Tuesday, January 31, 2006

It's Cartoon Time!

To make up for the gravamen of my last post, here's an effective cartoon on the insanity of fanaticism by Graeme MacKay, that I stumbled upon while looking for a picture of Hamas. I might get myself into trouble for this, but he's given me permission, so here goes. It's a bit macabre; consider yourself forewarned.


See his website here.

Has Hamas Success at the Polls Killed Hope for the Universality of Democracy?

Let's be serious for a moment. Freedom is not a God-given right; it is merited. Liberty is not a human condition. It is the result of a national consensus on the nature of human equality.

Raw human instinct for liberty makes us chafe against our societal tethers, mistaking freedom for license. Wisdom, on the other hand, causes us to tame that instinct and encourage it to lean all the harder against the harness of personal responsibility and mutual respect, so that as a nation we can seed the field of liberty and reap the harvest.

Americans know that freedom of religion is one of the fundamental human rights that gave birth to our country, yet our youthful success in this matter seems to be our Achilles heel. It gave us an unrealistic picture of other peoples' understanding of this and other basic human rights. We would be touching if we weren't so naive and cocksure.

Bush is right that human craving for liberty is perennial; but he may be wrong in underestimating the maturity of the social context it requires in order to flourish. To be realized, our desire for freedom must be rooted in the achievement of a certain level of understanding of, and hence respect for, fellow humanity. For liberty to thrive, this understanding must supersede race, sex, religion or any other of our human varietals. Everything in its time. Adolescence before majority. Wisdom begets respect begets freedom, not the other way around.

George Will makes the point nicely here, along with a few others about weathervane politics.

When I think that early 19th Century and economically destitute Germany was capable of electing Hitler to power and keeping him there until the very end, i.e. right up to their own suicidal destruction, I have no difficulty understanding how Hamas won the Palestinian vote, especially given the corruption of the opposition. The Palestinian people's anger is a volatile, flammable essence in search of a match.

[Thanks to betwix.com for the picture.]

In Iran, we had assumed that Ahmadinejad's victory was contrived through corrupt politics, which it may have been in part; but our optimism may have swept under the rug the possibility that many Iranians agree with this fanatic's insanity and that his quixotry might be playing to an audience.

Having said all this, I am going to hope against my better judgment that I am wrong, that democracy can precede, to wit engender, wisdom, and that Bush didn't make a mistake of historical proportions in Iraq. After all, perhaps the Iraqi people are just wise enough. And maybe the surprising election of Hamas will wake Palestinians up from their fanatic nightmare just long enough.

Monday, January 30, 2006

A Personal Healthcare Anecdote

Last June, I broke a bone in my foot. My husband drove me and my crutches to a podiatrist's office (the first one I found at the best hospital I knew) where the receptionist responded to my request to see the doctor by saying, "We don't take walk-ins." I politely pointed out that I hadn't walked in, but rather had hobbled in. She relented.

[Thanks to northcoast.com for the picture.]

The kinder doctor's first question was, "Do you have health insurance?" I answered, "Yes, I have catastrophic coverage with a $5,000 deductible." ...[pause] "You don't have health insurance." ...[pause] "Oh." ...at which point he told me that if I had had insurance, he could have proposed an operation to place some shiny pins in my bones to insure their proper alignment.

But being as I didn't have any coverage (so to speak), he thought the bones would heal pretty well as long as I wasn't a ballet dancer. I reassured him that I was not, and he issued me a heavy ski boot with instructions to put my foot up for the next month or so and come back for another X-ray.

Today, seven months and a few hundred dollars later, after a second, lighter shoe and lots of rest, I feel like I could even put my amateur toe shoes back on if I wanted to. Everything is fine, and I'm relieved that the $20,000 (?) operation is reserved only for the professional ballet dancers and/or the insured.

The Economist does an excellent job of analyzing Bush's challenges as he sets out to reform health care in America (which they announce as his main point in Tuesday's State of the Union speech.) I don't agree, however, with their conclusion that "[u]nfortunately, it will not work. The Bush agenda may speed the reform of American health care, but only by hastening the day the current system falls apart."

I wouldn't be so hasty to write it off, especially if I were as experienced as they with the fallacies of Britain's own nationalized healthcare headache. Nope; on the contrary, if by some miracle Bush can get Congress to play the game by the rules, he just may create an example for the world to emulate. (Economist article here.)

The African Aid Wall Should Come Down

Tim Worstall gives a hats off to economist William Easterly who has done a nice job explaining what's wrong with aid to Africa (another of my bugaboos.) See Tim's breakdown here.

[Thanks to Tech Central Station for the image.]

Another Scary UN Idea

I cannot (and then again I can) believe how stupid this new UN idea is. It is called a "visionary proposal" by The Independent. (Yeah I know, not a particularly good reference.) It is a new program called the UNDP (U.N. Development Programme) and according to the Independent, the program intends to tackle global warming, health pandemics, poverty, armed conflict, and disease, based on "working with the global markets to share out the risk."

What is this genius method for tapping into $7 trillion of dormant wealth? Why, a pollution tax, of course, paid mostly the the United States, plus a few borrowing/lending tricks. Now why didn't I think of that?


[Thanks to mypage.uniserve.ca for the image.]

Read this unbelievable nonsense here.

It comes hailed and endorsed by Gordon Brown, England's Chancellor of the Exchequer (figures) and Joseph Stiglitz, a Nobel Laureate (I guess he really does believe in selective government intervention.) It is also backed by the UK, France, Italy, Spain, Sweden, and the Bill and Melinda Gates Foundation. ... Strange bedfellows? Perhaps not so strange when you take into account leftist Microsoft's recent pounding in Europe, and the make-up possibilities offered in this let's-be-Bono-friends-and-agree-to-spend-the-REAL-bad-guy's-money-instead-of-mine proposal.

Those Swiss

[Thanks to alfatour.ru for the photo.]

Once again, I hear the sound of wisdom in the voice of a Swiss banker/investor. This one is Felix Zulauf, an investment advisor. In an interview at Barron's Roundtable, he says a few things that correspond with my views. For example:

"Intensive globalization leads to low headline inflation. The governments of the old industrialized nations run large fiscal deficits, and the central banks accommodate them with cheap-money policies."


"The bottom line is cheap money as far as one can see, and low real interest rates…"

You can read more at goldstockblog.

Felix Zulauf

This Gold Has Sunk

(But maybe not for long.) There are 2.6 billion British pounds worth of gold coins at the bottom of the Straights of Gibraltar. They're on a British ship, off the Spanish and Andalusian coast.

The warship has been located, but the coins are still down there. The British have hired Floridian company Odyssey Marine to survey the wreck. The Spanish have claimed the wreckage in their waters, as has its own regional government, that of the Costa Del Sol, Andalusia.

This is going to be fun. Read a short article here.

[Thanks to reinbrook.com for the image.]

Go McCain, Get That Pork

I told you recently in an earlier post that I'm allergic to pork, and that I'm apparently not the only one. John McCain seems to have his Republican hat on at the "right" angle, because he's really going after the porkers at the moment. See Robert Novak's encouraging piece of news here.

Obviously, McCain is going to be a candidate for 2008. I don't like much of what he believes (Global Warming, for example), and some of his campaigns have backfired (e.g. Campaign Finance Reform) to some degree; but his heart seems to be in the right place, and people like that.

I'd like to know more about his economics, but if he's attacking pork, he can't be all bad. Oh, and write your senators to tell them to vote up on McCain and Coburn's Fiscal Watch Team Offset Package. Here below is a site where you can find your senators' website, go to the contact page, send an e-mail, and put a teeny weeny bit of pressure on your representatives.


We all know that pork represents a relatively minor part of the government budget, but at this point it's a symbolic issue. Remember, at least one-half of American voters are probably with us. That makes about 75,000,000, and 150,000,000 e-mails (we all have two senators) will surely make some difference.

So let's get on this. DO IT NOW!!!

Friday, January 27, 2006

Romney's Dance Around Healthcare Reform

Massachusetts Governor Mitt Romney is trying to solve his state's healthcare mess. I thoroughly get where he is coming from. He wants to apply the car insurance principle, i.e. make health insurance mandatory. Get almost everyone into the health insurance market, thereby lowering premiums given that most of those who don't pay into the system are healthy.

Then he's done a few dances around the Medicaid campfire to get the poorest people out of emergency rooms and into his managed care.

[Thanks, firebasealpha.com for this picture.]

Admittedly, this isn't the way I'd do things if I were creating a new country with a blank slate to work with; but remember: He's got financial doom right in front of his door, a bunch of liberals in the legislature, and Medicaid is already in place and will be for some time. The least he can do is protect his citizenry's tax dollars by planning ways to avoid its abuse.

As he sees it, his plan doesn't necessarily make for nationalized insurance, or at least it hasn't so far with car insurance. After all, making it against the law not to have insurance is not collecting and managing people's money, as the federal government has done with social security. It's simply forces everyone to participate in the existent free market system.

I know, forced participation in the free market sounds like an oxymoron. I realize that mandatory anything is anti-libertarian, and goodness knows that most of what I believe in comes from some form of libertarianism and free market capitalism; but I'd love to find a reason not to try this transitory step. We cannot go back to a pure free-market insurance picture. There is no point is dreaming libertarian dreams, because we're already way beyond that point. (Libertarians annoy me for that very reason: They're always daydreaming.)

The problem comes about when trying to make exceptions for those who "cannot afford" coverage. Romney has tried to solve this by fusing his own failing state insurance coverage into a managed care compromise. I do think he makes a mistake when calculating deductibles, because he seems to prefer no deductible or low-co-pay managed care whereas I think forcing people to pay for their "oil changes" in cash would be a good thing for the market; but on the whole, I think there is justification for his idea. He has basically proposed that a state could simply put a law on its books requiring every citizen to either sign up for state Medicaid, purchase low premium managed-care health insurance, or have a high deductible with a health savings account worth at least $10,000.

I say, What's a man to do if he doesn't get with the music? Get down, Romney.

Thursday, January 26, 2006

Let 'Em Fail

Putting aside for now any discussion of how government intervention into the marketplace may have created big behemoths like GM and Ford in the first place, bailouts by the government should be an absolute No-No. One of the essential elements of a market economy is allowing the weakest companies to fail, so any attempts by government to "save jobs" or "avoid a recession" by bailing out our bigger corporations are counterproductive.

[Thanks to sooreams.com for the drawing.]

But it's the old story of public choice again. Politicians, in their eternal search to placate public opinion by saving the mammoths, will always weaken and put OUR money where THEIR mouth is, if they think it will keep them in office.

Auto workers are no more stupid than the rest of the population, they can learn new tricks and find alternative professions. There's even been a PBS special on the subject -- surely a sign that the evidence must be overwhelming indeed. One of the fellows, who you'd have sworn would rather commit suicide than stop wielding a sledgehammer, became a male nurse and now loves it.

Therefore, it's up to us folks to tell our politicians that it is not our vote that they should strive to obtain (because we may not have much choice), but rather our respect; and if they want to gain our respect, they would do better to pass a law outlawing bailouts.

Friday, January 20, 2006

The CPI Ain't What She's Cracked Up To Be

Statistics can be misleading. Take the fact that most economists, including Greenspan and the Fed, think that the CPI is the index to watch. This just demonstrates that they are not good historians. During the period leading up the 1929 depression, prices were relatively stable. What does that tell you? Nothing in and of itself, except that prices are not an indication of whether an economy is sound.

[Thanks to sdsu.edu for the image.]

Inflation is relative. Imagine a hypothetical situation where prices should by all economic indicators be going down, but they're not because there is a lot of inflating going on. ("Inflating" means that the Fed has loosened the credit money faucet and the proverbial "too many dollars" have been allowed out of their cage to chase "too few goods.") Maybe the prices remain the same only because the supply of goods is in fact exceeding demand, i.e. that relative to what prices should be doing under the circumstances, they're too high. They should be going down, but they're remaining the same because there are too many dollars in circulation. Get it?

In other words, I'm trying to illustrate to you that preconceived notions can deceive us into assuming a stable price level means everything is hunky-dory. Now don't get me wrong, I'm not saying this is what's happening right now, even though production was in fact quite high in 2005. Nor does this mean that I expect a 1929-type depression is upon us (although the comparison does make me want to look into whether or not we might be in a similar pre-1929-type boom phase.)

All I'm doing is checking out the price of gold on a regular basis, along with the price of everything in general including the Dow, treasuries, currencies, etc. The gold price can mean so many things that it is worthless to speculate (pardon the pun) on the reason for it or what it might forecast. For example, it could be:

- A rise in jewelry demand;
- A reaction to global political tension;
- A reaction to perceived future demand for gold relative to supply;
- Fear of currency volatility;
- Speculative profit-betting that gold is on a bubble roll;
- Attempts by Asian and Middle Eastern central bankers and other fund managers (even in this country) to protect their investments against a flight from the dollar;
- You name it.

One thing Professor Greenspan should never forget, however, is that gold ain't the tallest dwarf, it's the tallest giant.

Thursday, January 19, 2006

Economic Folklore

Arnold Kling hits the nail on the head when he says that the influence of folklore is much more powerful than the intellectual theorization that may have inspired it. His article at Tech Central here explains the point nicely.

[Thanks to TCS for this image.]

He has made me become conscious of what I unconsciously (up to now) consider my purpose to be, i.e. it is to interpret economic wisdom so that folklore can take hold of it and run. My problem is, I hope against hope that it runs in the right direction.

No pun intended here; after all, that would depend upon which "right" popped into the reader's mind. There's the "religious" right, the "Republican" right, the "conservative" right, the "neocon" right, the moderate "John Cain" right, or the just plain "correct" right, that some day I'll define for myself. (It definitely must include "free market," "small government," "strict Constitutionalist," "states' rights," "balanced budget," "non-interventionist," "low taxes," "no inflation," and perhaps a "gold [or silver] monetary standard.")

Wednesday, January 18, 2006

Another Peggy Blows Her Stack

Korea is mad. Mad at currency speculators. But they should not be mad at normal people doing what comes naturally. They should be mad at whoever decided to take us all off the gold standard -- or more precisely, those who destroyed the gold standard through their betrayal of its purpose through the excessive and haphazard inflating of currencies.

[Thanks to extrapop.com for this photo.]

See article at Tech Central here.

China, Japan and Korea are the leaders in dollar pegging these days. What they try to do (peg to the dollar to favor their exporting industries) will one day backfire in this fiat environment. He who said "fiat" says "currency speculation." China seems to have realized the problem and to be trying to deal with it. Korea apparently has some lessons to learn.

Tuesday, January 17, 2006

Michael Ramirez, My Hero

Every now and then, Ramirez pulls a bulls eye. Here is his latest, and he pretty much sums up this Alito circus:

McKennedy Hearings (You may have to enter 1/16/06 to "Get Image.")

Also, here
(You may have to enter 1/17/06 to "Get Image.")

TRIA: If It Weren't So Serious, It'd Be Funny

Government insurance of terrorism damage sounds like an economic no brainer, but it is really treacherous quicksand. Proof of that is that lobbyists have made a profession of pushing for it. The mistaken assumption is that there will never be any private coverage for such losses; however, if the industry were left to itself there would be, and there might also be a change in the way property is configured to minimize the risks as much as possible, and in the way insurance companies function.

As it stands, the government has now said, in sum, "We will pay for most of the damages from terrorism." This essentially sanctions business as usual and subsidizes the insurance industry. Here is how David J. Theroux of the Independent Institute describes the problem:

"Free federal reinsurance, as former Texas Insurance Commissioner J. Robert Hunter has noted, crowds out private reinsurance and encourages primary insurers to take greater risks. Furthermore, the extension of the act 'illustrates perfectly how crises operate as ratchets in the growth of government,' writes [Professor Robert] Higgs." The Lighthouse, Independent Institute, 01/17/06. Read Professor Higgs's article in full, here.

Government attempts to please the public would be funny if they weren't so serious.

[Thanks to icaramba.com, whoever you are, for this drawing.]

Monday, January 16, 2006

Another MSM Slip-Up

CNN has made a huge booboo that could have dire consequences, if it weren't for the fact that the situation is already beyond that point. They have misquoted Ahmadinejad as having said, "the use of nuclear weapons is Iran's right" when he really said, "the use of nuclear energy is Iran's right." Now you'd think they'd get that one right...'

[Thanks to crystal.typepad.com for this photo.]

Thursday, January 12, 2006

A Respectful Pause

I have just witnessed the tape of Mrs. Alito (Bomgardner) crying in the Senate hearing. It is here. See it; listen to it; and let the full effect sink in. I salute Senator Graham for his apology and for his wisdom concerning the future of American politics.

The Economics of the Alito "Trial"

The right says the hearings have "fizzled;" the left says, on the contrary, that "the quiet bombshells... have dropped." Can you stand this 'tis 'taint any longer? Economically speaking, the MSM is wasting our collective time. In fact, I'll go even further: The Senate is wasting our collective time.

A priori Number 1: Alito is qualified. A priori Number 2: We don't know how he would vote as a Supreme Court judge. End of story. The rest is just global warming gases.

Why don't they just publish the transcripts and let us figure out on our own whether the bombs have fizzled or dropped? Well, it's because we the public can't be bothered. We economize. We want someone else to "do all the work" and dictate the rationalization behind our party-line preconceived notions and premature conclusions.

[Kate Greenaway artwork from here.]

Wednesday, January 11, 2006

Oink Oink

Government pork has also been one of my bugaboos. Something's gotta be done about it. Why Oh why can't anybody stop it? Well, a few are trying. There's the website for Citizens Against Government Waste. Check it out for some juicy pig.

[Thanks to kdisanto.com for the drawing.]

Also, over at The Truth Laid Bear, you'll find some new action as well. They have brought to my attention the effort of 9 senators to reduce the federal deficit by cutting pork. Now you're talkin'.

This takes guts. Maybe not the Patrick Henry "Give me Liberty or give me Death" kind of guts, but at least a politician's grandstanding kind of guts. Of course there isn't a chance in hell that it'll pass, but it's worth a try, and it's certainly worth putting on the record.

I support the Fiscal Watch Team Offset Package. In fact at this point, I support any action to reduce pork, especially those that also reduce the federal deficit. This is becoming a vital issue. It's time to pay the pipers, fellow Americans.

Monday, January 09, 2006

The Historic Role of Gold

In my last blog, I wondered what China might have chosen to include in its "basket of currencies." I neglected to wonder whether they might have thrown into that basket a gold coin or two. That is what I would have done, were I in control of that basket.

The Privateer, an Australian website that tracks gold's performance, has some interesting things to say about gold, things that I myself have stated in the past, most particularly that:

"The global paper currency system is very young. It depends for its continued functioning on the belief that the debt upon which it is based will, someday, be repaid." He goes on to say:

"The one thing, above all others, that could shake that faith, and therefore the foundations of the modern financial system itself, is a rise (especially a sharp rise) in the U.S. Dollar price of Gold."

I couldn't agree more. Hold onto to your hats, folks, because we're on for a golden ride.

My deepist desire is that the market, i.e. individuals, will put us back on track and show us the way forward by choosing gold over fiat and reasserting a kind of de facto gold standard, in spite of the Machiavellian wishes of those who would dare to overthrow monetary wisdom. The problem is that, faced with any temporary economic instability, the macroeconomic puppeteers will attempt to convince a naive public that this rush to gold is the cause of our problems and not the cure. And they just might succeed, as they have in the past. If that happens, watch out for your freedom to own gold.

See more from The Privateer here.

Sunday, January 08, 2006

A Tisket A Tasket

The Chinese have announced a new tactic for pegging their currency. They will no longer be using the dollar alone, but will substitute a "basket of currencies."

This has got my imagination wandering. Which currencies do you suppose are in there? It could be a mix of the euro, the yen, the dollar, maybe the South African rand -- who knows? Maybe it's got dinars, australs, rubles, pulas, and ringgits. (Did you know the world also has nakfas, birrs, kunas, sylies and gourdes? Then there's kwachas, patacas, ouguiyas, lilangenis, pa'angas and guaranis. (For more, see here.)

Maybe it's just a big fat bunch o' dollars with an itty-bitty guarani in a side pocket?

[Thanks to ernn.org]

Or maybe it's got just the Asian currencies, in which case it might just as well be the dollar.

Do you suppose the chairman of the Chinese central bank is taking lessons in Greenspan-speak?

Hmmm. all this is vely intelesting.

Saturday, January 07, 2006

Is This How They Do Real Estate Economics In France?

In France, when City Hall decides housing prices are too high, they sure don't mess around. They just stop it. How? Well, the local government simply begins "negotiations" with sellers. At least that's the way it's done in St. Ouen, a suburb of Paris. There you will find nice flats going for half the price of their neighbors in the next quarter across the street, because City Hall has said that's the way it's gonna be. (Source: Eric Colomer, journalist for French TV5's show Complement d'Enquette)

[Painting by Ulrich Leive]

Don't need to tell you that potential buyers of these reasonably priced apartments immediately realized they could make a killing off the stupidity of bureaucrats and started snatching up the properties faster than you can say "C'est la vie," only to turn around and sell them at double the price, half the deal happening off the table if not squarely under it.

I don't know what the Mayor was thinking; I guess it's just your usual socialist logic. Sounds like the People's Republic of Santa Monica, California, with its rent control, where it can cost you up to an extra $50,000 off the record, paid to the former renter, to get the lease.

When will they understand that the free market is not a choice, it's just a fact.

Friday, January 06, 2006

French New Year

So, following up with our predictions about the French Economic Predicament, the New Year festivities were kept under control if one is to believe some of press. There was only the burning of 400 cars this year, and a little incident on a train. Read about it here.

Thursday, January 05, 2006

The Truth About Global Warming

Today's cartoon will be controversial. Let me hasten to tell you that I am just as much a bleeding heart as the next person; I love clean air, respect the earth, and cry for those baby seals just as much as anyone else. But what I hate more than most things is when people, some daring to call themselves scientists, manipulate our emotions for their own personal agenda.

So today I've given them a bit of their own medicine.

(The IPCC is the Intergovernmental Panel on Climate Change, a UN body that has done much to cloud reality in this debate.)

They may be well-intentioned, these "scientists," politicians and NGO'ers who have stepped beyond the bounds of their own methodology to twist our collective gut; but they have forgotten the scientist's Hippocratic Oath, which is first to open their research, their methods and their calculations for all to see, share and contest; and second to remain humble before the enormity of their task, refusing to take themselves too seriously and pretend to be what they're not. We don't need dragon-slayers; we need sober, wise, precautious scientists.

Climatology, even more than economics, is a relatively new science. Data is recent. This is to say it covers only an iota of time on the grand scale. To draw any conclusions and make any predictions, catastrophic or otherwise, is premature at best and pure folly from a scientific point of view.

See here for someone else's opinion. Why do we have to go to Germany to read this kind of mediatic common sense? Is the rest of the world including America so sensationalized that no reasoned voice can make it through the cacophonic hysteria?

PBS, National Geographic, Science Magazine, and others of your ilk: beware. You are being watched --perhaps even tried and executed. You will be your own undoing, because you are traiters to your cause, murderers of your own "raison d'etre."

Tuesday, January 03, 2006

Is Gold Getting Back Its Luster?

I'm an admitted goldaholic. It just runs in my blood. There's nothing scientific about it, at least not at my level of predilection. I mean, I have no statistical analyses, computer models, or other mathematics voodoo to substantiate it; but you have to admit that the history of economics puts the metal in a pretty prominent position, if not to say on an outright pedestal.

And apparently I'm not the only one. The Chinese have quietly been liberalizing their internal gold market and investing in gold mining operations. Lookie here at what I've just noticed over at www.gold.org here and here. The most interesting part describes Chinese government interest in receiving suggestions from larger-cap companies on creating a new gold trading company.

Can you imagine what would happen if the Chinese suddenly decided to dump all those Fed treasuries and hop onto a new gold bandwagon? And wouldn't it be satisfying for us free-marketers to see a kind of populist-inspired gold standard arising out of the Zhaoyuan streets, or maybe some New Delhi back alley. Personally, I live to see the day.

Also, this looks interesting. The Chinese are introducing some new currency trading policy. Can anyone tell me what this means?