Saturday, May 15, 2010

Could Mayor Michael Bloomberg Have Set the Times Square Bomb?

Prison notes that Mayor Michael Bloomberg felt few compunctions about psychopathic-style lying with respect to the recent Times Square bomb.  Knowing that the bomber is a Pakastani, Faisal Shahzad, Bloomberg told Katie Curic:

“If I had to guess 25 cents, this would be exactly that, somebody who’s homegrown, maybe a mentally deranged person or someone with a political agenda that doesn’t like the health care bill or something, it could be anything,”

Lying comes easily to Mayor Bloomberg.  For example, he claimed that scores on student achievement exams improved, overlooking falsification of exam results.  In one egregious case, Bloomberg played up the academic success of a particular high school, and when it was revealed that the achievement scores had involved cheating, Mr. Bloomberg never recanted his praise. 

Given Mayor Bloomberg's recividist lying, one cannot help but suspect other kinds of deranged behavior.   In particular, I can't help but wonder if it was Mayor Bloomberg who left the bomb.  He is more associated with the tendency to tell whoppers than any opponent of the health care bill I know.  As my friend used to say, "he who smelt 'er dealt 'er."

Thursday, May 13, 2010

Symmetry of Waste: Why Aren't Big Government Advocates Pragmatic?

For much of its history, proponents of "state activist liberalism," have claimed that expansion of government is "pragmatic."  This claim was set against three historical patterns.   First, the American ideology until the early twentieth century was freedom.  Expansion of the state could be posed as a more modern alternative.  Second, the pragmatism of William James and Charles Sanders Pierce was popular in the early twentieth century and state activist liberals used its rhetoric.  Third, the public became alarmed at economic developments in the late 19th century, specifically the development of large railroads and trusts that seemed to have economic power.   The large businesses claimed to exercise the right of free contract and laissez-faire in a tone that reflected social Darwinism.  In fact, the railroads and Standard Oil depended on government support.

The response to concerns about big business was big government. This meant legislation like the Sherman Anti-trust Act and the Interstate Commerce Act which aimed to regulate trusts and railroads.  These steps were extended during the Progressive era, when Theodore Roosevelt proposed the Federal Trade Commission and the regulation of trusts.  In his speeches, Roosevelt proposed most of the social legislation that was subsequently adopted during the New Deal.

However, the claim of pragmatism is that what works will be maintained and what fails will be terminated.  One of the earliest laws, the Sherman Anti-trust Act, did not work.  In fact, the Sherman Anti-trust Act resulted in firms growing larger each decade because it illegalized collusion among small firms, providing an incentive for mergers and takeovers. 

Without tracing the ensuing history, government was repeatedly extended, especially in the 1930s, 1960s and 1970s.  Yet, no one ever asked whether any of the programs worked or not.  No one asked whether the Fed was responsible for the greater economic instability and higher unemployment of the twentieth century than of the 19th century.  No one asked why welfare programs induced rather than reduced poverty and dependency.  No one asked why only three percent of government programs are terminated but 80 percent of businesses fail in their first five years.  Failure is an essential component of innovation.  Most ideas fail, and to find a good, workable idea many prototypes must be tried. But government programs never fail, hence they are not tested by reality.  They are not pragmatic.

It is not just that advocates of big government do not reject programs that fail.  Advocates of big government do not even QUESTION whether or not the programs that they advocate work.  There are no mechanisms in place to test whether social security, for example, works better than another alternative; or whether the post office is the optimal mode of mail delivery.  Not only is the information not known, the questions are scrupulously avoided.  To ask pragmatic questions is heresy to "state activist liberals."

In order to understand the reason why questions about program efficacy are avoided one needs to follow the money.  Government functions by borrowing money.  Banks make a profit off the lending.  The Federal Reserve Bank exists to expand the money supply so that the banks can profit by lending to the state. 

Banks do not care if the reasons for their lending work.  They want bigger government because they can lend more. Moreover, expansion of the state leads to monetary expansion and monetary expansion further subsidizes banks' profit margins.  This is so because increased government borrowing leads to crowding out of private sector borrowers.  Interest rates rise, the economy slows and the Fed can justify expansion of the money supply (lowering interest rates) to "stimulate" the economy to "help small business."  The result is that the Fed purchases treasury bonds from banks, and the monetary base expands.  The banks create a multiple of the reserves out of thin air, and business borrows.  Banks collect interest.  Much of the expanded money is diverted to privileged hedge funds, Wall Street and corporations.

In order to create the non-pragmatic version of "state activist liberalism" the government relies on two institutions: the media and the public schools.  The public schools fail to educate children, causing the majority to lack the basic cognitive skills needed to read, write, do basic math or follow a news story.  The graduates of American public schools are sub-literate, sub-numerate and lacking in basic reasoning skills.  At the same time, the graduates are ideologically trained to believe in government; in socialism and in state expansion. "Social justice education" is one of the fundamental goals of the banker-oriented education system.

The more capable, elite students are taught to scrupulously obey direction.  They are trained that the opinions of information sources such as newspapers and television are authentic while the opinions of friends or one's self are invalid.  They are trained to trust mass media rather than common sense.  The "other direction" that David Riesman described in the 1950s was a function of the financification of the US economy.

I've rarely met a "liberal" or left winger who was capable of thinking for him or herself. Rather, they parrot a newspaper or television station.   Many conservatives parrot radio and television talk shows.  Naturally, the newspapers and television stations are financially responsive to or owned by banks or other Fed-related institutions. 

There is a complete absence of pragmatism among both "conservatives" and "liberals".  "Conservatives" applauded the absurd Bush prescription drug plan and the Iraqi and Afghanistan Wars while "liberals" applauded the bailout, the stimulus and the absurdly designed Obama health care law.  Neither ends the other's programs.  The "liberals" have not ended the wars, which they claimed to oppose, and the "conservatives" have not cut back on the massive waste in Washington.  There is a perfect symmetry of waste.  The interest paid to the banking system mounts.

Wednesday, May 12, 2010

Aristotle on Money and Happiness

Aristotle was a Greek philosopher, a student of Plato and teacher of Alexander the Great, who lived in the fourth century, BC.  Contrary to Plato, he believed in freedom, although he was not overly fond of democracy. He preferred an ideal kingship, but recognized that few kings lived up to his ideal and that kingship typically turns into tyranny. Democracy, in his view the corrupted form of constitutional government, is not so bad a perversion as tyranny.

He was an advocate of the middle class.  He thought reason to be the way to greatest happiness and  happiness to be the ultimate good.  Morality was based, in his view, on virtues, habits or states of character in accordance with the right rule learned from childhood. Virtues include  moral virtues like courage, temperance and justice.  Other moral virtues include good temper, tact and interpersonal skills, generosity or liberality, the ability to virtuously make (or at least have) money, the magnificence of a generous man of great wealth,  and the ability to succeed in the political world of the Athenian democracy.  He views virtuous behavior as appropriate in a given situation, the mean or optimal way of behaving.  As well, Aristotle emphasized the intellectual virtues of philosophic wisdom, science, intuitive understanding, practical wisdom, and knowledge of crafts or skills.  Practical wisdom involves applying a particular to a general principle. Excellent deliberation succeeds in attaining the ends sought.  There is no conflict between success in what today we would call the economic sense and morality.  Rather, economic success would have been inconceivable to Aristotle as success were it not virtuous. 

Aristotle saw the highest virtue as a life dedicated to philosophy and thought.  But he was a realist.  He did not see money as the root of all evil. Rather, the virtues are a unity. For instance, one cannot be successful without being truthful. That is a far cry from today's post-Enlightenment world, where ethics and the ability to be successful are viewed as contradictory.

 In the final book of his Nicomachean Ethics he discusses the link between money and a life devoted to philosophical wisdom:

"But, being a man, one will also need external prosperity; for our nature is not self-sufficient for the purpose of contemplation, but our body must be healthy and must have food and other attention. Still, we must not think that the man who is to be happy will need many things or great things, merely because he cannot be supremely happy without external goods; for self-sufficiency and action do not involve excess, and we can do noble acts without ruling earth and sea; for even with moderate advantages one can act virtuously (this is manifest enough; for private persons are thought to do worthy acts no less than despots--indeed, even more); and it is enough that we should have so much as that; for the life of the man who is active in accordance with virtue will be happy.  Solon, too, was perhaps sketching well the happy man when he described him as moderately furnished with externals but as having done (as Solon thought) the noblest acts, and lived temperately;  for one can with but moderate possessions do what one ought. Anaxagoras also seems to have supposed the happy man not to be rich nor a despot, when he said that he would not be surprised if the happy man were to seem to most people a strange person; for they judge by externals, since externals are all they perceive. The opinions of the wise seem, then, to harmonize with our arguments.  But while even such things carry some conviction, the truth in practical matters is discerned from the facts of life, and if it harmonizes with the facts we must accept it, but if it clashes with them we must suppose it to be mere theory.  Now he who exercises his reason and cultivates it seems to be both in the best state of mind and most dear to the gods. For if the gods have any care for human affairs, as they are thought to have, it would be reasonable both that they should delight in that which was best and most akin to them...And that all these attributes belong most of all to the philosopher is manifest. He therefore, is dearest to the gods. And he who is that will presumably be the happiest..."

Stop Regulation of the Internet

Mike Marnell just forwarded this e-mail from Americans for Prosperity urging you to write your Congressman and Senators to oppose the Obama administration's attempt to regulate the Internet.  I wrote the following letter:

Dear Congressman Hinchey/Senator Schumer/Senator Gillibrand:

I oppose Julius Genachowski's and President Obama's efforts to squelch freedom of speech on the Internet.  The Internet does not need regulation, especially from a bonehead like Mr. Genachowski.  The very proposal is evidence of the authoritarian, fascistic intent of the Obama Administration and the Democratic Party.


Mitchell Langbert

>Washington wants to take over everything it can get its hands on. The banks. Insurance companies. Automakers. Our health care.

Now Obama FCC Chairman Julius Genachowski has set his sights on taking over the Internet, and we're launching a major national effort to stop him.

Too many dominoes have already fallen. We need to hold the line. The Internet as is exists now is the most powerful tool for grassroots activism and communication that the world has ever known. We simply cannot risk allowing the FCC to succeed in its efforts to impose heavy-handed regulation by "reclassifying" the Internet as an old-fashioned public utility.

Today we are launching a major national effort to educate and mobilize Americans against this newest threat. Check out our new ad, which is running nationally starting today, on

Robert McChesney, founder of the left-wing group Free Press (whose communications director was hired by FCC Chairman Genachowski to assist his effort to regulate the Internet) is honest about the stakes, telling "What we want to have in the U.S. and in every society is an Internet that is not private property, but a public utility."

Please take a moment right now to head over to and view our new national TV ad called "Dominoes." If you like the ad, please consider clicking on the donate button. Your donation will help keep the ad on the air to educate and mobilize more Americans to demand that Congress step in and stop the FCC's Internet power grab.

The new site also has a petition that I hope you'll sign, and tools to write Congress and demand they stop the FCC. Chairman Genachowski and his two Democratic allies at the FCC could, with just their three votes, take over a sector of our economy roughly the same size as health care.

Congress cannot let that happen. As the legitimate legislative branch, Congress must step up and take responsibility. And we need to send a clear message that if this Congress will not stop the FCC's Internet takeover, we need to elect one that will.

With your help we can finally stop Washington's takeover streak.


P.S. Please forward this email to your friends and share our new site on Facebook and Twitter. We need to make this a major issue so that Washington will understand that we're paying attention and will not accept another big government takeover. Thanks.

Why Might Obama Use a Connecticut-Based Social Security Number?

According to World Net Daily President Obama uses a Social Security number based in Connecticut (h/t Jim Crum).  WND writes that it:

"has copies of affidavits filed separately in a presidential eligibility lawsuit in the U.S. District Court of the District of Columbia by Ohio licensed private investigator Susan Daniels and Colorado private investigator John N. Sampson.

"The investigators believe Obama needs to explain why he is using a Social Security number reserved for Connecticut applicants that was issued at a date later than he is known to have held employment."

Perhaps the most remarkable thing about questions like this is the religious fervor with which the Democratic Party media outlets insist that raising  them is taboo.

Ron Paul on Vitter Amendment

Mike Marnell forwarded this video, which appears on the Daily Paul site.  As NPR reports, a weaker "audit the Fed" bill put forward by Senator Bernie Sanders had been approved 96-0.  NPR explains the difference between the Vitter amendment and the Sanders bill:

"The Grayson-Paul bill authorizes audits by the Government Accountability Office of every item on the Federal Reserve's balance sheet, including all credit facilities and all securities purchase programs; there would be exemption only for unreleased transcripts, minutes of closed-door meetings and the most recent decisions of the central bank. The Senate measure is narrower in its focus, but it would require the GAO to scrutinize some several trillion dollars in emergency lending that the Fed provided to big banks after the September, 2008, economic meltdown."

The Fed should be open to everyone's scrutiny.  Better yet, it should not exist. The recent "bailouts" of private Wall Street firms and now foreign governments such as Greece highlight the unconstrained power of the Fed to deprive the American public of its wealth at the whim of insiders, international bankers and greedy government officials.

Zeitgeist--the Movie

I noticed this five-part video on Youtube and embedded it below. It is about 65% accurate, which makes it 65 times more useful than anything you will seen on television news this year.  Rather than take facts from the movie, use it to stimulate reading.  Much of what's in the videos won't be supported by more detailed research.

I don't like the conspiracy theory aspects of these films and wish the implication that 9/11 was a Rockefeller conspiracy had been omitted. That's emabarrasingly absurd.  It is untrue that Robert McNamara said that the Golf of Tonkin attacks "never happened" or were a "mistake". He said that one of them occurred and one of them didn't. You can see this in the 2003 movie/interview Fog of War. There are numerous other mistakes. As well, I found the fifth part to be ridiculous.  Love as a political tactic is fine, but if the public cannot figure out that the Fed is destroying their future I'm not sure what deciding "life is a ride" will accomplish. That said, the movie does open your eyes.

Much of the history is useful, such as the discussion of  Prescott Bush's involvement with the Union Bank and the Nazis and the background of the Fed. Some interesting quotes from Woodrow Wilson are included.  The stuff about chip implants is worth watching.  The comments about the education system's serving as a counterpart to inculcated stupidity via mass media are spot on.

At first I liked the Patriot Act.  Now I don't.  Although I reject conspiracy-based theories I am convinced that government uses war to curtail civil liberties and that this has occurred in the past ten years.  I also see both the Democratic and Republican Parties as well as Congress, the President and the US Supreme Court as threats to my well being that exceed the threats that terrorists pose.  Which is not to say that terrorists don't exist or that they are a figment of Nick Rockefeller's imagination.  But Washington must not be permitted to accumulate power by using terrorism as an excuse.

It is unfortunate that opponents of the Fed fail to follow the KISS strategy--keep it simple, stupid. Occam's Razor is a guide.  That is, the simplest explanation is the best:  "plurality should not be posited without necessity."  Conspiracy theories fail the KISS and Occam's Razor standards and should be chucked.  

Tuesday, May 11, 2010

Obama = Hitler

I found this timeless classic on Youtube.  It captures the Obama administration to a "T".  If you've seen it before, you'll want to see it again.

Monday, May 10, 2010

Stock Market Volatility

As of this writing the Dow Jones Industrial Average is up 389 points today, and it was up 450 points an hour ago.  The graph above, from is of Thursday's Dow.  The 700 point intra-day dip is widely attributed to a trading error.

The trading error scenario spooks me.  If a trader's error can move the Dow 700 points, then that same trader can manipulate the market 700 points.  Saying that a single, unidentifiable trader can manipulate the entire stock market 700 points changes my world view. 

I do not believe in conspiracy or market manipulation theories because economic incentives and the power of imitation are powerful enough to explain virtually all patterns.  Conspiracies exist at times, but they cannot explain most real world phenomena.  Add to that the psychological bias known as fundamental attribution error, the tendency for people to see situations as due to human causes.  For example, for most of human history people believed that Zeus or similar anthropomorphic gods caused thunder and lightening. Conspiracy theories are Zeus-like explanations.

If you had asked me last week whether a single individual could cause a ten percent fall in the Dow by manipulating price, I would have answered absolutely not.  But everyone else, every major financial news source, says I'd have been wrong.  There are enough players who can do this that (1) a simple mistake caused Thursday's 7% intra-day dip and (2) no one can figure out who it was, which means that there are enough such players to make it hard to figure out.  Short term market fluctuations are even less meaningful than I would have thought.

The VIX, a measure of stock market volatility, had mushroomed in recent days (see Yahoo! chart here)  but it fell sharply today, 30% as of 10 AM, following the announcement of a European rescue plan for Greece. Nevertheless, it is still high.  High volatility is associated with stock market bottoms, at least in the intermediate term.

Let's say the sharp dip on Thursday and the sharp increase today are due to the Greek crisis. It seems to me that the Greek cure will work for several years but not forever.  In order to solve their problems, Europeans will need to curtail spending, which would seem to have a detrimental effect on demand, hence profits, hence the markets.  Sounds like the US as well. Without monetary expansion the world economy is burnt toast. The real quality of life has been falling for decades as Federal Reserve Bank monetary expansion has subsidized government, hedge funds and Wall Street at the expense of productive Americans.

One analyst on Kitco  is predicting hyper-inflation as the US and Europe continue to subsidize real estate and stock markets through monetary expansion.  Bloomberg reports today that Ben Bernanke and the Fed have redefined what they mean by "tightening."  Undergrad economics students learn that the Fed tightens by selling treasury bonds to big money-center banks.  The cash received for the bond sales is taken out of circulation, reducing the money supply. In turn, that pushes interest rates up.  But here is what Bloomberg says the Fed now means by "tightening", according to Mitch Stapley of Fifth Third Asset Management:

"Altering a pledge to keep short-term borrowing costs low or articulating plans to begin selling the $1.1 trillion in mortgage-backed securities it now holds will amount to a tightening of monetary policy because the announcements will send bond yields higher, raising borrowing costs, said Mitch Stapley, chief fixed-income officer at Fifth Third Asset Management in Grand Rapids, Michigan."

In other words, the Fed will tighten by saying it will tighten, not by actually tightening.  That sounds a lot like my diet plan, except saying I'm going to diet doesn't have any real long term effect.

The central banks are painted into a corner.  If they raise rates then the world markets will fall.  If they continue to keep them at extraordinarily low levels (money market funds are essentially paying zero now) then there will be escalating inflation.   When inflation starts, there will be few ways to stop it.  One option might be to let the inflation ride. The Kitco analyst is thus predicting a 50,000 Dow, up five-fold from today.

A 50,000 Dow would mean that a dollar today would be worth a small fraction of its current value.  I don't subscribe to that prediction (who knows?) but it does need to be considered.  The other alternative, responsible tightening, would lead to falls in employment and an economic slow down.  Given that unemployment increased recently to 9.9%, according to the Bureau of Labor Statistics, I suspect that Bernanke, et al. aren't in a hurry to raise rates.*

The response to the rising unemployment will likely be additional infusions of money into an already bloated monetary base (recall that Mr. Bernanke and the Fed tripled the monetary base in 2008, and that money is still ready for banks' use).

I happen to have "A" credit (I'm insane, I should have bought a McMansion and gotten the Fed to pay off the mortgage) and have started to get those invitations for credit card checks like I used to get a few years ago.  Might inflation be right around the corner?

The one factor that has offset the inflationary bias in the economy is China.  But China is likely to be thinking about expanding its home market rather than continuing to work for ever lower wages selling exports bought in a depreciating US dollar.  If China starts pulling out of the dollar, then stock market increases will be over-matched by commodity increases as the dollar dwindles into the dust heap.

*The BlS writes:

"Nonfarm payroll employment rose by 290,000 in April, 
the unemployment rate  edged up to 9.9 percent, and 
the labor force increased sharply, the U.S. 
Bureau of Labor Statistics reported today. 
Job gains occurred in manufacturing, professional 
and business services, health care, and leisure 
and hospitality. Federal government employment 
also rose, reflecting continued hiring 
of temporary workers for Census 2010."

Sunday, May 9, 2010

Washington's War on Men

Wall Street Journal editor David Wessel says on this video, which I picked up from Market Watch, that even when the economy recovers Larry Summers expects one in six men to remain permanently unemployed. This would likely be among the less educated and lower income.  In another Market Watch article Eleanore Goldberg points out that single women purchasing homes outnumber single men purchasing homes two to one.

The Federal Reserve Bank's policies have harmed low-wage workers, squeezing their pay through inflation while subsidizing investment and commercial banks through monetary creation.  I am not so clear why women should be outperforming men in America's declining economy, declining because finance has been massively subsidized at the expense of innovation and hard work.

Men need to make more efforts to learn marketable skills, obviously.  Perhaps false expectations have deluded many men, whereas women have tended to assume that they are at a disadvantage and so tried harder.  America increasingly strikes me as a place much less desirable in which to live than it was several decades ago when, say, I entered college.  I did not dream that so much decline would occur so fast.  Big government and a socialized economy, the policies that American universities advocate, have hammered America into the dust.

Americans need to wake up to the decline and end the socialism with which Washington has harmed so many.