Category Archives: Pols and Pundits

Tom Woods On Wealth Creation

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Nice finale to Tom Woods’ piece at Taki Magazine, putting an end to some superstitions about labor and wealth:

“Leaving aside the odd view that only manual laborers engage in “work,” all the brawn in the world could never have produced a steam engine or a Pentium processor. Only when informed by the knowledge of inventors and supplied with the capital saved by capitalists can the average laborer produce the tiniest fraction of what he is today accustomed to producing. The central ingredient in a laborer’s physical productivity is the equipment and machinery at his disposal. There is nothing natural or inevitable about the availability of this productivity-enhancing capital equipment.  It comes from the wicked capitalists’ abstention from consumption, and the allocation of the unconsumed resources in capital investment. This process is the only way the general standard of living can possibly rise.  Hartmann thinks it’s just swell to tax it.

The increases in the productivity of labor that additional capital makes possible, by increasing the overall amount of output and thereby increasing the ratio of consumers’ goods to the supply of labor, make prices lower relative to wage rates and thereby raise real wages.  That’s why, in order to earn the money necessary to acquire a wide range of necessities, far fewer labor hours are necessary today than in the past—say, 1950 or 1900. Thanks to capital investment, which is what businesses engage in when their profits aren’t seized from them, our economy is far more physically productive than it used to be, and therefore consumer goods exist in far greater abundance and are correspondingly less dear than before……

Hartmann’s argument runs, in effect: “Citizen, you need to be looted in order to stabilize the system [a nonsensical idea Hartmann came across in the popular Keynesianism that forms the entirety of his economic knowledge].  Let us hear no more anti-social talk about your so-called rights. All hail The System!  Wherever would we be without the stabilizing power of violence!”

As for the nonsense about FDR’s New Deal “stabilizing us”—and the perverse argument that our economy will never be stable unless the people are violently expropriated—check out economist Robert P. Murphy’s new book The Politically Incorrect Guide to the Great Depression and the New Deal.  Its playful title notwithstanding, this book mercilessly bludgeons thoughtless clichés like this.

At least the mafia has the decency not to put such transparently phony claims over on you. They’re honest: we’re taking your money because we have power, and you don’t.

What it all boils down to is this: one side of our political spectrum favors the central planning of Iraq, while the other favors the central planning of Americans. We can only hope for the continued growth of a third side, one that rejects as unworthy of a free people all the superstitious nonsense about the magical powers of our overlords, whether that power is exercised at home or abroad.”

Gold Above 940

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Wow. Bernanke opens his mouth and the dollar sinks to 84.5.

Can’t he read a RED STOP sign?

And this weird thing here: I saw a  piece on bond yields and when I looked it up on yahoo, it’d been removed.

/cnnm/090318/031809_credit_market.html http://news.yahoo.com/s/ynews/ynews_bs262‘

Here’s  the URL for the original site:

CMWire – The Capital Markets Newswire

But when I looked through Capital Markets wire just now I couldn’t find it.

Here’s a copy of  the google search result for the piece:

Mar 18, 2009 … Yields plummeted by the widest margin since 1987. … 14:41 AIG chief asks execs to return bonuses» CNN.com. AIG chief Edward Liddy told lawmakers ….. (

Corrects the headline to reflect that Treasury yields plunged). …
cmwire.com/ – 39 minutes ago – Similar pages –

(http://www.google.com/search?hl=en&q=yields+plunge+1987+cnn&btnG=Google+Search&aq=f&oq=)

Update:

OK – I found the piece. It’s by Deborah Levine and I found it at Market Watch.

I think the original wire report on CMWire and Yahoo might have been taken off to make the headline look less alarming, so that the reference to 1987 didn’t spook stock investors – the media’s target patsies.

You can see that the article now reads – “Treasury prices soared Wednesday, sending yields plummeting….”

The powers that be want to keep the poor Dow’s chin up at least for today before the big bad short sellers come out in droves…

“Treasury prices soared Wednesday, sending yields plummeting by the largest amount since 1987 after the Federal Reserve surprised bond investors by saying it would buy $300 billion in longer-term Treasury securities over the next six months.”

http://www.marketwatch.com/news/story/treasurys-soar-after-fed-says/story.aspx?guid={7DB91E8A-FD87-4BD4-9296-3C6EA402C920}&tool=1&dist=bigcharts&

Meanwhile here are the details at Bloomberg  on the FOMC decision:

” This Wednesday, the Federal Open Market Committee of the United States’ Federal Reserve made a unanimous decision to keep the Fed Funds rate unchanged at the 0.25% to 0% range. The rate decision was not a surprise for a good number of investors since the Federal Reserve stated clearly on its last FOMC statement that “economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time”. Even so, today’s FOMC statement sounded a bit more dovish than expected, not reflecting the positive performance of the U.S. stock, bond and credit markets over the last two weeks. The Federal Reserve said “it sees some risk that inflation could persist for a time below rates that best foster economic growth and price stability in the longer term”. In addition,  “to help improve conditions in private credit markets, the Committee decided to purchase up to $300 billion of longer-term Treasury securities over the next six months.” So once gain, the Fed said it will employ all available tools to promote the resumption of sustainable economic growth and this makes us believe that the Fed will continue to purchase large quantities of agency debt and mortgage-backed securities to provide support to the mortgage and housing markets. In other words, the Fed will use quantitative easing. Currency traders reacted very negatively to the FOMC statement driving the U.S. dollar lower against the world’s most heavily traded currencies.”

 Comment:

What are they doing? Blowing smoke in everyone’s eyes pretending they see deflation in store in order to throw everyone off the inflationary scent?  Hoping meanwhile that gold doesn’t pop up too much and give the game away before they finish the next mighty round of mortgage hot potato? (Most plausible scenario).

Or, are they really terrified of having so destroyed the capital base of the economy that they think something, anything (maybe another financial instrument’s been discovered we haven’t heard about)  has to be done. And since all they have is a printing press., well why not use it? Off with the heads of the middle class, the thrifty, the savers, those who have no debt, the creditors!  (Also plausible, though probably only if combined with the theory above).

There’s a third option, but I’ll explore that in another post.

And why is Bill Gross pumping this whole business to the public?

“You want to continue to buy what the government will buy,” Pimco’s Bill Gross told CNBC.

From now on, it will be Pimpco to me. Sorry.

Bernie’s Web: Madoff Fraud Hits $64.8b, Includes Family, Say Prosecutors

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Turns out that Bernie Madoff’s fraud took clients for more than what investigators originally claimed – $50 billion. Latest count is $64.8 billion  and it’s not clear that that’s the end. (Correction: I read that wrong. $64.8 is the figure alleged by prosecutors. Others say the statements are inflated and the actual losses might be less).

The new reports show things to be different from the picture the media originally gave us.

Now it looks as if Madoff didn’t promise just middling returns of 7-10% to everyone (which would imply that the scheme was believable and not on its face suspect).  The truth is he lured many people with promises of an incredible 46.5% returns that he claimed he generated through a technique called “split strike conversion” – a technique that was demonstrably incapable of providing such returns consistently.  In other words, fund managers, investors and regulators who had been doing their due diligence, would have known without difficulty that he was lyng through his teeth.

Now, this isn’t the first time this angle of the story has been reported, but it’s the first time the media has been willing to admit that Madoff’s scheme was an outrageous, flagrant fraud that went on for decades under the noses of the very people now writing the stories about it in righteous indignation (the New York Post, in this case). Regulators were told repeatedly by reliable people that Madoff was running a Ponzi scheme. Where were they?

Why do I bring all this up? To lay to rest the idea that more regulation (presumably by the same bunch of corrupt, incompetent, treacherous hacks in DC and New York) is going to help things.

More interesting details from the Post article:

* Contrary to early reports, the Madoff family and an inner circle of Madoff friends seem to be deeply involved with money laundered through “an English bank.”

* Wife Ruth is now “an object of investigation.”

* It seems that low-level employees were hired to create the appearance of a trading operation, with money even being moved from New York to Europe and back to bolster that impression (shades of Enron’s Potemkin office).

Obama Tanks the Dow

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More here

Comment:

Going further,  the Deal Journal gives the President some tips on how to make nice to the market and stop being Obummer.

The budget numbers are out, and they aren’t pretty, projecting a $1.75 million deficit for the year and including a provision to auction off permits to exceed carbon emission caps (frankly, this sounds like the sale of indulgences by popes during the Middle Ages – only now, we’re all so much more enlightened...).  This might tank the Dow even more,…

Especially if it also takes a look at  GM’s horrible numbers (a $9.6 bn Q4 loss and a decline in its cash position from the previous quarter of $2.2 bn ($16.2 bn to $14 bn).  And let’s see what London’s FTSE will do now that Royal Bank of Scotland has announced the biggest annual corporate loss in UK history ($34.2bn/24.1 bn BP)

Obama Declares Day of Reckoning…

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“Bluntly declaring that the “day of reckoning has arrived” after years of financial irresponsibility, President Barack Obama told Americans on Tuesday night that “we will rebuild, we will recover and the United States of America will emerge stronger than before.”

Comment:

Hmm……some of that reckoning talk sounds suspiciously like the language that Nina Totenberg as well as some NY Times writers were using a while back….shortly after NPR cited “Mobs, Messiahs, and Markets”…..shortly after we sent them the book……..

(Coauthor of said opus is the principle writer and creator of the Daily Reckoning....a newsletter very familiar to Beltway and non Beltway critics of empire as well as libertarians of all stripes, left and right….)

Meanwhile, here’s another headline that caught my eye for a different reason:

“Can Obama Save the Planet?” asks Robert Roy Britt at MSN.

Quite a mandate.  Not only is the president going to “fix the economy” (as though the economy were some wretched stray in need of neutering), heal racial tensions, win the “war on terror,” – now he’s going to save the planet too. Last time I looked a certain rabbi had that job…

Erk.  How do journalists come up with this stuff?

Alan Keyes Denounces Obama As Abomination

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Alan  Keyes, the conservative who lost to Obama in the 2004 Illinois Senator’s race, is back again with a fiery denunciation of the new President as a “radical communist” and “abomination” who “isn’t even a natural born citizen” and once (presumably when he was young) even supported setting aside babies who escape abortion for killing (?).

Inflammatory stuff….or speaking truth to power…. depending on what you think of Keyes.  Obviously, Fox loves him since they’ve been giving him a lot of air time on this, and the video is making a stir.

What is a “natural-born citizen”? It’s a citizen who meets one of  the legal criteria to be considered, by right of birth, a US citizen”. It’s not simply where you were born.  If you were born on foreign soil, you would still be a natural born citizen if at least one of your parents was a citizen who had lived in America for at least 5 years. Obama Senior was a Kenyan citizen. Obama’s mother was a natural born US citizen, although I’ve seen questions raised about that too.

There are also doubts if the marriage was a valid one under US law. Furthermore, Obama’s mother soon divorced his father and went on to marry another foreign national, with whom she moved to Indonesia.

The L. A. Times has a summary of the birth-certificate controversy, and here’s another at Salon, both of them from a critical point of view. I actually thought the issue had been laid to rest last year, but apparently not. Keyes and other members of the Independent party  filed suit  on November 13, 2008 (I was out of the country then, so I guess I missed it):  Keyes v Bowen, Superior Court, Sacramento, 34-2008-80000096-cu-wm-gds.

Previous suits on this issue have been dismissed because the plaintiffs lacked “standing” – which is the legal requirement that a matter brought to the courts have some specific, concrete effect on the person bringing the suit. You can see why. Otherwise, people would be cluttering up the courts with cases filed on theoretical grounds. Keyes, a former presidential candidate, does have standing, although that might be affected by the fact that the election is now over.

Alan Keyes is a very passionate proponent of the traditional Catholic position on abortion, and from that view point nothing he said was really untoward, although some of his facts are still in question on the birth certificate issue and his “fire and brimstone” delivery will strike many people as either over the top, hilarious, or both.  I also do think the word “abomination” was inflammatory and unnecessary. “Abomination” coming from an arch-conservative and statist carries Biblical overtones and will resonate with people who read Revelations (of John of Patmos, at the end of the Gospel) literally. Many of them will think of the “abomination of desolation” and  the “false messiah” (Obama is incessantly dubbed a  ‘messiah’ both by admirers and detractors) who precedes the Anti-Christ.

On second thoughts, though, I’m not sure  critics have a right to question the language on this tape, since it was the Obama camp itself that went out of its way to play up the ‘messiah’ angle. They probably figured that if religious rhetoric worked for Bush, why not lure away some of Bush’s religious following by cloaking their establishment front man, Obama, in dressed-up “preacher talk.”

A lot of Obama’s rhetoric is simply PR, as my post “Wake Up and Smell the PR” (over the weekend), alleges, and so what can I say? Live by PR, die by PR……

And, what if Keyes prevails? Then we get President Biden:

20th Amendment, Clause 3:“3. If, at the time fixed for the beginning of the term of the President, the President elect shall have died, the Vice President elect shall become President. If a President shall not have been chosen before the time fixed for the beginning of his term, or if the President elect shall have failed to qualify, then the Vice President elect shall act as President until a President shall have qualified; and the Congress may by law provide for the case wherein neither a President elect nor a Vice President elect shall have qualified, declaring who shall then act as President, or the manner in which one who is to act shall be selected, and such person shall act accordingly until a President or Vice President shall have qualified.”

Here’s more on Obama’s birth certificate and some of the facts surrounding his Kenyan father’s citizenship (Kenya was part of the British empire at the time). Obama Jr.’s Kenyan citizenship would have expired in 1982, in the absence of any renunciation of US citizenship on his part. More from the same website on some of the groups behind the promotion of the citizenship issue. I’m not sure that the website actually gives any evidence that’s incontrovertible, though, beyond a replication of a photocopy of the birth certificate (?).

Most of the debunking seems to be of the order – ‘he says it’s a dirty tactic, so it’s not true’.…or, ‘look who’s behind the issue.’

He says, she says is not evidence.  Its doesn’t go to the substance of the charges.

Other thoughts:

1. Wouldn’t a birth certificate be a minimum requirement for a candidate and wouldn’t intelligence have checked that out long before anyone was even under serious consideration for presidency? It would be incredible if it weren’t  so, given that even rather lowly jobs these days require quite a bit of a background check.

2. Why is the certificate number blacked out?

3. Are the type and seal authentic?

4. What about the categorization of the child father as African?

5. Why not just release the original and put an end to the issue?

More:

*Philip Berg (no relation to Nicholas Berg who was beheaded in Iraq), a 9-11 truther (not sure which of the many 9-11 groups that is), is one of the people who’d earlier filed suit. Berg also filed a RICO suit against Bush et. al. over 9-11.

*The eligibility issues was previously raised for Mitt Romney’s father George, who ran for president in 1968. The ruling was that he was eligible since his parents were US citizens, even though he (George Romney) was born in Mexico where they were missionaries. In 1964 another challenge was defeated when it was decided that Barry Goldwater, who was born in Arizona before it was a state, was eligible.

Propaganda Nation: Obama As Marketer-in-Chief

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 Every so often, plain-speaking slips through…. even on the pages of the New York Times. Here’s a quote on the Geithner plan:

“As a whole then, the plan takes important steps in the right direction, but it is unclear in critical aspects. We do not know whether this is because the Treasury cannot afford to be too clear, or whether it is because the Treasury still has little idea about what to do. The coming days will tell.

Finally, the plan will need public and political support to be credible. This means that bankers and existing investors should not be seen as benefiting at the expense of the taxpayer, and that all the government investment should start paying off in the not-too-distant future. While the Treasury has resisted the urge to ceremonially sacrifice the bankers, this makes it even more imperative that President Obama’s political skills be used to sell the plan.”

Diamond, Kashyap and Rajan on the Geithner Plan, Freakonomics blog, NY Times, February 12, 2009

(The emphasis at the end of the excerpt is mine. The blog on which this post appeared is run by Steven D. Levitt, co-author of the best-selling, Freakonomics;  the economists who are guest posting are University of Chicago Professors, Douglas Diamond and Anil Kashyap, and IMF economist, Raghuram Rajan)

Time Magazine Hits The Kleptocrats….And Misses

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If you ever wanted to see propaganda in action, check Time magazine’s list of the 25 people responsible for the financial collapse upon us:

“Twenty Five People To Blame For the Financial Crisis.”

Comment:

Where to begin?

For starters: I’m not a fan of “Top 40s” listings except for the Top Forties, i.e., for popular trends, celeb fashion faux, Red Book girlie advice and such like. At ostensibly news-heavy publications (then again, perhaps that’s rather an ambitious term for a coffee-table glossy like Time) you’d  expect at least a pretense at deep thinking. Apparently not….

Second:  Why 25? There’s so much blame to go around that you either make a list of hundreds (how about the Misfortune Five Hundred?)  or whittle it down to the Big Ten…

Third:  We expected Bob Rubin to be given a free pass, since the media has always had a peculiar love affair with this slippery guy, and we expected the knee-jerk over-emphasis on Republicans, but George Bush is more responsible than Alan Greenspan (Fed Chairman under Clinton and Bush) ??

Whatever you think about Bush, there’s one thing quite clear – the man was not an intellectual powerhouse…nor was he a  shrewd tactician.

Do you really think he was anything more than a mouthpiece…..and probably a fairly sincere mouthpiece…when it came to economic and financial issues?

Now, before I venture any further analysis, I want some honest reader response here. Since I am being brave and taking the personal and financial hits that go with public bloggery, you dear readers, must do your part as good citizens and raise your hands (and voices) in public. Tell me what you think this list means and how and why it was cooked up.

And here I give you an original rajivanation:

Not with silence and stealth are republics defended –  but so they are lost

Terror Wars: Mumbai Attacks Not About Kashmir

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KABUL: Indian Foreign Minister Pranab Mukherjee said on Thursday international community should not link 26/11 attacks on Mumbai to the Kashmir dispute.

Addressing a joint press conference with his Afghan counterpart Rangeen Dadfar Spanta, Mukherjee said the international community has to take Mumbai attacks as a part of global terrorism,

Apparently referring to the recent statement made by the British Foreign Secretary David Miliband on Kashmir suggesting terror attacks in south Asia would stop with the resolution of the Kashmir dispute, Mukherjee said: These attacks (on Mumbai) are not related to Jammu and Kashmir and are a part of global terrorism.”

More at The Jang News, Pakistan.

Comment:

What’s with Miliband? Whence this common-sense approach so conspicuously absent from that little unpleasantness in Mesopotamia this past – what is it? – half a decade?

Oh, I see. The Brits don’t want the Wogs* to step out of their carefully allotted place in the terror theater.  Can’t have Gunga-Din getting a piece of the global terror racket. No, let the regional empires stick to the regional market. And let the Anglo-American Empire collect on the global terror trade – where you get the best prices and the highest return on your money.

*Westernized Oriental Gentlemen

New Blinds On The Old Broken Window

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The colorful face of empire:

“With a black first family in the White House and a diverse group of appointees and Cabinet nominees, the all-white dinner party feels all wrong. Certain hosts are suddenly grappling with a new reality: They need some black friends. Overnight, black politicians, lawyers and journalists are hot properties, receiving engraved invitations from people they never got invitations from before. (emphasis mine)

“This article, trumpeting the latest blend of powerbrokers, is about as far from the mark of what the real problem is as you can get without entering a vegetative state.  As if we’re supposed to be all Woo Hoo! because the percentage of beltway players that could use a tan has gone down.  Please…

See, the issue here isn’t what the people with influence look like.  Their overwhelming whiteness has been historical coincidence due to previous factors, which is being dealt with already.  No, the issue is this: as long as the same ideas and the same worldview are in charge, nothing will change, no matter how loudly the mainstream press cheers.  If accepting the status quo is the price of admission then functionally we’ve not moved, and are merely sticking new blinds on a broken window….”

Read the rest of the post by libertarian blogger, Psychopolitik

Comment:

 Now, tell me why you never hear this slant from most of the African American community’s representatives in the media? Instead, you get the voices of the “welfare establishment” – those who think the community must always look to Washington to address its problems. Less frequently, you hear the voices of conservatives, but they also think you need to have someone with a gun and a slogan as some kind of prop for their religious views.

You hear someone with libertarian or antistate views rarely.

 But then, of course,  why would you, with a media mostly beholden to the gun-makers correction: weapons industry and the sloganeers?

Update:Rereading this, I find it sounds as if I am opposed to gun ownership. I am not. I meant the weapons industry, as in weapons of war.

I’m all for responsible gun ownership and nurse unending dreams of  that handy revolver I’ll have some day, hidden snugly in a hip pocket….