Sunday, March 26, 2006

More Hot Air from the Propagandists

I am becoming apoplectic about the Global Warming hysteria put out by people who should at least be cautious, if I can't say they should know better. After all, no one knows better; in fact, that's the whole argument of the skeptics -- who, by the way, are not a "marginalized breed," as Time would have us believe. On the contrary, they are increasingly on point and vocal. It's just that it's all behind the scenes, because people like Drudge and Time and Science and Nature and National Geographic (it brings tears to my eyes to add this last one) are all so blind-sided to how the pseudoscientific community behind the hysteria has duped us all.

Here are some excerpts from Time with my comments. But first, promise me you'll go watch five short videos here before you jump to any hysterical conclusions. No one denies the earth is warming; but others say an ice age is coming within the next 100 years. Who to believe? Look at both sides first.

Also, please complete your education by consulting this blog and this blog, in depth, before you make up your mind. Remember, GET ALL SIDES OF THE FACTS. Not just the spin, as others have said before me. Kyoto makes no economic or climactic sense. It wouldn't even cure the supposed problem, as the climatologists themselves have admitted.



Excerpts:

"Environmentalists and lawmakers spent years shouting at one another about whether the grim forecasts were true, but in the past five years or so, the serious debate has quietly ended. Global warming, even most skeptics have concluded, is the real deal, and human activity has been causing it." [This is not true; in fact, I would call it an abject lie. The controversy is just getting warm.]

"[J]ust last week the journal Science published a study suggesting that by the end of the century, the world could be locked in to an eventual rise in sea levels of as much as 20 ft." [Science is one of the worst offenders who have betrayed the equivalent of the scientific oath.]

"For years, popular skepticism about climatological science stood in the way of addressing the problem, but the naysayers—many of whom were on the payroll of energy companies—have become an increasingly marginalized breed." [I demand that Time put their fact checkers where their mouth is. Cite some names on the energy company payroll, please.]

"The most notable of them is An Inconvenient Truth, due out in May, a profile of former Vice President Al Gore and his climate-change work, which is generating a lot of prerelease buzz over an unlikely topic and an equally unlikely star. For all its lack of Hollywood flash, the film compensates by conveying both the hard science of global warming and Gore's particular passion." [Do we here a come-back for 2006? Good grief. Not only did he NOT invent the internet, he wants us to believe he started this hysteria about Global Warming.]

"Such public stirrings are at last getting the attention of politicians and business leaders, who may not always respond to science but have a keen nose for where votes and profits lie." [And time Magazine has a good notion for what sells magazines.]

"Wal-Mart has begun installing wind turbines on its stores to generate electricity and is talking about putting solar reflectors over its parking lots." [Yes, Wal-Mart knows where public opinion lies. Of course, you won't hear any praise from the unions for this.]

"And how much carbon is socked away in Arctic soils? Lawrence puts the figure at 200 gigatons to 800 gigatons. The total human carbon output is only 7 gigatons a year." [Oh, so humans are so puny after all? That is one piece of data that makes sense.]

"The anger surrounding all that exploded recently when nasa researcher Jim Hansen, director of the Goddard Institute for Space Studies and a longtime leader in climate-change research, complained that he had been harassed by White House appointees as he tried to sound the global-warming alarm. 'The way democracy is supposed to work, the presumption is that the public is well informed,' he told Time. 'They're trying to deny the science.' " [No, Mr. Hansen, they're trying to keep their scientific nose clean. Go promote your personal bugaboo on your own time, not the government's. The public finances your paycheck, and for once, the foxy government is actually trying to mind the henhouse.]

"Curbing global warming may be an order of magnitude harder than, say, eradicating smallpox or putting a man on the moon. But is it moral not to try? We did not so much march toward the environmental precipice as drunkenly reel there, snapping at the scientific scolds who told us we had a problem. The scolds, however, knew what they were talking about. In a solar system crowded with sister worlds that either emerged stillborn like Mercury and Venus or died in infancy like Mars, we're finally coming to appreciate the knife-blade margins within which life can thrive. For more than a century we've been monkeying with those margins. It's long past time we set them right." [If I were not a qualified agnostic, I'd say, "God must be chuckling at the hubristic egocentrism of this being He created in His 'likeness.' "]

For the full article, watch a free publicity at this page and press onward.

Saturday, March 25, 2006

C'est La Guerre!

France is headed straight for a new revolution. On one side, you have the courageous efforts of Chirac's team [sic] towards a more open economy and most particularly, a more supple labor force. ["sic" because Chirac is about the most leftist "right-wing" national president in Europe, and his backbone in the following incidence is thus surprising.]

On the opposite side, you have the union gangs, their government-worker constituency, the socialists, and the nothing-to-lose youth who prefer the status quo.

Subject: The proposed CPE youth work contracts that would free employers from heavy existing labor contracts as concerns only the newly hired workforce.

D-Day: It's supposed to be March 28th, Tuesday, and Thursday the 30th, but it may happen even earlier. Tension is mounting on both sides.

Showdown: The unions are blackmailing the country with threats of general strikes if the government does not completely withdraw its new law proposal. Yesterday, the government invited the unions to the table. Their seats remained empty in front of the TV cameras, signifying their cocky refusal to negotiate without first a total withdrawal of the proposal.


Book about what the author has called France's "Syndicate Dictatorship."

As of Saturday, Chirac spoke from Brussels in full support of his Prime Minister's refusal to cower before syndicate hardball, stating that the government would not tolerate efforts to mandate legislative action via ultimatum. He decried union tactics as a direct affront to the whole republican democratic process and an insult to "la France." For once, I completely agree with him.

Sarkozy, France's up-and-coming Presidential candidate alongside De Villepin and actual Interior Minister, has spoken some hard defensive words against any planned violence in the days to come. (From what I've seen on French TV, the national police forces are nowhere near ready for this.)

Paris, Minsk, Milwaukee, Los Angeles -- what's going on this weekend? Global Swarming?

Mediaganda Wars

Today you get one of my cartoons, inspired by various events since the publication of those infamous Danish caricatures in newspapers and on TV around the world. Click on the image to get a larger version.




Thursday, March 23, 2006

Did Someone Just Pass Some (M)ethanol?

The truth is leaking out little by little, green fuel is -- well, may not be all it's cracked up to be. "Late last year in Goldfield, Iowa, a refinery began pumping out a stream of ethanol, which supporters call the clean, renewable fuel of the future.

"There's just one twist: The plant is burning 300 tuns of coal a day to turn corn into ethanol -- the first US plant of its kind to use coal instead of cleaner natural gas."

But don't panic yet, other ways of providing the necessary heat are percolating up to the surface:

"...[A] new ethanol plant in Nebraska [is] strategically located by a feed lot, using methane from cattle waste to fire ethanol boilers."


[Bonnie's Corner Cafe in Gas, Kansas. Thanks to gladstone.com for the photo.]

If you burn anything, including methane (natural gas), you will end up with some kind of carbon discharge, even with natural gas. Injecting the CO2 into the ground sounds like an interesting idea, as long as you can get it down deep enough. But is that economical? And even if you could do that, why not just harness the earth's molten core energy? Too expensive? Interesting stuff.

(Read more here.)

Tuesday, March 21, 2006

The Bubble Index: How Much Excess Purchasing Media is Actually in Circulation?

Fed watchers had fun trying to interpret Bernanke's speech last evening, looking for a sign of coming interest rate movement. Of course, he didn't reveal anything. But he did say that "a number of forces could be behind the low long-term [mortgage] rates, including an excess of savings in other countries looking for returns, strong demand from pension funds for longer-term bonds, a shortage of longer-term bonds or confidence in the Fed's ability to keep a lid on inflation."

I don't know about the last three. The first one sort of makes sense, although "excess" seems a poor choice of word when it comes to savings. Is there such as thing as "excess" savings? He should be kissing the ground those savers walk on, because they are funding the overspending that is maintaining our economy and war spending in high gear. I would call it "manna from heaven" savings, not "excess" savings. And secondly, when you think about it, what are they sending us? Not just their hard-earned cash. They are sending us the dollars we spent on their exports like petroleum or clothing from China.

Sniff sniff. I smell a rat. We've touched on something Professor Bernanke missed, the real source of all of those dollars making that gurgling sound as they flow into our treasury bonds.

Where are we getting all those dollars we're spending in Canada, Mexico, China, the Middle East? Some of them we earned. Some we are borrowing from our house equity, or from our credit card companies. And where are the credit card companies and mortgage refinance companies getting their money? From people who invest in such instruments; but only in part, because some of it comes from credit supplied by the treasury and Federal Reserve through treasury bond issuance. Even more comes from our banks and other semi-federal financial institutions like Freddie Mac and Fannie Mae.

How do the Fed and the banking system know how much of this credit is too much for our monetary system? They don't; however, I'll rely on the statistics of the American Institute for Economic Research. (See their website here.) They publish (only in print) a graph called the Harwood Index of Inflating. This is not a chart about inflation, per se. "Inflation" as commonly used means the increase in general prices, for example as defined by the CPI. "Inflating" as they use it, on the other hand, is the rate at which the Federal Reserve and the banking system are "printing money," or advancing credit, to excess. Click on these charts to see a larger image.


________________________________

Now, why would the Fed "print" extra money and hand it out for public use? They say they do it to insure that the economy doesn't falter, as it was doing in 2000 during the dot com crash. The problem is, this is a chicken or egg conundrum. Which came first, the crash, or the credit? The burst, or the bubble? The Fed has been pumping the system with credit since the First World War, well before the 1929 depression. According to the AIER, it is the credit bubble that comes first and then bursts, every time. Not only that, it is this very credit creation inflating that causes our CPI inflation and is destroying our dollar. A dollar today only buys as much as 2 cents bought in 1900.

The chart is not precise and doesn't pretend to calculate the excess money down to the penny. On the other hand, it is the only effort of its kind that I know of, and I believe it is as accurate as it can get, giving the dearth of statistical information available.

So, according to this chart, we do about half of our spending with credit the Fed has given the public over the years, and it's been taking our very productive economy about 15 to 20 years to catch up with the money supply. I believe this is what has supported our present real estate bubble. It is what created the dot com bubble. And it also explains why we don't save money. Think a minute: Is it any wonder that we are adverse to saving when we can get money so easily from our banks, central bankers, and government, and when the rate of interest on money we might put aside is inferior to the inflation rate? (The CPI rate, that is.)

And is it any wonder that the Chinese and Arabs are buying our treasuries and other assets like our oil companies and our ports, when they are awash in dollars that our government advanced to us on our good credit rating, and that we turned around and gave to them for their exports, and which they accepted in good faith?

And do you really think we can continue to borrow money from the printers of cash without ever paying the piper? History would say otherwise.

(if you're interested to read an article about Bernanke' speech, it's here.)

Monday, March 20, 2006

The UN Has It Wrong (Again)

They are claiming that African governments are "prevented from supplying clean water to their people" by outside forces such as drought, poverty, war, pollution and chaotic urban growth. This reminds me of Rush Limbaugh's anti-SUV fanatics who are always blaming the car for the accident.

"A huge SUV ran off a freeway in downtown LA today..."

"The speeding SUV went through a red light at 4th and Main..."

"The powerful four-wheel-drive vehicle spattered the deer on Highway 7..."

It's as though no one was driving.


[Thanks to truckworld.com for the photo, with which I have messed.]

Well, the same principle applies to governments. Someone is driving them, and in Africa and elsewhere, the drivers are sometimes corrupt, self-serving megalomaniacs who suppress their country's free market forces and entrepreneurs for their own private profit.

Too many countries with unbelievable odds against them manage to "feed their people" -- i.e. manage to keep out of the way of their people's survival instincts and specialization tendencies. It's the old Adam Smith adage: division of labor is a natural force in human nature. I'll add that it can be stymied by man's vice: his inhumanity to his own species.

Look at the Saudis and the Israelis. Left to their own devices, humans will find a way to bring water to the driest desert, even if they have to desalinize and transport it first.

The article is here.


Buffett Is Right Again but as Usual It's For the Wrong Reasons

Warren Buffett has the knack of hitting the head with the nail.


[Thanks to bradbyers.com for the image.]

He says, "I think over time the dollar is going to weaken. I have no idea whether it will be this year or five years from now, but I think that we are following policy that will cause the dollar to weaken over time."

I couldn't agree more. But then he goes on to say:

"It's the consumer's action in the end that is doing it but we have no governmental policy that counters the fact we are sending a couple of billion dollars a day abroad. We are trading - we are buying goods and we are selling capital."

So he's got the right outcome, but for the wrong reason.

What would he have the government do? Surely not stop inflating the dollar. No, he'd rather they slap on some tariffs to stop imports. Or maybe he'd rather see restrictions on foreign investments in the US. Or what about forbidding outsourcing, to "maintain American jobs?"

Perhaps he'd like China to allow the dollar to drop (I'm guessing he's heavily invested in Chinese real estate.) Whatever Mr. Buffett advocates, he is looking out mainly for himself and his investors -- which is what he should be doing, by the way. The fact that he may be right doesn't mean he sees the larger picture showing the defective inflationary policies of this Federal Reserve, administration and legislature.

See the Reuters article here.

Merrill Sees Gold at $850

And if Merrill Lynch says so, it must be true. They talk about the relative ratio between the Dow Jones and the price of gold. According to them, "The long-term target for the relative ratio appears to be 13:1" and it's now at 20:1. Interesting statistics.


[Thanks to sandiego.edu for the image.]

I've been saying that the Dow is over-valued, if only from a price-earnings point of view. Then again, gold is hanging in there, too. The investment option boat is overflowing from both sides -- which is normal, because there are so many dollars filling it up.

The vessel is poised for a sloshing to one side or the other. People are expecting the Fed to raise rates at least once more, but the suspense has unnerved people at the switch. If it happens, they'll breathe a sign of relief and things will continue as is, until some glitch indicates a change in course. If it doesn't and the Fed does nothing (they won't lower rates for sure), both the Dow and gold will be surprised.

No rate action will mean the Fed evaluates inflationary pressures as under control, which should enhearten the loose-money advocates, who will rush to profit from an uptake in stockmarket confidence however shortlived. International confidence and inflation hawks like myself, on the other hand, will take it as a shot in the heart and will be poised for the ensuing exchange rate slip and bond market movement.

In my opinion, gold will win in the long run. Won't this be fun to watch as it plays out.

Source link: theglobeandmail.com.

The French Are Back in the Streets (What Else is New?)

This time, it's the young people. They're scared. Millions of them swarmed the streets of Paris and outlying cities to protest the government's latest attempt to jump start job creation, called the "CPE," or "Contrat Premiere Embauche" (First Job Contract.)



This story starts with the riots of last November when thousands of unemployed French youths (mostly from immigrant families living in government housing) turned Paris into a bonfire. Two young men had been electrocuted in a horrifying accident while fleeing from policemen, and then a knee-jerk government Minister made an unfeeling remark about "getting the riff-raff off the streets." The pent-up rage exploded, and the violence, car fires and mayhem led down the fuse from Paris to other flammable pockets all around the country.

The government reacted as governments do, setting up curfues and trying to act with stayed force as though they were in control. By New Year's Eve, the overworked, unprepared cops were gratified to see that the car fires had diminished to a manageable few hundred.

Ministerial officials scrambled to find a redeeming scheme to put these young people to work, and in fact what they came up with is not a bad idea. The CPE simply attempts to unload from French employers the yoke of unrealistic job security provisions that socialism has put in place. The existing contracts and the very employee-leaning "Prudhommes" workers' rights system impose the equivalent of job permanence for everyone, including those starting out in professional life -- something that is unheard of in America, Ireland or England, and implemented differently even in socialist countries like Sweden. In France, it is difficult to fire an incompetent worker, nevermind let them go for economic reasons, so employers end up not hiring, putting the extra load on existent employees.

Student groups, backed by the omnipresent power-hungry French unions, say that these new CPE contracts "would create disposable workers without job security." That may be true. However, they don't realize they have been spoiled. The truth is they prefer no job at all, i.e. the relative security of unemployment. (In France, benefits are easy to obtain and last many months.)

The real problem, according to my own analysis after watching French news and TV programs over the weekend, is that French youths are fed up with the politicians. They believe in no one, see only incompetence on all fronts, and are ready to explode on a moment or two's notice into a national free-for-all.

This will be a real challenge for Chirac's "right-wing" government, led by his Minister Dominique de Villepin, to come up with a dialogue that will be convincing to the public and that will placate both the impatient kids and the wily union leaders who want nothing more than to see this whole fiasco explode in their left-wing favor. They're already planning the general strike as I write. Watch out for March 28th.

Read the CNN version of this story.

China's Plans for a Golden Disney Land?

China has plans to open "what it has billed the world's first theme park dedicated entirely to the precious metal," according to this AFP report.



The whole world respects gold for its intrinsic appeal and for its historical role as a store of value and medium of exchange; but the West has failed up to now to realize its entertainment potential. It took a new kid on the block to see that -- a new kid that has a multiple-millennium old relationship with this unique earthly element.

Friday, March 17, 2006

Eastern Europe Shows Us Up Again

Belarus may issue gold secured bonds. Read about this news.



I will repeat my oft stated belief that gold will reassert itself via the market. There are too many people on this earth who understand -- consciously or unconsciously -- the role of gold in all monetary systems, whether officially recognized by governments or not.

And I will repeat: You can take gold out of the standard, but you can't take the standard out of gold.

For my other commentary on this subject, see this post and this post and this post and this post.

Thursday, March 16, 2006

Dow Jones in All Its Splendor

Just stumbled upon a gorgeous chart, Dow Jones Industrial Average 1900 - 2004, by Minyanville.


[Click on image to see larger version at their website.]

I'm especially taken by the lower portion, where one could conclude (without doing any further homework) that the Dow is presently climbing back into overvalued territory. That jives with my own "unwarranted assertions" concerning our present global economy. It's bubbling, because investors/speculators are running around like chickens without their head, looking for a place to park their cash and their savings or investments before things start to slide out from under them.

I'll further unwarrantedly assert (just for fun now, and I can because this is just a blog) that I think the gold party isn't over yet, even though it may technically be overvalued somewhat as well. These are all just bubbles in this witches' broth created by excessive purchasing media hunting after goods or investments to buy. Perhaps the fact that it is global at this point tends to obscure the phenomenon, which is a good thing for the American economy. How long the obscurity will hold is anyone's guess. It might hold until things settle down in the credit department. Then again, it might not, and all hell could break loose.

What exciting economic times in which to live. Who will win this argument, the Austrians or the Keynesians? For they are the two extremes of this debate, and there are very few in the middle.

Hats Off to the Spendthrifts on Both Sides of the Aisle

$9 trillion surely deserves some kind of celebration. After all, this country has never in its history had this much national debt. It certainly is a sign of something noteworthy, of a famous or infamous nature. Mostly, it's a sign of a rotting dollar.

Breitbart news.


[Thanks to the White House, Angeline Gazdag for the photo.]

It's also a sign of major hypocrisy. Let's look at the figures. It's curious, but the vote was 52 to 48 -- a party-line showing.

YEA 52
52 Republicans

NAY 48
3 Republicans
44 Democrats
1 Independent

Were the nay-sayers inspired by the sheer size of the figure? "Hey, let's get on the stick and reduce spending before the night is over." Don't think so. Were they really going to let the Treasury go into default? Or did they rationalize, "Hey, I can now say I voted against the debt."

Did the 52 Republicans think, "Oh, this is only temporary, we'll be getting things back on the small-government track next year."

The conclusion is stark and clear. Most Republicans say they want to restrain government spending, but in truth they want to spend, and to hell with tomorrow. At least they can count and know what a budget is.

Most Democrats want to spend, can't count, and think "Budget" is a rental car company.

Lord help us from ourselves.

Wednesday, March 15, 2006

The Free State Project

This has got to be one of the best ideas I've heard in a long time. The Free State Project began in the mind of Jason Sorens, once a student a Yale. He wrote this, and the rest is history of a sort.



I've known of this group for over a year, and I'd like to follow them to New Hampshire -- may still do so. I believe that some defect in our constitution has led us down the tube towards socialism, and we're having trouble backing ourselves out of it like a porcupine stuck in a rabbit hole.

Incidentally, that's one reason why I'm so fascinated by the French. They are way ahead of us down that rabbit hole, and they are having a very tough time backing out. I'm also interested in New Zealand and Ireland, because it seems they've managed to recapture some of their economic freedom out of the hands of their politicians, and I wonder how they did it.

Wednesday, March 08, 2006

France's New "Alternative Liberale"

In the classical sense of "liberal" of course, meaning free market, and maybe even libertarian.

I forgot the most important part in my last blog. Their website. It's:

www.alternative-liberale.fr.

The New Face of France (And What a Beautiful Face it Is)

France has a new political party called the (classical) "Liberal Alternative," created by a group of energetic, very smart young people. It takes courage to form your own "parti politique" and enter into the fray of French politics.

I've been following this group. They stick out like a sore thumb, have had several successful street campaigns, got themselves on the news several times and have been invited to several talk shows. The root organization from which this party has sprung is called liberte-cherie.com , and the person who stuck in my mind out of this fascinating group is Sabine Herold, a beautiful young lady who makes me think of "Liberte," the French symbol of freedom, a woman leading the troops into battle.



These don't appear to be LePenistes (the French extreme right wing.) I have yet to find fault with their positions.

I wish them luck. They probably don't have the whisper of a chance; but if they are who I believe they are and if I were French, I'd support them all the way.


Monday, March 06, 2006

Economic Models

The climate skeptics are having a go at persuading the NAS that it needs to review its position on Global Warming. You can get a play-by-play of the recent hearings that took place, where Mann, et al., creators of the hockey stick theory, faced off against McIntyre and McKitrick, et al., representing the skeptics. Go to the www.climateaudit.org blog.


[Thanks to john-daly.com for the image.]

I particularly liked this comment:

"Incidentally the AGWers have another problem - Economic modelling is as problematical as GCM’s. Both are trying to model non-linear phenomena and half of the IPCC model is economic prediction. Unfortunately if one is economically a Keynesian then this criticism would be strenuously objected to. Maybe another House Committee should be set up to look at the economic modelling because aren’t these assumptions part of the drivers of the GCM’s?" Louis Hissink

The fellow has made at least five good points.

Saturday, March 04, 2006

How Much Gold is that House Worth?

Did you know that houses in Vietnam can be bought and sold on the basis of a price in gold? And that the recent surge in the price of gold has caused havoc in the Ho Chi Minh City housing market, bringing it to a standstill in some sectors? Read more about this here.


[Thanks to siamese-dream.com for the picture.]

If we ever try to get back onto a gold standard, we may find ourselves on a very interesting roller coaster ride. Some have put the needed dollar price as high as $2,800 an ounce, and you know? I'm not far from believing it.

Read a fascinating collection of opinions on this subject in a book published at the American Institute for Economic Research after a conference in May of 2004. It's called "Prospects for a Resumption of the Gold Standard," and holds the opinions of Anna J. Schwartz, Lawrence H. White, 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, economics experts all. Get a copy here.

Friday, March 03, 2006

Why Government Shouldn't Mess with Industry

Read this if you want to see why governments should not be involved in subsidizing and/or funding industry. Schwarzenegger's efforts to push hydrogen-powered vehicles will create much too much legislative gas to have anything but a worsening effect on global warming. ( Too bad they can't burn that.)


[Thanks to amydresser.com for the photo.]

Thursday, March 02, 2006

More on Statistics, Models, Math and Constructs

As a postscriptum to my post entitled "Kids in a Candy Store" about the use of computer models and mathematical constructs in the field of economics, among others, I give you this from a sage back in the 1960s:

"No modern inquirer would draw conclusions, much less offer policy prescriptions, merely because he could successfully express his verbal argument in the shorthand of mathematics."


[Thanks to tuffware.com for the photo.]

This obvious remonstrance is from Edward C. Harwood, founder of the American Insitute for Economic Research. His book that deals with the subject is:

"Useful Procedures of Inquiry"
Handy, Rollo & Harwood, E.C.
Available at AIER.

For my earlier post, see here.

The Net Wealth Bubble

Interesting figures, this Federal Reserve Survey of Consumer Finances. Seems like there's an increase of median net wealth all around, and mostly in the upper levels, but less than in the last two surveys. Debt is rising in certain groups. The wealthiest are getting richer faster. (And that's not counting the Forbes 400.) 70% of the net $50 trillion of wealth is in the hands of the top 10%, according to the Wall Street Journal. Only 2.5% of the wealth is in the hands of the 56 million families in the bottom half of the pyramid.

It seems that a lot of the increase in net worth is due to increased real estate values. The report is unclear as to how and when researchers calculated home value figures, which have been changing on almost a daily basis over the last three or four years.

Also, these surveys seem to be based on verbal interviews. How many of you reading these words have actually answered a verbal or written survey of this nature? I know I haven't. Some research should be done to see just who is and is not responding to these surveys, and how truthfully. Don't we have to evaluate the value of the evaluation? Don't want to rely on faulty scaffolding to jump to unwarranted conclusions.


[Thanks to the safetyandlosscontrolassoc.com for the picture.]

Read the Fed's summary under "Features" in the right-hand column at the Fed website.

For a quick look at some of the figures, see an article in the Wall Street Journal at this link.

Wednesday, March 01, 2006

Big Bad Mortgages

I disapprove of government intervention, but where are the consumer protection people? Mortgages are getting ridiculous and dangerous.


[Thanks to spookshop.com for the image.]

Rob Peebles over at Prudent Bear cites some interesting figures:

"Total interest paid on a 30-year mortgage loan of $300,000 at 6%: $347,515
Total interest paid on a 40-year mortgage loan of $300,000 at 6%: $492,308

"Amount monthly payment is lowered by going the extra 10 years: $148
 
"A borrower who turns 60 when his 30-year mortgage is paid off, will turn 70 by the time he pays off the 40-year version.

"Reduction of principal on the 30-year loan after 10 years: $49,000
Reduction of principle on the 40-year loan after 10 years: $25,000, and it takes almost 30 years to cut the principal balance in half."

Then you've got the interest-only crap, the negative amortization deals and the "choose your payment" shenanigans.

Scary stuff. Read Rob's not-so-funny piece here.

France to Fight World Poverty by Taxing Airline Tickets

Chirac just doesn't get it. He's proposed a(nother) tax on the French to "diminish global poverty by one-half by 2015." That sounds feasible, right? A euro here, 40 euros there, little by little we can all climb to paradise together. So warm and touchy-feely. And he's only asking for 50 billion dollars. Goodness knows the French can afford it; unemployment is only around 10%. Oh, all right, if you insist on the details, it's 40% for young ethnic immigrants living in "sensitive" zones; whatever.


[Thanks to toons.strana.de for the image.]

An article in "La Liberation" says the operation will be "painless -- a simple, just and economically neutral tool..." Yes, it's well known that taxes have no effect on the economy. And they're definitely painless.

A French group called "ATTAC," for "Association pour la Taxation des Transactions Financieres pour l'Aide aux Citoyens" (Association for the Taxation of Financial Transactions to Aid Citizens") (...?...) seems to be at the origin of this excellent idea. ATTAC also favors (I'm paraphrasing): (1) stopping expulsions of people from their apartments when they don't/can't pay, (2) eliminating real estate speculation, (3) requisitioning and rehabilitating abandoned buildings, (4) relocating squatters of unhealthy housing, (5) freezing rents, (6) increasing national housing assistance payments, (7) massive construction of truly "social" (in the French socialistic sense) living quarters by state enforced mobilization of real estate investors, and (8) the creation of a governmental oversight board for public housing that is truly democratic.

Whoa. I'm exhausted.

You'll be glad to hear this is an international effort. The UN has signed up. Kofi Annan will soon give a speech in Paris to encourage these efforts. Sweden will be chipping in as well, in the form of a few euros on airline tickets to "finance the combat against global warming." After all, "the aeronautics industry, ... responsible for only 4% of carbon emissions, is the source of the most rapid pollution (15% of CO2 emissions in 2050.)" Yes, a little consumer penalization should cut that short.

Any more taxes in sight? "Oui," says someone close to Chirac, "We want to open other horizons." Liberation suggests: weaponry, shipping, nuclear waste, luxury products, the internet, water, bank card withdrawals, world lotteries, multinationals, and why not those "grandes fortunes," those great rich families of France, that notorious 1% of the population that holds as much wealth as the lowest 57% combined. (How they still can hold so much after 48% income tax, another percent or two annually on everything they own, and dozens of other property and social taxes, is a mystery.)

Read the horror story in the original French here.

Bruce Meyerson's article on Dubai Deal over at AP

Just heard on Rush Limbaugh's program that Mr. Meyerson has written a piercing article on the Dubai deal. He says something to the efffect that "foreign ownership of American assets and the trade deficit are the price we must pay for preaching free-market capitalism all over the world." Hooray to Bruce, hooray to AP for printing this opinion.

Now, if I can only find the article... Someone, please help me out with a comment.


My Credit Bubble Case

The trade deficit isn't the problem, at least not in the abstract. I perceive a credit bubble that is much more dangerous. It's just my opinion, and not a very scientific one at that, I admit. Some day, when I become a real economic scientist, I will bring more solid grist to the mill.

Read me over at Prudent Bear here.

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