The CSR: "Corporate Shakedown Racket"

Nick Nichols has written a great article about the influence of NGOs on internal corporate politics. The main subject is the concept of Corporate Social Responsibility, which he calls "taxation without representation." He also calls it socialism via the Trojan horse of corporate marketing (the equivalent of their conscience.)


[Thanks to Warner Bros./Reuters for the picture.]

It's true, we've all noticed those big globals trying desperately to make themselves look green with a heart of gold -- BP, Ford and others with their TV campaigns aimed straight at the wallet of the environmentalist consumer. The problem with it is that the ones paying for the extra cost are every consumer, including you and I and everyone.

The Other Side of the French Story

These are photos you won't see much in the French or any other press. There were two sides to the recent demonstrations when students blocked entrances to schools and universities to protest the government's attempt to modify an inflexible and heavy work contract for young people.


[Thanks to Liberte-Cherie for the photos.]

While most photojournalists only saw the kids and the unions, there were others carrying signs that read,

"Stop the Strikes"
"Drop the paving stone, pick up your pen"
"Halt the Picket Lines"
"Smashers, picketers, don't touch my university"

Liberte-Cherie is one of the few organized free-market groups in France (website). One of their founders, Sabine Herold, has left the group to become the spokesperson for a new French political party, the Alternative Liberale, that is making surprising progress in a country that is paralyzed by a dysfunctional kind of social democracy, i.e. one that has allowed privileged minorities to attain a position of force wherefrom they can blackmail the public and the government into submission.

Copper Penny? -- NOT!

My husband and I were just thinking, "Hey, we've got all these pennies laying around. Let's gather 'em up, go the bank -- not to cash them in but to change dollars in for pennies, and go sell the copper to the highest bidder."


[Thanks to lemonde.fr/reuters/Christian Charisius for the photo.]

Well, that idea was short-lived. Turns out the US Mint beat us to it. They took all of the copper out of our pennies in 1983. See this chart for the evolutionary details of our beloved "copper" penny.

The joke's on us -- but I guess we knew that anyway. After all, gold was taken out of the dollar back in 1933.

Watch Your Step

Today's cartoon issues a warning to the Fed. Click on image for a larger version.

Get Out Your Crystal Ball

The waste caused by uncertainty concerning the economy and the dollar, which uncertainty I attribute to the lack of a gold standard, is breathtaking. For example, after the recent G7 meetings, people like the economists of the Deutsche Bank -- no amateurs -- are wondering:

"Does [the recent G7 decision to request help from the IMF concerning enforcement of exchange rate floating agreements] mean a coordinated policy of dollar weakness is imminent?" ("'Est-ce à dire qu'une politique coordonnée de dollar faible est imminente?', s'interrogaient ainsi les économistes de la Deutsche Bank." See boursorama article.)

Or look at this from the Wall Street Journal, no less:

"Five Indicators Give Early Clues To the Direction of the Economy" (Source)

So, we now have five clues to guess at what the Fed will do next. How can anyone have confidence in the future? Does this mean that the whole world of business, including industrialists, small business owners, governments and economists, must now wait for indicators of clues of unpredictable reactions to uncertain statistics?

Why not bring in the fortunetellers to plan for the next twenty years? Do we really have to sit here on pins and needles waiting for someone in the Fed to give us a hint of which indicator will give us a clue to the potential direction they might go next? And then do we have to believe that what they do will actually affect the direction of the economy in a predictable way? -- because we don't even know that, you see.


[Thanks to northgirlshideaway.homestead.com for the image.]

No wonder the smart money has taken their marbles out of true capitalism and is now spending all their time at the equivalent of Las Vegas poker tables. Who would want to be putting serious money into anything heavy these days, given that (1) you can't predict the value and cost of money tomorrow, (2) the economy could take off or tank at any minute, and (3) you can bide your time speculating on derivatives, exchange rates, interest rates and asset bubbles -- which work no matter which way the economy goes if you play your cards right -- and your chances of success aren't much worse.

If we had a gold standard, the trade deficit wouldn't be what it is. If we had a gold standard, the Fed couldn't create empty credit at the drop of a CPI index. If we had a gold standard, we'd have no inflating of the money supply and the dollar would not be on the brink of revealing its true weakness to the world. If we had a gold standard, foreigners wouldn't be gobbling up our assets -- treasuries, stock market shares, American companies or real estate -- and in the process destroying our savings interest rates, because they wouldn't be holding the results of our bubble-based-equity and future-earnings spending spree. If we had a gold standard, the government might think twice before committing trillions of dollars to assist foreign countries with their timid democratic instincts.

If we had a gold standard, there wouldn't be all of this uncertainty. What does the Fed think it's doing? What was the government thinking when they created this monster? I don't believe in its brand of economics voodoo, whatever it's called.

Good Luck to the IMF

The G7 are unanimous in support of a larger role of the IMF in the control of exchange rates. I cannot believe anyone is naive enough to believe that an international organization can control anything. All we have to do is look at the UN's incapacity to bring peace to the world to realize this is a pipe dream.


[Thanks to Lewis Carroll for this etching.]

Just think about countries like Russia, Saudi Arabia or China. For example, do we really think the Chinese government will allow the rest of the world to mandate the exchange rate between the yuan and any other currency? I don't think so. No dictator takes orders. Fortunately, in the long run, markets don't either, and China's centralized efforts to control the yuan will probably fail sooner or later all by themselves -- hopefully before too much damage is done all around.

I'd say, let's look at the UN successes and failures before we globalize something else. Let each country mind his own business. Let the market and individual market participants handle the problems as they arise.

Who knows, maybe gold will reassert itself as a de facto monetary standard by popular demand. I can think of ways it could be done; I can also imagine that the free market will come up with other ways to do it that we haven't dreamed of yet. One of those ways is not the IMF -- unless of course you privatize it -- a not-so-crazy idea I've seen here in the 11/22/04 Research Reports of the American Institute for Economic Research.

I also highly recommend their book, Prospects for Reforming the IMF and the World Bank, a collection of submissions to a panel discussion at AIER on this very subject in November of 2004. You'll get the opinions of the participants, some of whom were actually on the Melzer Commission: Gerald P. O'Driscoll, Jr., W. Lee Hoskins, Richard Huber, Adam Lerrick, Kenneth Rogoff, Mary Anastasia O'Grady, Robert Skidelsky, Brett D. Schaefer, Thomas Ferguson, Claudia Rosett, Ian Vasquez, Walker F. Todd, Walter Cadette, Sara Cooper, Jane Bussey, and Jack Willoughby.

Remember my motto: You can take the gold out of the standard, but you can't take the standard out of gold.

A Not-So-Floating Yuan

Excellent insight here at China Law Blog about the true yuan/dollar situation, derived from a Forbes Magazine article by Paul Maidment. I quote CLB:


[Thanks to news.bbc.co.uk for the photo.]


"Maidment argues that China cannot float the Yuan right now because if it did, it would lower the cost of foreign goods in China and drive many rural, state owned, industries out of business.  Because these industries provide so much rural employment, Beijing simply cannot allow them to fail: 

" 'Instead, its [China's] currency imperative is to protect the vast network of bankrupt but job-providing heavy industries that Mao Zedong scatted across China's countryside. They would be destroyed by import competition if the yuan was revalued.

" 'That would exacerbate the social disruption and violent protests breaking out in record numbers in China's poorest regions. Beijing won't countenance that level of political unrest.

" 'That is the political imperative that drives China's exchange-rate policy right now, regardless of how much atavistic chest thumping comes out of Washington, either while Hu is here or after he has left.' "

Ah sooooo. CLB concludes:

"Bottom Line: China is not going to float its currency soon so the United States would be wise to move on to other issues." I'll add that the "other issues" will be trade barriers, unfortunately, and usually I'm agin 'em. But in this case, I admit I'm tempted to put my Wealth of Nations aside for a Senate vote to two -- temporarily of course -- nah, it'd probably do more harm than good.

The French Winemaker's Mea Culpa

Great, great article in today's Le Monde (in French) about how French winemakers have missed the boat on the international marketplace.


[Thanks to booknotes.buzzword.com for the photo.]

This sentence says it all:

"As concerns [globalization of the wine market], the country gives a sad illustration of the very thing that holds it back in general: a conservatism fed by the vanity of believing one can teach the whole World a lesson or two." ("Le pays donne dans ce domaine une triste illustration de ce qui le freine plus généralement : un conservatisme nourrit de la vanité de croire qu'on peut donner des leçons à la Terre entière.")

This is an excellent way to describe France's problem, whether it be in the domain of wine marketing, economics or politics. "La Vieille France" is guilty of harboring a self-satisfied attitude, of living upon the laurels of yesteryear, of clinging to musty socialist idealism and of smothering innovation, which in turn will conspire to tether this magnificent nation until it can dare to find a way to adapt without compromising its unique set of values. I believe it is possible; and the answer lies in opening up French society to the free market of young ideas instead of trying to preserve the status it once derived from ancient successes.

The only problem is that these tethers are also tied to a system of special privileges for a number of democratic minorities (the young, the unemployed, the federal bureaucrats representing 25% of the workforce, the unions, the unwed parents, to name but a few) who have been smart enough to unite in a common effort to stymie change and preserve their favoritism status quo.

It's a sad sight to behold.

Read more on France in an article of mine.

The G7 Meet Again (What Else Is New?)

This article over at marketwatch.com tells us what the G7 and major corporations said to each other on Friday, 4/21/06.


[Thanks to digidagboek.blogspot for the image.]

The article notes that, as usual, everyone was in agreement that someone should do something. Meanwhile: tick, tick, tick.

Here is a summary of the G7 statement with my sarcasms.

1. The G7 promise "that member countries will work together to tackle global imbalances." So it's business as usual.

2. "Success will not be easy. The world got into the mess it's in because it was the path of least resistance." Yes, it's not any government's fault, it's that lazy world.

3. "In the United States, cutting budgets will not be easy, because you might have to raise taxes that you promised would never ever be raised." Of course the option of cutting spending isn't on the table.

4. "Saving more means consuming less." Yes, people, you should put your money in a savings account at minus 1% interest and stop spending so much. (The savings rates may be changing, but they're not even keeping up with inflation.)

5. "Increasing U.S. exports means people trained to flip houses or underwrite mortgages will have to be retrained to do something useful." Indeed. The implication is that manufacturing is the only respectful profession and it's all of those poor unemployed factory workers who are stuck "flipping" houses a-la-McDonald's and pushing pencils instead of doing something "productive" -- a pretty non-economics view of the labor market.

6. "Investing more in productive enterprises means investing less in real estate." Real estate is so unproductive. Houses just build themselves. On the other hand, if governments hadn't created the real estate bubble in the first place, there wouldn't be all of this flipping of houses, underhanded writing of mortgages and admittedly wasteful speculation.

7. "For China, reducing the reliance on exports means creating new vibrant domestic markets, with all the necessary and expensive infrastructure, creating new expectations and a messy consumer economy. State companies would have to be allowed to fail. Some people, perhaps millions, would lose their jobs. The state could lose its grip." It's not the exports that are creating the problem. It is the centralized control of everything from A to Z that is. Change in that sector is probably not in the cards, but if it were, it would mean the Chinese state employees would be the only ones to suffer, if only temporarily. I would have confidence in those "messy consumers," much more than in the state -- although they have gotten some of it right, apparently, because the people of China have never had it so good.

8. "In Europe and Japan, reforming labor market structures is painful, because young people might riot over losing the right to keep a job they'll never have. The social compact might have to be rewritten with few guarantees that the new compact will be popular or just." No comment here.

9. "[T]he G7 ministers ... promised 'vigorous' and concerted action. In particular, the G7 said that further U.S. action is needed to boost national saving by reducing the budget deficit. European nations must encourage domestic consumption, while Japan should take further actions to ensure long-term growth, ministers agreed." Interpret this to mean that the US should raises taxes, Europe should increase loose credit, and Japan should continue to flood their economy with yen.

Good grief.

Debating the Bears

Those on gold's side (as I am myself as a matter of long-run principle) go to great lengths to look for the stats and defend of our position, given we're in the minority. Some day soon, I hope to acquire the necessary tools to do my stats myself, but in the meantime, I allow myself to "bloggiate" (my own word, pronounced "BLA-jee-ate") and read the honest efforts of others.

Douglas Noland is one of my favorite commentators/stat collectors. His latest column over at prudentbear.com, the Credit Bubble Bulletin, discusses what he describes as one Fed member's impression that they've just about "wrapped things up," i.e. conquered the inflation dragon, at least for the time being.


[Thanks to sjgames.com for the image.]


Doug accuses the Feds of playing a vital and irresponsibly happy-go-lucky role in today's global monetary chess, and I agree with him. He says:

" As the issuer of the world’s reserve currency, the U.S. economy has for decades enjoyed the capacity to inflate dollar denominated securities (Credit) at will.  Our competitive advantage in issuing top-rated and liquid securities has served us especially well over the past decade.  It was a key facet of 'reliquefications' and 'reflations' during periods of economic weakness and/or fledgling financial crisis.  The much trumpeted 'resiliency' of the U.S. economy and banking system owes almost everything to the capacity for the U.S. government and financial sector to endlessly create debt instruments readily accumulated by domestic and foreign holders.  Additionally, I believe a strong case can be made today that long-term yields would be significantly higher if it weren’t for the perception that the Bernanke Fed will aggressively cut rates at the first indication that the U.S. economic Bubble and/or Global Asset Market Bubble are beginning to falter.  The blundering Fed apparently not only believes that the U.S. economy is more resilient than in the past, it presumes it now has significant leeway to cut rates and 'reflate' when necessary."

As usual, he hits the nail on the head. The only nit I would pick concerns his interpretation of the recent bubbles in real assets sectors. In his view, "the nature of the current global Credit inflation (and attendant wholesale currency degradation) has manifested into a full-fledged flight to real assets sectors such as energy, metals and real estate" -- i.e. that people have finally understood that the dragon is going to win. Personally, however, I would have described the flurry of activity as a fishermen's race to the best fishing waters before the crowd gets there.

I have three reasons for saying the party may not be over yet:

1. The fishermen'll be back to the dollar at the first sign of reflation, i.e. when the Fed stops increasing rates.

2. There's still too much room for competitive currency bloating of our trading partners.

3. Cost-of-living equilization with our present and future trading partners still has a long way to go, i.e. we can count on finding a cheaper place to manufacture goods for the US market for a long time to come, helping to control prices.

These three factors could absorb the US dollar's bloat and continue to render US CPI inflation flacid, at least in the eyes of the Fed observer. So, I don't see that the flight is upon us just yet; however, I realize that he may be correct, because panicked flights have a way of creeping up behind you and going, "BOO!"

On the whole, though, I think all of the above scenarios, combined with what seems to be a market shortage of the metal, continue to be bullish on gold.

Hoorah for David Ranson

This President of H.C. Wainwright & Co., an investment advisory service that appears to follow the typical pattern of trying to predict the future in various markets (an endeavor that I find pretty useless at best and misleading at worst), has said something extraordinary, given the nature of his business, in a letter he wrote to the the Financial Times.

He says:


"The dollar is a variable, while gold is the next best thing to a constant. Commodities form merely the vanguard of a general break-out in the prices of everything."

Touche.


[Thanks to forin.it/Getty images for the picture.]

"... if the markets value the dollar less, the price of gold must rise in nominal terms regardless of these 'real' considerations [gold supply and demand.] It all makes much more sense if it is the currency that is changing and not the metal."

Touche.

"Why should there be [anxiety about the dollar], since other currencies have been losing their gold values even faster than the dollar? It is paper money that is going down the tube, and on a worldwide basis."

Bravo, bravo, bravo, Mr. Ranson.

Now tell me: What's a smart fellow like you doing in a place like that? (Just kidding -- remember, I spelled your names right.)

Central Bank of Sweden to Diversify Away from Dollar

China and Japan are not the only central banks wanting to diversify. Sweden is now joining the crowd, according to an article (in French) at boursorama.com.

Sweden will increase Euro reserves to 50% (from 37%) and decrease dollars to 20% (from 37%.)


[Thanks to banknoty.pl for the image.]


Most economics and investment "experts" will say that the dollar will come out of this okay, if only because it's still pretty much the best game in town; but that superiority is waning, and speculators continue to fly their bets all over the globe in search of a quick profit, i.e. dollars to foreign currency and/or assets back to dollars, etc. -- to wit the havoc wrecked in Iceland and New Zealand recently. (NYT source -- You may have to log in to read article.) I hear Australia, Turkey and Hungary are the next on the list, so those central banks, beware. (See more on this subject, in French, at boursorama.com.)

I think everyone knows the dollar is inflated; but every currency around the world seems to be trying to follow suit. Inflating the monetary unit has become an insidious game that profits the wily central governments and the speculators at the expense of the modest-means little guy who doesn't have the knowledge or the extra cash to take advantage of the various bubbles that pop up around him stealing his non-bubbling salary. His reaction is just to spend it as fast as he can, and it's no wonder.

Maybe a thousand wrongs do make a right when it comes to fiat (not standardized) money, but I'm convinced that someday the world's economies will have to pay the price. As Hayek said (and I paraphrase), over-expansion of credit will come to the inevitable end of its run, assuming history is the judge and jury; and it is only a question of whether it will be a decades-long, slow, torturing slide or a violent and fatal overnight crash.

All of this is good news for gold. As I say, you can take gold out of the standard, but you can't take the standard out of gold.

South Africa Breathes a Sigh of Relief

The rise in the SA rand/dollar exchange rate was beginning to worry the locals, but reassurance has come from the recent extraordinary rise in the gold price. The fretting was based on the fact that any rise in the rand would offset the advantages offered by an increase in the dollar price of gold.


[Thanks to namibia-info.net for the photo.]

South Africa has held the leading role as gold producer for a long time, but now that status may be challenged. To quote an article from dispatch.co.za:

"The South African gold mining sector is the largest in the world, but New York-based commodities analyst Jeffrey Christian said earlier this year that if South African output remained at these levels, the country may lose its status to China within the next five years as China’s annual output had been increasing at a rate of 5% a year." (source)

Who knew? If China becomes its own supplier of gold reserves, that changes the dynamics a bit.

Gold to $3,000?

Fascinating interview over at Mineweb.net/radio with Bill Murphy of the Gold Anti-Trust Committee (GATA.) Most investors who have heard of Mr. Murphy blow off his take on the gold situation as a paranoid conspiracy theory. I don't pretend to know anything to either rebut or support his thesis, but it's an interesting one, nonetheless. As mentioned in the radio article, Credit Agricole Cheuvreux Mining, a French company, has come out in support of GATA, and it has other supporters, like a former Putin minister, for whatever that's worth. (Read the Cheuvreux January 2006 report, downloadable from GATA at this page.)

The conspiracy theory claims that central banks have been "lending" gold stocks out to brokerages and banks, who then turn around and sell it or otherwise tie it up with derivatives and so forth. This would imply that central bank gold stocks are over-reported, because the banks report these "loans" as assets, even though the "loaned" gold will not necessarily be returned, some having actually been sold. Furthermore, the "borrowers" also count the gold in question as "assets," creating, according to GATA, a misleading overstatement of existing gold stock.


[Thanks to terpsboy.com for the photo of Saddam's gold stash.]

All of this would translate into a vast undersupply of gold should a market upturn occur, as the gold price now seems to be indicating. GATA does take it one step further to imply that central banks have covertly attempted to suppress the gold price since the 1990s, to create the illusion that all is well with the world's fiat monetary system in spite of the Japanese crisis, the dot-com crisis, the federal hedge fund bail-outs, and other such dangerous events of the recent past. GATA has gone so far as to file lawsuits against the offending parties, and one has been dismissed "for a technicality," and the other is still in process.

I think that's an approximation of the theory. He further states in the interview that he doesn't believe the source of the recent boom in the gold price can be traced to doubts about the dollar's strength, but that the excess dollars in circulation may have an impact down the line. He thinks that the recent moves are only the beginning.

Time will of course tell, as usual.

The Government as Accomplice in the Illegal Immigration Issue?

It just occurred to me, after reading this article on Homeland Security's intentions to crack down on illegal immigrant hiring, that the government has been pocketing taxes and social security payments from people with invalid social security numbers for how many years? How is it that the people in the Social Security office don't verify which numbers are valid and which are not? It would be a simple matter to do so once every six months or so. Doesn't that make them guilty of something?


[Thanks to dragonwings.net for the cat-that-ate-the-canary photo.]

Of course, I don't really need anyone to answer those rhetorical questions. Even if they would be found guilty by a jury, they are accountable to no one.

Ireland Is Still Hot

That tiny green country is quietly moving to the forefront of innovation and savvy. An Irish market research and data company has come out with an intriguing product offering called Bank and Country Risk Analysis.

Yahoo's version.


[Thanks to sitebelt.com for the photo.]

This report is one of the first that addresses what we've known all along, that is to say that today's investors must attempt to understand not only companies and business, but international banking, government, politics, and fiscal and monetary policy -- and I'd throw in economic history just for good measure. (You'll note I didn't include economic theory, because if you delve into more than a historical view, you'll get stuck in the Economics Quagmire.) (See my 7/2/05 post.)

Ireland has made an astounding come-back over the last 20 years that should be carefully observed by all those nations who are headed in the opposite direction, i.e. towards higher taxes and more centralized government. Perhaps this report will bring to the forefront the fact that countries are now in competition with each other for the investment funds of the world and that governments and central banks must be very careful how they play with their own and other nations' currency.

A Good Explanation of Oil Prices

This Investors Business Daily article gives a great expose of the panoply of reasons why gasoline is so expensive now, putting particular emphasis on the details of how government regulations make it so difficult to (1) produce gasoline, (2) open new refineries, and (3) introduce competition into the marketplace.


[Thanks to nightscribe.com for the photo.]

There is one thing the article doesn't mention: The decreasing value of the dollar that pays for the stuff.

Read it.

Scientific Method

All economists and climatologists, indeed all scientists, would do well to memorize the list at the end of this article before doing research. It's the best article I've read in a while on how science is supposed to work.

Scientific Method


[Thanks to msg.ku.edu/~dave for the photo.]

Cute Gold Chart

This one gives us a clear visual of recent gold price history. Nicely done. (Also from amergold.com) [Please note: for anyone whose feed did not pick up the proper chart on my last post, please see my source blog for the corrected version. Sorry for the inconvenience.]

Another Nice Dow History Chart

Found this one at amergold.com, in an article entitled, "Gold at $1700 an ounce?" Click on the image for a larger view.



The 2002 article is coming into its own these days. Looking through some of their more recent commentaries, they've been right on the money and very close to my reasoning on all of this. We'll see how it plays out, won't we?

A Democrat of a Different Stripe

I'm talking about Kwame Kilpatrick, one of Time Magazine's "worst mayors," who has decided to do something I consider very smart: privatize Detroit's government services.



He must not have gotten the Democratic Party talking points. Even though he was allegedly involved in the leasing of a Lincoln Navigator for his wife out of city funds, he seems to have aimed right at the budget problems and struck a bull's eye.

For example, he has eliminated 5,500 government jobs and cut property taxes. If you don't believe me, read this article by Josh Hendrickson at Tech Central Station. Let's hope that he's caught a very contagious virus and that the Democrats will catch it before they take over our federal and state legislatures this Fall.

Since When Can You Stop a Bubble from Deflating?

Every time I hear someone of prestige state that they need to "fight deflation" or that they have "deflation fears," I get the same reaction: You can't stop an open-ended balloon from deflating. You can slow it down by pumping credit hot air into the monetary system at a certain velocity, maybe even reflate it for a while, but you can't really cure the problem, because the supposed "problem" is in fact a cure.


[Thanks for unitoops.com for the photo.]

"What nonsense is that?" you say. I say that, all else equal, deflation is a cure for inflation.

Why don't economists get this simple principle?

The latest example of an effort to "fight deflation" is Japan. "We cannot allow a setback in the current recovery track," Prime Minister Junichiro Koizumi said. "There are signs of deflation ending, but I am wary of whether deflation has been beaten. It must be judged cautiously." (Japan's Prime Minister is quoted from sirchartsalot.com.)

He makes it sound like deflation is a virus. Deflation is not a virus; it is the antidote to a virus, which virus is the inflating of the Japanese yen that caused them to bubble in the first place.

Ever since 1913, the US and other nations have allowed those responsible for maintenance of the currency to inflate it, even encouraging them to do so with unending credit reserve pumping. So what now do they expect? It's either deflation, or de facto devaluation. Either the inflated monetary unit must deflate back to normal, carrying that country's economy with it on the ride down, or the unit must lose its asset- and exchange-value credibility. There is no third way. Gold is making this crystal clear at this very moment, and gold is usually the fat lady singing.

It is time central governments bit the bullet, paid the piper, did their mea culpas, and found a way to deflate us safely back to fiscal and monetary sanity. Japan had the chance to do so over the last eight or so years, but instead they blew it (pun intended.)

More Cartoon Commentary

No other comment necessary. Click on the image to get a larger view.

Easter Amaryllis

The most beautiful Amaryllis in the world. (And it's mine.) Happy Easter and Passover and all other simultaneous holidays! Click on image for larger view.

A Little Gas Price Humor

Today's Cartoon

Click on it to get a larger view.

European Gas Prices -- YIKES!

You thought $3.00 was a lot; the French are now paying about $6.60 a gallon. Let's hope all of this instability doesn't lead to government price fixing, whether it be over there or, yes, even over here. That would be a bullet to the brain, right? Remember the Nixon gas price fiasco?


[Thanks to scorcher.org for the image.]

So, when the time comes, get ready to go out into the street and scream, all in unison: "No price controls! No price controls! No price controls!" We the common-sensical silent majority may have to stop being so silent in the near future.

Article in French at Le Figaro.

New York Times: The Socialist Voice

The New York Times is on a mission. Why don't they just come out and say it? They want nationalized health care and all the other trimmings that come along with socialism. The bias of the New York Times is so blatant, that they have become a joke to people who see things as I do. Read this NYT version of the only thing Congress has gotten right in the last few years, the Deficit Reduction Act. You'll die laughing/crying.

I especially liked this:

"The Center on Budget and Policy Priorities, a liberal research and advocacy group, estimates that three million to five million low-income citizens on Medicaid could find their coverage at risk because they do not have birth certificates or passports."

HA HA HA HA HA HA HA HA A A A A A A A Ba Ba ... Boo Hooooooo....... It's so sad.


[Thanks to tattoosbysean.com for the laugh-cry image.]

Economics According to the ACLU

The ACLU's Mark Rosenbaum is crowing about his defeat over the LA City ordinance that forbids people from sitting, lying or sleeping on a public way, that the City put in place to discourage the homeless from taking up residence in LA's Skid Row streets, a 50 block downtown "eyesore." (How's that word for an unfair dismissal in one fell slur of a huge logistic and humanitarian problem?)


[Thanks to weingart.org for the photo.]

I believe all people should have the right to live where they please, but the City should have the right to choose where they cannot do certain things, i.e. sleep in the middle of the street or cohabit in carton shelters under conditions that attract vermin. On the other hand, arresting a homeless and having him spend the night in jail is no solution, either. The City would have to build facilities for 11,000 new "inmates."

That's about as bad as Rosenbaum's suggestion that the City collect our taxes to build shelters and give the homeless free health care and jobs.

" 'I think what community leaders need to do now is deal with the problem, not by criminalizing homelessness, but by developing shelters, mental health programs and jobs ... That's not only humane, it is economically and socially wise. Once they do that, so many other social problems in the community,' will be alleviated, including the high population in the county jail and pressure on emergency health services and foster care..." (Article from the LA Times here.)

How moving the population to as-yet-unbuilt shelters from existing jails will relieve any pressure on government resources is anyone's guess. Another problem with this idea is that if the City does go down this road, as they have in San Francisco, at some point LA will become the Skid Row that the heart of San Francisco is fast becoming. (Have you been there recently? It's heart breaking.)

There must be a more practical solution out there somewhere, and personally I think it should involve private charities and not the very same state government that makes a mess of everything it touches. Furthermore, the Omnipotent State mentality discourages private parties from donating to and creating charities because "we've already given our money to City Hall through taxes, so they will take care of it." They won't, and probably can't if the ACLU has anything to say about it.

In the meantime, there's a potential Supreme Court case brewing here because the ACLU did evoke the 8th Amendment, cruel and unusual punishment. I hope the City has the guts to take this further. And what about New York, where it's illegal to sit on a milk case? Where's the ACLU on that one? On the other hand, having just come back from comparative visits to San Francisco and New York, I know where I'd rather live; and I'm not alone, because the consensus population of San Francisco is now on the decline.

Is Exxon Wise, Insane, or Out of Touch With Reality?

Lee Raymond, Exxon's retired executive, has just received one of the highest retirement packages in history, according to ABC. Of course, ABC jumped on this chance to embarrass Big Oil, but I must say I wonder what Exxon was thinking. Aren't they conscious of the outcry and future political ramifications this little detail will stir? Remember Marie Antoinette, with her "Let them eat cake!"


[Thanks to lookonline.com for the image.]

They must be suffering from a sort of CEO Ivory Tower syndrome and have no idea that legislators are drooling just at the thought of being able to don the Shining Armor of the Knight to penalize those evil rich who disdain the weak and downtrodden. America isn't exactly 18th Century revolutionary France, but the price of gas is exploding and complacency is not a permanent given, even in the good old US of A (to wit, the immigration turnout.)

The politicians have already begun to strut their stuff on the stage of the Senate commission hearings. If I were one of those very smart CEOs, I'd go lightly where angels fear to tread in these dark days of coming price hikes, windfalls and global tension.

Read more about Mr. Raymond's fortune here.

Is Dick Durbin Wise, Insane, or Just Another American Liberal?

Dick Durbin (D-Ill.) has got his finger up in the wind-fall. He is clamoring out for a 50% tax on oil profits using $40 a barrel as a basis for calculations. This is a perfect example of how economic instability creates havoc with civilization's progress towards freedom.

He says: "Oil companies are living in the fast lane and consumers are being left on the side of the road."

I say so what if they are living in the fast lane? They already were at $40 a barrel. Furthermore, without them there wouldn't even be any barrels.

Without profits, there's no research for alternative fuels. Without profits, there's no new refineries. Without profits, you, Senator, wouldn't be sitting in Washington, and you know it. Your campaign and the campaigns of all politicians depend upon the profits of productive people, and they depend even more on the profits of the very productive.

Senator Durbin and all of those in Congress who want to threaten the oil companies had better not bite the hand that feeds them -- unless, of course, all of this hot CO2 is just for the television and the media to convince the electorate of their respective good intentions.


[Thanks to bodybagcatholic.com for the drawing.]

Read the UPI version of Durbin's actions here.

Bubble, Bubble Toil & Trouble

Another of my little sketches, self-explanatory this one. (Click on image for larger view.)

Today's Cartoon: Ah, Innocent France

You will see my love for France, and my fear for her innocence, in this depiction. Click on the image for a larger view.

French Gold Sales in 2005

[Thanks to finemint.com for the photo of a French gold coin.]

"(MENAFN) The chief of the Central Bank of France said that the bank has sold 161 tonnes of gold in 2005, for a value of $2.30 billion, Reuters reported. Bank of France Governor Christian Noyer declined to comment on the pace at which the central bank would sell gold in 2006, saying only it would depend on market conditions and take place in conformity with an accord by central banks.

"The Central Banks' Gold Agreement, which came into force in September 2004, bound banks to cap their total sales at 2,500 tonnes in the 2004-2009 period, compared with 2,000 tonnes in the previous five years.

"The official said that the central bank would use revenues generated from its gold sales to invest in foreign exchange."

I wonder what "foreign exchange" they find more interesting than gold.

Read the rest of the story from the Middle East North Africa Financial Network News, 4/11/06.

The Clintonian Economic Catastrophe

I'm just going to quote a few passages from Hillary's speech today in Chicago, and frankly, I don't think I'll even have to improvise my usual spin. She's whirling without me. Just read these:

"Asked if the government should step in should General Motors Corp. go bankrupt, Clinton said the government could help by relieving some of the costs auto companies bear for retiree health care in return for getting them to 'expedite a move toward energy efficient products.' " [...Oh no, a double whammy...]

"On health care, Clinton said a new plan in Massachusetts to require everyone to have health insurance 'gives us some hope,' though a market-based approach to pensions and health care is 'not sufficient... We've got to have a national conversation about health care,' Clinton said." [There she goes again.]

"White House Press Secretary Scott McClellan said Democrats want to allow the tax cuts enacted under Bush to expire. 'The real debate is on taxes,' said McClellan. 'Are we going to make tax cuts permanent and keep taxes low to keep our economy growing, or are we going to let Democrats have their way.' Clinton sidestepped whether she thinks the tax cuts should be rolled back. 'We have to look at the whole package,' including 'both the spending side and tax side,' she said." [Hillary? Reduce spending? Not increase taxes? Right.]

"She also called for a 'more robust' research and development agenda for U.S. companies and said companies should be encouraged to 'begin to take some of these profits and these productivity gains and put it into wages.' " [She's either going to give them money (i.e. increase government spending) or penalize them (increase government intervention.) What else is new?]

[Good grief. Lord help us.]


[Thanks to fightthebias.com for the image.]

Read the whole Bloomberg article.

Did You Know Texas and Mexico Were One and the Same for the Democrats?

[Thanks to mjolnir910 for the picture in Dallas.]

Look at the latest Democrat voter recruitment flyer seen at an immigration rally. It's a zinger. Thanks to Michelle Malkin for the link to Kim Priestap at Wizbang. See all the references in Michelle's blog.

You Can Oink, But You Can't Hide

[Thanks to moonspheres.com for the picture.]

Pork Busters and Instapundit have brought my attention to the activities of a group whose whole aim in life is to put a bullet through the heart of pork politics. They are driving a bus around the country, highlighting the wasteful earmarks of federal funds for things like Rock 'n Roll or teapot museums, bridges to nowhere, and federal budget education -- yes, I said federal budget education. Read about this ironic pig here.

Gold Price Has 'Em Talkin'

We're beginning to see all kinds of punditry around gold's performance. I'll take this one from Reuters and give an improvisational spin.

"So far, major inflation indexes appear sufficiently contained to suggest the U.S. central bank is edging closer to a pause in its monetary-tightening cycle. Yet the surge in the price of gold and other precious metals is prompting some to question that conventional wisdom, fueling worries the Fed may be behind the curve in its fight against inflation." Not only is the Fed behind the curve, it is the cause of the curve. Contrary to conventional wisdom, it is the earlier Fed loosening of money that has caused this bubble mentality around the world and that will soon rob the little guy of even more of his purchasing power unless he's got gold. Furthermore, I will wager that it doesn't matter what the Fed decides to do, the dollar must pay the Piper sooner or later, and gold will be the eventual winner. Gold's value may be "making a come-back," but it's role as Piper-To-Be-Paid is as old as Herod. We can of course expect the gold price to over-blow and then settle back down -- i.e. perform like a bubble -- although I'm betting this time it'll keep a lot of its "newfound" value, i.e. the dollar will finally reveal its "not-so-newfound" loss of integrity.

"For a long time, a direct correlation existed between yields on longer Treasury debt maturities and gold -- both are safe havens when times get turbulent, both are good places to hide when the economy heads south." I guess I'm too young (58) to have learned that direct correlation. Bonds would be the last thing I would buy in times like these.

" 'The problem with the logic of using the price of gold as a leading indicator of inflation is that it is subject to a variety of influences that have at best a tenuous relationship with U.S. inflation,' warns Lakshman Achuthan, Managing Director at the Economic Cycle Research Institute, an independent research group. 'This includes the policies of the world's central banks with regard to the sales of their gold holdings, the hedging policies of gold producers, and the demand for gold jewelry around the world.' " I guess Mr. Achuthan is right about the speculative nature of today's price of good and the difficulty of trying to use that price as a standard regarding monetary policy...

[Click on image for a larger view.]

[Thanks to Peter Nicholson for this cartoon.]

It's true that, as a Federal Reserve statistical tool, today's gold is a pretty poor rung on which to step -- unless of course you actually reinstate the gold standard... Ahem... which, you respond, will happen when hell freezes over and it's not about to, what with Global Warming and all; to which I answer, "Or is it? If the statisticians are so wrong about GW, maybe they're wrong about the gold standard as well..."

As I keep repeating, you can take the gold out of the standard, but you can't take the standard out of gold.

Read the whole Reuters article.

My State or Your State?

At first I was very excited to see which states have the most taxes, both collectively and per capita. But then I thought, "Hey, wouldn't it be much more interesting to know how much taxes each state's income-earners pay, per dollar earned?"


[Thanks to usgtf.com for the image.]

After all, it's not a question of how much money they rake in, or how much taxes there are per capita if some are not working. As a taxpayer, I want to know where to move to. That's the more relevant figure.

Oh well, I guess this list is interesting anyway. States Ranked by Total Taxes and Per Capita Amount: 2005

Unions 1, De Villepin 0

Chirac has caved in -- oh, excuse me, I mean he has arbitrated the dispute between the French schoolchildren and his Prime Minister, Dominique de Villepin. The CPE is dead. (This is the "Contrat Pour l'Emploi," a measure to allow employers to fire a new employee under age 26 without cause as is done in the more productive areas of the free world.)

In it's place is the CNE ("Contrat Nouvelles Embauches"), which sounds the same but which is politically much more correct, inasmuch as it has been negotiated between the government and the rowdy French unions who are behind this youthful free-for-all.


[Reuters photo.]

What is this new contract? Well, let's not get too impatient. For starters, it's not the CPE. What the actual terms are will be determined throughout the coming days.

This is a political chess game. We are only into the first few moves. Checkmate is of course the denouement, but who will be victor is anyone's guess. The unions need to preserve their position of blackmailing strength. The government needs to look gentle but firm.

De Villepin seems to be the first sacrificial pawn in this game. Now the strong player may be his fellow party member and arch rival, Sarkozy, Minister of the Interior, who opportunistically saw the writing on the wall early on, calling for the demise of the CPE as soon as he saw the defects in De Villepin's high-handed and unseductive style.

Read these interesting articles in French.
The CPE is dead
CPE's replacement does not end student mobilization
CPE: unions cry victory without calling for renewed mobilizations.

Quadruple Whammy Monday

Gold is on the cusp of $600. I'll wager it shoots through that ceiling today. The Dow is going to sink back through one of my favorite numbers, 11,111.11. The 10-year treasury yield is going to burst through 5%. Perhaps not last and definitely not least, the yuan is going to bottom down under 8.00.

All today, or almost.

I'm sure every hedge fund manager and Wall Street broker is inquiring, "Does it MEAN anything?"

Does this qualify as scientific research?


[Thanks to creative-chemistry.org.uk for the photo.]

Expanding Markets for Freddie Mac

What a coincidence. Just when the home-buying spree seems to be calming down, Freddie Mac starts to feel charitable -- or whatever you want to call it. Seems they have teamed up with a big bank (BB&T) and the Virginia Cooperative Extension (a government bureaucracy) in order to help "working families meet their housing needs" through something they're calling the HOME PREP initiative.

Right. Well just allow me to send this message to Freddie, Virginia and BB:

Watch yourselves. Watch what products you try to foment upon some poor unsuspecting victims. The mortgage market is already stretched to the hilt. We don't want any casualties of overzealousness, like those Dust Bowl souls from the past century.


[Thanks to theroadwanderer.com for the photo.]

According to your own statement:

" 'Our objective is to help more families overcome the key barriers to homeownership such as impaired credit and lack of information about the homebuying process,' said Craig Nickerson, vice president of Expanding Markets for Freddie Mac. 'We look forward to working with BB&T and the Prince William County Office of Virginia Cooperative Extension to help more people become homeowners.' "

Right. Well, just be careful. We watchdog bloggers are looking on with great interest.

Read the whole article.

The Invisible Hand of the Army of Davids

I suppose I'm not the first to think of this parallel, but Glenn Reynolds's new concept of the blogosphere as an army of Davids evokes images of Adam Smith's invisible hand, only this time it's doing its work in the markets of communication, information sharing and technology.

See more about his book by clicking on this image.

By the Skin of their Teeth

This report of a federal attempt to seize the gold right out of the mouth of a couple of alleged criminals is unusual, to say the least. Flenard T. Neal, Jr. and Donald Jamar Lewis found out the government had a warrant to seize what is labeled "grills," those gold or jeweled caps on the teeth, right out of their mouth.

Read the AP story.

When the feds found out that the grills were bonded to the defendants' teeth, they ceased and desisted.

Maybe we can start a fad: "A new place to store your gold." How about this style? (Click on images for a better view.)



Or this one?



[Thanks to mrbling.com for the pictures.]

Gold at $600

New York gold hits $600, and bonds are beginning to fall. (Reuters) Aren't we getting into a Fed Catch 22 here?


[Thanks to www.bsu.edu/web/jkmorrison/plans6.html for the image]

If they don't raise rates once more after the next one, the dollar will speed up its crash and gold will skyrocket. If they do, they risk pushing the housing market over the edge and scaring the equities markets, likewise pushing the dollar down.

The situation is coming to a head. I know I shouldn't speculate, but I believe all the symptoms are out there.

One thing is for sure: It's going to be a very interesting year, perhaps dragging on into election time, when the Democrats may take over, and then what? I don't think even they know themselves.

I personally believe this summer will be very golden.

The Asian Flew?

The Asian Development Bank is a bit worried about the future strength of the dollar. They have warned that "[a]ny shock hitting the U.S. economy or the global market may change investors' perceptions given the existing global current account balance. ... Our suggestion to Asian countries is: do not take this continuous financing of the U.S. current account deficit as given. If something happens then East Asian economies have to be prepared."


[Click on image for larger view.]

Chart from a great website belonging to Michael Hodges.

Read the whole article here. Thanks to Rob Peebles at the Prudent Bear for pointing to this piece of news.

Romney's Plan: Nationalized Health Care or a Way to Weasel Out of the Quandary?

The Democrats rule in Massachusetts, so it's hard to imagine that what actually passed as health reform is anything but statewide health care, which I am against for free-market economic reasons.

On the other hand, Romney is a Republican and has a great reputation for getting the job done, and because he's the one who's managed to bring this option to the table, it will be interesting to see which way this goes down in history. Of course, any results must be qualified by the fact that Mass. is surrounded by states that don't participate and whose own health care prices may either drive their residents into Mass. for care, or may attract Mass. residents out of their home state.


Mitt Romney

Here's a description of what's up.

Another Golden Voice

There are lots of gold bugs out there, and I've got to admit I'm one, although I'm not in the business. I'm just an observer.


[Given to my father Edward C. Harwood on his 80th birthday, by the artist Joanna St. Aubyn]

I look at both sides of the present economic picture, and my personal brand of common sense tends to come down on gold's side.

This article at Business Day is a fun read, even though the fellow has an obvious bias. As to the ultimate dollar value that gold might settle at, it's anyone's guess. Many factors will come into play.

1. The Fed just might get away with yet another loosening up of the printing press.

2. The world really has no better currency alternative unless we start to use fractional gold on international and other contracts (an idea I support, and who knows, maybe we'll actually come to it via the markets.) This lack of a better currency means that all sides will do whatever it takes to avoid a flight from the dollars they already hold.

3. We don't know what inflation will do, given (a) the global nature of today's marketplace, which is in the intermediary stage progressing towards a more unified global standard of living but which is still providing goods at unbelievably cheap prices; and (b) the amount of dollars that are circulating permanently outside the US, which some place at over 50%.

4. Unknown factors that I'd love to have readers contribute in the commentary.

For a great discussion about this subject and a possible dollar price for gold, get a collection of ideas published by the American Institute for Economic Research called "Prospects for a Resumption of the Gold Standard" here. You'll find the opinions of people such as Anna J. Schwartz, Gerald P. O'Driscoll, Jr., H. David Willey, Hugo Salinas Price, John C. Hathaway, Michael T. Darda, Richard Sylla, Michael W. Crook, Robert E. Wright, and John H. Wood.

Which is Worse?

An article at Towhall raises some interesting points about the similarities between France's socialist street democracy and our own immigration malaise, with one exception: at least in France, they're not waving some foreign country's flag.


[NBC photo.]

To see Americans, or American legal or illegal residents, waving Mexican flags in defense of illegal immigration is ... well, confusing. I assume it's simply a way of saying, "We are proud to be who we are," as a rebuttal to those who have blamed illegal immigration's problems on those of Mexican origin. They are mistaken. We don't reject Mexicans; we hate the double-whammy hypocrisy of the present US immigration situation, and it so happens 99% of the illegals are Mexican and Hispanic.

On the one hand, you have the Americans who are pro-illegals saying, "Go ahead, break the law," and behind them, the government that is allowing it to happen. That's bad enough in ordinary circumstances, but with today's violent anti-Western climate it's all the more criminal. On the other, you have the Hispanics migrating to the US to find work saying, "We want your money, but not your culture or your politics." There's something wrong with both of these attitudes.

The most pertinent passage in the Townhall article, in my view, has to do with the erosion of the Founding Fathers' philosophy of freedom, which is tied to personal responsibility. It also touches upon the intertwining of economics and politics. (I've paraphrased it a bit to make it echo my own thoughts more closely.)

"If all we were dealing with were economics and jobs, we could find grounds for compromise. But under the tutelage of the Left, Hispanics are becoming 'assimilated' to the identity politics, and entitlement mentality that is so beloved by the Democratic Party and so obnoxious to taxpayers.

"I go to a church that is filled with Mexicans. I love them. It is a privilege to worship with them. They are good, devout, family-oriented people. But after a few years of associating with [and receiving favors from] [the Left], they won’t be."

For more insights, read Jennifer Roback Morse's article here.