Tag Archives: conservative economics

BP Oil Spill And Shooting Ourselves In The Foot

There is understandable distress about the oil spill in the Gulf on the BP well and lots of heated rhetoric about “doing something” to BP to punish them for their perceived negligence.  We truthfully don’t know the facts yet about the cause of the mishap.  Sometimes things just go wrong and no one is at fault.  One would suspect that the old bug-a-boo, human error, is the culprit.  That is because the odds would favor such a conclusion when dealing with complex machinery and man.  Most airline crashes are caused because some person made a mistake along the way.  On a few occasions we find that equipment failed but that is normally the exception.

Some pundits have already called for the demise of BP.  Maybe you have heard them saying that BP should be put in bankruptcy or “nationalized” by the government.   Of course many politicians have already called for BP to suspend its dividend including the gang that can’t shoot straight in the White House.   That same gang has already imposed a moratorium on new drilling in the Gulf for deep wells and suspended drilling even in the shallow waters until they complete a review.  Lord only knows how soon that review will take.   They first have to wake up the bureaucrats and get them off their porn watching habit and actually do some work.

That moratorium will  cost us thousands of jobs, good jobs for Americans at a really bad time.  The loss from income and the unemployment benefits that will have to be paid will badly exacerbate the financial condition of the US and dramatically impact the local economies of the Gulf States.    The six month moratorium will not be for just six months.  The companies that own those rigs will have to put them to work somewhere and they will be moving them out of the Gulf at lighting speed.  Those rigs will move to Africa, Indonesia, Thailand, The South China Sea, the Middle East and any other place that Japan, China or India what to explore and develop their own independent source of oil.  Those rigs are huge and cost hundreds of millions of dollars.  It isn’t like picking up a tinker toy set and moving it from the den to the kitchen.  Once moved they will go to work and remain there for the duration of the contract to drill.   The moratorium means in reality an interruption of drilling for a year or much more.  There is no assurance those rigs would ever return to the Gulf.  What company would want to face the potential wrath of Congress and the White House and the blizzard of new regulations coming down the pike?   Meanwhile back at the ranch as they old westerns used to say, we will still be using oil, lots of oil ever day and it will have to come from somewhere.

The demands that BP cancel its dividend raises very difficult economic and diplomatic issues we need to face.  The fact is that about 14% of all dividends last year in Britain came from BP.   Literally the widows and orphans and the retirees depend on that cash stream for their living.  The news indicates that one in six of those receiving a dividend in Britain got it from BP.   The British government is already dealing with pretty severe economic problems with their own debt and deficit.  You think they will notice the loss of billions annually in those dividend payments?   You can just imagine the conversation between the Chancellor of the Exchequer with our tax cheat in chief, Geithner.   “I say old boy, that dividend  restriction is a bit of unpleasantness for us.   I fear if that were to occur we would have to eliminate our capital gains tax entirely and all transaction taxes on securities of any stripe.   We’ve always rather wanted Wall Street to move to the City in any event.”   London could change its laws in a heart beat and virtually all the investment firms, hedge funds and large banks would move there.   They don’t have to be on Wall Street in the modern era.  Do we really want to lose that business and income stream.  New York, both city and state, would become a ghost town overnight.    What if the British were to tell us they couldn’t supply our military bases in Britain with fuel any more if BP were destroyed?   The payback scenarios are too numerous to count and none of them would end well for us.  

We need some grown ups running things, not a bunch of kids on the school yard yelling taunts and epithets.   Let’s see what BP can pay first and how much damage has resulted.  We don’t need to be pouring gasoline on the roaring fire.   They already face lawsuits out the wazoo and have all the incentive in the world to move fast and efficiently.  That moratorium should be one month; we should make those bureaucrats work around the clock if they have to see if there is a system wide problem or regulatory issues.  I think there won’t be anything of significance found.  It was probably someone not following proper procedure in the first place.   We should not compound the problem with the loss of thousands of jobs, billions of lost revenue and even more dependence on foreign oil.  Like a good physician, let’s first do no harm.

It is not on the front pages any longer because we have such a short attention span, but that Icelandic volcano is still erupting and spewing ash in the atmosphere.  It has been three months now.  Now why haven’t the regulators and bureaucrats figured out how to stop that thing.  It is going to have a much bigger influence on our climate than anything we are doing if it keeps this up much longer.   http://www.olcranky.wordpress.com

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2 Cents For These?

The following are worth what you paid for them but the asking price is still 2 cents per each as they say on the loading docks.

When you have spent an hour on the tarmac with no word from the cockpit about take off or pulling up the the gate, you wonder if those pilots were “distracted” with their computers and heated discussions about company policy.  Like the policy for keeping passengers informed.

The current health care proposal to have a public option but with a provision to allow States to opt out of the program has one glaring fault.  The folks in Kansas might not want to have anything to do with a Federally run and mandated health care program and decide not to participate.  But, but, but, the new Federal taxes of all stripes being implemented to pay for the program will still be in place so those good folks in Kansas will still pay the taxes and the people in Michigan will get the benefit of the program with a subsidy from Kansas.  That’s a real Hobson’s choice opt out if I ever saw one.

One wonders sometimes if the US will survive the length of the Roman Empire.  The myth of Remus seeing the 12 buzzards flying over Rome supposedly meant that the empire was to last for 12 centuries and that turned out to be pretty close to the facts.  Will the US enjoy ascendency for 12 score of years?

You watch the news and see our troops and allies training Afghan soldiers with modern weapons and how to use proper infantry techniques.  Then sometimes they are firing larger weapons like machine guns.  It is usually some scruffy looking fellow who looked like he just came in from the fields.  Am I the only one that has a concern that all we may be doing is supplying and training our future adversary on the field of battle?

Now our good friends at GMAC are back asking for more money.  This time it appears to be about 3 or 4 billion more in addition to the 12 billion it has already received to make loans for Government, Inc.’s autormobile industry.  Hmm, let’s see if GMAC went out of business then folks would have to get their car loans from a local or regional bank or even a credit union.  Wouldn’t that be a good deal for everyone.  I thought we were all worried about those too big to fail banks.   Why don’t we let the local banks have that business and stir the local economies.  Government, Inc. is subsidizing GM and Chrysler and they are subsidizing GMAC and there is no end in sight.  You really think the UAW will ever agree to meaningful changes to their contracts to make our auto industry truly competitive as long as Government, Inc. will be there to pick up their tab with taxpayer money from throughout the nation?

Interesting to see that someone finally is reading our Constitution.  Note the recent letter from some members of Congress to the guy in the White House that he can’t accept the Noble prize without approval of Congress.  They are right.  Hate to rain on anyone’s parade but one would hope that occasionally the current gang in Washington would follow the law and the press would hold them to it.  The provision is not comlicated.  Art. 1, section 9….”No title of nobility shall be granted by the United States: And no person holding any Office or Profit or Trust under them, shall, without the consent of Congress, accept of any present, Emolument, Office, Title, of any kind whatever, from any King, Prince, or Foreign State.”  It is not a big deal if followed but it is our law and either it should be followed or not.  Maybe we will ignore it jsut as we do our own immigration laws and pretend they don’t exist.

Speaking of Art. 1, section 9, it requires that there be a “regular Statement and Account of the Receipt and Expenditures of all public money”….. Do you think the off books accounting used for Medicare, Social Security and soon the other like comports with that Constitutional requirement?  Don’t we have the right to demand under that section as legitimate an accounting as is required by other public companies regulated by the SEC?  Government, Inc. official would be prosecuted for fraud if that were held to the accounting standards of the private market.   They make “material misrepresentations” with every alleged budget and accounting they submit. 

Rather than give money to big banks and GM why not use that money to fund big increases in the NASA programs.  It would create thousands of new and well paying jobs.  It would continue the true nature and purpose of Man to venture out and test the new and explore.  It would have side benefits not yet imagined.  We could send a manned crew to Mars.  The scientific knowledge alone would pay for it down the road.  What are we getting for our money in GM or Citigroup?

When you go to the hospital and they make you put on one of those darn gowns with your rear end exposed wouldn’t you prefer to be dressed as you like and tell them you will be glad to undress for their exams or check ups everytime they need one?  I mean those gowns are not a medically necessity it is for the convenience of the staff which I appreciate but gee whiz.  They are so demeaning.  I would rather dress and undress 8 times a day but be able to look normal between times.  It would sure elevate my mental state, don’t know about you.   Then you probably have a cuter rear end than I do.

How is it that the Holidays seem so far away at Easter and then you get hot and before you can blink they are only 7 weeks away?

“The Democratic Party has a vested interest in depression at home and war abroad.  Its leaders are always troubadours of trouble; crooners of catastrophe.  Public confusion on vital issues is Democratic weather.  A Democratic President is doomed to proceed to his goals like a squid, squirting darkness all about him”….  Hard to believe but that is from the New York Times, February 1959.   It could apply to their headline for tomorrow.    http://www.olcranky.wordpress.com

 

 

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Capitalism Dead or in Hibernation?

It seems as though every other day for the last couple of months there have been comments about the demise of capitalism or at least a radical governmental intervention into the market place to correct the perceived shortcomings of capitalism.   That has been  the lead story on the TV news networks and in the print media of late and has captured the front cover or front page on a few occasions.   That prediction has been made before for the US.  You are referred to the 1930’s and the very active movement of the left and the Socialist to bring socialism to these shores.   With the economic and social turmoil of that era and the aura of benign disregard of the abuses of the Soviets portrayed in the press of that time there was much talk then that the US would have socialism here.   The Roosevelt administration was on the march to a huge expansion of government and the unions were in the ascendency.   That union growth continued right into the ’60’s and then plateaued into the ’70’s and then began its  long but steady decline since then.

We Americans love our freedoms.  I believe this is true for all stripes of our political spectrum.  The far left and the far right both echo the calls for freedom.  They differ on which freedoms should be stressed and which should be more curtailed but the concept of maximum freedom for the people is a bedrock of our founding.  It has been true since the earliest Pilgrams first stepped ashore almost 4 centuries ago.   They were seeking greater freedom than allowed in their homelands in religion and in the broader area of personal freedom to move about and make of your life what you could with your own endeavors.  They were farther removed from the yoke of government and when the yoke became too heavy again we rebelled and our nation was born.

The Constitution and the Bill of Rights are all about freedom and freedoms granted and guaranteed to the people and the states.  No other country was founded on the same basis in all of history.  Usually a country was created from common language, natural geographic boundaries, common religion and a consensus view of the power afforded the Emperor, King and autocrat in charge.  Freedom is at the heart and soul of capitalism.  Only and puny and diminished capitalism can exist with restricted freedoms.  The less freedom the less capitalism flourishes.  It has been with us in one form or another for several centuries now.   Capitalism as we would define it only came as the power of the monarchy or empire was lessened.  The greater the freedom the more vigorous the capitalist society.  The early experiments in capitalism were quite different than what we would recognize.  Under the Tzar there was a capitalism but it was based on favoritism and royal dispensation more than merit or worth of services or products offered.  The British used Mercantilism for quite some time to direct and control capitalist enterprise.   The capitalists had to conform to the needs of the state and its favorites more often than not regardless of whether the business made sense in the market place.  

The US has had the most productive and adaptive of the capitalist systems in the world.  It has been filled with abuses and downturns and dislocation throughout our history but over the long haul has served us extremely well.  For every Bernie Madoff we’ve had an Alexander Graham Bell, for every Enron there has been a Microsoft or Apple, for every downturn we’ve had an era of enormous growth.  It was bad in the ’30’s but great in the ’50’s, rough in the ’70’s but splendid in the ’80’s.  We should take care not to kill that golden goose.  The more freedoms the more capitalism and it has been ever thus.  If our capitalism is reduced you can be assured so will our freedoms. 

I recommond some reading for you.  Fernand Braudel wrote a triology about economic development.  The books are: Structures of Everyday Life; Wheels of Commerce and Perspective of the World.  Be advised he is left wing.  But the works do examine economic life going back for centuries and the facts are of great interest.  He does get on his socialist high horse.  He was a very bright fellow.  Of course he wrote the last of them before the ’80’s and was predicting the complete demise of the capitalist system.  It is always good to review a different way of thinking.  His history is quite good, his analysis of what events and facts mean are something else again.  No doubt if he was around today he would be one of the talking heads on CNN telling everyone that capitalism is finished.  He was an admirer of the socialist agenda even in spite of the abuses of the Soviets.  He thought there would be a kinder and gentler socialism even though he supported the general concept of the ruling party elite being in charge of everyone’s life.  Funny how those who disparage capitalism also always believe they know what is best for everyone and are willing to impose their view with the force of law.

Many smart people have written off capitalism before.  Smart doesn’t mean you are always right and certainly doesn’t mean you are decent or honorable–I offer Adolph Hitler and rest my case.

I see that there is finally some talk about putting guards on the ships passing the Gulf of Aden and the Somali coast.  I urged several weeks ago to revive the Armed Guard navy force from WWII to do just that.  It w0uld work and be very economical.   I would give the Armed Guard the same rules of engagement as in any other war–if it looked like a duck, quacked like a duck and smelled like a duck then open fire.  You could hail the vessel but it must respond or that lack of response would be considered hostile intent.  If it really was an innocent fishing boat then that is truly collateral damage.  Real fisherman would have no hesitancy in responding and identifying themselves. 

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It Goes Around and Comes Around

Think back to the late ’80’s and the Savings and Loan crisis of that era and you should recall that it was a mostly regional problem.  Yes, the effects of those bad commercial loans spread to many regions of the country but the pain was not universal.  The real epi-center of that crisis was in the southwest–Texas, Oklahoma, New Mexico, Colorado and Louisiana were the states the hardest hit.  Only shortly before the crisis unfolded that area had been doing quite well economically.  The price of oil and gas was strong and climbing.  In the early ’80’s oil peaked at the then outrageous price of just under $40 per barrell.  There were plenty of predictions that the price would quickly move to $100 per barrell.  That oil revenue helped fuel a sharp increase in economic activity in the southwest.  The savings and loans were also awash in money at that time as were most of the banks. 

That availability of money and the oil profits sparked a large building spree by the developers.  There were deals for office buildings, strip centers, malls, apartments and almost any type of commercial construction.  I had many clients at that time who had the banks call on them asking them if they needed some money for a project.  It was not unusual for the banks to even suggest an area or project they thought would work.  The banks took a piece of the action in many of these cases.  They not only were looking to profit from the loans themselves but were getting a portion of the equity in the projects.  This was indeed a “partnership” between the developers and the banks.  But alas when the Feds got involved after the trouble started the position then was that everything was a fraud from the git go.  The Feds denied that there was any partnership with the developers.  There never was a document called a partnership agreement; however, the banks would have a “participation” agreement or use some other euphemism for it.   There were a number of lawsuits over that issue.  In any private litigation the existence of the partnership would have been proved without a problem.  But the Feds didn’t want the liability of a partner and also there was intense political pressure from Washington to scapegoat the “bad” guys–developers.  You can look up those cases if you like.  D’oench Duhm was the lead case on this issue.

The country as a whole was not sympathetic to the southwest and felt that the folks there were reaping the rewards of extravagance and risky business practices.  Many felt like there was no need to do much of anything and didn’t care what happened.  The take over of many of the s and l’s was a political cause celebre much like the bailouts of today.  You can go back and look at some of the editorials from that era from the northeast, midwest and west coast to get a flavor of the sentiments.  There were a handful of unscrupulous developers but only a handful.  Most of them were merely following the rules of the game at the time they made their deals with the banks.  The government changed the tax rules in ’86 which really gutted the real estate investment market.  Then of course the very regulators who had been cheering on the s and l’s to go out and make all these loans were suddenly “shocked, shocked” to discover that a lot of those loans had indeed been made.  It was part of the deal Reagan had to make with the Democrats to keep his budget lower.  It was a classic political trade off to close loopholes and yet get lower taxes through a Democrat controlled congress.   Those in the southwest didn’t want any special favors and didn’t get any.  There was about 300 billion in federal money poured into the debacle.  But even in those days that was a manageable number and didn’t seriously effect the national economy.  Of course that 300 billion number was mostly due to the incompetence and pusillanimity of the federal regulators themselves.  If the feds had allowed the s and l’s to rework the loans privately with their borrowers the loss would have been greatly diminished.  I worked on many of those cases and know whereof I speak.  I personally witnessed the government wasting millions and millions by demanding foreclores and bringing in new managers when a simple reduction in interest payments would have solved the problem at hand.  Odd that now the mantra is that Government, Inc. is forcing the banks to work with their lenders and do everything to avoid foreclosures; times and fortunes do change.

Now the wheel has turned.  It is Michigan, Ohio, Florida, Arizona, Nevada, California and New York City that have the problems.  Just check the numbers and the stats.  The fall in housing prices and the foreclosures are there.  Yes, I know there are some problems in other areas but they pale in comparison to those states and NYC.  All of this mortgage bailout help, foreclosure issues and falling home prices are there.   Explain to me again why I should be that concerned about those regions?  All I remember is vilification for the southwest when it had problems and the worst help in the world.  The help was from those people showing up saying “We are from the federal government and we are here to help you”.  Sure.  It took about 8 years for our area to recover from all that government help.  I certainly don’t feel any moral obligation to pay for someone’s mortgage in Victorville, California who bought a house he couldn ‘t afford with no verifiable income and it was 100% financed by some agency of the US government.  We are not all in this together when it comes to our economic life;  otherwise we would all share one joint checking account.  I don’t feel in the least responsible for every spendthrift in the country–how about you?   Let each person and each state work out their own problems.  That is what is best for all of us.  If California wants to tax and spend itself into oblivion that is their choice but I don’t feel in the least sympathetic for them.  If their path is the right one they will prosper and I am just dead wrong.  I ask however that I not be required to “invest” in their economy or political dreams.  We have choices and we have consequences.  I will live and struggle with my choices but I damn sure don’t want to suffer your consequences.   Seem fair to you?

“There exists in human nature a strong propensity to depreciate the advantages, and to magnify the evils, of the present times”.   Gibbon

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Stress Tests Weak Hearts

I wonder if our free market system still has a heartbeat sometimes.  There is no question that the interventions of Government, Inc. over the last 6 months has severely wounded the vital organ.  Our income tax chief who can’t calculate his own taxes correctly and who also happens to be the Secretary of the Treasury announced with some fanfare the imposition of stress test on the banks a couple of months ago.  Now those results are about due.   It has become clear however that “passing” the stress test is going to be in the eyes of the beholder.  In this case the beholder is Government, Inc., the entity wearing mulitple hats and having more conflicts of interests than a Rostenkowski aide.  (For those under 40 or so he was the Democratic speaker of the House in the ’80’s who was finally caught with his hand literally hanging out of the cookie jar–another famous or infamous Chicago politician.)   

Even though several banks have said they are prepared to return the TARP money the Treasury has demurred and told them no.  They can’t do it without regulatory approval.   Geithner acts like the FDIC is some foreign entity from Mars that has no connection with Treasury.  I assume the same is true with the Comptroller of the currency.    Why does Government, Inc. keep trying to hide who is in charge?  Another thought that is just as troubling is that maybe they don’t know who is in charge.  Is it Larry Summers?  Is it Geithner?  Paul Volker?   The testimony yesterday from Geithner was confusing at best when he stated the government would like to get back the TARP money but wouldn’t allow the banks to do it if in the opinion of “regulators” that such payment would have a negative impact on the macro-economic situation.  He can tell the regulators what to do why he is trying to hide this fact?   The market responded in a sensible way and concluded that this vacillation was merely a ruse to cover a deepening government desire to control the entire banking system.  This was especially true given the idea floated by Government, Inc. in the last couple of days that it was considering converting its preferred stock to common stock in some of the banks who received the TARP funds.  That gives Government, Inc. direct voting power in the banks.  With that power they wouldn’t have to make those offers that can’t be refused like the Mob and could assert direct control of banking decisions in the future.    The current administration doesn’t like the negative publicity of financial aid to the banks but is chomping at the bit to exercise dominion over that vital section of our economy.  You can rest assured that the spin will be that they had to do it for our own good to expunge the market place of those corrupt bankers. 

The government is owed money by the banks and some of those large banks in turn are owed billions by GM.  Government, Inc. is already running GM.  Anyone who doubts that should recall the “dismissal” of Waggoner as the President of GM.  The government wants the large banks including Citigroup and JP Morgan to take at least an 85% haircut on their loans to GM.  They could probably recover 100% of their debt even in a Chapter 7 liquidation of GM.  They do hold the first liens on the assets of GM.  The banks don’t want to do that understandably enough.  Why should they take a loss when they don’t have to?   Well, because they are being bullied by Government, Inc.  The g0vernment runs GM, is owed money by GM and is owed money by the banks who want to repay their TARP  loans and now Government, Inc wants to force the banks to take a loss from the GM loans.  I wonder how that loss will be calculated under the stress test?   If the market was truly free the banks would push GM to the limit and it would file a Chapter 11 to reorganize it company.   A substantial portion of GM would emerge from that process.  It would be smaller but stronger.  The banks would recover their money and GM would survive to fight another day and compete with cars the public wants.  

It would appear however that the designs of Government, Inc. are driven purely by political ambitions.  Populists notions and numbers of votes on election day will be driving these decisions, not the free market system.  They will complain that the market system broke down and can’t recover without their help.  Balderdash!  They are not allowing the market system to function and make the corrections it would impose on losers and then move on and grow again.   Government, Inc. is involved in centrally planning key and large segments of our economy.  It has bootstrapped itself into the role of regulator, creditor and owner of the banks and GM simultaneously.  That is the grossest of conflicts of interest.  The puppet master is pulling all the strings behind the curtain.   Our market system with all its flaws and ups and downs over the last 200 years has been the most productive and wealth creating one ever seen on this earth.  By any measure you want to use, any metric as the moderns like to say, we have outperformed any other nation on earth.  Our people are healthier, richer and have the most modern of conveniences and freedoms so far.   The “heart” of our free market system is under stress for sure.  There are those in power who wish to replace it with an artificial heart designed and operated from Washington.  Please keep up with the news.  Observe the reach of government into an ever expanding behemoth striding across our economy.  Along the way Government, Inc. is ignoring the rights of due process for companies and individuals and breaches the private property rights guaranteed under the Fifth Amendment.  Where are those shareholder suits under the Fifth Amendment against the Government?   What about the rights of the shareholders of GM, the large Banks, (remember some of the banks were strong-armed into taking the money in the first place by government)  and even AIG? But that is a topic for another day.   Would the failure and closure of any or all of these entities have produced results any worse than we are facing now?  Think about it.  Papers will be written on that subject in a few years. 

Am I the only one that has doubts about the efficiency of the modern computer and printer making drafting documents quicker to produce.  I remember in the ancient days when the secretary had to type  the document and use carbon paper and make corrections using “white out” ink.  It was laborious.  But because of that you and your secretary were pretty darn careful with the very first draft of any document.  Normally only typos would have to be corrected.  Then with the advent of the modern system where everyone hits the “print” button and corrects on the computer screen I noticed that the guys in the office were making 4 or five drafts of a document.  They would go back over it and had in their head it would only take a minute to make the corrections on the screen then hit the print button again.  I really wonder if that has expedited the process.  I actually think the old way was quicker from composition to finished product.

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Liberal Changes To Chagrin of Conservatives

Looking at a long historical perspective it occurs to me that there is a consistent pattern in a liberal view of the political and social world.  You can start pretty much any where you like with the analysis on a timeline.  Whether it is 1850, 1900, 1940 or 2000 there is a pattern to the liberal fulminations and calls for action.  The liberals like to change the rules in the middle of the game.  If you start at any time period there will be “rules’ in place that everyone is expected to follow.  Those rules are the formal laws of the land and even the informal laws of society.  At any given point in our history there are those who find a way to flourish and thrive whatever the prevailing rules are at that time.  Naturally there are those who don’t flourish.  They bounce along at the lower levels of society economically and in social esteem.   This has been so since the birth of man.   A far smarter man than me said we would always have the poor with us.  You might recall His name.

We are born with different talents and aptitudes.  That is a fact of nature beyond any control of man.  For example someone with an 80 IQ is simply not as likely to achieve the same standing and status in society as the fellow who was blessed with an IQ of 120.  That fellow with the low score I believe does have certain rights and is entitled to the dignities of our society.    Some are born with a drive to achieve and indeed might become a “workaholic” and have financial success but abysmal familial success in life.  We are all so diverse in our abilities and motivations that it is not realistic to expect that we all will have the same “success” in life.  That success is normally measured in one’s earning capacity and has been thus for all recorded time.   Those with the higher level of talent will succeed under the rules of their time and generation.  But that disparity in achievement causes envy and resentment in those who don’t   fair as well in society.  In comes the liberal to rectify that situation.

The liberals are in a constant and repeated pattern of wanting to change the rules.  You grow up under one set in any era and along the way the liberals decide that there is not an equality of outcome for everyone.  They refuse to accept my basic premise that all are not created equal in ability even though in rights.  They change the rules to bring down those on top and to lift up those on bottom.  This evening out process is not based on merit or achievement but simply on status.   Look back over our history.  All that legislation over the past 150 years for the alleged advancement of the common  man has been to disrupt the natural striation of society.  Then everyone adopts to the new rules of the game.   Sure enough after a while the disparity still persist even under the changed rules of the game.  Then the process starts over again after a generation or so.   The Great Society of Johnson was to put an end to these descrepancies once and for all if you remember.  Lord knows enough Government goodies were handed out in one fashion or another that persist to this day.  Same with the New Deal. 

The elite liberals inherently think they are smarter than everyone else and certainly more caring about their fellow man.  They brook no disagreement with their tenets.  They believe fervently in a top down approach to the new rules everytime.  The rules are imposed from on high–the Federal Government.  They believe that they know what is best for all of us.  They believe in freedom but only so far as it makes everyone pretty much equal in their life outcome.   If there are disparities then freedom takes a back seat to whatever new rules they impose to work their equalizing strategy.  They are there for the common man.  But the elites are so removed from the common man that it is all theory not reality.  Remember when Sargeant Shriver of Kennedy family connections was going to run for President and he went to the local bar to have a few drinks with the working crowd and he order a Courvoisier brandy?  I can’t think of a better example of that attitude and detachment of the liberal elites.  Unless it is Mr. Geithner giving us that “you don’t understand” attitude about the bailouts and expansion of Treasury power beyond Constitutional limits.  He attended prestigous schools for sure but he can’t do his own taxes and he thinks we don’t understand. 

The other liberals are those that are attached to the “victimhood” outlook like a leech to a juicy leg.  It is not that they can’t achieve like the rest of us; no, they are victims of an unfair and unjust society!   Look, I accept the fact that I am NOT the smartest guy  in the room, that I can’t jump as high as some other men, that I don’t have the business acumen of T. Boone Pickens.   I believe most conservatives accept their shortcomings and will take responsibility for their achievements or the lack of them.  Many conservatives work on the railroad or drive a truck or paint your house.  They are not all country club denizens.  Liberals will not accept the differences in our innate abilities and the willingness of some to work harder than others.  So they will want the rules changed yet again.  I fear the process will go on ad infinitum.  No doubt there will be a liberal push two hundred years from now to rectify the disparities in society. 

Both camps of liberals fed on each other and need each other–the elites and the victims.  They do have a symbiotic relationship.  One can’t exist without the other.  I wish that we could someday get a set of rules that will last but the struggle will continue I fear.  The problem is that every time there are new rules there is a corresponding restriction on our choices in life and our freedoms, including the freedom to fail.

It is time to remind you again about the date for Easter.  We get so many requests for this information.   Easter Sunday is always the first Sunday after the first full moon after the spring equinox.   It is geared to the Jewish Passover which is based on the lunar calendar.  That is why Easter varies by as much as a month from year to year.

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Old Bad Remedies Are Still Bad Ones

We are faced with difficulty at the moment in our economic and financial affairs.  Many refer to it as a crisis.  I suppose that is in the eyes of the beholder.  But a faltering economy is a fact whatever its degree.   Some are  proposing certain remedies that they vervantly hawk as new and different to fix the exigencies of our times.  The proposal of Government, Inc. include among others the following: i) a  program of wage and price controls ii) printing of money that will debase the current value of money and iii) the issuance of extraordinary amounts of notes–borrowing. 
The phrase “exigent circumstances” has even been used by the Federal Reserve to justify several of its more extreme actions of late, such as the take over and funding of AIG and other banks.   Likewise the Treasury has called upon such language for its justification for recent actions.    We have tried wage price controls before and without exception they have all been dismal failures.  Check your history.  There is not a single example of that effort being efficacious.  

Government, Inc. has not set the sticker price of GM cars, at least not yet, but it has in reality.  By mandating the amount of wages the company will pay and the amount of debt it will be allowed to carry on its books and lastly demand that it produce “green cars” , the Government, Inc. bureaucrats and politicians are setting the price.   The market is not setting the price.  Likewise Government, Inc. through its regulatory controls will be setting the price of borrowing for everything from cars to houses.  In the face of growing international hesitancy to buy our debt the Treasury is issuing even more debt of unprecedented proportions–Trillions.  (See China for the hesitancy).  Lastly, the Fed has embarked upon a policy of printing up money and dumping it into the stream of commerce without any underlying economic justification that there is an equivalent  increase in  value in our economy.   Have these problems and attempted remedies been tried before?   Yes.   Go all the way back to the embryonic days of our Republic.

During the Revolutionary War we faced these problems.  Shortages and disrupti0ns caused by the war with Britain were causing a tremendous spike in prices.  We weren’t really a nation yet but a confederation of colonies with limited financial resources and were facing difficulty in provisioning our armies.  Indeed that was the constant thorn in the side of Washington throughout the war.  As early as 1776/77 the effort was made to impose wage price controls by some of the colonies.  A few did.  They prepared very specific lists of the prices that could be charged for services or products.  “horse-keeping, at sea port towns per night or 24 hours, 2s, 6d”, “best beaver hats at 42s. best felt hats at 8s”, and the lists go on.  This was from Rhode Island in 1777.  There were many others.  There were those who were opposed to the whole notion.  From Dr. Rush in 1777–“The wisdom and power of government have been employed in all ages to regulate the price of necessities to no purpose”.  ….”We estimate our viture by a false barometer when we measure it by the price of goods”….”The resolution before you is nothing but an opiate.  It may compose the continent for a night, but she soon will awaken again to a fresh sense of her pain and misery”.   Later John Adams commented “I much doubt the justice, policy and necessity of the resolution.  The high price of many articles arises from their scarcity.  If we regulate the price of imports we shall immediately put a stop to them forever”.

The colonies varied in their approach to the controls.  Many ignored them completely.  It was a hodge- podge of enforcement but they were failures.  We printed more money through the Continental congress.  The Continental currency had little value because we printed too much and our power was limited.  Thus the phrase “not worth a Continental”.    There were heated arguments about the effects of inflation.  Those arguing against the wild printing were right.  A few years later in 1781 we had to reconstitute our money and debts.  We traded in the old debt at 40 to 1.   Our currency was recognized as having little worth and thus our debt was without value.  The King of France loaned us millions out of his own purse.  So did other French interest and the Dutch.  This was all before our final victory at Yorktown.  Those were our biggest debts.  The money was used to pay for the war.  Naturally the French King and his subjects had their own selfish reasons for helping us defeat the British.

 A few years later when we adopted the Constitution and organized our affairs as a nation one of the first things we did was recognize the obligation to pay our national debts.  Mr. Morris of Pa. had also financed much of our war expenses.  Indeed he financed almost alone our campaign and victory at Yorktown.  The decision to honor our debts was not universally popular at the time.  Many thought is was merely favoring the rich here and abroad.  Those in power recognized how important it was for our new nation to start its voyage as an equal on the world stage by honoring its debts–by doing the right and honorable thing.  The memory of the inflation and debasement of our debt and currency was fresh on the minds of all in the late 1780’s.  Despite the populist demand and rants that we deny payment on the debts of the Confederation decency  and common sense prevailed.  Thus we have Article VI of the US Constitution. 

Having money that is worth something is vital.  Honoring your debts by paying with real value is economically important and letting the market work will keep our economy free.  Government, Inc. is not the solution, it is going to be the problem.   Our virtues and values are the solution.  Please, please read some history yourself on this topic from different eras in history.   Government intervention into market systems universally leads to bad results.  Otherwise the Soviet Union would still exist and be the world’s premier economic powerhouse and leader.ore  www.olcranky.wordpress.com

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Does “Market” Need Fix?

Only yesterday our tax cheat in chief who happens to also serve as the Sec. of the Treasury said that the market can’t fix the financial mess.   Oh, I do beg to differ.   The arrogance of such a position is mind boggling.  The “market” is all of us making our individual and collective decisions on a daily basis.  All of that accumulated brain power however is not the equal of a hand full of technocrats and bureaucrats on a mission to show us just how smart they are.  He repeated the mantra that only Government, Inc. is qualified and capable of restoring health to the markets.  

What the market needs from Government, Inc. is to be a fair referee and nothing more.  The market itself is fair in the sense that it allows for a wide variety of outcomes and everyone is treatedly equally.  The market does not and never has discriminated against anyone.  The market is the same as a force of nature.  The market does not assure equality of outcome for everyone.  That is its very nature and its purpose.  It is the Darwinian theory writ large on the economic scene.  It is when Government, Inc. gets its hands on the process that distortions occur that are inherently unfair.  The market allows for success and so-so results and yes, indeed for failures.  The failures dispite all the jokes about setting a bad example are truly the examples that the market holds up for examination and as a warning to others.  The successes are to be emulated until the market deems them a bridge too far.  

Just like in a football game you want to know the rules before the kickoff and then on with the game.  The last thing anyone should want is for the ref. to change the rules in the second quarter, then again in the fourth.  The game permits some to be heroes and score multiple touchdowns, others with stumble with missed passes or fumbles and you can rest assured there will be a winner and a loser.  But if the game was played fairly by the teams and the ref officiated fairly no one will complain.  The same should be true with our market.  The market if fairly refereed is always fair in its ups and downs.  It is the world’s best self regulating entity ever invented by the brain of man since we started permenant settlements.   The common law applies to the market and is a creature of the needs of a fair and efficient market.  The common law was the first referee of the market system.  We have a huge layer now of regulations already in place.  Please check into how many there are already if you doubt that statement.  Don’t take my word for it.  The market always self corrects and can do it more effectively and fairly than Government, Inc.  When the Feds get involved the politicians are picking the winners and the losers rather than the market place.  Then those same politicians blame the market for not being efficient.  If we had let AIG, some of those large banks and GM go under in the first place we would already be on the way to a market recovery.  Yes, there would have been winners and losers that the market rewarded or punished.  But it would not have been Government, Inc. doing it.  It would have been the result of all those millilons of decisions we all get to make as a free people.   Sure there would have been problems.  But most of those would have fallen to people making bad choices who deserved to deal with failure rather than be artificially propped up to a phony “success” by the Feds.  If the House of Rothschild lost 100 billion on credit default swaps I don’t care.  I don’t care if Bank of America exist are not, we have over 8000 other banks that want your business.  In the “market” there is no such thing as to big to fail. That is purely a political concept, not a market concept.  Just the same with Mother Nature i. e.,  how many dinosaurs have you seen lately in the neighborho0d?  Did the w0rld end when they went extinct?   The market does not creat artificial categories that are preordained for success or failure like the Feds. 

The market doesn’t have human emotion. It is not populist or socialist or any other isms if it is allowed to work.  We have Government, Inc. trying to reinvent the wheel here.  They will make even a worse muck of it than they already have and the outcomes certainly won’t be fair.  Fair meaning that the successes are determined by the ingenuity and hard work of the folks working in the market and the value and esteem of the market for their product or service.   What made a man who can’t calculate his own taxes correctly think he has all the answers, and more to the point, and all the correct answers for our economy.  I would think that is a bit more challenging than his tax return.  I wonder if he is using Turbo Tax for his calculations with our economy.  Let failure ring I say so the glory of success can make its clarion call across the land. 

For everyone except the brainwashed the recent comments from the President of the European Union should be a real wake up call.   They are not exactly knuckle -dragging, troglodyte, right wing wackos and they think we are heading the wrong way with the current budget proposal from the grand poo bah of Government, Inc.  He referred to it as the path to Hell. 

There are two kinds of mass.  I hadn’t thought about it that much but those phycisists sure do and I am glad they understand it better than me.  Inertial mass is the effect of mass whereby it measures the force necessary to move mass from a given path or set it in motion.  The energy if you will to move a loaded wagon from a standstill.  Gravitational mass is the attraction that every independent piece of mass has on every other–the force that keeps the earth rotating around the Sun.  Mostly it is so small and weak that it is not measurable or noticeable but it is a key point in the theory of relativity.

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Satirical(?) Fix for Global Warming

We are inundated with news constantly that we are all going to die, or at least our progeny, in the not too distant future as a result of the man-made Global  Warming.   We are assured that the science is solid and there is no dispute about the conclusion.  Of course data is a hard thing to ignore–pro or con.  The oceans will rise due to the melting of the icecaps on the land masses around the world we are told.  The rise in sea levels will flood major portions of the populated world we are told.  Starvation, ruin and civil unrest await us all.  Some even preach the oceans will rise because of the melting ice sheets in the artic and Antartic regions.   Those in fairness are the commentators on MSNBC who over look some basic physics.  Those ice sheets are already in the water and their conversion to liquid water rather than frozen water will not add to the volume in the oceans.  It is already there.  Just as the level in a glass of ice tea does not rise as the ice cubes melt neither will the oceans rise from them.  But I divert myself.   The point is we are advised that the world faces imminent doom from Global Warming.  So let’s assume those Al Gores of the world are completely correct.  I think I have the perfect solution to the problem and it w0uld take less than a generation to restore  old mother earth to health.   I can’t believe all those wise men haven’t already thought of it themselves.  Those scientists around the world who believe there is some question about the cause of any warming should be ignored.  They didn’t get the memo obviously or else they would be onboard with the Sierra Club and Greenpeace. 

You recall that it was only a short time ago that the threat of the day was of an impending ice age.   It was all the rage only about 20 or 30 years ago.  We were going to freeze to death.  Those prognosticators were wrong.  They weren’t in Gore’s class at Yale or they would have known better.  There were several scenarios offered about how that ice age would be triggered.  Some proffered that it would be due to carbon emissions.  Hmm, well, anyway since they didn’t like those results they merely changed the target and now it is Global Warming.   The scariest scenario for an immediate ice age was what was called the Nuclear Winter.   During the Cold War there was much study made of the effects of the use of nuclear weapons on the earth.  It was postulated that the explosion of numerous nuclear weapons during a conflict would spew tremendous amounts of debris into the earth’s atmosphere and produce a “cloud” cover that woulde block the warming effects of the Sun.   We would all freeze to death and it would take only a matter of months for this process to begin.  This theory was put forward by similar left wing groups who were strongly anti-American and viewed the US as the world’s greatest villain on the world stage.  These predictions went on during the Reagan years.  He was too bellicous they said and would take the world to war with the Soviets and the Nuclear Winter would be the result and thus there would be no winners in any such conflict.  This theory had serious play in the press of the day and was touted by many a Noble prize winner.   I say we should make lemonade out of the lemons.

Let’s have a world wide self-induced Nuclear Winter.  We get with all the other nuclear powers of the world, Britain, France, Israel, Pakistan, India, Russia, Ukraine, Iran (?), North Korea (?), and South Africa (?) and work out an agreement to set off the bombs and create the Nuclear Winter.  That would put the kaboosh to the Global Warming efffects immediately and we could all sleep easier.   I know there are a few details to work out.  How hard could it be though?  We would select all those wasted spaces on the planet.   We could start with Antartica.  You weren’t planning a vacation there anyway and it won’t support crops.  Then we could use some of those worthless millions of square miles in the Sahara.   The Australian outback is another perfect locale for detonation.  The Aussies might need a little persuasion but they are enlightened and would no doubt come around because it is for the greater good of mankind.   Siberia doesn’t have any major areas loaded with people and is another great place to save the world.   Once we got the ball rolling I am sure others would volunteer plenty of space.  There are great swaths of unused land in the Iranian and Aftganistan areas that could be contributed.   We could have a sort of Kyoto style summit to hammer out the details.  We were told back when it would only take less than a hundred of the thousands of bombs in existence to cause the Nuclear Winter so we have ample stocks but we need to hurry before those peaceniks cleanse us of all our weapons and we lose this option.  

Just think about it.  The ice caps and ice sheets would actually increase in size and the ocean levels would fall, not rise.  Think of all the new beach front properties that could be brought to market.  It would stir economic growth around the world.  Merely building all those new condos in Florida and Dubai would employ thousands.  The dust from the Nuclear Winter would be completley cleared in a few years.  Even the alarmist of the past agreed on that point.  But that settling would also clear out the excess carbon.  Likewise think about all those cows that emit methane gasses into the atmosphere.  We could get rid of most of them in a few years and we could  become vegetarians which would be good for most of us anyway.  Who really needs a juicy T-bone steak?   The nasty tobacco industry would be gone overnight.  We would figure out how to make up the lost revenues from the cigarette lawsuit settlements going to the States.

I admit that there would be some collateral damage.  But compared to the death sentence for the entire world we are facing with Global Warming, it would be worth it.  Man must survive.   We stock up on can goods and bottled water and candles.  After about six months we could resume our normal activities.  Ok, I admit there would need to be a few changes.  Gore could be elected as the envoirnment Czar for the entire world.  Maybe that would finally be a stage big enough to hold his ego.  The reduction in population would reduce the carbon footprint of man by an exponential factor.   Nuclear Winter is not the problem, it is the solution!   I urge you to join the movement now.  Be reliant and start your own nuclear fallout shelter now before the rush to Home Depot.   As a side benefit we wouldn’t have to worry about the economy or financial crisis or whether our Secretary of the Treasurer knows how to pay his taxes.   I promise with this program tax rates would fall and we wouldn’t have to worry about inflation or stimulating the economy or Madoff or Barney Frank.

Don’t forget your sweetheart for Valentine’s Day.  Order flowers.  And if you want some personal attention, then I advise you try something unique and have a conversation with her.

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Filed under Economics, Environment, Global Warming, history, Mother Nature