Friday, October 12, 2012

Zero Hedge take on Hayek

http://www.zerohedge.com/news/2012-10-11/we-are-road-serfdom "this will end badly" Btw, I recommend reading "The Lords of Finance"

Tuesday, September 11, 2012

Brownshirts

Just witnessed the TSA marching in the austin airport concourse. I find it sickening:  teaching the brown-shirts to march. 

Saturday, September 8, 2012

The Scary Math Behind The Mechanics Of QE3, And Why Bernanke's Hands May Be Tied | ZeroHedge

I know what you're thinking:  I should be more careful and take my meds as prescribed...  It isn't just that each successive round of money printing has less of a psychological effect on the market.  It is that the Fed is running out of bonds to monetize.  Wow.

The Scary Math Behind The Mechanics Of QE3, And Why Bernanke's Hands May Be Tied | ZeroHedge

Friday, September 7, 2012

Santelli: Where Did Scotty Beam All the Unemployed?

Santelli: Where Did Scotty Beam All the Unemployed?

Thought you all might enjoy this.  By the way, I'm readying Currency Wars.  Intro and analysis of first two of three world currency wars are riveting.  Loses its way a bit toward the end.  But, very illuminating.  I have been calling it a race to the bottom with currency devaluations.  I think currency wars are a better description.  



http://www.amazon.com/Currency-Wars-Making-Global-Crisis/dp/1591845564/ref=sr_1_1?ie=UTF8&qid=1347046427&sr=8-1&keywords=currency+wars

Wednesday, July 18, 2012

Bernanke to Congress: We're Much Closer to Total Destruction Than You Think - CNBC

Bernanke to Congress: We're Much Closer to Total Destruction Than You Think - CNBC


I think the Fed has been trying to avoid deflation from the beginning.  It seems they have taken action based on a greater fear of deflation than of hyper-inflation.  It is a hard course to steer (this metaphor is particularly apt because like steering a boat you can steer all you like but the sea and wind may take you in a different direction).  I suspect they will continue to take action that errs on the side of inflation.  If that is wrong (they steer a middle course and are blown off course toward deflation) gold is the absolute wrong place to be.  

I am betting on inflation.  If things go toward deflation I suspect it will be better to own guns...

Tuesday, July 17, 2012

Santelli: Libor, Rigging Rates & the Law

Father of the Tea Party speaks.  I wish this guy would run for office.

Santelli: Libor, Rigging Rates & the Law

Monday, July 9, 2012

Austrian school goes on the offensive

Fantastic!!! http://www.zerohedge.com/news/ultimate-krugman-take-down

Thursday, June 28, 2012

Restraining Arizona, Unleashing the President by Andrew P. Napolitano

Our president is headed down the path of Hitler.  FDR and Nixon took this path.  Will we stop Obama?  Or, hope Providence will arrest his progress?






Shortly after the opinion came down, the Obama administration announced that it will cease providing Arizona police with the immigration status of persons in that state, and it will not detain anyone arrested by Arizona police for immigration violations unless those violations rise to the level of a felony, which undocumented presence in the U.S. is not. Thus, this constitutional rebuke to Arizona has become a personal license for the president. He now has demonstrated that he will not faithfully enforce federal law as the Constitution requires. He will only enforce the laws he agrees with.


Restraining Arizona, Unleashing the President by Andrew P. Napolitano

Saturday, April 28, 2012

Wenzel speech to NY Fed: have we been punked?

 Can't find this on urbanlegends.com but it still seems too good to be true...


EconomicPolicyJournal.com: My Speech Delivered at the New York Federal Reserve Bank

Wednesday, April 18, 2012

Electoral College Predictions: Ted Nugent may be away for a while

For anyone that thinks the November presidential election is in doubt.  Obama wins if he gets two of three of Pennsylvania, Ohio, or Florida.  Romney is losing all of RCP polls for each state even though they are listed as toss-ups.  Looking back at Pennsylvania the state hasn't gone Republican since 1988.


RealClearPolitics - 2012 Election Maps - Battle for White House

Tuesday, April 17, 2012

Wednesday, April 11, 2012

WSJ Opinion column that was source for last post

http://online.wsj.com/article/SB10001424052702304450004577279754275393064.html

Wall Street Journal, Mar. 27, 2012

The conventional wisdom that nearly infinite demand exists for U.S. Treasury debt is flawed and especially dangerous at a time of record U.S. sovereign debt issuance.

The recently released Federal Reserve Flow of Funds report for all of 2011 reveals that Federal Reserve purchases of Treasury debt mask reduced demand for U.S. sovereign obligations. Last year the Fed purchased a stunning 61% of the total net Treasury issuance, up from negligible amounts prior to the 2008 financial crisis. This not only creates the false appearance of limitless demand for U.S. debt but also blunts any sense of urgency to reduce supersized budget deficits.

Still, the outdated notion of never-ending buyers for U.S. debt is perpetuated by many. For instance, in recent testimony before the Senate Budget Committee, former Federal Reserve Board Vice Chairman Alan Blinder said, "If you look at the markets, they're practically falling over themselves to lend money to the federal government." Sadly, that's no longer accurate.

It is true that the U.S. government has never been more dependent on financial markets to pay its bills. The net issuance of Treasury securities is now a whopping 8.6% of gross domestic product (GDP) on average per annum—more than double its pre-crisis historical peak. The net issuance of Treasury securities to cover budget deficits has typically been a mere 0.6% to 3.9% of GDP on average for each decade dating back to the 1950s.

But in recent years foreigners and the U.S. private sector have grown less willing to fund the U.S. government. As the nearby chart shows, foreign purchases of U.S. Treasury debt plunged to 1.9% of GDP in 2011 from nearly 6% of GDP in 2009. Similarly, the U.S. private sector—namely banks, mutual funds, corporations and individuals—have reduced their purchases of U.S. government debt to a scant 0.9% of GDP in 2011 from a peak of more than 6% in 2009.

The Fed is in effect subsidizing U.S. government spending and borrowing via expansion of its balance sheet and massive purchases of Treasury bonds. This keeps Treasury interest rates abnormally low, camouflaging the true size of the budget deficit. Similarly, the Fed is providing preferential credit to the U.S. government and covering a rapidly widening gap between Treasury's need to borrow and a more limited willingness among market participants to supply Treasury with credit.

Getty Images

The failure by officials to normalize conditions in the U.S. Treasury market and curtail ballooning deficits puts the U.S. economy and markets at risk for a sharp correction. Lessons from the recent European sovereign-debt crisis and past emerging-market financial crises illustrate how it is often the asynchronous adjustment between budget borrowing requirements and the market's appetite to fund deficits that triggers a shock or crisis. In other words, budget deficits often take years to build or reduce, while financial markets react rapidly and often unexpectedly to deficit spending and debt.

Decisive steps must be implemented to restore the economy and markets to a sustainable path. First, the Fed must stabilize and purposefully reduce the size of its balance sheet, weaning Treasury from subsidized spending and borrowing. Second, the government should be prepared to lure natural buyers of Treasury debt back into the market with realistic interest rates.

If this happens, the resulting higher deficit may at last force the government to make deficit and entitlement reduction a priority. First and foremost, however, we must abandon the conventional wisdom that market demand for U.S. Treasury debt is limitless.

Mr. Goodman is president of the Center for Financial Stability and previously served at the U.S. Treasury.

61% of new US Treasuries issued last year bought by the Fed

From a newsletter I subscribe to:

A Fiction Called the U.S. Dollar
~ by Michael Lombardi, MBA

Prior to the financial crisis, the Federal Reserve bought minuscule amounts of U.S. government debt. In 2011, the Federal Reserve bought 61% of all net U.S. Treasuries issued (source: Wall Street Journal, Mar. 27, 2012).

Reread that again, dear reader, to absorb its full meaning—61% of all issued U.S. Treasuries were bought by the Federal Reserve last year.

Before the financial crisis, it was foreign countries that were the major purchasers of U.S. government debt. Since then, many countries have reduced their purchases of U.S. government debt, especially China.

In December of 2011, all foreign countries were net sellers of U.S. government debt to the tune of $21.0 billion (source: Forbes). South Korea reduced its holdings of U.S. government debt and its holdings of U.S. dollars from 63.7% of foreign currencies to 60.5% of foreign currencies.

Over the last five years, China purchased an average of 63% of all newly issued U.S. government debt. In 2010, it dropped to 45% of all newly issued U.S. government debt and now China is purchasing only 15% (source: Wall Street Journal, Mar. 27, 2012).

With the Federal Reserve being the largest buyer of U.S. Treasuries, it creates the false impression that the U.S. government debt market is functioning normally and that there is ample demand worldwide for it. However, if the Federal Reserve stops buying, who will be there to purchase U.S. government debt?

In the U.S. government debt market, like in all other debt markets, the higher the demand, the lower the interest rate one needs to pay on their debt. The Federal Reserve is creating its own demand, thus keeping interest rates low.

Of course, as I mentioned in these pages last week, each full percentage point rise (one percent) rise in interest rates will cost the U.S. government approximately $150 billion more in interest. It is no wonder the Federal Reserve is attempting to keep interest rates low on U.S. government debt?

The other consequence of the Fed buying U.S. government debt is that it forces the American banks to buy short-term U.S. government debt. The Federal Reserve is currently conducting “Operation Twist,” which is selling short-term U.S. government debt in exchange for long-term U.S. government debt.

Well, someone has to buy that short-term debt, and that someone is a participant with no choice in the matter: the large U.S. banks. So, U.S. banks buy the short-term U.S. government debt from the Federal Reserve, and the Federal Reserve takes the proceeds and purchases long-term U.S. government debt in order to keep long-term rates low.

In the first two months of 2012, large U.S. banks bought more short-term U.S. government debt than in all of 2011, as Operation Twist ramped up. In the first two months of 2012, $78.2 billion was purchased, bringing the total amount of short-term U.S. government debt held by the large U.S. banks to an eye-popping $1.78 trillion (source: Bloomberg).

If short-term rates were to rise due to inflation (likely) or an economic recovery (unlikely), then U.S. banks would lose billions of dollars from owning short-term U.S. government debt that pays almost zero interest. Who would then bail out the U.S. banks should this occur, dear reader? You guessed it.

The U.S. government debt market is currently very calm thanks to the Federal Reserve. If the Federal Reserve stops buying U.S. government debt and foreigners continue to walk away from the U.S. government debt market, then who will buy the debt? The only choice the Federal Reserve has in a bid to keep rates low is to print more money and buy more U.S. government debt to stabilize the market. This is why I see the current correction in the 10-year old bull market in gold as such a great opportunity.

Michael’s Personal Notes:

Frustrated with what they viewed as being ignored by the West and not having a prominent role in institutions like the World Bank and the International Monetary Fund, Brazil, Russia, India, China and South Africa (also known as the BRICS countries) held their first summit in Russia in 2009 to discuss their common interests.

Just three short years later in 2012 in New Delhi, the BRICS countries emerged from their meetings to declare that trade between their countries would take place in their own currencies, doing away with the use of the reserve U.S. dollar.

Just to be clear, dear reader; it takes time, money and effort to set up bank exchanges that would allow them to trade in their own currencies. It is much easier to trade in the world’s reserve currency, the U.S. dollar, than take this route.

This is significant as well because the BRICS countries represent 40% of the world’s population and 20% of the world’s gross domestic product (GDP). There is no question however, that the BRICS countries are growing their portion of world GDP faster than the West, which means that, even in a decade, the BRICS countries are going to represent a lot more than 20% of the world’s GDP.

Another major objective that was announced at this year’s summit was to increase trade among the BRICS countries themselves, in order to reduce the influence of exporting to countries in Europe and to the U.S. Trade among the BRICS countries is growing at a 28% annual rate and is expected to double in just a few years from the $230 billion worth of trade being transacted today in the BRICS countries, increasing their GDP influence.

The most startling announcement to come from the summit was the formal proposal for studying the creation of a BRICS development bank that would offer an alternative to the U.S.-dominated World Bank. The finance ministers of the BRICS countries were asked to study the possibility and report back with a proposal at next year’s summit.

The proposed development bank would allow not only member BRICS countries to apply for loans for infrastructure projects and other development initiatives, but also all developing countries in the world.

Of course, should such a bank be created, it would need to be denominated in a reserve currency, so that loans could be issued in that reserve currency to developing countries around the world.

As a surprise to no one, even though the subject has not been discussed, there is no doubt that China wants its yuan to be the reserve currency for the BRICS development bank, as China continues its quest to have the yuan become an international currency, on par with the U.S. dollar and the euro. However, considering how culturally diverse the BRICS countries are, they may develop a new currency, which will still require that China significantly back it with its yuan.

The BRICS countries represent the fastest growing countries in the world. Although only 20% of the world’s GDP today, this GDP number is rising rapidly and, as a consequence, so will the BRICS countries’ influence. The agreement to trade in their currencies and to create a BRICS development bank is a direct assault on the U.S. dollar.

As I’ve said all along, dear reader, the reserve currency status is earned, not given. This is not a good sign for the U.S. dollar longer-term, ensuring its decline and placing its reserve currency status in jeopardy.

As well, the possibility of China having its yuan as the reserve currency of choice among the BRICS countries or having the yuan back a new currency means that it will need more gold bullion to back its currency. China has only a fraction of the gold bullion that Europe and the U.S. currently hold, pushing China to be an active and aggressive buyer in the gold bullion market today.

Monday, April 9, 2012

What happens end government Stimulus ends?

This chart is the ugly truth about the true standard of living in the US right now (the black line is US personal income; the orange line is US personal income less government transfers).  The gap is filled by 
what can only be a short-term fix at the expense of the future standard of living of Americans. 

I have been wondering lately when the Fed will stop being responsible for propping up the stock market by printing money.  The answer?  It won't be a choice but will be forced upon us by some outside force or event (a failed US Govt. bond auction?).  Japan has 10 years lead on us down this slippery slope.  And, they don't have the benefit of a reserve currency.  I suspect their fall will come first.  But, ours will be harder/farther.

CHS-2-20-12-1.jpg (580×420)

Tuesday, April 3, 2012

Newspeak rules the day...Health-care reform on trial: Full-court press | The Economist

Re: Orwell's Newspeak

Health-care reform on trial: Full-court press | The Economist

I find The Economist to be one of the best mainstream publications.  Has anyone else noticed The Economist has lost its way with respect to the difference between a Liberal (US Left) and a liberal (the philosophy committed to the ideal of limited government, constitutionalism, rule of law, due process, and liberty of individuals including freedom of religion, speech, press, assembly, and free markets.)?


This is truly frightening.  Newspeak has indeed become the norm.

France's future: A country in denial | The Economist

In case you haven't read the book This Time Is Different, you should check it out.

I really do think this time is different.  We do not simply always come out of a downturn.  We are driven out of a downturn by innovation and hard work.  I believe we haven't seen the worst of the current mess.  And, that any recovery will be on a different, lower trajectory as we continue to weigh down the producers with the obligation to support non-producers.

I thought you might find the following article interesting.  The state of politics doesn't surprise me.  What surprises me is the percentage of GDP made up of Government Spending.  Wow.  At least we aren't France, yet.



France's future: A country in denial | The Economist

Friday, March 23, 2012

The Oil Conundrum Explained | ZeroHedge

ZH takes a while to get to the point but it is an important one:  the price of oil isn't going up, the value of the dollar is going down.  
This schizophrenic disconnection between the stock market, and oil, and true supply and demand, is, though, a symptom of one very disturbing illness lurking in the backwaters of the U.S. fiscal bloodstream; dollar devaluation.
...
The dollar’s only saving grace has long been its status as the world reserve currency and its use as the primary trade mechanism for oil.  This, however, is changing. 


The Oil Conundrum Explained | ZeroHedge


By the way, did anyone else notice how the Mainstream Media fell right into line with Obama's PR push to show he is working to lower the price of oil?  Nice how he fast-tracked the part of the new pipeline that is already approved and was already moving swiftly to operation?  Gotta love the NYT jumping in to help their buddy Barry:

http://www.nytimes.com/2012/03/23/business/energy-environment/inching-toward-energy-independence-in-america.html?_r=1&hp

My only question about the election in November is how to go long Obama...no doubt he's going to get another four years...

CNBC Twitter Poll: what would you spend $600 on?

One share of AAPL (at an all time high) or a new iPad?

My favorite response:

"Why not go all American with what's still made here: Beer and Strippers." @BarryGoldwater

http://www.cnbc.com/id/46796427


Monday, March 5, 2012

Jamming mobile phones by 'government actors'

The FCC is seeking public comments on the interruption of cellular service (essentially jamming of mobile phones) by authorities (including CapMetro or BART) for "public safety" reasons. Please take a moment and let the government know your thoughts on not being able to call 911 from your mobile phone because a 'public agency' employee thought bad guys might use their cell phones to cause trouble...seems to me that is exactly when I WANT to be able to call 911.

Here is the link to make comments:

http://apps.fcc.gov/ecfs/proceeding/view?name=12-52

Here is the link to the request for comments:
http://transition.fcc.gov/Daily_Releases/Daily_Business/2012/db0301/DA-12-311A1.pdf

COMMISSION SEEKS COMMENT ON CERTAIN WIRELESS SERVICE INTERRUPTIONS
GN Docket No. 12-5

Tuesday, February 14, 2012

Thoughtful article examining plunge in Gasoline consumption

This article looks at gasoline consumption normalized for increasing fuel efficiency. I wonder why there aren't nighly laments on NBCCBSPBSABC about this?

Guest Post: Why Is Gasoline Consumption Tanking? | ZeroHedge

Monday, February 6, 2012

The Forgotten Man: McNaughton Fine Art

Interesting explanation. Mouse over each president and get a short explanation. Notice the spectrum from right to left. And, who is applauding. I applaud McNaugton for getting George W. Bush with the right crowd. But, I think Clinton and Kennedy should swap places.


McNaughton Fine Art