Dale F. Ogden's Blog on
|Is life so dear or peace so sweet as to be purchased at the price
of chains and slavery? Forbid it, Almighty God! I know not what course others may take,
but as for me, give me liberty or give me death! Patrick Henry, 23 March 1775
4/30/2008: Hiring leaps in public sector First-quarter gain most since 2002
Federal, state and local governments are hiring new workers at the fastest pace in six years, helping offset job losses in the private sector. Governments added 76,800 jobs in the first three months of 2008, the Bureau of Labor Statistics reports.
"More hiring has nothing to do with good government or economic policy," says economist Kenneth Brown, research director at the Rio Grande Foundation in Albuquerque. "It has everything to do with government being slow to react to economic change."
4/30/2008: Siphoning Off Corn to Fuel Our Cars As farmers feed ethanol plants, a costly link is forged between food and oil.
Across the country, ethanol plants are swallowing more and more of the nation's corn crop. This year, about a quarter of U.S. corn will go to feeding ethanol plants instead of poultry or livestock. That has helped farmers like Johnson, but it has boosted demand -- and prices -- for corn at the same time global grain demand is growing.
And it has linked food and fuel prices just as oil is rising to new records, pulling up the price of anything that can be poured into a gasoline tank. "The price of grain is now directly tied to the price of oil," says Lester Brown, president of Earth Policy Institute, a Washington research group. "We used to have a grain economy and a fuel economy. But now they're beginning to fuse."
Rising food prices have given Congress and the White House a sudden case of legislative indigestion. In 2005, the Republican-led Congress and President Bush backed a bill that required widespread ethanol use in motor fuels. Just four months ago, the Democratic-led Congress passed and Bush signed energy legislation that boosted the mandate for minimum corn-based ethanol use to 15 billion gallons, about 10 percent of motor fuel, by 2015. It was one of the most popular parts of the bill, appealing to farm-state lawmakers and to those worried about energy security and eager to substitute a home-grown energy source for a portion of U.S. petroleum imports. To help things along, motor-fuel blenders receive a 51 cent subsidy for every gallon of corn-based ethanol used through the end of 2010; this year, production could reach 8 billion gallons.
Although ethanol was once promoted as a way to slow climate change, a study published in Science magazine Feb. 29 concluded that greenhouse-gas emissions from corn and even cellulosic ethanol "exceed or match those from fossil fuels and therefore produce no greenhouse benefits." By encouraging an expansion of acreage, the study added, the use of U.S. cropland for ethanol could make climate conditions dramatically worse. And the runoff from increased use of fertilizers on expanded acreage would compound damage to waterways all the way to the Gulf of Mexico.
4/26/2008: "We cannot figure out why you (Americans) are even bothering to hold an election. On one side, you have a bitch who is a lawyer, who is married to a lawyer, versus a lawyer who is married to a bitch who is also a lawyer. On the other side, you have a war hero married to a beautiful woman who owns a beer distributorship. Is there a contest here?"
4/25/2008: Thanks to Alan for pointing me to a really cool site (some of my favorite):
Death by Mortar Warning!
But there's lots more at www.splodetv.com
4/24/2008: The Democrats' Energy Plan
Count your blessings. With the Democrats in control of Congress, it's a wonder the price of gasoline isn't already $10 per gallon.
4/24/2008: Out of the way, peasants -- Government workers are a privileged elite exempt from even basic traffic laws. by STEVEN GREENHUT, Sr. editorial writer and columnist, The Orange County Register, firstname.lastname@example.org
Readers have been shocked to learn that California has about 1 million citizens who are literally above the law. Members of this group, as a Register front-page article April 6 detailed, can drive their cars as fast as they choose. They can drink a six-pack of beer at a bar and then get behind the wheel and weave their way home. They can zoom in and out of traffic, run traffic lights, roll through stop signs and ignore school crossing zones. They can ride on toll roads for free, park in illegal spots and drive on High Occupancy Vehicle lanes even if they have no passengers in the car with them. Chances are they will never have to pay a fine or get a traffic citation.
They are a special class of people, basically exempt from the laws the rest of us must follow. This isn't a small number, either. Drivers of one of every 22 California cars and light trucks on the road have this special immunity, which should cause our government leaders and law enforcement authorities always eager to protect us from any perceived problem to demand a fix to this real public safety threat. Think about what this means: a million drivers who can endanger our lives with near impunity. I can hear it now: "There ought to be a law!"
But instead of pushing for a fix, most legislators are trying to expand the program so that even more people can have the special "we're above the law" license plates. What gives? The answer is sickeningly obvious. The Special People are those who work for law enforcement or other government agencies or are their family members.
Now you get it. Government officials are zealous about dealing with problems caused by average citizens, but they are far less interested in dealing with the excesses of fellow members of the privileged, government elite. There are rules for "us" and rules for "them" us being the subjects and them being the rulers. Feel free to pound the table in anger now!
How did we get to this sorry place?
In 1978, the state started a program to protect the confidentiality of peace officers so members of the public couldn't find their addresses on Department of Motor Vehicle databases. Over the years, the program has been expanded from one set of government workers to another. It now applies to corrections employees, social workers, nonsworn personnel who work in juvenile halls, parole officers, parking enforcement employees and on and on. Even county supervisors, city attorneys and city council members can be exempt from the state's traffic laws.
Even after the Register article exposed this outrageous situation, an Assembly committee voted to expand this special privilege to firefighters, animal control officers and veterinarians. Assemblyman Mike Duvall, R-Yorba Linda, explained his vote to the Register in this way: "I don't want to say no to the firefighters and veterinarians that are doing these things that need to be protected." That attitude explains why our society is moving in this direction. No one not even a self-proclaimed believer in limited government will stand up to groups of workers who have become as demanding, self-righteous and arrogant as those found in the French bureaucracy.
Americans used to be better schooled in the views of our nation's founders, who believed that government should be strictly limited and highly accountable. The Constitution, after all, is designed to protect the People from their rulers. These days, and especially after 9/11, Americans have become compliant and dangerously obedient to the authorities. Hence, they keep getting rolled. You know something's amiss when museum security guards, court workers, DMV employees and retired parking officers are part of the special-license caste.
The special-plate program works this way: The addresses are kept secret, so toll-road operators and parking enforcement cannot easily track down violators. The Transportation Corridor Agencies, which runs the toll roads, does not legally have access to the confidential addresses. The Orange County Transportation Authority has to go through additional hoops to get the addresses and admittedly doesn't pursue toll violations too zealously.
In one instance reported by the Register, one couple had racked up almost $35,000 in penalties from OCTA for driving on toll roads without paying. Regarding moving violations, when police see these special plates they either don't pull the drivers over or they don't ticket them if they do. The cops call this "professional courtesy." Officers know that those with the special plates are "their own," and officers are quite open about refusing to ticket other members of the Brotherhood. They scratch each other's back. "It's a courtesy, law enforcement to law enforcement," Sgt. Tom Lee of the San Francisco Police Department, told the Register. "We let it go."
Well, such "courtesies" are functions of police states, not free societies. In a free society, the government serves the people. No one is supposed to be above the law, not even animal control officers and their spouses. Assemblyman Todd Spitzer, R-Orange, calls the situation immoral, unfair and unethical. He has proposed legislation that would limit the practice. Spitzer deserves kudos for this effort, but I wouldn't expect the legislation to go far given the deference afforded public-sector union members and law enforcement in the state Capitol.
The whole thing is a scam. This confidentiality of plates is defended on grounds of safety even though there's no example of anyone's safety having been jeopardized and even though so many of the workers who receive the protections are not in even remotely dangerous professions. Plus, the original rationale for the protection has evaporated. As the Register noted, "updated laws have made all DMV information confidential to the public."
Pound that table again!
Wouldn't it be nice if the government, for once, put the public's safety above the concerns of its own workers and its own bureaucratic prerogatives? These days, the focus always seems to be on the safety of the government workers (FYI, no government job is in the top 10 list of most-dangerous occupations), even though the government's entire raison d'Ítre (hey, French is appropriate, given the subject matter) is to protect us. Public-choice theory is correct government workers function mainly to promote their own self-interest, and not to promote what some naively believe to be the public good.
Sadly, as the government expands, America is becoming a society where the public "servants" are now the masters. Government workers earn higher salaries than their cohorts in the private sector and far higher benefits with a massive public unfunded liability (debt) as a result. The taxpayer eventually will be forced to clean up the fiscal mess. These same government employees have special protections from accountability. There's the Peace Officers' Bill of Rights, civil service protections and government unions, the last of which instill fear and trepidation into the hearts of politicians.
And now we learn that members of this coddled and powerful group (and their family members) don't even need to follow the basic traffic laws that apply to the rest of us. If you're not angry, then you must be a member of the special caste.
Contact the writer: email@example.com or 714-796-7823
101: The Price of Gas
First, we need to take into account inflation. The result of the Federal Reserve printing too much money is a loss of purchasing power of the dollar: something that cost $1.00 in 1950 would cost about $8.78 today. As for gas prices, in 1950 the price of gas was approximately 30 cents per gallon. Adjusted for inflation, a gallon of gas today should cost right at $2.64, assuming taxes are the same.
But taxes have not stayed the same.The tax per gallon of gas in 1950 was roughly 1.5% of the price. Today, federal, state, and local taxes account for approximately 20% of gas's posted price. Taking inflation and the increase in taxes into account (assuming no change in supply or demand) the same gallon of gas that cost 30 cents in 1950 should today cost about $3.13.
Neither have supply or demand remained constant. The world economy is growing. China and India are obvious examples. At the same time, Americans continue to love driving SUVs and trucks. As for supply, we are prohibited (whatever the reasons may be) from using many of the known oil reserves in our own country. Furthermore, due to government regulation, the last oil refinery built in the United States was completed in 1976. In addition, the Middle East is politically unstable which leads to a risk premium on the world's major source of oil. It is obvious that the demand for oil has grown while supplies have been restricted.
The average price of gas in the United States today is approximately $3.25. The question is, why are gas prices not higher than they are? Blaming greedy oil companies on the rising price of gas is simply irresponsible. The profit margins of a few selected industries are as follows:
The water utility industry has higher profit margins than major oil and gas firms! Why isn't every CEO with profit margins above that of the oil companies made to testify before Congress for "price gouging"? Clearly, greedy corporate profits are not the issue.
Again, while just over nine percent of the price of a gallon of gas goes to oil company profits, approximately twenty percent of the price of a gallon of gas is composed of federal, state, and local taxes.
Those who want the government to step in and do something about the high price of gas are either forgetful of recent history or too young to remember the oil crisis of 1979. During that time, restrictions on the price of gasoline led to the inability of some to find gas at all. Price ceilings always lead to shortages. The only thing worse than having to pay "too much" for gas is not being able to find gas at any price.
Let us not be swayed by politicians out for power or by reporters out to create news where none exists. Facts and economic logic should prevail rather than rhetoric.
Taxes were on the forefront of many Americans minds this week as they scrambled to meet the April 15th deadline to file their returns. Tax policy in this country hurts taxpayers twice once when they pay taxes, and then when the government spends the money. Americans are sick and tired of the financial burden and the endless forms to fill out. To add insult to injury, after collecting this money the government does some very detrimental things to the economy.
The burden of complying with the income tax is tremendous. Since its inception in 1913, the tax code has gone from 400 pages to over 67,000. The Tax Foundation estimates that around $265 billion dollars and 6 billion hours are spent just on compliance. That expense amounts to about 22 cents of every dollar the IRS collects. Imagine the boon to the economy if we spent that time and money expanding our businesses and creating jobs!
Aside from the direct loss of money and productivity, the funds from the income tax enable the government to do some very destructive things, such as vastly over-regulating economic activity, making it difficult to earn money in the first place. The federal government funds over 50 agencies, departments and commissions that formulate rules and regulations. These bureaucracies operate with little to no oversight from the people or Congress and generate around 4,000 new rules every year and operate at a cost of about 40 billion dollars. There are some 75,000 pages of regulations in the Federal Register that Americans are expected to know and abide by. Complying with these governmental regulations costs American businesses more than one trillion dollars per year, according to a study by Mark Crain for the Small Business Administration. This complicated system drives production to other countries and shrinks our job market here at home.
Big government is destructive when it takes your money and when it spends it. There is no economic benefit to supporting a government sector as massive as ours. In fact, this country thrived for well over 100 years without an income tax. Today, if you took away the income tax, the government would still have revenue from other sources equal to total government spending in 1990, when government was still too big. $1.2 trillion should be more than enough to fund a government operating within its constitutional confines, and that is exactly what we need to get back to.
I have introduced legislation many times to abolish the IRS and the income tax. It is fundamentally un-American to require taxpayers to testify against themselves and be considered guilty until proven innocent. Abolishing the IRS altogether would trigger an avalanche of real growth in the economy.
With these financial hard times only just beginning, this would be the most efficient and logical way to get our economy growing again, and Americans would need not dread the 15th of April every year.
4/23/2008: You Don't Need A Weatherman to Know
Which Candidate Blows
...On one hand, Obama pals around with terrorists. On the other hand, Hillary pals around with James Carville. Advantage: Obama...
...If he had only said he bombed the building in Oklahoma City to protest American "imperialism," McVeigh, too, could be teaching at Northwestern University, sitting on a board with and holding fundraisers for presidential candidate B. Hussein Obama...
4/18/2008: "Remember the election in 2006? Thought you might like to read the following. A little over one year ago:
"Since voting in a Democratic Congress in 2006 we have seen:
"America voted for change in 2006, and we got it!"
- Author unknown
Eliot Spitzer is no longer on the prosecuting side of the criminal justice system. But his brand of extrajudicial punishment is alive and well among U.S. Attorneys. Take the case of former Gen Re CEO Joseph Brandon, who was forced to resign on Monday although he has not been charged with any crime and was by all accounts a superb manager.
Without insisting on any grant of immunity, Mr. Brandon cooperated in an investigation of a fraudulent reinsurance transaction between Gen Re and AIG. That investigation resulted in the convictions of one AIG employee and six Gen Re executives. Prosecutors wanted to make it seven and named Mr. Brandon an unindicted co-conspirator. But instead of charging Mr. Brandon and having to convince a jury of his guilt, they made it clear to Warren Buffett, Chairman of Gen Re parent Berkshire Hathaway, that Mr. Brandon had to go, according to various media reports.
Mr. Buffett didn't respond to our call for comment, although news accounts duly note that he never hired Mr. Brandon and simply inherited him when he bought the company. Not so long ago, however, Mr. Buffett was full of praise for his manager.
In his annual letter to shareholders two months ago, Mr. Buffett gushed, "Now, thanks to Joe Brandon...the luster of the company has been restored." Mr. Buffett went on to say that Mr. Brandon and President Tad Montross "have been running the business for six years and have been doing first-class business in a first-class way, to use the words of J. P. Morgan." Sounds like Mr. Brandon deserved a raise, not a dismissal.
We're tempted to conclude that we wouldn't want to be in a foxhole with Mr. Buffett, even a "first-class" foxhole. But the sad truth is that the Sage of Omaha may not have had much choice. Fiduciary duty to Berkshire shareholders requires him to avoid a criminal indictment of Gen Re at any cost. Such a reputational blow is a likely death sentence for any financial company.
The Justice Department's 2006 McNulty Memo put modest limits on prosecutors' ability to extort settlements from corporations. But U.S. Attorneys still have a free hand to pressure companies to fire people as a show of cooperation. Georgetown Law professor John Hasnas says prosecutors rarely if ever tell corporations to fire their target, although Mr. Spitzer was an exception. But all they have to do is to suggest that they are considering whether to indict the corporation, and that the extent of their cooperation will be considered in the decision, and "the message gets across."
So we have the spectacle of Nora Dannehy, less than two weeks into the job of Acting U.S. Attorney for the District of Connecticut, essentially deciding that she has the right to punish a man she wasn't able to make a formal case against. Even if you're never charged, much less convicted, prosecutors can still take away your livelihood.
There's also the not so small matter that firing Mr. Brandon may harm Berkshire Hathaway shareholders. Mr. Spitzer forced the dismissal of both Hank Greenberg at AIG and Jeffrey Greenberg at Marsh & McLennan. Both companies have since seen their businesses decline and their share prices plummet. We have come to a strange pass in this country when prosecutors who can't prove their case can nonetheless tell Warren Buffett who can run his companies.
4/16/2008: Frederic Bastiat: The war against illegal plunder has been fought since the beginning of the world. But how is... legal plunder to be identified? Quite simply. See if the law takes from some persons what belongs to them, and gives it to other persons to whom it does not belong. See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime. Then abolish this law without delay... If such a law is not abolished immediately it will spread, multiply and develop into a system.
John Marshall: An unlimited power to tax involves, necessarily, a power to destroy; because there is a limit beyond which no institution and no property can bear taxation.
Ronald Reagan: [April 15] is the last day for filing income tax returnsa day that reminds us that taxpayers pay too much of their earnings to the Federal Government. And Americans will continue to pay too much money to the Federal Government until the Congress acts on our proposals to reduce tax rates across the board... While April 15 serves as a reminder, the people of the United States truly do not need to be reminded. They are victims of inflation, which pushes them into higher tax brackets. They are robbed daily of a better standard of living. They are discouraged from work and investment... Taxes are much too high to deal in half measures... The choice before us is clear. I strongly feel that the great majority of Americans believe that nothing would better encourage economic growth than leaving more money in the hands of the people who earn it. Its time to stop stripping bare the productive citizens of America and funneling their hard-earned income into the Federal bureaucracy. Today is a day when the people reaffirm their commitment to our system by contributing a portion of their income to the Government. Americans have always been prepared to pay their fair share, but today they should make it clear to all elected officials that government has gone beyond its bounds and that the people will not tolerate the ever-increasing tax burden they have experienced in recent years.
4/15/2008: Where do your federal tax dollars go?
on a High Horse
Barack Obama may be exactly what his supporters suppose him to be. Not, however, for reasons most Americans will celebrate.
Obama may be the fulfillment of modern liberalism. Explaining why many working-class voters are "bitter," he said they "cling" to guns, religion and "antipathy to people who aren't like them" because of "frustrations." His implication was that their primitivism, superstition and bigotry are balm for resentments they feel because of America's grinding injustice.
By so speaking, Obama does fulfill liberalism's transformation since Franklin Roosevelt. What had been under FDR a celebration of America and the values of its working people has become a doctrine of condescension toward those people and the supposedly coarse and vulgar country that pleases them.
When a supporter told Adlai Stevenson, the losing Democratic presidential nominee in 1952 and 1956, that thinking people supported him, Stevenson said, "Yes, but I need to win a majority." When another supporter told Stevenson, "You educated the people through your campaign," Stevenson replied, "But a lot of people flunked the course." Michael Barone, in "Our Country: The Shaping of America From Roosevelt to Reagan," wrote: "It is unthinkable that Roosevelt would ever have said those things or that such thoughts ever would have crossed his mind." Barone added: "Stevenson was the first leading Democratic politician to become a critic rather than a celebrator of middle-class American culture -- the prototype of the liberal Democrat who would judge ordinary Americans by an abstract standard and find them wanting."
Stevenson, like Obama, energized young, educated professionals for whom, Barone wrote, "what was attractive was not his platform but his attitude." They sought from Stevenson "not so much changes in public policy as validation of their own cultural stance." They especially rejected "American exceptionalism, the notion that the United States was specially good and decent," rather than -- in Michelle Obama's words -- "just downright mean."
The emblematic book of the new liberalism was "The Affluent Society" by Harvard economist John Kenneth Galbraith. He argued that the power of advertising to manipulate the bovine public is so powerful that the law of supply and demand has been vitiated. Manufacturers can manufacture in the American herd whatever demand the manufacturers want to supply. Because the manipulable masses are easily given a "false consciousness" (another category, like religion as the "opiate" of the suffering masses, that liberalism appropriated from Marxism), four things follow:
First, the consent of the governed, when their behavior is governed by their false consciousnesses, is unimportant. Second, the public requires the supervision of a progressive elite which, somehow emancipated from false consciousness, can engineer true consciousness. Third, because consciousness is a reflection of social conditions, true consciousness is engineered by progressive social reforms. Fourth, because people in the grip of false consciousness cannot be expected to demand or even consent to such reforms, those reforms usually must be imposed, for example, by judicial fiats.
The iconic public intellectual of liberal condescension was Columbia University historian Richard Hofstadter, who died in 1970 but whose spirit still permeated that school when Obama matriculated there in 1981. Hofstadter pioneered the rhetorical tactic that Obama has revived with his diagnosis of working-class Democrats as victims -- the indispensable category in liberal theory. The tactic is to dismiss rather than refute those with whom you disagree.
Obama's dismissal is: Americans, especially working-class conservatives, are unable, because of their false consciousness, to deconstruct their social context and embrace the liberal program. Today that program is to elect Obama, thereby making his wife at long last proud of America.
Hofstadter dismissed conservatives as victims of character flaws and psychological disorders -- a "paranoid style" of politics rooted in "status anxiety," etc. Conservatism rose on a tide of votes cast by people irritated by the liberalism of condescension.
Obama voiced such liberalism with his "bitterness" remarks to an audience of affluent San Franciscans. Perfect.
When Democrats convened in San Francisco in 1984, en route to losing 49 states, Jeane Kirkpatrick -- a former FDR Democrat then serving in the Cabinet of another such, Ronald Reagan -- said "San Francisco Democrats" are people who "blame America first." Today they blame Americans for America being "downright mean."
Obama's apology for his embittering sociology of "bitterness" -- "I didn't say it as well as I should have" -- occurred in Muncie, Ind. Perfect.
In 1929 and 1937, Robert and Helen Lynd published two seminal books of American sociology. They were sympathetic studies of a medium-size manufacturing city they called "Middletown," coping -- reasonably successfully, optimistically and harmoniously -- with life's vicissitudes. "Middletown" was in fact Muncie, Ind.
God and Gotchas
Long ago I discovered that the word "frankly" often meant a lie was coming. I learned this from an insurance agent, who preceded every attempt to sell me useless coverage with a "frankly." This is why I distrust what Hillary Clinton said about Barack Obama and his admittedly klutzy statement about guns, church, immigrants and bitterness -- "elitist, out of touch and, frankly, patronizing," she said. Frankly, I don't believe her.
And this, frankly or not, is the trouble with Clinton. Obama clearly misspoke. But there are very few moments with him where I feel that he does not believe what he is saying -- even when, as with his lame capitulation of leadership regarding the Rev. Jeremiah Wright, I can't respect it. With Clinton, on the other hand, those moments are frequent. She is forever saying things I either don't believe or believe that even she doesn't believe. She is the personification of artifice.
The current fuss is an example. She turned Obama's statement into an affront to gun lovers everywhere, which it just might be. But since when is Hillary Clinton a gun lover, a hunter or even a weekend skeet shooter? She is apparently none of the above -- at least she will not say when she last fired a gun. The truth, if a guess is allowed, is that she does not give a damn about guns and hunting, and when she brings up her "churchgoing family" and "Our Town" values, they are expressions of treacly nostalgia and not the life of incredible affluence and situational morality she now enjoys. To paraphrase Dorothy, Clinton left Kansas a long time ago.
At times, Barack Obama has the air of a maitre d' who shows you to a bad table. It's the impeccable suit. It's the air of consummate confidence. It's the awesome self-assurance that comes from knowing that he has something you want. In the headwaiter's case, it's a good table. In Obama's case, it's himself.
That air of self-confidence can sometimes come off as smugness or indifference. The signal moment for that came in a New Hampshire debate when Obama glanced at Clinton and said, by way of dismissal, "You're likable enough, Hillary" -- a kiss-off as head-snapping as when James Cagney smashed a grapefruit into Mae Clarke's puss in the 1931 classic "The Public Enemy."
It is this quality of Obama's -- this sense that you need him more than he needs you -- that probably explains why Clinton seized upon his remarks about the poor of Pennsylvania and elsewhere who, in Obama's artless telling, have turned to God and guns. It was, as he conceded, a bumbling attempt to express an economic truth, and it gave her a chance to imply that you can judge this particular book by its cover. But the spirit of what Obama said was not condescension but empathy. People were hurting. They were bitter. He understood.
The campaign for the Democratic presidential nomination has become a version of that crack about academic politics -- so vicious because the stakes are so small. In the presidential race, the stakes are huge but the differences are small. Both Clinton and Obama are liberal Democrats -- the former less liberal than the latter, but no matter. One is more experienced than the other. One is white, the other black, and one is a woman and the other is not. Still, on mortgages, Iraq, Israel and almost anything you can name, they are in general agreement.
That's why the campaign has increasingly been about what one or the other candidate said or meant to say or should have said. It's even been about what one of their supporters said -- Geraldine Ferraro on race, Merrill A. McPeak on patriotism, Billy Shaheen on cocaine and Bill Clinton on just about everything. Both campaigns have indulged in this silliness, with Obama's supporters yelling "race!" the way a certain boy cried "wolf!" and the Clintons, on occasion, pretending to a kind of political naivete that ill becomes them.
Obama should not have attributed a yearning to hunt or attend church to hard economic times. The remarks will haunt him -- witness how John McCain has also called them "elitist." But Obama was right about the economic roots of bitterness and anti-immigrant sentiment. And he's been right, too, about the patent insincerity of Clinton's criticism. Her attack is hardly based on a touching regard for gun owners or even churchgoers, but on the desperate hope that the smoothly aloof Obama can be painted as arrogant and elitist. It's old, tiresome politics -- the politics of politics -- and, paradoxically, more patronizing than anything Obama himself said.
4/14/2008: Dearth of Direction At a Time of Crisis By JOSEPH
The weekend Group of Seven gathering in Washington demonstrated how little stewardship the world's richest countries are exerting at this time of global economic tumult.
There was much for finance ministers and counterparts at the World Bank and International Monetary Fund to discuss, but the most dominant theme seemed to be inflated food prices world-wide -- one of the most tangible concerns for voters in Europe and the U.S., and an existential threat to many others in poorer countries. The World Bank estimates that global food prices have risen 83%, a phenomenon that could be seen in the commodity-market surges that have captured headlines since last summer and the social unrest it has provoked from Thailand to Egypt and on through Africa. [This is the fault of those global warming idiots who think ethanol is better than gasoline] With farm costs on the rise from New Zealand to the American Midwest, there seems little chance food prices will diminish any time soon, The Wall Street Journal notes.
China's Education Ministry today said that despite the raft of price controls imposed there, the government plans to boost subsidies for students to help ease the pain of costlier food. Rioting fueled by the soaring price of rice, beans and other staples in Haiti led to the ousting of the countries prime minister on Saturday, and inflation looks set to be a key issue in India's upcoming elections, as the Journal reports. The high cost of food, coupled with rising energy prices, is having an exaggerated effect on inflation in the likes of Romania, Turkey and other countries on the eastern and southern fringes of Europe, thanks in part to their higher reliance on debt, the Journal notes. But it's hitting closer to home for G-7 and fellow industrialized countries, too. A Financial Times/Harris poll taken in France, Germany, Spain, the U.K. and the U.S. indicated rising food and energy prices are the biggest economic concern. But it certainly isn't the only one.
The G-7 issued its most explicit if still decisively vague comments about the "sharp movements in major currencies" and the possible resonance the dollar's as yet unbridled tumble could have on economic and financial stability, as the FT reports. Rajendra Pachauri, head of the U.N.'s Nobel Peace Prize-winning Intergovernmental Panel on Climate Change, chose this weekend to accuse the U.S. and other rich countries of failing to set a clear example on the reduction of the carbon emissions credited to contributing to global warming, and blamed this for China and India's unwillingness to sign on to a climate-change pact that would succeed the Kyoto protocol, as the Guardian reports. In the past month, concerns about the effectiveness of European carbon-cutting plans have raised questions about whether European Union members will have to switch to more economically painful climate policies.
And G-7 ministers undoubtedly spent much of their albeit scripted time dealing with the credit crunch and economic growth worries -- amid a reminder from the General Electric quarterly results released Friday that trouble has spread through the U.S. economy, as the Journal notes. While the FT/Harris poll suggested relatively small levels of Italians and the Spanish are among the first in Europe starting to perceive pain from the credit crunch, business leaders on the Continent tell the FT they expect the real contagion to hit half a year down the road. "I don't see any impact at the moment. But I have no doubt it is coming, probably in six to 12 months' time," Peter Loscher, chief executive of German industrial conglomerate Siemens, tells the FT. "It has to affect the real economy -- the credit crunch, exchange rates, raw materials increases and wage demands." Echoing a growing number of private-sector economists and such eminent investors as George Soros, the Japanese newspaper Nikkei notes G-7 was confronting what some consider "the worst financial storm since the end of World War II."
The fragility of governments charged with straightening out the world economy could be seen in how tough a time Japanese Prime Minister Yasuo Fukuda recently had in pushing a new Bank of Japan chief through the country's divided Parliament. There isn't much strength elsewhere atop other G-7 members. President Bush, with barely nine months left in office, is at or near record nadirs of popularity that have limited his ability to act. British Prime Minister Gordon Brown, who once counted his record as Chancellor of the Exchequer as his biggest political strength, lacks the confidence of 68% of Britons on the economic crisis, according to the FT poll. Less than a year after his election, French President Nicholas Sarkozy has squandered much of the voter confidence that greeted his move to the Elysee Palace. And a disaffected Italian populace is going to the polls in lower numbers for yesterday and today's election, which is expected to see Silvio Berlusconi -- despite the taint of corruption allegations and his 71 years of age -- succeed in once again gaining control of at least the lower house of Parliament.
Against this backdrop, it isn't that surprising that the G-7 produced no more decisive a result than it has during less traumatic times. But it's easy to read the frustration of World Bank President Robert Zoellick, who might have been speaking for millions of others when he addressed the food issue ahead of the meeting: "We have to put our money where our mouth is now -- so that we can put food into hungry mouths."
4/13/2008: Lots of Americans are doing their taxes this weekend. I'm one of them. Everyone should feel bad about the IRS and the Income Tax. And for those wage slaves who are excited about their big refunds...they should feel bad too! Why? Because Big Government hurts, and if you got a large refund, that just means you lent the federal government your money at zero interest.
The PROBLEM is the spending!
Big Government costs you big, inconveniences you all the time, and far too often hurts the people you love. It routinely injures your neighbors, damages your industry, steals someone's property for some lamebrain political scheme, and destroys your community -- it even kills people. We must Downsize DC for harmony and human progress.
I feel blessed to have been born in this country. I love American ideals, especially the Constitution. There are lots of good things happening and it's easy to forget those things. And I'm excited by the evidence I get that people are indeed waking up to the damage done by our federal government.
But in this week comes April 15 -- Christmas for the thieves on the Potomac. And at least once, perhaps, we shouldn't be so rosy or upbeat. I find myself wishing I could get millions of people to feel -- yes, feel, rather than just understand -- how harmful the federal government really is. All that money you "voluntarily" surrender to them -- all the votes given to the politicians that impose the taxes and allocate that money -- are used to inflict pain, demolish peace, and impede human prosperity.
4/12/2008: A Penny for an Old Book By Thomas G. Donlan
THE WARNING SAID THAT IN A CERTAIN YEAR, "... the United States of America, as we know it today, will cease to exist. That year, the country will have spent itself into a bankruptcy from which there will be no return. What we once called the American Century will end, literally, with the end of the American way of life -- unless you and I act now to pull ourselves and the country back from near-certain oblivion."
That certain year of disaster, however, was 1995. Harry E. Figgie Jr. first issued the warning in Figgie International's 1985 annual report. Government debt, he said, was growing out of control. The trend would culminate in 1995, when all the tax revenues of the federal government would not suffice to pay the interest on the national debt.
Figgie repeated his warning many times, buttressed with calculations provided by an economist, Gerald J. Swanson. People listened. Figgie and Swanson published Bankruptcy 1995, which enjoyed more than nine months on best-seller lists in 1992 and 1993.
Used-book listings on Amazon show that Bankruptcy 1995 is widely available for a penny, plus $3.99 shipping.
No Shortage of Warnings
We have been warned before. Thomas Jefferson, who spent $27 million to purchase Louisiana but was frugal enough to reduce the national debt from $83 million to $57 million in eight years, said that public indebtedness was "the greatest danger to be feared."
The War of 1812 seemed a greater danger to his successor, James Madison, and the country survived having a debt of $123 million. Real danger only appeared when the country freed itself from its debt during the administration of Andrew Jackson.
Post-war arrangements to pay off the debt included the sale of public lands that had cost the government nothing. Purchasers' payments were financed by bank loans on easy terms, since everyone knew that vast profits could be made on the resale of land to new immigrants, new cotton planters and new developers of new towns. Payments for land deposited to the Bank of the United States helped retire the national debt, putting liquidity in the hands of former bondholders, many of them bankers who could then lend for more speculation in land. The phrase "doing a land-office business' entered the American language at this time.
On Jan. 1, 1835, the United States was officially debt-free. This happy condition lasted two years and a bit -- five weeks longer than Jackson's presidency. The Jacksonian boom of development and real-estate speculation accelerated, further fueled by foreign capital and foreign creditors. It came to a crashing end in the Panic of 1837. The conversion of bank currency into gold was first dubious, then made mandatory, then suspended, then made irrelevant by a wave of bank failures.
Historian Edward M. Shepherd summarized the situation in his biography of Martin Van Buren, the unlucky president who followed Jackson and received the blame for the ensuing depression:
"Fancied wealth sank out of sight. Paper symbols of new cities and towns, canals and roads were not only without value, but they were now plainly seen to be so. Rich men became poor men. The prices of articles in which there had been speculation sank in the reaction far below their true value."
The United States did not go out of business in the Panic of 1837 and the following depression, nor in the cyclical panics and depressions and recessions that followed through the decades. Each time, individuals suffered dispossession of their homes and the loss of what they imagined was their monetary wealth.
The development of the United States continued. Immigrants did not stop setting up farms and businesses. Miners did not stop mining, traders did not stop trading and, most importantly, capitalists did not stop investing.
John Jacob Astor, who had made a good-sized fortune in the fur trade, sold out in 1834. He had gold when others had paper, so he was able to buy Manhattan properties for cash. He leased them back to the sellers for 5% of the purchase price per year. Such transactions saved the sellers' homes and businesses and made Astor one of the richest men in the country. Other capitalists also made their fortunes in distressed real estate in other cities.
Capitalists also rose to the occasion or the bait, in the other panics. The Great Depression was the first in which government attempted to impose solutions, and it lasted longer, with worse pain, than any other.
Even in the 1990s, capitalists were at the center of the solution. The Clinton administration acquired a healthy fear of "bond-market vigilantes."
Interest rates fell even as the national debt was piling up. Figgie and Swanson had projected a $6.5 trillion national debt in 1995 with interest payments of $619 billion. The debt was only a little lower than their ferocious projection -- it came in at just under $5 trillion -- but interest expense in 1995 was only $332 billion.
The government had increased taxes and slowed the growth of spending for a time, and investment capital, foreign and domestic, flowed into U.S. stocks, corporate debt and government bonds. The returns on capital were reinvested in a more productive economy, and taxes on investment profits were reduced, not raised. A few years after the expected disaster, the U.S. very nearly ran a real surplus, and did report budget surpluses for three years.
Running a surplus, however, merely encouraged higher spending and lower taxes. By 2004, after tax cuts and war spending, Swanson was back with a new book, America the Broke, and other authors joined the doomsday chorus. Financial Armageddon, by Michael J. Panzner, spread scorn all over the mortgage-backed securities market in 2006, a year or more before most financial writers knew what CDO stood for.
This year, the national debt is on track to surpass $10 trillion, not counting another trillion or two of mortgage debt that won't be paid back unless the federal government does it, or allows capitalists to pick up the pieces of a shattered market.
You have been warned. Again.
4/10/2008: The fundamental [problem] is the Fed itself, which
purports to be the great savior of the money system but in fact is its destroyer. By
flooding the economy with ever more paper money, it reduces the value of our money
an insidious tax that the governing elites levy in ways that keep the people in the dark.
Llewellyn H. Rockwell, Jr., The Inflation
Monster and Its Owner [April 10, 2008]
4/9/2008: Quote of the Day: "Democracy means simply the bludgeoning of the people by the people for the people." -- Oscar Wilde "The Soul of Man Under Socialism," 1891
Fact of the Day: British dentists have been forced to go on holiday because they've fulfilled the annual work quotas allotted to them by the National Health Service. The dentists are denying treatment to patients because the government will not pay them to do the work. More than 7 million British citizens are unable to find an NHS dentist. Universal access?
The politicians want us to burn more ethanol in our cars. Like most plans concocted by politicians, this one is a terrible idea that is having devastating consequences. Here are the facts about ethanol . . .
Ethanol consumes more energy than it produces. A study by Cornell and UC Berkeley found that corn converted to ethanol consumes 29% more energy than it creates. Most of these energy losses come from the burning of extra fossil fuels. Energy losses from other sources of ethanol, such as switch grass (45%) and wood (57%) are even worse.
Strike one for ethanol.
Burning ethanol in our cars emits less carbon dioxide (CO2) than burning gasoline, but this hardly matters given the net energy loss involved in ethanol's production. Burning extra fossil fuels to create ethanol adds more carbon dioxide to the atmosphere than we save by using ethanol as a partial substitute for gasoline. Overall, ethanol increases CO2 emissions, raising the risk of global warming.
Strike two for ethanol
When farmers use their land to grow crops for ethanol production, instead of food, the food supply drops and the price of food rises. Increased food prices create an incentive to plow new land to replace the missing food crops. Expanding the acreage used for agriculture also adds extra CO2 to the atmosphere. A study reported in the journal "Science" indicates that, depending on the crop used to create the ethanol, it could take tens or even hundreds of years for ethanol to make up for the CO2 surge caused by plowing more land for agriculture.
Strike three for ethanol.
If we were playing baseball ethanol would now be on its way back to the dugout, but we aren't done yet . .
Ethanol increases the cost you pay for food. A University of Iowa study indicates that ethanol production increased the average food bill by about $47 over the last six months of 2007. This increase in food prices is also having knock-on effects on food prices around the world, devastating consumers in under-developed nations.
Strike four for ethanol.
Ethanol also makes your fuel prices rise. Politicians mandated that refineries add 4 billion gallons of ethanol to your gasoline in 2006, in spite of the fact that ethanol is twice as expensive as gasoline. This is part of the reason it costs you so much to commute to work.
Strike five for ethanol.
Ethanol has also been sold as a way to make our fuel supply more secure, but an examination of this claim by scholars from the Cato Institute (published in the Washington Post) indicates that corn crops are far more variable than the world oil supply. The more we depend on ethanol the more likely we are to have fuel shortages after a bad harvest.
Strike six for ethanol. Having struck out twice, you might think that it's time for ethanol to retire from the field, but there's still more to come . . .
Ethanol has also been sold as an important part of achieving energy independence, but this is another myth. Even if we used ALL the corn produced in the U.S. to make ethanol, and NONE of it for food, U.S. gasoline consumption would drop by only about 12%. This wouldn't even make us independent of the oil we import from the Middle East (which is about 14% of our total consumption), let alone the oil we import from other parts of the globe.
Strike seven for ethanol.
Ethanol makes it more likely that you will burn to death in your car. Neither water nor conventional foams work on ethanol fires. Ethanol fires require special materials and training to extinguish.
Strike eight for ethanol.
The ethanol program is really a government program of corporate welfare. In "Archer Daniels Midland: A Case Study In Corporate Welfare," James Bovard shows how big agri-business corporations have used government subsides and tax breaks, like those for ethanol, to loot billions of dollars from taxpayers and consumers. Our government's ethanol policies are a major culprit. Bovard estimates that every $1 of profit earned by ADM from its ethanol operation has cost taxpayers $30.
Strike nine for ethanol. We have now retired the side.
The case is clear. All government mandates, subsidies, and tax breaks for ethanol production must end, immediately. If we can achieve this goal we will improve the environment, reduce government spending, and make it easier to balance the federal budget. Better yet, all of this can be achieved while also lowering your fuel and food prices. Please send Congress a message instructing them to end all subsidies and mandates for the production and use of ethanol. You can do so here.
Jim Babka, President
4/9/2008: Once again, government employees are more equal than the rest of us.
Lawmakers and police in California do not have to pay tolls or photo tickets when using secret government license plates.
Nearly one million special government license plates have been issued in the state of California giving law enforcement, judges, district attorneys, politicians and their friends immunity from photo ticketing and tolls. According to an expose published yesterday in the Orange County Register newspaper, the Confidential Records Program has handed out a total of 996,716 protected plates to 1800 state and local agencies. These plates keep the identity of the vehicle owner out of the computerized databases that track ordinary motorists. This protection ensures that private red light camera companies and collection agencies for parking tickets toll road violations have no idea where to mail a ticket for nonpayment.
In 1978, the Confidential Records Program was introduced to protect vulnerable police officers who faced criminal threats. It has since become a perk handed out to anyone with the right connections to lawmakers or police. In 2001, for example, museum guards won the right to the plates in their union contract. Anyone driving with such a plate can also expect leniency from traffic police who will, after looking up a special plate, often release a speeder as a "professional courtesy" because having such a plate signals the driver is "connected."
The Register found that on the 91 Express Lane toll road alone, special plate holders have skipped out on $5 million in tolls and penalties because the plate holders know they cannot be caught. The top violators include prison guard Dwight Storay, social worker Lenai Carraway, and Chino Police dispatcher Susie Stephen. All denied the charges or refused comment to the Register.
The California Department of Motor Vehicles has shielded the program from further scrutiny by refusing to provide a more specific list of plateholders under the Freedom of Information laws. It demanded the Register pay $8,442 for a simple list of the number of license plates issued to each participating government agency.
State Assemblyman Sandre Swanson (D-Alameda) has introduced legislation to expand the confidential plates to dog catchers, zoo veterinarians, firefighters and code enforcement employees after being asked to do so by the American Federation of County Municipal Employees.
Source: Special license plates shield officials from traffic tickets (Orange County Register (CA), 4/4/2008)
4/8/2008: Why Are Government Employees More Equal Than You? By Kamal Jain
Do you remember the novel "Animal Farm" by George Orwell?
In the story, animals on a farm joined together, overthrew their human owners, and "liberated" all the animals.
The first thing the animals do was proclaim that "all animals are equal." They painted this credo on the barn in big letters for all to see.
Over time, some animals started taking charge -- overseeing things at the farm, devising the rules and enforcing them. Order was necessary after all! All this seemed innocent and harmless enough until the animals in charge got comfortable with their power. They had cushy jobs on the farm, as did their family and friends.
Other animals worked and worked, being punished if they questioned this arrangement. The governing animals produced nothing, but took more than an equal share of feed and water, claiming it was necessary for maintaining order and productivity on the farm.
One night, without discussion or consent, the governing animals changed the credo on the barn to: "All animals are equal, but some are more equal than others."
You might say that's got nothing to do with us here in America - "Animal Farm" was about Marxist-Socialism and Communism. And you'd be right sort of. Orwell did say that he wrote the novel as a cautionary tale about the virulent form of Socialism brewing in the Soviet Union, not against the Socialism he saw at home in England (a kinder, gentler Socialism).
But if you look around you today, you might think the animals' situation seems all too familiar, all too applicable to our lives today. And you'd be right sort of. The key difference today is that our credo, borne out of the Declaration of Independence which states that " all men are created equal " has not been updated to reflect reality.
Modern politicians and bureaucrats have learned that it's best not to draw any attention to the privileged lives THEY enjoy - at OUR expense. But if you look back over the past few decades you'll notice something interesting: Some people are more equal than others. By law. The dividing line is the same as in Orwell's story.
Just the same as in "Animal Farm", we find today that government sector employees get higher wages, have better benefits than workers in the private sector.
Why are government employees more equal than you?
Why do most government employees get automatic, mandated by law Cost- of-Living pay increases each year - while you and 99% of private sector workers do not?
Why are government employees exempt from Social Security taxes - while you and other private sector workers are taxed to fund Social Security and Medicare every year you work?
Why are government employees able to retire at age 54 - while you and other private sector workers must keep working until age 65?
Why do average 30-year government employees get retirement pension paychecks of $25,000 to $45,000 a year*, starting at age 54 - while you work 41 years, and are forced to squeak by on Social Security payments of $1600 a month, starting at age 65?
Why are government employees more equal than private sector employees?
Why are government retirees more equal than private sector retirees?
Why are the tax receivers more equal than the tax payers?
Why are government employees more equal than you?
* For example:
4/6/2008: "Klaatu Barata Nikto" This December, there will be released a remake of the 1951 science fiction movie, The Day the Earth Stood Still, one of my favorites when I was young and naive and still believed that the wisdom of science and technology ultimately might save us from political mayhem. I'm not sure anymore. When idiots like Al Gore are awarded Nobel Peace prizes, muscle bound morons like Arbold Schwarzenegger are elected governor of Calfornia, most politicians (left and right) have drunk the Kool-Aid of the Global Warming religion, and we have high energy prices caused by the devaluation of the dollar and energy shortages inflicted on us all by the environmentalist-wackos and government thugs, it's difficult to be optimistic...but I still keep trying. The millions who voted for and donated to Ron Paul in the last year or so prove that not everyone is stupid enough to fall for the "Let me take care of you." politicians of the nanny state who can't even take care of themselves.
4/5/2008: CFF: CLINTON FAMILY FRAUD: This is just so typically Clinton.
It was disclosed yesterday that the Clintons have raked in over $100 million since leaving the White House with the fine china and bath towels. Fine. It's a free country. And the money came from idiots stupid enough to pay to listen to the pair speak and read their books. It didn't come from me or, to the best of our knowledge so far, taxpayers.
But of that $100 million-plus, the Clintons are getting fawning praise from the mainstream media for giving about 10 percent of the haul to "charity." A worthy and commendable figure.
But as with everything else Clintonian, you have to look beyond the obvious. As our friend Amanda Carpenter of TownHall.com reports this morning, the charity the Clintons gave most of that money to was...themselves!
That's right. The Clinton tax returns show that $10,256,741 was donated to CFF, the Clinton Family Foundation.
"On the 2005 forms and those from previous years, Bill Clinton was listed as CFF President, Hillary Clinton has the title of secretary/treasurer and daughter Chelsea Clinton was 'director,'" notes Carpenter. "The 2006 tax forms list Gloria Clinton as CFF CEO and Manager, Erlinda Valdez as secretary and Catherina Hillman as treasurer. Gloria Clinton was paid $252,500 according to the 2006 returns for her work that year."
Of the $10 million-plus the Clintons gave to themselves, they only parceled out about $2.5 million to other charities. Then again, $80,000 of that went to the Clinton Birthplace Foundation.
So the Clintons gave money to themselves in order to give money to themselves? These people are beyond contemptible. All the more reason why it's so important for Barack to crush her as soon as possible and make sure these two weasels have zero chance of getting back into the White House in November.
4/4/2008: The Goal Is Freedom: Statecraft Is Not
Soulcraft by Sheldon Richman
So according to McCain, good citizens see government as something other than a service provider. What would that be? A moral beacon, perhaps? I think he has this wrong. Non-cynics see the government as a service provider. The rest of us see it as many early Americans saw it: as a distributor of privileges at the expense of the taxpayers, consumers, and laborers.
As for the expectations of liberty, no one who cares about freedom reduces it to the choice among coffee brands. I fear for what's left of our liberty if McCain tries to change our expectations about it. [Read More]
...Wouldn't it be bliss to be able to ignore these self-styled "leaders" who wish to remake our characters and who, in that quest, will do anything to get their hands on power?
4/3/2008: Happiness is often the result of being too busy to be miserable.
4/3/2008: Today's Daily Reckoning: ...The danger, of course, is that the markets are signaling that we are dead wrong. Stocks are healthy...gold is not. Thats what yesterdays news could be telling us. If that is so, we want to close out our Trade of the Decade right now, hole up in a monastery somewhere, and rethink our whole Weltanschauung. In the thin air and dim light, with no alcohol available, perhaps well be able to see things more clearly. Well come to realize, finally, that paper money really is a good thing; that Alan Greenspan and Ben Bernanke are not only geniuses, but saints too; that Wall Street labors night and day for the betterment of mankind; and that now is the time to dump gold and buy stocks...Maybe.
...Again, we see the sad evolution of the U.S. of A. since the end of the 60s. Then, fewer than five million people received food stamps. Now, nearly six times that number are living on them...after, what was supposed to be the biggest boom the world has ever seen. Of course, dear reader, we know that the boom was a phony. It made Indians and Chinese much, much richer. But Americans were left out. They got to spend their wealth, not make more of it. And now, nearly 26 years after the boom began, Americans find that they owe more money to more people in more places than any people ever did. Whats worse...while wages shot up among our old adversaries Russia and China, in the 50 states, the average person earns about the same thing, in real terms, as he earned during the Carter administration.
4/3/2008: Yet, because Mrs. Clinton continues to try to win what has become unwinnable, John McCain now holds comfortable leads over both Democrats for the first time in this race. In her selfishness and grandiose sense of entitlement for the presidency, Mrs. Clinton's continued pursuit of the nomination threatens to tear asunder what could otherwise be a dream Democratic year.
4/2/2008: Being a disinterested government official does not mean that you know what you are doing. That fact gets left out of the equation in a lot of proposals for new government programs. Thomas Sowell
4/2/2008: THE CROTCH INSPECTORS: "There
are two kinds of people in the world: the kind who think it's perfectly reasonable to
strip search a 13-year-old girl suspected of bringing ibuprofen to school, and the kind
who think those people should be kept as far away from children as possible." -
Columnist Jacob Sullum
4/2/2008: Tighten Your Belt, Strengthen Your Mind: Short Term: we have a limited amount of willpower and may need to conserve it to accomplish our short-term goals. Long Term: the more we exercise our willpower, the stronger it gets over time; it's just like a muscle--it needs exercise or it atrophies. Go to Article in the New York Times
4/1/2008: Being a Pathological Liar has its drawbacks...
4/1/2008: What a remarkable day! We never thought wed see the likes of it.
First, Ben Bernanke appeared in the U.S. Senate, with former Fed governor Paul Volcker by his side, and announced an incredible turnaround in Fed policy. Yes, he said, he and his fellow Fed governors were very concerned about weakness in the financial sector. And yes, they were very sympathetic to all those people who had high mortgage payments to make and all those people who had bought shares in Bear Stearns and other high-flying investment firms. But he went on to say that the Feds primary mission was not to protect people from the consequences of their own mistakes; it was to protect the nations money and its credit.
Bernanke went on to hint strongly that there would be no further rate cuts. Instead, Fed policy has turned back to its more traditional role of fighting inflation, he said. The Fed has become serious about stabilizing the value of the dollar.
We can no longer ignore the economic consequences of price increases in fundamental resources, such as oil, wheat and iron ore, he said. These price increases not only cause suffering on the part of average citizens who now pay an average of $3.23 for a gallon of gas. They also cause huge distortions and malinvestments in the whole world economy.
While he was still speaking, prices of stocks began to fall in anticipation of higher interest rates with the Dow closing down 535 points. The dollar rose against all foreign currencies; the euro dropped back to $1.30. A shop owner in Paris was heard to say that he actually liked Americans. Commodities fell, and the price of gold dropped to $750 an ounce.
That was just the beginning. At 11AM a group of corporate executives, present and former including Stan ONeal, Richard Fuld, Ray Irani, John Mack, Barry Diller and William Foley appeared at a press conference in New York. The spokesman for the group startled reporters when he announced the groups intention to return a considerable part of its earnings to the shareholders for whom they worked.
Weve thought long and hard about this, said Mr. Fuld. And weve come to realize that these salaries are just absurdly high. None of us can think of anything weve done anytime in the last ten years to warrant a salary of even half of what we get paid much less the $38 million Stan got or the $322 million Ray got. Speaking for myself, I spent practically all of last year attending meetings, parties, and ceremonies and frankly I cant recall what any of them was about. None of them needed me. And Ill tell you something else, when I attend those board meetings, half the time I dont even know what the accountants and lawyers are [there] talking about. We got together this morning and asked each other how those CDSs work, for example. None of us had any idea. And apparently, believe it or not, between us, weve got billions of them on our books.
As weve been saying here at The Daily Reckoning , executive salaries are preposterous. But we never thought wed see the day when executives would admit it.
But the day wasnt over.
Hedge funds have had the worst quarter since theyve been keeping records. Fifty of them went broke last year. About 8,000 more to go, by our estimate.
What is remarkable is the hedgies response. According to the American Hedge Fund Association, managers are reversing their typical 2 and 20 compensation package, to make up for their lost income. Instead of charging 2% of capital and 20% of performance (usually over a benchmark), theyre charging 20% of capital and a 2% performance fee.
An article in the Financial Times demonstrated recently how the previous fee structure worked. Managers were encouraged to take risks, knowing that heads I win, tails I lose someone elses money. Taking a big chunk of the gains, while not participating in the losses, gradually transfers ownership of the capital from the investor to the manager. This new system of fees merely speeds up the process.
Finally, Alan Greenspan himself stepped up to the microphones yesterday.
I think it is time for me to apologize, said the former head man at the Fed. This crisis in the financial markets; its really my fault. It was on my watch that the bubble in residential real estate developed. It was while I was at the Fed, too, that the huge parallel banking system grew to its monstrous size with trillions of dollars worth of CDSs, SIVs, MBSs, and all the other crazy alphabet derivatives, that are causing so much trouble.
I knew all along that the only real money is money backed by gold. And I knew that there would be Hell to pay when people got carried away with the cheap paper-dollar credit that I was helping to make available. I remember that I said at the time that the growth in sophisticated investment vehicles helped spread out the risk. And I also told homebuyers that they should take advantage of those ARMS that they now regret.
I am truly sorry for what I have done.
What a day!
*** In addition to the financial news, the political news was also worthy of comment. The little town of Ashford, Tennessee, held a special election yesterday, after its mayor died in a freak poker accident. He was playing poker with friends in an abandoned warehouse when the roof collapsed, killing him, the chief of police, the coroner, and the towns leading brothel owner, Ray Borvis.
The resulting election to replace the mayor and police chief pitted democrats against republicans in a bitter battle for control of Ashford. Here we see democracy in its purest form. This the actual transcript of a public debate held at the James Earl Ray Memorial Hall yesterday.
I have every respect for my opponent in this race, said the democrat, Liddell Fulsom, a stout man who was said to sweat a lot. It is just that I dont think he shares the values of Ashford and its people.
What values are you talking about? replied Myron Byer, the republican. The values of the previous administration are nothing to be proud of.
What? Are you casting dispersions on the town and its people? I know I am very proud to be from Ashford. Were number one in the state in supporting the U.S. government...why, we have more flags flying in Ashford than in any other city in the country...per capita, of course.
Yes, but thats because you got a special deal on the flags, made in China, of course...and then you sold them to the city government so they could put them up all over town. And you made $5 on each one of them...didnt you?
Are you opposed to free enterprise, Mr. Byer? Would you like to tell the people of Ashford why? Its because you were and probably still are a radical, a draft dodger and a subversive.
Are you kidding? I was a student during the Vietnam War...I had a student deferment. And then I got a high number in the lottery. I was just lucky.
And I guess youd say that those of us who served our country were unlucky? I spent 18 months fighting for Ol Glory in the swamps and jungles of Southeast Asia, and you know, those are the proudest moments of my life. I feel very lucky that I had the honor to defend this great country.
And what about killing those women and children...remember, you were court-martialed for it? Are you proud of that too?
Wait a minute...thats hitting below the belt...they were armed Vietcong...I was railroaded by communists and the peaceniks... And at least I wasnt spending my time up at the university fooling around with thespians.
You dont even know what a thespian is...
And I dont want to know...Im a married man with four upstanding children...
No, youre a racist, a bigot and a moron.
Hold on, you piece of sh**. Or Ill come over there and punch your lights out. Lets face it, Myrie, you dont have a prayer in this election. Youre desperate.
Oh yeah, Ive already announced my plan to build a new senior center. All this towns got are seniors. And theyre behind me.
How do you think youre going to pay for this thing?
Im going to raise taxes on that stupid store of yours.
These past few weeks have provided an unfortunate opportunity to discuss inflation. The dollar index has reached new all-time lows. The total money supply, M3, as calculated by private sources, is growing at a disturbing 17% rate. The Fed is pumping dollars into the economy at an alarming rate. Just recently the Fed announced new loan auctions totaling $100 billion. That is new money created from thin air. If these money auctions, combined with the bailout of Bear Stearns, continue to be the trend, we are in for some economic stormy weather. The explanation lies in understanding the basics of money, and why it is dangerous to give government and big banks control over it.
First, money is not wealth, in and of itself. You cannot create more wealth simply by creating more money. Wall Street bankers cry out for more liquidity, but what is really needed is more value behind the dollar. But the value, unfortunately, isn't there.
You see, the Fed creates new money and uses it to purchase securities from banks. Flush with funds, these banks seek to put this money to use. During the Fed's expansionary period, much of this money went to home loans. Through a combination of federal government inducements to lend to risky borrowers, and the Fed's supply of easy money, the housing bubble took shape. Fannie Mae and Freddie Mac were encouraged to purchase and securitize mortgages, while investors, buoyed by implicit government backing, rushed to provide funding. Money that could have been invested in more productive, less risky sectors of the economy was thereby malinvested in subprime mortgage loans.
The implicit guarantee from the Fed is quickly becoming explicit, as those institutions deemed "too big to fail" are bailed out at taxpayer expense. Wall Street made a killing during the housing bubble, reaping record profits. Now that the bubble has burst, these same firms are trying to dump their losses on the taxpayers. This approach requires more money creation, and therefore debasement of all dollars in circulation.
The Federal Reserve, a quasi-government entity, should not be creating money or determining interest rates, as this causes malinvestment and excessive debt to accumulate. Centrally planned, government manipulated economies always fail eventually. The collapse of communism and the failure of socialism should have made this apparent. Even the most educated, well-intentioned central planners cannot plan the market better than the market itself. Those that understand economics best, understand this reality.
In free markets, both success and failure are options. If government interventions prevent businesses, like Bear Stearns, from failing, then it is not truly a free market. As painful as it might be for Wall Street, banks, even big ones, must be allowed to fail.
The end game for this policy of monetary inflation is that the money in your bank account loses purchasing power. So, by keeping failing banks afloat, the Fed punishes those who have lived frugally and saved. The power to create money is a power that should never be granted to government. As we can plainly see today, the Fed has abused this power, and taxpayers are paying the price.
4/1/2008: Happy April Fools' Day! Dedicated to all the crooked Politicians (I know, redundant) and Government Employees who steal our property and try to ruin our lives. Thank God they are all stupid and petty or we'd have absolutely no freedom left.
4/1/2008: For me it is sufficient to have a corner by my hearth, a book and a friend, and a nap undisturbed by creditors or grief. -- Fernandez de Andrada
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Other Information about Dale F. Ogden
Dale F. Ogden &
Actuaries & Management Consultants
Dale F. Ogden,
California Insurance Commissioner, 2006
Dale F. Ogden,
California State Senate, 2004
Dale F. Ogden,
California Insurance Commissioner, 2002
Ogden, Libertarian, for
California State Assembly, 2000
Dale F. Ogden,
California Insurance Commissioner, 1998