Saturday, May 22, 2010

Government Waste and Wall Street

I just sent this letter to the Olive Press, our local newspaper:

Dear Editor:

Several local acquaintances have expressed surprise at the American media’s avoidance of discussion of waste in government.  “Why would the media support government waste?” they wonder.

Wall Street and the banking industry benefit from interest and sales commissions generated by the issuance of treasury bonds, bills and notes.  The more government waste, the more spending, the more government debt, the more Wall Street profits.  The left has been more aggressive in expanding government and so Wall Street likes it better than the right. In 2009, the first year of the Obama administration, Obama significantly increased total federal spending as percentage of gdp by ten percent over the Bush administration.  This causes the federal government to issue more treasury securities.    

It is true that Wall Street loved Bush’s wars, but the waste of the Obama administration does it better.  Wall Street profits by dealing and banks profit by holding bonds, which they can sell to the Federal Reserve Bank in exchange for monetary reserves, a ten fold multiple of which they can lend to the public at interest.  Thus, a single treasury security can generate (a) sales commissions to brokers; (b) interest payments to banks; and (c) a means by which commercial bank loans and the money supply can be expanded up to ten times the amount of the bond. 

Who owns the media?  The same Wall Street firms and commercial banks that profit from the government bonds.  One can tell which party is better for Wall Street by the degree to which it receives support from the banker-owned media.  Virtually all television stations and newspapers support the Democrats.  Since they are banker owned (for instance, MS-NBC is owned by General Electric) the party that is best for Wall Street and the banking industry is clear.  The media would not support the Democrats if they were not the best party for Wall Street.  Chris Matthews is a good GE man.

The Democratic Party’s spirit is embodied in Paul Pelosi, a corrupt San Francisco business man who has benefited directly from a range of subsidies that have been adopted under the aegis of the Speaker of the House, his wife.  As well, a host of billionaires and multi-millionaires, to include Bill Gates, George Soros, Warren Buffett, Steven Spielberg and Larry Page, have advocated the agenda of Barack Obama.  Wall Street contributed to Obama two to one over McCain, a much better ratio than Bush received, and Obama has rewarded and will continue to reward them.  The recent  financial industry law is an example.

Mitchell Langbert

Friday, May 21, 2010

Ulster County, NY Young Republicans Takes Action

I just received this press release from Erich Deagostino, president of the newly formed Ulster County Young Republicans:

The Ulster county Young Republicans have successfully organized.  A meeting was held on April 17 where bylaws where accepted and officers were elected.  This marks the beginning to a new era for Ulster County Republicans, as we begin work to expand our party while simultaneously bringing in new energy and fresh perspectives. A Second meeting was held on May 15 where goals and events will be proposed.

The Ulster county Young Republican club will serve as a forum to help Young Republicans train to run for office, campaign, and help senior Republicans understand the ideas and perceptions of today’s youth and young adults.  While giving students with conservative views a place of refuge from the corruption of our (single payer) education system.

The Ulster County Young Republicans will encourage young people in Ulster County to become involved in the political process by, assisting on campaigns, debating the issues that affect our community, giving of themselves to help move our community forward, involving themselves in our community to ensure good government, and helping to communicate the perspectives of the young to senior republicans. The Ulster County Young Republicans will not be a passive organization that looks in comfortable areas to grow. Instead, we will work proactively to target those often overlooked by the Republican Party and with each success set a documented example of how to expand the Republican Party in liberal regions of the nation and acting as a foot fold for national conservative organizations seeking to make progress in our region.

EU Can Learn from South Carolina

Ron Holland has another excellent blog on the Lew Rockwell site.  Holland starts by noting:

"The state of South Carolina has been an independent republic and nation twice in history, first in March of 1776 and again in December of 1860. History here certainly shows how it is far easier to get into a political union than to get out again. In South Carolina, we have found that once in a voluntary union, the open door slams shut as political and monetary elites who benefit from this arrangement seldom give up their power to tax, inflate the currency, protect special interest monopoly rights and engage in mercantilism without fighting to retain their distant dictatorial controls."

Holland notes that just as the Civil War forced the South to be subjugated to the whims of the Federal Reserve Bank that was established 50 years later, so the European elite aims to force all of Europe to be subject to coercive, centralized banks and failed government institutions. 

The solution to today's economic failures is DECENTRALIZATION, not centralization. Holland posts several wonderful quotes from Benjamin Franklin and Walter Williams.  As he points out, the best run country in Europe, Switzerland, is a small country that itself is decentralized.  Why aren't the Europeans emulating them instead of the failed federal government of the USA?

Jon Voight Tells It Like It Is

H/t Patriot246.

Money Matters: Wall Street in Turmoil

Several pundits had been predicting a correction in the market averages and they seem to have been right.  According to Morgan Stanley Smith Barney the Dow fell a hefty 376.36 points today and the S&P 500 fell an equally hefty 43. 46.  After some more decline the market could well recover, and if you want to time this correction there still might be some life left in the post-2008 Fed bank credit expansion rally.  Recall that the Fed tripled its bank credit on reserve with the nation's commercial banks in 2008.   It is unclear how far the potential liquidity will expand the stock market or how inflationary it will ultimately be. I would be wary of playing the short term market decline and getting in in a big way, although a small bet should the Dow hit 9500 and stay there for a few days might be interesting. 

The fact is that interest rates are now zero, and the Fed has no further slack to stimulate the markets. If it does, there could be a serious reaction from China and other overseas bond holders, who are seeing the value of their dollar-denominated assets decimated. 

The Australian and Canadian dollars  and a number of other currencies continue to fall. Chuck Butler of Everbank, which markets foreign currency denominated CDs, has an explanation.  Writing on Kitco Butler writes that there have been rumors of China's economy crashing.  A China crash would hurt commodity exporters like Australia and Canada.  Thus, commodities may decline along with various currencies.  This could well be a significant buying opportunity, say if gold falls below $900.

The current situation is a kind of self-contradiction  The Fed has been printing, expanding the supply, of dollars. Yet demand has exceeded supply because of a "flight to safety."  But the demand is short term, or else it relies on the assumption that Congress, the Fed and the President are reliable when it comes to economic self discipline.  If you believe that then you feel comfortable with cash as a long term holding, but I don't. Nevertheless, for the short term the markets are keeping me in dollars. I am currently about 70% in dollars. My other asset holdings, stocks (14%), commodities (10%) and currency (6%), have all been falling this week.

Butler argues that rumors of a China crash have come and gone before, so the currency declines might be good plays as well.  It is certainly nice to have a large share of cash right now, but I would not be optimistic about the future of the US dollar.  Butler puts it well:

"Speaking of deficits... I was thinking last night that I've been blind to something that I should have seen a long time ago, since I talk about both of them all the time! The National Debt in the U.S. is nearing $13 Trillion dollars... But... It's really $19 Trillion... Where did the $6 Trillion come from? Ahhh, grasshopper, it even too me this long to figure this one out... You see... The debts of Fannie and Freddie total over $6 Trillion... And since these two were nationalized their debts are our debts now... And just because the Gov't doesn't count their debts with ours, from now on, I will...

"How are we ever going to pay back $19 Trillion? (Oh and that's not counting the unfunded liabilities of Social Sec., Medicare, and Medicaid) Higher taxes? That won't work folks... Gov't spending cuts? That would help, but going forward with all the baby boomers like me nearing retirement, the unfunded liabilities become "funded" and those alone will be more than tax receipts and spending cuts can cover!"

If there is a sizable market decline and then some stabilization, I'm going to move money into the markets. I don't think the final crash with capitulation that will end the secular bear market is near.

Thursday, May 20, 2010

Now There Are Two Rats in the White House

The Brutally Honest Blog (h/t Rick) has posted this photo.  Look at the rat on the lower right hand corner.  How condign.  Now there are two rats, the big one behind the podium and the small one scurrying on the floor.

Anthony Weiner Is a Shady No Goodnik

I'm ticked that  a shady congressman, Anthony Weiner, has been making noises about proposing legal action against Glenn Beck because Beck advocates holding gold.  I don't know about the particular firm that  Beck advertises, but however dishonest it is, its dishonesty pales next to the corruption of Anthony Weiner, his fellow crooks in Congress and their brainchild, the Federal Reserve Bank.  I wrote Anthony this brief letter:

Dear Tony:

Your attack on Glenn Beck is misguided. The biggest racketeers in the United States today are the Federal Reserve Bank and the US Congress. By creating three times the 2008 level of reserves the Fed has monetized every corrupt, incompetent practice of Wall Stret and the US Congress, including you.

I would add to it that the New York Times and the rest of the Democratic Party's PR organization, NPR, CNN and the rest, lied to the American public on behalf of their owners on Wall Street and told them to buy and hold stocks at inflated prices for years.

You might consider that the Democratic Party media has been engaged in fraud for the past three decades, and since the abolition of the gold standard the US economy has largely become a casino steeped in corruption.

But instead of advocating a gold standard and an end to Wall Street's corrupt domination of the American economy via the Fed, you choose to kick at Glenn Beck.

Tony, you are a low breed of human being. Count me out. I don't want to live in a country that calls scum like you "honorable."


Mitchell Langbert

FRAUD IN THE USA (Chapter 1, Part 1): The greatest birth certificated fr...

Concerns about US-Israel Relations Mount

I received this communication from Sharad Karkhanis:

Subject: Very disturbing information - sent to me by a friend.

I have just received this: from my friend in Israel, who moves in high circles in Israel. Tonight Clive and I heard very disturbing information – we heard it  from a consultant to the United States who meets once a month with the President in the White house. He is in the know. This is what actually has happened with the relationship with Israel and the USA and it is not pretty:

1.       Israel during the Bush and Clinton Administrations – had landing rights in Turkey , and in the USA bases in the middle east and more recently under George Bush, in Iraq . This was in case they were invaded by Iran , or Saudi or any other Arab country. Obama has withdrawn those landing rights. Israel now has nowhere to refuel in the middle east.

2.  Netanyahu was  instructed to come to the white house for a meeting. He was brought in through a servants entrance – the only head of state ever in US history to be given that disgraceful treatment. He was not offered even a cup of tea – but was lectured to by Obama who told him that he is not permitted to attack Iran and that he has to withdraw all forces from the West bank and may not build any more settlements (neighborhoods) in East Jerusalem.

3.       Israel found out that there were four terrorists meeting in Dubai . As they have done for the past 62 years, they informed the US of that and said that these terrorists had to be dealt with. Obama said under no circumstances. Israel decided to go ahead. They killed the one terrorist who showed up. However the CIA was sent there to film the entire event by Obama – and then a concerted PR campaign was waged by the White house to discredit Israel and what they did – this kind of action has taken place with US support for the past 62 years since we have common enemies.

4.       Obama has refused to oppose Syria ’s re arming of Hezbollah and Hamas – Israel now sits in imminent danger from the amounts of missiles that can be sent into her territory.

5.       Israel will never tell the US again of its plans – since they cannot trust us.

6.       Israel intends to attack Iran –there are over 30 installations  of which 4 have underground bunkers that contain nuclear weapons. Israel cannot wait any longer. The US is no longer supporting Israel ’s
self defense.

7.       This is the same man that gave the White House a full file on the 9.11 attack – his warnings and proof were laughed at.

8.      He believes that the next attacks in the USA will be mass transportation – subways and malls – especially the largest malls where the most people can be killed  - and that Vegas and wherever there are
conventions of employees will be a huge target. We are not prepared and are naïve in our lack thereof.

9.       Once Israel attacks Iran , every Jew and Jewish institution will be at risk – temples, religious schools etc. We must be prepared.

10.   This kept a room of 200 people spellbound. It is not fiction. It is fact. What can be done? It is essential that everyone who doesn’t know yet, now understands that the protection and survival of Israel is not on Obama’s list – and he is now taking ACTUAL steps to move all protections away – no more landing rights, negotiating with Iran and Syria and he is no friend of the Jewish people and Israel. We must be sure that we elect politicians who protect Israel as well as the USA – our interests are intertwined. Please forward to everyone you know.

Wednesday, May 19, 2010

Call Me a Racist? I'll Call You a Serial Killer

Barack H. Obama began his presidential administration with a massive subsidy to the welfare mothers at Goldman Sachs. He then followed it up with a subsidy to corrupt, organized crime linked contractors and other perpetrators of fraud, which he called a "stimulus".  Then, he pushed through an incompetent and destructive health care law that needs to become the first major Washington boondoggle to be repealed.  Throughout it all, his supporters have smeared anyone who disagrees with his massacre of the US economy as being a "racist."

The truth of the matter is that there was a statistically significant increase in federal government spending as a percentage of gross domestic product in 2009 as compared to 2008.  The spending was mostly attributable to corrupt subsidies to Wall Street and contractors via the stimulus.  The spending will be outmatched in coming years as the health care law goes into effect. Anyone not out to murder the American economy is opposed to the policies of President Barack H. Obama.

If opposition to Obama means racism, then an equally valid deduction is that Obama's supporters are serial killers of the economy.  They are Jeffrey Dahmers, Ted Bundys and David Berkowitzes.

Call me a racist? I'll call you a serial killer.

Ron Holland on the Coming Currency Crisis and Economic Viagra

Ron Holland has an excellent blog on the Lew Rockwell site about the coming currency crisis.  Holland makes four excellent points:

1. The Greek crisis may lead to a shrinking of the Euro zone as more socialist nations like Greece pull out in order to have the flexibility to inflate further.

2. Eurocrats would like increasing centralization of Europe, just as Republicrats here in the US favor increases in Washington's power.  But, Ron rightly notes, Europe "would be far better off as a confederation of sovereign states that allows competition among individual national currencies." The same is true here in the U.S.  The U.S. would be better off if the states were sovereign and were to spin off from Washington, which ought to become a loose coordinative hub like Brussels is today.

3. There will be continuing periods of dollar strength as the mania of  "dollar safety" continues to motivate investors.  Eventually, though, massive increases in the monetary base and China's and Japan's ending of their subsidization of a devaluing dollar will cause currency depreciation here.

4.  Holland concludes:  "Eventually the sovereign debt crisis will also come to the U.K. and then to the U.S., with disastrous results. The tragedy in Greece today is just a glimpse of what will happen to the sovereign debt of the United States. It will come to America, and it will come on its own schedule, so be prepared."

That means be ready to purchase gold when the price of gold falls.  I have about 5% of my total assets in gold right now and I'm planning to increase it over time, buying in the dips.  Other commodities such as agriculture (DBA) and general commodities (DBC) as well as silver (SLV) and other metals should be included in a balanced portfolio.  Gold stocks (for instance, Eldorado, EGO or GDF) and leveraged gold ETFs (e.g., DGP) are higher risk/higher return ways of investing in gold.  Similar ETFs exist for silver and other commodities.

I am currently 68% in cash and about 10% in commodities, including silver and agriculture as well as gold, and about 6% in two foreign currencies, the Canadian dollar and the Australian dollar. The rest is in a few stocks, including a Singapore ETF (EWS).

My worst positions are the Australian and Canadian currencies which have plummeted, apparently because of the Euro crisis (I don't understand why, but I also don't understand why the dollar is rising).  A buying opportunity in the making?

Do not buy and hold.  The mammoth increase in monetary reserves two years ago has motivated the past year's run-up in the stock market, and it may be that this injection is running out of steam. It is possible that the massive increase in potential liquidity (tripling of the monetary base) will continue to boost the stock market for some time, but ultimately the viagra will wear off.  Then, Bernanke, Obama and their supervisors at 85 Broad Street will need to decide whether to inject nine times the monetary base to try to "get the stock market up" another 50%. If they do, hyper-inflation will be a certainty. If not, then expect some major disappoints in the American stock market.

Bernanke's use of monetary reserves somehow reminds me of viagra.  The older the rally gets, the more viagra is needed.

Rand Paul's Victory

Rand Paul is the GOP candidate for Senator in Kentucky!  Yiiippppeee!  His speech is just awesome. And who can doubt that, to recall a quote I heard somewhere: something's rotten in Denmark. And long live freedom!

Tuesday, May 18, 2010

Mitchell Langbert's Blog Exceeds 200,000 Independent Visits in 26 Months

I don't think of this blog as mass media and generally I get between 100 and 200 visits per day.  My readers are a mixture of people who surf in through links to various topics, friends, former students, people with whom I worked on the Obama birth certificate issue two years ago and others whom I know. This past week, though, demonstrates the amazing power of the Internet.  One post concerning the use of hay to soak up oil has been attracting over 5,000 visits per day and over 10,000 on two days, with better than 50,000 visits in the past week to that page.  I am not sure how that worked.  Several major sites picked up the story and linked to that page.  But according to my site meter the majority of visits have been from e-mail links.  I'm not technologically savvy and so have had trouble piecing this phenomenon together.  I must thank Contrairimairi for forwarding that video to me.

I wish the large number of vistors were to take a look at the rest of my blog, but only about six percent have.  In any case, 200,000 visits since March '08 amounts to an average of 7,695 per month.  That's  more than the annual circulation of most academic journals.  Let us hope for many more phenomenal successes in the years to come.

Monday, May 17, 2010

Cartoon Reveals Why Obama Administration Is Snake Oil

Joe Toscano forwarded this 1948 cartoon that is featured on the National Juggernaut site. There is more sense in it than in the entire City of Washington.

Socialism In Extremis: Greek Economy, Newsweek Head for Hades

In February 2009 Newsweek claimed that "we are all socialists now."  Prime Minister George Papandreou and the Greek government could not help but agree.  Now Newsweek is following Greece to socialist Hades.

Big reports that socialist Newsweek, following socialist Greece, is headed for bankruptcy:

"Despite staff cuts, Newsweek has remained a drag on its parent company (The Washington Post), which is also struggling with ad declines at its namesake newspaper...Newsweek is pretty much dead, and now the only question is who’s going to rouge the corpse for a few more years, if anybody, to keep its collection of Morning Joe talking heads with at least the fig leaf of meaningful employment before the final axe falls...At $5.95 per issue, Newsweek is hardly a bargain. Newsweek is your father’s magazine, and no amount of reinvention could fix that..."  

I disagree.  Were the editors of Newsweek more imaginative, they could have found a way to survive.  Newsweek's unimaginative socialist ideology is matched by its unimaginative marketing strategy.  Just as new media is re-conceptualizing the news, so might have the Democrats at Newsweek.  Back in February 2009 I urged Newsweek to move to France.  Perhaps Hades would have been a better bet.

Sunday, May 16, 2010

Tax Increase or Gold Standard?

The Midas Letter (h/t Kitco) predicts that there will a bi-partisan consensus as to a massive tax increase following the midterm election this fall. This will harm the United States economy.   Midas writes:

"Washington's elites are quietly preparing a post-election fiscal compromise that will fund much of President Barack Obama's domestic spending agenda with huge tax increases. They aim to create a value-added tax and will argue that there is no alternative even though doing so will leave the United States resembling the stagnant, bureaucratic nations of Western Europe."

This is only a prediction, of course, but would this scenario differ much from the history of the past 40 years?  Ever since Richard M. Nixon abolished the gold standard and Ronald Reagan adopted Keynesian monetary expansion, both New-Deal policies, the Republicans have largely adopted a strategy of "Democratic Party light."  Under Reagan the GOP held the line on domestic spending as a percentage of real gdp but did not begin to reduce total government spending until the end of the Cold War, following Reagan's departure.  Thereafter, there was a small drop in total federal spending, which remained in the 16-18% of real gdp range until the end of the Bush II administration.  In 2009, the Democrats once again proved to be the leaders in government bloat and expanded real spending by more than ten percent, to 20% of real gdp. President Obama should be renamed the Emperor of Bloat.

The 20% expansion of government spending as a percentage of real gdp directly followed the largest expansion of monetary reserves in living memory in 2008.  Perhaps the expansion of the Continental during the Revolutionary War was comparable to the expansion of the monetary base two years ago.  Obama then increased real domestic spending, in part through a painfully nonsensical "stimulus" plan.  Although the Democratic Party's media has downplayed this, as of this month the unemployment rate is higher than it was last year on a non-seasonally adjusted basis. In other words, government has expanded, it has failed to reduce unemployment, and now new investment will be crowded out if the spending increases are validated through tax increases next year.

If the GOP goes along with any sort of tax increase now, and does not demand sharp spending reductions, it does not warrant any further support.  A third party will be needed. Hopefully, this scenario will not play out. If the GOP stops further increases in government and proves that it aims to reduce government, it can redeem itself.  But any sort of bi-partisanship with the pigs in the Democratic Party ought to spell the end of the GOP.  A replacement party will be needed just as the GOP replaced the Whigs in the 1850s.

The Midas Letter suggests an alternative to a tax increase:

"The U.S. could return to a gold standard, a system that would not only prevent the government from running chronic budget deficits but would also curb attempts to manipulate the value of the dollar for political reasons... The first an American commitment to a dollar convertible to gold on a date certain. The second step is allowing the market, in the run-up to that date, to find and fix a dollar price of gold that would encourage other nations to replace dollar reserves with gold holdings as their new monetary base, whether or not they choose initially to join the new international gold standard...Legislation restoring dollar-gold convertibility should be accompanied by passage of a constitutional amendment guaranteeing the American people a right to conduct their economic affairs in gold, regardless of the future status of gold as the official money of the United States."

Which would you prefer--a massive tax increase, or a return to the gold standard?  Write your Congressman, even if they're as incompetent and corrupt as mine.