused the truth to be found. There’s a certain poetic justice in that.

‘Does Sarah Palin Have What It Takes to Be President?

‘During the 2008 campaign much was made of Barack Obama’s lack of executive experience in comparison with Sarah Palin. Running a major enterprise, such as the executive branch of the American government, requires a kind of savvy in using the various levers of power to achieve one’s ends. Even more important, it seemed to me, was to have the necessary political judgment that could be brought to bear on the decisions that would inevitably have to be made.

‘Political judgment is the prime requisite of someone at the top of a political system. Do we want this person rather than some other to be making the important decisions about the most diverse array of issues that no one, absolutely no one, can ever hope to fully understand for themselves? They must make the final decisions based, as they must always be, on incomplete information about the present, and with no certain information at all about what will happen in the future. It is the knowledge one has and the instincts one has developed that tell. The question becomes, if Sarah Palin does actually seek the nomination in 2012, whether she is the right one for the job.

‘Her book is therefore in many respects an outline of her political past. It is a review of many of the decisions she has made as a sampler of the kind of President she would be. It discusses her philosophical position on a number of questions which will be major matters for decision for a President having to deal with the world as it will be in 2013 and beyond.

‘The Presidency is no place for learning on the job. What you bring along on day one so far as philosophy and instinct are concerned is more or less what you take home when your term is passed. It is the visceral judgments that will tell.

‘Since what I know best are the economic questions she will face, I will dwell on what she writes on these. They are, in many respects, an indicator of how she might be expected to act in areas far from the explicitly economic, because there is an entire political philosophy bundled up in how these sorts of questions are framed and answered. But in looking at her approach, I will also focus on what I see as a weakness for Sarah Palin as a candidate for the Presidency. But first she must speak for herself:

‘Within six months of taking office, President Obama put the United States on track to double its already staggering national deficit. The new debt, which will burden future generations, is immoral …

‘Where is all the money going to come from? It can come from only three places. Government borrows it, government prints it, or government taxes the people for it …

‘We tried growing government back in the 1930s, and it didn’t work then either. Massive government spending programs and protectionist economic policies actually helped turn a recession into the Great Depression. New Deal-like spending plans aren’t the only blast from the past we see today. With the government takeover of parts of the banking industry and the auto industry, we see the return of corporatism—government collusion and co-option of big business.

‘No one person is smart enough to control and predict markets. The free market is just that: free to rise or fall, shrink or expand, based on conditions that are often outside of human control. Government interference in market cycles is just as dangerous as government-directed programs that encourage permanent dependency. In both cases the rewards for responsible behavior and penalties for irresponsible behavior are removed from the scene. This is the lesson I tried to convey to Bristol when we discussed her plans for the future. [emphasis added]

‘This is, as economics goes, remarkably sophisticated but given the Keynesian semi-dirigiste kinds of societies in which we live, where government direct involvement is often seen by substantial majorities as the central component of almost every solution to social problems, it is well outside current norms. That five pages previously she has quoted Thomas Sowell gives me a fair idea of where such ideas may have come from. But it is not that she read such concepts in Sowell that matters (if that is indeed what happened) but that when she did come across them, those were the ideas that stuck and remained. Sowell is one of the most articulate conservative intellectuals of our time (and interestingly for me, his first book, like my own, was on Say’s Law). That she would find an affinity with Sowell, understand with perfect clarity what he had written and then condense the points so well, is entirely to her credit. She (as well as he) may be wrong. But these are crucially important ideas that, should current policies fail and new ones be required, may make the difference between prolonging recessionary conditions even further and the ability to recover from what began as a relatively mild recession, however much commotion there may have been at the time.

‘It is that these ideas resonate and make sense to her that matters. Being President is not being the head of a fact-finding commission. It’s not about being the smartest person in the room. The role is to make decisions in real time about issues that have become boiling hot. What you are looking for is someone whose value system, background capacities and general outlook on the world will keep the community safe in a dangerous and unpredictable world. It is to answer these kinds of questions towards which this book has been directed. Sarah Palin’s aim is to demonstrate that she is just the kind of person in whose hands the American public can safely place its trust.

‘But let me come back to the words, “this is the lesson I tried to convey to Bristol“. Bristol is her daughter, and an important part of Sarah Palin’s discourse on the economy and other matters is presented as part of a dialogue between her and members of her family. One can say it is in the Socratic tradition where Plato’s ideas are detailed as part of a similar sort of dialogue. It may be that this is the means to make one’s thoughts clearer to others who are not used to the kinds of more technical ideas found in more technically in-depth works (I suspect more people will read Going Rogue than have read the collected works of Thomas Sowell).

‘But this does have a negative side. For anyone with an academic background (such as, for example, the kinds of people who might read an article such as this), there is a certain cornpone tone that keeps rubbing away at the serious intent. The “you betcha” of the campaign carries over into the book. She writes, “I joked, ‘Dang oil companies’”, and later on she says, “‘Dang, I must be getting old’, I mumbled“. And her use of “so” as an emphatic is so persistent and consistent (as in “the green grass smelled so good“) that I have little doubt that whatever help she may have had, this book is written in her own voice.

‘And for no reason at all that I can see, other than to show a kind of independence that can, in my view, do her no good (but what do I know in comparison with her about political calculation?), she wrote:

‘I believed in the evidence from microevolution—that geologic and species change occurs incrementally over time. But I didn’t believe in the theory that human beings—thinking, loving beings—originated from fish that sprouted legs and crawled out of the sea. Or that human beings began as single-celled organisms that developed into monkeys who eventually swung down from the trees; I believed that we came about through a random process, but were created by God.

‘Not one decision an American President must make will depend on their views on the mechanics of human evolution. Such views will, however, alienate significant portions of the public on whose good will she would depend, since this is one of those issues where sharp ideological lines have been drawn which are not paralleled by the usual Left–Right of politics. With this statement she is offering hostages to fortune that bespeak a character that is far from the girl-next-door sweetness the rest of the book portrays. She has strong views and plays to win.

‘And is she running for President? She has branded herself as a “Commonsense Conservative“. You tell me what her intentions are, based on this passage which comes at almost the very end of the book:

‘”As I write this, Commonsense Conservatives are out of power in D.C. But that does not discourage me. I think of Reagan in 1976, when his conservative politics and his political future were declared all but dead. How did he turn things around in four years? By speaking to ordinary Americans about the ideas that bind us together.

‘”These ideas resonate just as strongly today. Encourage the free market. Lower taxes. Get government out of the way. Put the people’s money back into their hands so that they can reinvest. Empower them to be generous. Respect honest work. Strengthen families. But because these are commonsense ideas, they will be ignored by politicians until their employers—the American people—make them listen.”

‘Will Sarah Palin be President? Will she be the one to “make them listen“? This we will only know sometime in 2012, possibly not until the first Tuesday following the first Monday in November. Maybe we won’t even know until 2016.

‘More important, however, is should she be President? Is she up to the job (assuming anyone is)? That is a different matter that may never be resolved unless she finally is, and perhaps not even then. In the meantime, Going Rogue is her early manifesto, written to put her back on a pathway towards this undoubted goal. The book has done exactly that and has done it extraordinarily well in spite of the enormous obstacles that have been thrown in her way. She is nobody’s fool, not to be underestimated by anyone.

‘Steven Kates teaches Economics at RMIT University in Melbourne.’

I’m always mystified by those who proclaim Sarah Palin doesn’t have the experience to be President. My God, Barack Obama had never run anything as complicated as a lemonade stand, and yet his is somehow “qualified.” I find this to be outrageous.

My guess is a lot of this has to do with the fact that Sarah is a girl, and a mighty attractive girl at that. There a lot of dimbulbs out there that simply cannot accept the fact that women can do anything they set their minds to, just like us guys.

Women are at the very forefront of the conservative movement, and as we wrote earlier, Sarah Palin has inspired millions of strong women to go out and take leadership roles

When Sarah Palin was chose by John McCain, she immediately became the most experienced person on either presidential ticket, and the only one of the four: Herself, McCain, Obama, and Biden, who had an ounce of Executive experience, the real experience one must have to be an effective President

Despite what they want you to think, the Obama campaign, and now the Obama regime, recognized this straightaway. This is why the attacks started from the moment she was introduced to the world, and why they have never stopped.

Readers will recall that once Sarah was announced as the Republican candidate for Vice President, for all intents and purposes, John McCain pretty much ceased to exist. It was attack Sarah all day, every day. Still is. One doesn’t exert this sort of effort on people who are inconsequential.

Does Sarah have the right experience, we think so. She’s spent most of her adult life in positions of authority, and most of these positions were as a chief executive. Sarah was the Mayor of Wasilla. Now some will say Wasilla is a small town, and they are right. But the mechanics of management are the same. Doesn’t matter if you are running a city of 7,000 …70,000… 700,000… or 7 million. That’s only the scale of the job. The scope of the job is the same. If you can run one successfully, chances are you can run them all.

For those that aren’t familiar with city government, there are two types. One is a government of elected officials who actually run things, with the Mayor in charge of day to day management. This is the type of government Sarah was in charge of.

Many cities, of all sizes, including the one I live in, chose a City Manager form of government. In these cases the city actually hires someone to run the city’s business on a daily basis. The city manager then reports to the city council, which consists of elected officials, including the Mayor. In this form of government, the Mayor is but one of a group who merely oversee what the city manager is up to. It’s not a full time job.

Again, in Sarah’s case, she, herself, was the City Manager. This is an important distinction, and immediately gives her more executive experience that Obama has, even now.

Of course Sarah and Todd also have several successful businesses, which gives her a leg up on Obama, who has zero business experience, as well as 90 percent of the Obama regime’s advisors, who also have never had a job in the real world.

Remember, Obama boasted that running a presidential campaign, his own, counts for “executive experience.” Of course that’s completely laughable, but he was able to get away with that. Kind of like Mitt Romney saying having his sons serve on his presidential campaign in 2008 was the equivalent of military service, because they were “serving their country.” Yeah, whatever. Tell that to Track Palin who served a year in Iraq on the front lines.

After serving as Mayor, and being the president of the Alaska Council of Mayors, Sarah ran for Lt Governor. This resulted in a loss, but garnered her more experience, should you want to use the Barack Obama method for measuring experience. All joking aside what her run did do was elevate Sarah’s political profile and netted her a position as the state’s top energy and environmental regulator, another executive position, and one of the most powerful jobs in the energy rich state.

Then there is her Governorship. There is a reason why Americans generally seek out Governors to become Presidents. Other than declaring war, the job of Governor and the job of President are the same, only the scale is a bit different.

Sarah was an incredibly popular and effective Governor, one of the top in the nation. As Governor she also was Commander-in-Chief of the Alaska National Guard, which has the unique distinction as the only permanently deployed Guard in the nation. She was also C-I-C of the Alaska Defense Force, an auxiliary police and militia unit that can be called up in times of crisis. Member of the ADF fought with distinction in WWII when the Japanese invaded Alaska.

As a leader in energy Sarah was also the Chairman of the nation’s Interstate Oil and Gas Compact Commission, an agency that develops policies on energy exploration and sound environmental stewardship. Sarah served as Chairman of this commission while serving as Governor of Alaska.

When one looks at Sarah Palin’s career, one see’s a solidly qualified Chief Executive who has the resume that says “yes, I am made of presidential timber.” For those who have read Sarah’s book, her many nationally published op-eds, and her Facebook blog, as well as listened to her speeches and political commentary, there is no doubt she has the right policies and temperament to be a successful President.

Sarah Palin has established herself as a leader and yes, she is ready to lead the nation.

Boy, Does This Ever Sound Like Canada! (Guess Which Side)

April 22, 2010

Political Fatal Conceit

By Monty Pelerin

Economists and lawyers think differently. Economists believe that incentives are more effective to alter behavior; lawyers believe that coercion via laws is the way to affect behavior.

The parable of the Sun and the Wind is illustrative. They are both intent on getting a man to remove his overcoat. The Wind tries to blow the coat off, an action which only produces behavior that makes retention of the coat more valuable. The Sun heats up, making removal of the coat more comfortable than retention. In the latter case, the man willingly removes his coat.

In the parable, the Sun behaved like an economist providing incentives to alter behavior, while the Wind behaved like a lawyer trying to coerce behavior.

In Washington, most elected politicians are lawyers. Too many believe that they can achieve desired behavior via coercion. They distrust incentives and markets. All problems are seen as having legislative solutions -- i.e., coercions or controls. Our current financial mess is being approached in such a fashion.

There is no real reform underway for the banking system. If real reform were intended, the following bank expansion, as reported on from the NY Times, would not have been permitted and encouraged:

In the last year and a half, the largest financial institutions have only grown bigger, mainly as a result of government-brokered mergers. They now enjoy borrowing at significantly lower rates than their smaller competitors, a result of the bond markets' implicit assumption that the giant banks are "too big to fail."

Instead of worrying about the real problem, the administration and Congress took the populist route of demagogy, attacking the executives and their pay levels. While many believe that those attacks were not unwarranted, they were political diversions and not constructive to producing any solution.

Size matters! The moral hazard associated with too-big-to-fail enables large banks to engage in more risky behavior than prudent. Because of the implied government "put" to save them, investors and depositors provide funds in excess of what they otherwise would. The normal corrective forces of the free market are negated by such a "put," enabling big banks to engage in bad behavior. 

When George Schultz was Treasury Secretary and was approached with the "too-big-to-fail" issue, he is reputed to have responded, "Well, then, make them smaller." That was the right advice then and now. However, according to the Times,

... there is no attempt to break up big banks as a means of creating a less risky financial system. Treasury Department and Federal Reserve officials have rejected calls for doing so, saying bank size alone is not the most important threat.

Gary H. Stern, former president of the Minneapolis Federal Reserve Bank and co-author of Too Big to Fail: The Hazards of Bank Bailouts, described the current bill as follows: "It tries to address the problem but it's half a loaf at best. It doesn't address the incentives that gave rise to the problems in the first place."

The belief that Washington is able to design any legislation for any purpose would be laughable if it were not so harmful. Can anyone point to a single government program that has been successful in terms of its original intent and costs? Is there anything that has ever been "regulated" properly?

Any bill that passes without breaking up the large banks is doomed to failure. It will ensure a repeat of this crisis, except on a larger scale. Past interventions created the conditions for this banking crisis. The impossibility of effective regulation enabled it to fester and grow.

Congress now proposes more of the same. Apparently, they don't understand the definition of insanity as attributed to Einstein: "doing the same thing over and over again and expecting different results." Or perhaps they do and are arrogant enough to believe that they can legislate anything, including legislating away the law of unintended consequences.

The issue is not bad regulations, bad regulators, or bad bankers. The issue is complexity. No one person or group is capable of writing effective legislation for complex markets. No legislation can replace market monitoring and discipline. That would be true even if regulators were not influenced by politicians (the "public choice" argument).

To believe otherwise is to engage in what Friedrich Hayek termed the "fatal conceit." According to Greg Ransom, who made this observation almost a year ago:

The interpretation of Barack Obama and his government as an instantiation of what Friedrich Hayek examined in his classic book The Fatal Conceit has become one of the dominant narratives of today. In May John Stossel wrote a widely circulated pieceon the topic. This week, Thomas Sowell weighs in. So does Sheldon Richman. And also Ralph Reiland. I'm guessing we'll be hearing more about this over the next month and year.

The only way to solve the financial crisis is to allow markets to discipline bad banks. Effective reform of the banking system can be achieved in only two ways:

  • 1. Break up the too-big-to-fail banks and preclude their attaining the size where that adjective would ever apply again.
  • 2. Revisit the entire concept of banking to move it closer to free-market banking.

Both solutions would be amenable to bank failures without bailouts. The threat of real failure reintroduces market discipline to banking. It provides an incentive for bankers not to take the additional risks that increase the probability of failure. Nothing being talked about in Washington today achieves that goal.

A financial bill will pass. It will be accompanied by all the celebratory hoopla that infects Washington. It will not break up the big banks. It will be another Washington charade designed for the rubes that are expected to vote in the next election. This kick-the-can behavior is what got us into the mess, and it guarantees an even bigger crisis in the future.

Eventually, the crisis will repeat itself. It is probable that the next crisis will produce a worldwide collapse of the banking system. At that point, item number 2 above, the real solution, will be addressed. 

When that point is reached, we will have come full circle back to the old Jefferson-Hamilton debates about banking. Hopefully, Jefferson will then be seen as correct, and the world can get a banking system that serves the people rather than the bankers. Properly designed, banking will no longer be the cause of periodic business and financial crises.

Monty Pelerin maintains a website at Contact him at

Page Printed from: at April 22, 2010 - 07:01:49 AM CDT

Real Sex Education (The American College of Pediatricians)

Attention: School Superintendents

Out of concern for the health and well-being of all youth, the American College of Pediatricians mailed a letter to all public school superintendents in the United States on April 1, 2010. The purpose of this letter was to inform school policy makers of a new Web resource,, created by the College and other professional health organizations to clarify the proper approaches to youth with non-heterosexual attractions.

The mission of the Facts About Youth project is to advance a school environment in which all students will experience the opportunity to achieve optimal health and safety.

Read the Letter, the Fact Sheet, and the Press Release on the subject.

Should Schools Identify and Affirm Students as “Gay” or “Transgender?”

Are there Health Risks Associated with Affirming Students Who Question Their Gender and/or Sexuality?

How Can School Officials Properly Assist a Student and Family Dealing with Same-Sex Attractions?

Rebuttals to Just the Facts About Sexual Orientation and Youth

Thursday, April 15, 2010

Death-Spiral Intercept (Karl Denninger)

Posted by Karl Denninger in Monetary at 08:15

Well well well....

In essence, White was saying: "it’s the debt, stupid."  When aggregate debt levels build up across business cycles, economists focused on managing within business cycles miss the key ingredient that leads to systemic crisis. It should be expected that politicians or private sector participants worried about the day-to-day exhibit short-termism. But White says it is particularly troubling that economists and their models exhibit the same tendency because it means there is no long-term oriented systemic counterweight guiding the economy.

This short-termism that White refers to is what I call the asset-based economic model. And, quite frankly, it works – especially when interest rates are declining as they have over the past quarter century. The problem, however, is that you reach a critical state when the accumulation of debt and the misallocation of resources is so large that the same old policies just don’t work anymore. And that’s when the next crisis occurs.

It seems that Mr. Harrison has it figured out.  He goes on to spend a lot of digital ink on the periphery of the bottom line, which is that we continue to think of debt in terms of service costs (indeed, you'll hear Bernanke talk about it, but never about the actual gross financial system debt outstanding.)

When you boil all this down, however, you get to the following chart (trendline added by moi):

You can see what's going on here - each "crisis" leads to lower lows and lower highs.

This presents two problems:

  • Lower lows have run into the zero boundary.  That wasn't sufficient this time, which of course is why we got "Quantitative Easing" and other similar abortions intended to distort market rates - like guarantees on bank debt, for example.  Ultimately this devolves into The Fed or The Government (as if there's a real difference) guaranteeing everything to prevent spreads from blowing out.

  • Far more sinister, however, is what happens to the top line.  The top line - that is, the maximum rate between crises, declines because it becomes impossible to normalize rates - nobody can afford to pay "normal" rates with the amount of leverage they have.

This is where the ultimate failure in policy arrives, and it leads to at best a Japan-style scenario where the economy fails to come out of recession or, at worst, monetary and political system failure.

We had a bubble at the S&L crisis, ultimately culminating in the Tech Wreck, because we refused to force the bad debt to clear.  This was obvious even in the 1990s, but nobody wanted to hear it.  The few businesses that ran without leverage did ok, but those who ran lots of leverage had spectacular success - right up until they detonated, and most of them did.

The 2000s were marked by even more leverage.  Why?  Because it was the only way to get return left.  The Government, having stepped in to support the economy with $500+ billion annually in deficit spending, was unable to pull back without instantaneously crashing the economy:

They thought they were smart. 

In point of fact, they were criminally insane, and proof of it is found in what we're doing now.

We now have both driven the low end of the rate curve to zero and taken on more than $3 trillion in new Federal debt.  To put this in perspective the total outstanding accumulated Federal Debt at the end of 1992 - from the founding of the US to January 1st of 1993 - was just $4.2 trillion.

We added more Federal debt than had been accumulated in 217 years in just a little over THREE years - from 2007 to the third month 2010.

The ugly is that this debt load (currently $12.8 trillion, more or less) presents interest expense.  If the Fed Funds Target was to reach just five percent, and every bit of the Treasury debt was to be refinanced into overnight obligations at that same 5%, the interest expense alone of the current debt would be $640 billion a year.

If the Treasury was to have to pay a roughly 6% average coupon (reasonably aggressive with a 5% Fed Funds Target) the interest expense would be $768 billion annually.

To put this in perspective that is an amount roughly equivalent to that spent on defense, and is higher than Social Security, Medicare, or all other "mandatory" program spending combined.

It would consume nearly all of Social Security and Medicare tax receipts ($891 billion) or the personal income tax ($915 billion)  (ed. All 2009 federal budget numbers)

It is also four times what we spent last year on interest.

There is not a snowball's chance in Hades that the Federal Government can afford that.

This will inexorably lead to political pressure to hold down rates, which will in turn lead to more malinvestment - and bubbles.  Like, for instance, an 80% increase in stock prices in one year, or more than a doubling in the price of oil over the same time.

It will also lead to silly things like allowing banks to hold "assets" at dramatically above their true value in order to keep them from having to hold sufficient capital against real losses, in a futile attempt to keep them from going boom.

But you can't fix debt intoxication with another bottle of whiskey.

What we're doing now will inevitably lead to another crisis, this one much worse than the last.  Burdened with the bad paper they refused to unload, the banks will get into cash flow trouble as their attempt to extract ever-larger amounts of money from everyone else in society to paper over their own insolvency will ultimately fail.

The Federal Government will see the market back up rates irrespective of what they try to do, just as Greece has.  This will force borrowing costs higher, and ultimately make destruction of the "mandatory" on-budget programs necessary.

What comes with that is anyone's guess - in particular, whether civil order survives in a world where half of Medicare and Social Security are gone, all other "mandatory" programs are erased, and taxes are running at roughly double the rates we have today.

Timing?  Best case, a few years.  Worst case, anything could set it off.  Defaults in other nations, a loss of confidence in The Fed or Government, war.

But what's not in question is the outcome if we do not change course.  If we do not take serious, even radical steps.  If we do not stop the deficit spending, accounting fraud, bailouts and punitive view of the tax system toward capital formation.

All of those things must happen, and happen soon, but there is no political will to do any of them.  The banks have the government in their pocket - witness the statements made in the WaMu hearings Tuesday, when a literal 500-page tome of reference documents on the witness table laid forth one of the most-voluminous list of alleged felonies I have ever seen in a Congressional Hearing.  Or Kanjorski's joke of a hearing last year in which FASB effectively had a gun shoved up their nose and was told to legalize balance-sheet fraud.  Or Paulson and Bernanke's "dead of night tanks in the street" game of fear run on Congress in 2008 - after they created the conditions for that fear by willfully and intentionally ignoring the fact that Lehman had been insolvent literally for months.

No folks, we're not going to get out of this cleanly.  Enjoy trading the market which ever way it goes.  The "pumpfest" is on full-bore now, with CNBC and everyone else crooning about how "retail" (that's you!) has missed it and needs to "get in the game." 

They don't ring a bell at the top, but they sure do herd the sheep into the pen to be shorn, and you can bet that those who placed bets against Armageddon last time need someone - you - to sell to.

Maybe you're fast enough, maybe you're not.  But just as the last time around, when the banksters knew for three months that Lehman was bankrupt before you did (and you can bet they placed their chips on the table!), you won't be told in advance before the floor disappears - but they both will be told and they'll be the ones to pull the pin.

It isn't different this time folks, and the math is never, ever wrong.