Archive for December 2008

There’s No Pain-Free Cure for Recession

December 27, 2008

Excellent op-ed by Peter Schiff in today’s Wall Street Journal. Schiff’s analogies and analyses are always right on target and this piece is no exception.

It would be irresponsible in the extreme for an individual to forestall a personal recession by taking out newer, bigger loans when the old loans can’t be repaid. However, this is precisely what we are planning on a national level.

I believe these ideas hold sway largely because they promise happy, pain-free solutions. They are the economic equivalent of miracle weight-loss programs that require no dieting or exercise. The theories permit economists to claim mystic wisdom, governments to pretend that they have the power to dispel hardship with the whir of a printing press, and voters to believe that they can have recovery without sacrifice.

As a follower of the Austrian School of economics I believe that market forces apply equally to people and nations. The problems we face collectively are no different from those we face individually. Belt tightening is required by all, including government.

Governments cannot create but merely redirect. When the government spends, the money has to come from somewhere. If the government doesn’t have a surplus, then it must come from taxes. If taxes don’t go up, then it must come from increased borrowing. If lenders won’t lend, then it must come from the printing press, which is where all these bailouts are headed. But each additional dollar printed diminishes the value those already in circulation. Something cannot be effortlessly created from nothing.

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$700 Billion is Nothing

December 27, 2008

Retailers Request Bailout

December 27, 2008

salesignThe National Retail Federation has written a letter to President-elect Obama requesting a bailout of retail stores. Their plan is for three nationwide 10-day “sales tax holidays” that they hope will entice consumers back into the stores. The federal government would then “reimburse” states for the lost sales tax revenue, estimated at $20 billion.

When will the madness end?

If consumers aren’t spending their money during the traditional holiday shopping season, in spite of huge discounts, they aren’t going to spend it at other times of the year, sales tax holiday or not.

When people are losing jobs in enormous numbers they are far more concerned with paying their utility bills, mortgage or rent, and putting food on the table. A sales tax holiday is no incentive to spend money on non-essentials when you’re living hand-to-mouth.

The kicker to this plan is that the people who will supposedly benefit from it – the consumer paying no sales tax – will still end up paying that sales tax in the form of income tax or inflation. The federal government has to get the money to reimbuse the states from somewhere. Most likely it will come from you and me, one way or another.

Source links for this post:

New York Daily News
24/7 Wall St.
National Retail Federation

Christmas Fun and Mischief

December 24, 2008

Wishing everyone a safe and happy Christmas!

Santa Claus Bailout Hearings



Santa’s helpers disable naughty cameras in Tempe



Santa Claus Boot Camp



Sock It to the Holidays!



12 Days of Global Warming



I Can’t Pay My Taxes This Year




An “Elf Yourself ” I made. I call it “Depression? What Depression?”

More “Change” Ahead

December 24, 2008

The Washington Times reports that President-elect Obama wants most of the Bush war team to stay.

“Geoff Morrell, Pentagon press secretary, confirmed that Mr. Gates wants to retain temporarily most political appointees, saying nearly all of the service secretaries and undersecretaries will remain until Senate confirmation of their successors, which can take months. He declined to identify who will be asked to leave. ”

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And the Wall Street Journal has a piece about Democrats working desperately to lower expectations.

Even as they depict a massive stimulus package as indispensable to turning the economy around, U.S. Democratic leaders are aggressively lowering expectations that the package will yield dramatic accomplishments quickly.

Rep. David Obey, who is playing a key role in assembling the stimulus plan, which is expected to approach $800 billion, said recently that an infusion of federal spending is “the only game in town.” But the Wisconsin Democrat, who is chairman of the House Appropriations Committee, was careful to add: “The downward momentum appears too strong to end the recession anytime soon.”

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I’m not the least bit surprised but I am interested to see how long it takes for most Democratic voters to become disillusioned and disappointed. How does that go again… the more things change, the more they stay the same.

Obama to Use Lincoln Bible at Swearing-In

December 24, 2008

President-elect Obama’s transition team says:

On January 20th, President-elect Barack Obama will take the oath of office using the same Bible upon which President Lincoln was sworn in at his first inauguration.  The Bible is currently part of the collections of the Library of Congress.  Though there is no constitutional requirement for the use of a Bible during the swearing-in, Presidents have traditionally used Bibles for the ceremony, choosing a volume with personal or historical significance.  President-elect Obama will be the first President sworn in using the Lincoln Bible since its initial use in 1861.

“President-elect Obama is deeply honored that the Library of Congress has made the Lincoln Bible available for use during his swearing-in,” said Presidential Inaugural Committee Executive Director Emmett Beliveau.  “The President-elect is committed to holding an Inauguration that celebrates America’s unity, and the use of this historic Bible will provide a powerful connection to our common past and common heritage.”

More of this story…

Meanwhile, carpenters are busily increasing the height and width of all doors at the White House so that Mr. Obama’s head will fit through them…

Cooling Is Warming

December 24, 2008

My relatives in New England are fighting their way out from under a giant ice storm. Here in Las Vegas it’s been snowing all week, several weeks earlier than our usual one-day-a-year photo op of snow and icicles sparkling one of our palm-bedecked golf courses before melting away by afternoon. The National Weather Service calls it “a rare snow event.”

Why? It’s getting colder. 2008 was the coolest year in a decade.

The American mainstream press seem to know “team players” don’t mention such inconvenient developments, but in the U.K., the esteemed Guardian reports, “This year is set to be the coolest since 2000, according to a preliminary estimate of global average temperature that is due to be released next week by the Met Office. The global average for 2008 should come in close to 14.3C, which is 0.14C below the average temperature for 2001–07.”

How stupid does this make politicians such as Barack Obama and the other suckers who have fallen for the “global warming” hoax as they race to say, “Never mind”?

Actually, they haven’t missed a beat. These guys are so “scientific” that the evidence of their own eyes and overcoats has become irrelevant. They now contend global cooling is just further proof of global warming. Honest.

So-called “climate scientists” insist “The relatively chilly temperatures compared with recent years are not evidence that global warming is slowing,” The Guardian reports.

Um … Earth’s cooling doesn’t mean the Earth is cooling?

“Absolutely not,” responds Dr. Peter Stott, the manager of understanding and attributing climate change at the Met Office’s Hadley Center. “If we are going to understand climate change we need to look at long-term trends.”

You might want to pause and savor that for a moment. This is the gang who keep telling us, “The Debate is over! Dissent no longer allowed! Man-made global warming is going to ruin the Earth!”

Yet they now say cooling “is not evidence that global warming is slowing,” and that, “If we are going to understand climate change we need to look at long-term trends.”

If we are “going” to understand climate change? Like … in the future?

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Ron Paul: Where’s The Bailout Money Going?

December 23, 2008

“We shouldn’t even be in the business of propping up and bailout out everybody.” – Ron Paul

Exactly so, sir.

The Road to Hyperinflation

December 23, 2008

welcome_to_zimbabweThe interim will feel like deflation, but that will only last until the day it doesn’t. We aren’t likely to see a re-emergence of bubble inflation any time soon but when the mass printing of dollars by the Federal Reserve causes people to doubt the usefulness of paper currency to store their purchasing power, look out. The poor may be hungry, but the rich will find the whole world scrambling to allocate their freshly created paper bills to assets perceived as safe. Right now, that’s treasuries, but eventually that bubble will burst and all that cash will look for another home. With manufacturers bankrupt and commodity producers unable to finance exploration due to falling prices, the supply of goods will be extremely tight at precisely the moment the supply of dollars will be at its height.

Picture a giant tower of cash leaning over a few pieces of cheese being fought over by mice. We could go straight from a deflation-like environment to hyper-inflation with very little notice. And if that occurs, don’t pretend for a moment raising interest rates or selling bonds at higher yields will stop it. Hyperinflation is as much psychological as monetary.

Nobody knows how long it will take for people to lose confidence in paper currency, or what event will do the trick, but the unholy alliance of Keynes’ ghost, money-printer Bernanke and big-spender Obama may make it inevitable.

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As I’ve said before, I am sure that Ben Bernanke thinks he can control the situation and head off hyperinflation before it takes root. I just don’t have any faith in Helicopter Ben “I and others were mistaken early on in saying that the subprime crisis would be contained,”  Bernanke.

Bailout Money Goes Missing

December 23, 2008

distressWithout Representation, Without Accountability

After receiving billions in aid from U.S. taxpayers, the nation’s largest banks say they can’t track exactly how they’re spending the money or they simply refuse to discuss it.

“We’ve lent some of it. We’ve not lent some of it. We’ve not given any accounting of, ‘Here’s how we’re doing it,'” said Thomas Kelly, a spokesman for JPMorgan Chase, which received $25 billion in emergency bailout money. “We have not disclosed that to the public. We’re declining to.”

The Associated Press contacted 21 banks that received at least $1 billion in government money and asked four questions: How much has been spent? What was it spent on? How much is being held in savings, and what’s the plan for the rest?

None of the banks provided specific answers.

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And you know what? They don’t have to provide answers. When the TARP bailout plan was passed it included “transparency and accountability” for the “troubled assets”  Treasury would purchase. But Treasury didn’t purchase any “troubled assests”.

Treasury Secretary Henry Paulson changed the plan suddenly and instead started handing out billions to banks that were not all that troubled, asking them to start lending it out to consumers and businesses. So much for accountability. Angry yet?