Free and worth every penny

It's no secret that I think most government statistics are bogus*.  Faulty. Wishful-thinking BS that when eventually exposed will cause both financial panic and deep, abiding anger in the average person.

It's not that the feds - under both parties - are simply pulling number out of hats. They are not making it up. Instead, they use methodologies and models that incorporate happy-faced assumptions in lieu of actually measuring what it is that they are claiming to measure.  That's how the Stimulus package can create-or-save millions of jobs, and it's how the birth-death model can add jobs every month in the face of actual measurements that show that jobs are being lost in every category that is actually measured.  But most of the time, since the department giving these answers refuses to show its work, it's very difficult to tell exactly both how they are bogus and how bogus they are.

Not so much with the new Census Bureau measurement of retail sales:

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for January, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $355.8 billion, an increase of 0.5 percent from the previous month and 4.7 percent above January 2009. Total sales for the November 2009 through January 2010 period were up 4.3 percent from the same period a year ago.

Now the first thing to realize is that these numbers, despite the precision with which they are measured, are bogus. They are not true. If there's one real, actual number that's proportional to retail sales, it's retail sales taxes collected, and states and cities are uniformly reporting year on year drops in revenue, even as some of them raise rates. To pick an example or three, New York state's revenues are down 6%; Fort Collins, Colorado is down 5%; tiny Columbus, Nebraska is down 10%. The Rockefeller Institute of Government reports that nationwide sales tax revenues are down 4.1% and have been down five straight quarters. Those examples are fairly consistent across the board.  In short, there is no way that retail sales rose 4% nationwide while sales tax collections are down 4% and more from Maine to California.

So where does the bogus, the fudge factor, come in? In methodology, of course:

The advance estimates are based on a subsample of the Census Bureau's full retail and food services sample. A stratified random sampling method is used to select approximately 5,000 retail and food services firms whose sales are then weighted and benchmarked to represent the complete universe of over three million retail and food services firms.

On the surface this makes sense - you take 5000 stores, measure this year's sales vs. last, and from that extrapolate to the whole world.  Except for one thing: none of the thousands of stores that closed during 2009 get counted.  It would be one thing if you used the same 5000 stores from year-to-year with $0 factored in for closed stores, but this faulty selection process constantly excludes "bad news" - is it any wonder only good news is left?

Let's give an example of how this methodology can go very wrong. Let's say there are 7000 stores in the US, each with sales of $1, for a total of $7000 in sales** in 2008. In 2009, 2000 of those stores go out of business and those left have have sales of $1.10, for total sales of $5500. The Census Bureau measures the $1.10 per each of its 5000 remaining stores, compares it to the $1 last year, and declares that retail sales have risen 10% when in fact they have dropped more than 20%. I'm not saying the numbers are that wrong, but I am saying they are wrong in that direction and will always be. In a time where we have massive bankruptcies, like today, the numbers are the most wrong.

The question arises, of course, whether this bias is on purpose or the result of incompetence.  I think it's the former.  If it were mere incompetence, the numbers we get ought to be good or bad a little more randomly. But no one ever got fired for giving good news to his boss. Especially when the boss can use those numbers as proof of the great job he's doing.

* It's not simply that I dislike government; I dislike very much the societal effects of expensive, overweening, and (most of all) crooked government. I can handle bad news. But a government that refuses to give bad news is like a doctor who refuses to tell you that you have cancer. Yes, the effects are the same - only the body is different.

** I'm a little slow, so small, round numbers appeal to me.

(hat tip: Mish)

Another reason to cheer for global warming

Hillary's prison break

Greenspan was the leader of the bank-robbing gang, she insists:

WASHINGTON, Feb 25 (Reuters) - Secretary of State Hillary Clinton on Thursday said "outrageous" advice from former Federal Reserve Chairman Alan Greenspan helped create record U.S. budget deficits that put national security at risk...

"I served on the budget committee in the Senate, and I remember as vividly as if it were yesterday when we had a hearing in which Alan Greenspan came and justified increasing spending and cutting taxes, saying that we didn't really need to pay down the debt -- outrageous in my view," she said.

Though she did not give a date, that hearing must have taken place during the presidency of George W. Bush...

The naivete of the press is almost endearing sometimes. So innocent. So trusting. I'm sure I'm not the only one who suspects that Clinton's memory of "that hearing [that] must have taken place" under GWB is just as "vivid" as that of her Bosnia trip. But the press? They are fully willing to believe that Alan Greenspan* sat before a senate committee and through the Saruman-like power of his voice convinced a skeptical congress to spend money they did not have. Congress would never do such a thing without evil counsel.

The sad thing is that Hillary is perfectly correct about the debt, making a point I have made literally for years. China's owning of trillions of our debt gives them leverage over our foreign policy** and that is a very, very bad thing.  I'm glad Hillary finally understands the national security need to get our spending under control.

So it is perhaps ironic that she said all these very true things while sitting in front of a senate committee, which she has just accused of being hoodwinked by the evil Alan Greenspan, while asking them to spend even more money on her department.


* Whom I am not excusing from blame in any way.  Greenspan is as responsible as anyone for the mess in which we find ourselves. But convincing politicians to spend money against their better judgment is something he was singularly unable to do, if only because they have no better judgment.
** though perhaps not as much as having her husband*** in the White House in the first place *cough* Johnny Chung *cough*.
*** who re-appointed Greenspan twice, FWIW.

Doubling Down

Global warming will continue until the glaciers roll over us all:

CLIMATE scientists yesterday stunned Britons suffering the coldest winter for 30 years by claiming last month was the ­hottest January the world has ever seen.

The remarkable claim, based on global satellite data, follows Arctic temperatures that brought snow, ice and travel chaos to millions in the UK...

Professor Neville Nicholls, of Monash University in Melbourne, said yesterday: “January, according to satellite data, was the hottest January we’ve ever seen...

“Last November was the hottest November we’ve ever seen. November-January as a whole is the hottest November-January the world has seen.”

These guys don't seem to realize the jig is up. The veneer is off. The horse has left the barn. Given that there has been no significant global warming for close to two decades, it's pretty funny to see scientists* trying to run the same old three card monte that was just exposed weeks ago. Even the press is now calling such don't-believe-your-lying-eyes claims "remarkable," a remarkable change from the credulous mantra-parroting of the very recent past. People shoveling the most snow they've seen in their adult lives have a better word for it: bullshit.

But no matter the actual weather**, I suspect we will be told that February and March and April are the hottest we've ever seen, because that's how the game works. Those whose livelihoods are supported by rising temperatures are not about to give up the perks of science, science be damned. The only possible response left, I suppose, is to point and laugh. And not put your garden in until the frosts of May are safely past.

* perhaps quote marks would be in order here.
** Weather, we are told, is not climate.  Weather is what you live in. Climate is what provides grants and awards for scientists.

Proudest moment of my life

The necessity of force

Jim Fedako accidentally uncovers the fatal problem with anarcho-capitalism:

A world without the state would never be a world without authority...

As Christians, we are to obey the legitimate governing authority, but it does not follow that the authority must be the state. Paul’s instructions are the same no matter who is in charge. And in an anarcho-capitalist world, we would only be forced to obey the governing authorities whose properties we chose to enter.

A better world, indeed.

Now certainly it would be a better world if, as Mr. Fedako posits, all of us respected the property rights and authority of others.  No matter how much he would love to watch the storm, he submits to the commands of the captain and heads below deck.  He does not enter the door that says, "Employees Only" because he is not an employee.

Unfortunately, in concluding thereby that the state is not necessary, he forgets why the state exists in the first place: some people say to hell with the captain.  Some people not only head through the employee door, but clean out the register at gunpoint.  As Paul said to Timothy, "the law is not made for a righteous man, but for the lawless and disobedient..." Government, the state, does not exist to keep Mr. Fedako from voluntarily respecting the authority of others, but to keep him from stepping on their rights.

Bastiat wrote that "since man is naturally inclined to avoid pain — and since labor is pain in itself — it follows that men will resort to plunder whenever plunder is easier than work. History shows this quite clearly. And under these conditions, neither religion nor morality can stop it." When a person is inclined to plunder the person and property of others, there is no sense in appealing to conscience, nor in pointing to a sign, nor in pulling out Romans 13. The only way to ensure that plunder is NOT easier than work is to punish plunder. And that punishment must be inflicted by a force that can brook no opposition*. Call that force the sheriff or the king, it matters not. That punishment must come from the state. 

Without the state, "we would only be forced" Fedako says, "to obey the governing authorities whose property we enter." But forced by whom? Because if you're voluntarily submitting to someone else's authority, you are in no way being forced.  And so we see that even the language of anarcho-capitalism reveals that it can only exist until the first person - or more likely, gang of people - decides they do not want to submit to legitimate authority.

* If it can brook opposition, then it is a civil war or a gang war - not punishment but destruction of all civil society.

A reading from the book of Second Opinions

Someone is wrong on the internet

Not that people don't have a right to be ignorami in public:

Legal tender for all debts public and private

Naturally, a phalanx of hairsplitters quickly pointed out that the Pitts proposition [of issuing gold and silver coins as legal tender in South Carolina] would violate the U.S. Constitution, which established Federal Reserve notes as legal tender for all debts public and private a couple of centuries ago.

Legalities aside, I think Mr. Pitts may be onto something here. In fact, I don't think he goes quite far enough. I mean, why gold and silver coins? Is he trying to defend his state from highwaymen?

Actually, defending his state from highwaymen is precisely what he's trying to do.  But a discussion about whether a commodity currency is better than a fiat currency is neither here nor there.  What is here is that Jay MacDonald of bankrate.com is too stupid to internet.

Sufficient idiocy to prove the point can be found in his statement that the Constitution establishes FRNs as legal tender. The Constitution does not mention the Fed* and establishes neither a national bank nor a currency. In fact, it mentions legal tender exactly once, which we will get to below. Whatever the Fed is**, neither it nor its debt notes are in any sense "established" by the Constitution. If you need another proof of ignorance (if innumeracy can be counted as ignorance), I would point out that 97 years - the present lifespan of the Federal Reserve and its notes - does not qualify as "a couple of centuries." Not even in the new math.

But the question as to "why gold and silver coin?" is a funny one, given Mr. MacDonald's obvious confidence that his cowchip currency reductio-ad absurdum establishes the epic doofus-ness of gold or silver as money. I mean, who ever heard of something so stupid? The answer is that Article I, Section 10 of that same Constitution that doesn't authorize the Fed, says that, "No State shall ... make any Thing but gold and silver Coin a Tender in Payment of Debts..."

Any thing but gold and silver coin. Just as Mr. Pitts proposes.

* which came into being in 1913, alongside the income tax.  That is not a coincidence.
** besides a stock corporation owned by banks which creates money from nothing and lends it at interest to the government, I mean.

Football vs. handegg

 

Ok, so maybe it's not that funny. I just wanted to post a picture of a Viking doing something right.

That was quick

Quick, everyone act surprised:

BOSTON -- A month after being crowned the darling of national conservatives, Republican Sen. Scott Brown of Massachusetts is being branded "Benedict Brown" for siding with Democrats in favor of a jobs bill endorsed by the Obama administration...

"We campaigned for you. We donated to your campaign. And you turned on us like every other RINO," said one writer, using the initials for "Republican-In-Name-Only."

Heh. I had actually said - before he was even elected - that it might take 2 years before conservatives hated the guy. I mean, seriously, he voted for Romney's* state-level version of Obama Care**, which should have provided sufficient evidence of non-conservatism to anyone paying attention.  But four weeks?  That exceeds even my high hopes for him.

On the other hand, conservatives have very little reason to complain.  He took Kennedy's seat away from the Democrats and thereby single-handedly destroyed any momentum the Democrats might have had left following their abysmal, incompetent first year in power.  You can't ask for much more of a Massachusetts politician than that.

* Boy are conservatives going to be mad when they discover Romney is no conservative.
** Which is fine and, to be honest, where it ought to be.  States have every right to impose this kind of economic tomfoolery on their subjects - laboratories of Democracy and all that - and it is far better to have it fail miserably in a small, communist area of the nation than to take the whole nation down.

Your lack of faith disturbs me

The Telegraph tries to convince us it's our brains that are mistaken:

For decades critics of modern classical* music have been derided as philistines for failing to grasp the subtleties of the chaotic sounding compositions, but there may now be an explanation for why many audiences find them so difficult to listen to...

While traditional classical music follows strict patterns and formula that allow the brain to make sense of the sound, modern symphonies by composers such as Arnold Schoenberg and Anton Webern simply confuse listeners' brains...

"That isn't to say, of course, that it is impossible to listen to, it is just harder work. It would be wrong to dismiss such music as a racket."

Now perhaps atonal modern classical music really does present particularly effective metaphysical imagery and interesting rhythmic devices which seem to counterpoint the surrealism of the underlying metaphor of the Vogonity of the composer’s passionate soul. I suspect the truth is that it's really just crap. Modern art** and modern "classical" music** are inseparable in this respect.

But it's not the same kind of crap as is presented by a million monkeys pounding away on keyboards, just like Picasso is not the same kind of crap as monkeys flinging poo against a white wall, superficial similarities aside. The difference is that modern art is created by very talented people who are either so bored or so angry at the world in which they live that they have rebelled against even their own minds, purposely creating discordant crap that no human can appreciate***.  Then they sit atop their crap and laugh at humanity.

They actually have quite a bit to laugh about, especially when government officials purchase their crap and put it on public buildings in order to improve the lives of the befuddled masses. But they laugh the most when we conclude that our inability to appreciate the crap politicians buy on our behalf means there's something wrong with us.

* oxymoron alert.
** false advertising alert.
*** There are only those humans who pretend to appreciate it in order to display solidarity with the innate emptiness of the artist's soul.

"They lied to me"

Fat, drunk, and stupid is no way to go through life, son:

In response to criticism from opponents seeking to defeat him in the Aug. 24 Republican primary, [John McCain] says he was misled by then-Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke. McCain said the pair assured him that the $700 billion Troubled Asset Relief Program would focus on what was seen as the cause of the financial crisis, the housing meltdown. 

"Obviously, that didn't happen," McCain said...

No kidding Sherlock.

It was obvious from the beginning that Paulson and Bernanke's plan to purchase as many crappy burritos as our financial system could produce was so idiotic that only the US Congress was stupid enough to buy it*. The fact that within weeks of receiving their $700 billion slush fund Paulson and Bernanke completely abandoned Plan 9 is sufficient evidence for a rational person to conclude that from the beginning it was wholly unnecessary**. When it resulted in a bunch of money the Executive branch could use to save favored industries, from Congress we heard nary a whimper. McCain was most notable for his silence.

The Congress got snookered, and McCain - who called off his presidential campaign however briefly to scamper back to Washington to vote for that fraud - was first among snookered equals. Now the fact that he fell for so transparent a trick is supposed to be evidence that he should be returned to the Senate?  Pardon me while I puke up my $5 foot long.

As much as I hope Obama fails***, I am still glad McCain is not president.  Not only because having McCain as president would most likely have given us two Democrat parties instead of one - as we had under el presidente pasado - but because no one so naive as to believe that naivete itself is evidence of fitness for office should ever, ever be allowed anywhere near executive power.

* at the low, low price of 700 billion dollars. But since they called in the next 10 minutes, Paulson threw in AIG and General Motors at no extra cost.  Well, maybe a little extra cost.
** they sold the plan by claiming that unless Congress coughed up the money RIGHT FREAKING NOW, we would all drown in lakes of blood.  But they never completed the purchases that were so necessary.
*** Actually, I hope Obama is the most successful president we've ever had. But so long as as he promotes policies that harm the nation, I am reduced to hoping he has some manner of Road To Damascus conversion to become that success.

Monday Randomness

So anyway, I read two biographies of John Brown over the weekend, one by WEB Du Bois, the other by Robert Penn Warren.  It is hard to believe they were talking about the same man.

I'm not sure what to think of the fact that my 100th Facebook friend was my mom.

Letting kids test out of high school is a great idea. But only government could accumulate hundreds of millions in extra costs by having fewer kids in school.

In Southern History last week, the question arose as to exactly how literally the Constitution ought to be taken. I argued for a very open construction* while a Marxist grad student buddy of mine** took the tack that it must be strictly-constructed. It was pretty amusing, actually. At least the professor seemed to think so.

Global Climate Progress continues apace.  In an article about how climate progressives just had to withdraw a scientific study on rising sea levels because their numbers were discovered to be utterly bogus, the caption next to the included photo reads, "The Maldives is likely to become submerged if the current pace of climate change continues to raise sea levels."

* Not that I actually believe that to be the case; I think the Constitution ought to be applied as literally as the IRS applies tax laws to us. I was simply explaining Hamilton's reasoning behind the first Bank of the United States.

** You long-timers might remember him as the triple-digit unemployment guy.

Updated thru February

The fundamental dichotomy

This is the part where I laugh:

(CNN) -- U.S. Rep. Ron Paul, R-Texas, a stalwart foe of government spending, won a blowout victory Saturday in the annual Conservative Political Action Conference presidential straw poll...

The announcement of Paul's win, a surprise victory unlikely to have a major impact on the 2012 presidential contest, drew a volley of loud boos from the CPAC audience.

I don't recall another CPAC winner getting boo'd, nor seeing a straw poll victory written off as "unlikely to have a major impact" on a future contest*. Had Mitt Romney won, as he had three years running, it certainly would have boosted his conservative credentials**.

Conservatives love and hate Ron Paul, which I suppose is an improvement over 3 years ago, when they universally hated him. The major reason they think they hate him is his opposition to the war(s) in Asia, though I suspect that after 3 (or God forbid, 7) more years of floundering around over there, even conservatives will ready to be finished with these wars. But that's not the real reason. The real reason they hate him is the reason for the wars in the first place.

CPAC passed a series of resolutions the other day called, The Mount Vernon Statement, in which they praised limited government, baseball, hot dogs, mom, and apple pie, but mostly limited government.  But tucked into the resolutions was this one, which illustrates the fundamental internal contradiction of modern conservatism:

It supports America’s national interest in advancing freedom and opposing tyranny in the world and prudently considers what we can and should do to that end.

One will of course look in vain through the writings of the president who hailed from Mount Vernon for any indication that it is the US government's business to either advance freedom or oppose tyranny around the world.  That president even sat out the French Revolution, which was tyranny in the world if it ever existed.

Washington - like Ron Paul - understood that you cannot have limited government while going overseas looking for dragons to slay, because there is no end to dragons. There is no sense in bringing "enemy combatants" back to this hemisphere while sending our troops to another, because there will be no end to the enemies who will combat you. There is no lasting good in imposing democracy on nations who lack the economic and cultural underpinnings to support it. And the money necessary to support such efforts (and fight its side effects) is unlimited.

Conservatives are going to have to give up one of two dreams: either they will give up the principle of limited government, or they will give up opposing tyranny around the world.  The fact that they love and hate Ron Paul shows that they themselves have not made up their mind which it will be.

* Even if in this case it is an entirely true statement.
** Which just goes to show how little those credentials mean.  Romney, the creator of a going-broke medical system in Massachusetts - that Scott Brown voted for, btw - with more similarities to Obama care than differences, is a very unlikely conservative. He does have very Republican hair, however.

Hope for America

And now for the good news:

Rep. Patrick Kennedy's decision not to seek reelection will leave Washington without a Kennedy in political office for the first time in more than 60 years.

If it wasn't 8:00 in the morning, I'd have a big slug of Irish whiskey in celebration.

UPDATE: Today was Checkers' last day, so I'm having that whiskey, though not necessarily in celebration.  I do hope, however, that I am able to find another dog as awesome as her.

They're both right

Biden is a national treasure

Jumpin' Joe explains politics:

Speaking of intense partisanship in the capital, Biden said on CBS's "The Early Show" that "I've never seen it this dysfunctional." He said the message coming from the stunning Republican upset in the recent Massachusetts election was, 'Hey guys, get your act together. Get something going.'"

That's right. Massachusetts voters were so sick of nothing getting done that they gave the GOP enough votes to keep the Democrats from passing anything else.

I'm just wondering, once Obama is gone, can we keep Biden around to just make random pronouncements about stuff?  Seriously, the guy is a like a one-man national bank of doofus. And we're going to need someone to cheer us up.

I call shenanigans

On Dr. Glaude. For he tricks us:

(CNN) -- If we are to address seriously the economic devastation in black communities across the nation, we have to put aside, once and for all, the idea that President Obama has a special obligation to African-Americans.

So anyway, when I started reading this paragraph, I was hoping that I had finally met a professor of religion and of black studies who gets it, one who is finally willing to say that black people's economic suffering is usually proportional to the number of black politicians around them. But after that hopeful opening, and the more hopeful* title "Black America can't rely on Obama alone," I was aghast to discover what Black America ought to be relying on instead:

[I]t is one thing to say that Obama must be the president of all Americans; it is another to say, because of that, African-Americans cannot demand specific policies that will relieve their suffering.

Americans are being ravaged by this economic recession. Joblessness plagues black communities...

More black children are growing up poor. According to the National Center for Children in Poverty, 35 percent of black children live in poverty. In the 10 most populated states, "rates of child poverty among black children range from 26 percent in California to 51 percent in Ohio..."

What black communities need are just and targeted policies to address the Great Depression they face.

So in other words, black communities don't need to call on Obama**, they need to call on Congress and politicians for "just and targeted policies" that will somehow relieve them of the special suffering they endure.

Rubbish. Absolute freaking rubbish.

What black communities need is less politics and fewer policies.  It seems completely lost on black studies professors that black people live worse lives (higher poverty and higher unemployment and more violence) in places where there are more black politicians, where there is more money spent on schools, where there are more "targeted policies" to handle these very problems.  And while that is not proof that those policies cause black suffering, it is surely proof that more of the same are not the solution.

What they need to do is the things that cause you not to be poor or unemployed:

First of all, stop having kids out of wedlock.  Black kids are not poor because white-racist America fails them - they are better fed in America than any black-run nation in the world. They are poor (relative to whites here) mostly because 70% of black children are born without married parents.  That means they generally have only mom and her support structure, which, while she doubtless puts forth a noble effort, is no match for two-parent support structures***.

Take whatever work is available, no matter how low it is or how little it pays. Hey, I know it's hard (especially for teen boys), and I know there's racism and all manner of unfairness you'll have to face. You need to do it anyway, so pull your pants up, take your backwards-ass hat off, cover up the tattoos, take the earrings out, and don't stop looking until you get a job, any job.  Then do what it takes to keep it.  If you don't do that, in 10 or 20 years, you'll still be hand-to-mouth.  If you get a job and keep it except to trade up, in 20 years your kids will be in college.

I thought about a third solution the other day when I ran across a friend of mine in the college library, sitting comfortably with his nose in a book. It was not until I was passed him and was thinking about him that I realized that he is the only black guy I have ever seen reading a book there.  Asians are everywhere in the library****; blacks - who make up a little higher proportion of our students - are seldom to be found except on the computers. Blacks have educational opportunities: take advantage of them. That means more time in the library. That means degrees in plastics and business rather than black studies*****. That means taking courses even if you can't afford to go to school full time. It means doing your homework and dedicating yourself to learning even after you leave school.  When Chris Rock said that books were like Kryptonite to blacks, he was only half kidding. That has simply got to change. If you come out high school and can't read you have no one to blame but yourself for whatever happens the rest of your life.

The most tragic thing about the problems of the black community is that they are soluble almost exactly****** to the same extent as white communities, and yet Blacks are convinced that, black president or not, some government policy is going to change their lives. And they will wait, and agitate, and march and complain. And a good number of them will waste the opportunities they have and act so as to ensure that no more come their way.

And when they end up poor, they will complain about a lack of justice when they are actually experiencing the results of it.

* yet as we shall see, misleading
** Except where they need "specific policies that will relieve their suffering."
*** It's no use saying, "Hey, white kids are born out of wedlock, too." Yes, the poor ones are.  If you want to succeed the goal is not to be white, it's to do things that cause success.
**** In all fairness, much of this is because a lot of them are foreign students and have nowhere else to hang out.
***** There are few things in American education more tragic than a black studies class full of black students. Only white kids should be allowed to take black studies.
****** There's racism and its real and has real effects, so there may never be identical opportunity. But those effects are overrated in modern America and are far more often an excuse for failure than a cause of it.

Obama was right

when he said, "We can't just keep borrowing from China."  But only because they may have grown tired of lending:

WASHINGTON (AP) -- The government said Tuesday that foreign demand for U.S. Treasury securities fell by the largest amount on record in December with China reducing its holdings by $34.2 billion*.

The reductions in holdings, if they continue, could force the government to make higher interest payments at a time that it is running record federal deficits.

The Treasury Department reported that foreign holdings of U.S. Treasury securities fell by $53 billion in December, surpassing the previous record of a $44.5 billion drop in April 2009.

One month does not a trend make. But if record dumping of foreign holdings of US debt becomes a trend, then the debt sink has arrived and we will begin circling the drain faster and faster. Greece is the word.

Our budget deficit is up 5x in 2 years and our best customers may be going on strike. Those facts make the claim that this "could force the government to make higher interest payments" the height of optimism.  Raise interest rates and you raise the deficit even higher, which in turn raise rates, which in turn raises the deficit, all while reducing both economic activity and government revenues at all levels.

That's a debt sink, and it is what scientists call "very, very bad."

* FWIW, $34b is just over 5% of China's total holdings. Whether they actually sold them on the market or just failed to purchase replacements for maturing securities I don't know.  And I don't know if it matters.

Slogan Management

Colorado's governor mixes his mindless metaphors*:

Most disturbing, Ritter said, was that Colorado is now 23rd for its percentage of obese children — 14.2 percent, according to a survey of parents.

"That's just not tolerable," he said. "There are kids who are obese in this state who are going to school hungry."

The evidence is that they are not hungry enough**.

I'm reminded of one time when I entered the kitchen and announced to the lovely and gracious Rogue that I needed to get to the fridge, as I was starving.  She put her hands on her hips, looked me up and down, and said, "You don't look like you're starving to me."

However I felt about it, I have to admit she had the evidence on her side. Of course, if I was a Democratic governor, perhaps I could have convinced her that I'm not heavy for my height, I'm merely short for my weight. And underfunded as well.

* Technically, they are slogans, but who ever heard of mixed slogans?
** Not that evidence is itself enough to make a politician to forgo familiar talking points.

A handy dandy sovereign default table

Here's something everyone can use*, courtesy of those clever little financial gnomes of Credit Suisse: a handy, dandy table ranking nations' risk of sovereign default.  It ought to be of some comfort to us that Swiss bankers still consider the US to be a better credit risk than Estonia. Plus, we totally pwn3d Kazakhstan.

There are two numbers that are of special interest in our case. The first is private sector credit, wherein we are one of only 4 or 5 nations to have more than twice as much outstanding private sector debt as economic production.  The second is the 2009 government budget balance. That is of most interest because, apart from Iceland (already bankrupt), Greece (going bankrupt now), and the PIGS (going bankrupt as soon as Greece is taken care of), only England and Ireland are such profligate spenders as us. We are truly in excellent company.

What I think is going to be most enlightening about our own bankruptcy will be all the politicians who are surprised** when acting like Greece and Iceland puts us in the same financial boat as Greece and Iceland. Only with no one big enough to bail us out.

*even if the blogger upload has trouble maintaining its clarity. If you can't read it, there's a nice copy here.
** Not just pretending to be surprised, but truly, honestly surprised.  I am fully convinced that most of them have absolutely no idea what they are doing.

Dirty little lies

When it comes to Social Security, Rick Unger says, "All is well":

Did you know that there is currently a large surplus in the Social Security Trust Fund?

While the surplus will not last forever, The Social Security and Medicare Board of Trustees reports that it will be enough to carry us through 2037. ...

According to the 2009 Annual Report of the aforementioned Social Security board, we will reach the point where more is flowing out of the Social Security Trust than coming in sometime around 2017. The non-partisan Congressional Budget Office suggests it will happen closer to 2020.

First of all, the bad news: more will flow out of Social Security than comes in this year and next year, not 7-10 years down the road. The other bad news is that the Social Security surplus* dropped from $63 billion in 2008 to $3 billion last year, while retirements jumped by 20%. Retirements are permanent: once you start drawing benefits, you draw them for good. This is no temporary blip - the actuaries have erred** and that error will compound from here forward. The other bad news is that since SocSec was last "saved" its D-date has moved from 2058 to 2037.  It will be moved again much, much closer to today.

But the dirty little lie is not that actuaries err. Of course they do.  No one can project the future with any sort of accuracy, so government "best guesses" are just that: a best-case scenario that seldom materializes.  Rather the dirty little lie is the very first line. There is no "large surplus" in the trust fund, because there is no trust fund. Oh sure, there's an accounting entry on the government's book called a trust fund that allegedly has $2.5 trillion dollars in it, but where is the money?  It's gone, spent, and will have to be borrowed in the future to pay benefits.  A government in debt cannot have a $2.5 trillion trust fund any more than a bankrupt can become a millionaire by writing himself a check for a million dollars. The $2.5 trillion is not an asset, it is a liability, a government obligation to people who have paid SocSec taxes, to be added to the $12 trillion in outstanding debt today and the $2 trillion that will be added every year henceforth.

By their own admission, the actuaries were wrong and continue to be wrong about the future of Social Security, which is why it has been "saved" three times in the past 3 decades. Therefore relying upon what they say about the program's long-term future and current footing is a bit like believing every A/S/W in a singles chat room. Rather one ought to figure what happens to Uncle Sam's pocketbook once he no longer has a Social Security surplus to hide his spending binge. Then one ought to look at what happens to countries like Greece, Spain, Iceland, and the USSR that spend like that. One will quickly come to the conclusion that Social Security is not in trouble so much as the broke entity that owes it 2500 thousand million dollars is in trouble and the people said entity will take the money from are in trouble.

So what's the solution to this paltry actuarial dilemma? "Privatization" in the Bush/Republican model is not an answer as much as it is another transfer of control and wealth to Wall Street. Rather, Social Security*** needs to be a much smaller part of every individual's retirement*** and probably should operate more like rest home insurance than a way to draw a paycheck for 30 years without working. I would raise the retirement age to 86 to start with - a simple adjustment that reflects increased life expectancy since the 1930s - then allow anyone who wishes to opt out of SocSec for life. If that's too much to ask for then we should promote smoking in order to bring life expectancies back in line with the program's original actuarial assumptions.

* i.e. The amount of Soc Sec money Congress spends on things other than Soc Sec.
** It happens, right, JD?
***assuming such a thing continues to exist, which I don't. 

Beware of greeks bearing debt

Bring that thing inside, what could it hurt?

LONDON (AP) -- Greek shares led world markets higher Wednesday, boosted by news that European Union leaders are discussing some form of support for the heavily indebted country...

Analysts say EU nations could offer loan guarantees or financial assistance from countries that want to help, and that Germany and France could play a leading role.

So now we have progressed from bailing out banks, insurance companies, and automakers to bailing out whole countries, and this is reason for stock markets worldwide to go up.

Except that those buying stocks because of "good news"* seem to be missing a progression here: the problem of too much debt is not going away, it's simply being transferred to larger and larger entities. AIG's and Citi's debt gets guaranteed by the US taxpayers, Greece's debt gets guaranteed by German and French taxpayers.  Meanwhile, Germany and France and the US's balance sheets start to look very much like AIG's and Greece's used to. 

So who bails them out?

* I'm not a buyer at the moment, but I will be when the news gets bad enough.

heh

EPW HEARINGS POSTPONED DUE TO WEATHER

The following Senate Committee on Environment and Public Works hearings have been postponed due to inclement weather this week: ...

"Global Warming Impacts, Including Public Health, in the United States."

Once the hearings are rescheduled, information will be posted at www.epw.senate.gov

---

Yeah, I laughed.

UPDATE: I'll bet you didn't realize that both the lack of snow in Vancouver and the abundance of it in the US were caused by Global Warming. Is there nothing Global Climate Progress cannot accomplish?

Confusing problem and solution

In an article explaining why the sheer size of the deficit demands that America implement a sizable value-added tax (VAT), Fortune magazine defeats their own argument:

But the sheer scale of the expected numbers makes it practically inevitable that the U.S. will soon adopt a big VAT. ...

But it's never gotten much support in the U.S. for two reasons. First, it's a regressive tax: Low-earning families pay a bigger portion of their incomes than the wealthy. And second, the VAT -- first introduced by a French civil servant in 1954 -- has fueled the rapid growth of government in France, Germany, and even Japan. In fact, no other country spends the kind of money we're planning to spend without a VAT. 

Fortune argues that the VAT needs to be implemented to deal with problem of increased government spending and that the VAT precedes the "rapid growth of government."  Does anyone else see a problem with this solution?  What the implementation of the VAT proves - considering that Japan nor Germany nor France nor any other nation with a VAT has a balanced budget - is that the problem of massive deficits and fiscal irresponsibility is simply not a problem of revenues*. What instead needs to happen is not a balancing of budgets but a cutting of them.  Without that, it does not matter what solution is implemented, it will only exacerbate our fiscal problems, setting up a fall from a higher cliff rather than a low, manageable one.

But you might be surprised to learn that I'm in favor of a VAT, a really freaking huge one. One big enough to get rid of the individual income tax. One excellent benefit of that would be to relieve Americans of the burden of $400b in time wasted filling out forms; another would be to keep Uncle Sam from snooping through their underwear drawers for hidden income. But the greatest benefit would be the ability to opt out of being lab rats.

Did you ever wonder why the government gives deductions for this, credits for that, taxes this income at this rate but that at that rate? It's not simply for the raising of revenue**. Since the implementation of the income tax, it has been the preferred progressive vehicle for social experimentation, for "encouraging" you to live in this manner but not that. There are no end to the rules because there are no ends to the desires of government to run your life for you and no end to the power the government must have to ensure that you're not cheating.

If the best result of the VAT were that government could get out of the sociology business, that would be enough.
* In fact, a review of European nations in fiscal trouble will reveal that all of them already have huge VATs, like Spain at 16%, Portugal and Greece at 20%, and Iceland at almost 25%. If more money was a cure for government deficits, surely someone in Europe would have cured them by now.
** at less than $250 billion collected each year - 6% of federal spending - it's hard to argue that the individual tax is even a meaningful federal income source.

Congrats to the Champs

 

I'm really, really glad Indy didn't win, but it would have been nicer if they didn't win to the Vikings.

Is Jon Stewart the next Dennis Miller?

Unused to harsh treatment in the press, liberals are starting to wonder if Jon Stewart is turning on them:

Stewart's barbs are generating partisan buzz. In a tweet, Americablog's John Aravosis invoked Martha Coakley's Massachusetts loss in trashing the prompter joke: "So is this the new post-coakley Jon Stewart, picking on Dems for insignificant BS to burnish his indie credentials. Third time in 7 days." The conservative Fox Nation site, by contrast, ran the video under the gleeful header "Jon Stewart Mocks Obama's Teleprompter Dependence." ...

Bill Kristol, the Weekly Standard editor and an occasional guest, sees a glimmer of hope. "Jon has always been a crypto-neocon," he e-mails. "Could he be coming out of the closet? . . . A neoconservative is a liberal mugged by reality."

I think Kristol is either engaged in wishful thinking or has been hitting the medical marijuana establishments a little too frequently, because there's actually a very simple reason Obama has become Stewart's target of choice: he's the president now. El Presidente Pasado is not there to kick around anymore, and there are no Republicans in real leadership positions* in either of the "funny" branches of government. The President is a Democrat, the Speaker of the House is a Democrat, the senate leadership and the chairmen of every committee in Washington DC are Democrats. For the last year they could have done anything they wished - up to and including invading Iceland or making the minimum wage $100/hr - and they would not have needed a single Republican vote to do so.  The Republicans as a party are as close to irrelevant as a modern political party can get, not unlike the Dems 6 years ago. Even now they can only stop legislation, they cannot assure a single idea ever makes it into or out of law. Who in the world is Stewart supposed to talk about**?

Now I suppose liberals never really thought about what would happen to late-night comedy once there was no one else to talk about but them. Chalk it up as another of those "unintended consequences" of them winning elections***. And true to form, they are surprised, amazed, and outraged by what they should have seen coming as a result of their own actions but did not.

* No, I don't consider "minority leader" a real leadership position; it's a consolation prize.
** And it's pure win for Stewart that the Democrats are a live-action Island of Misfit Toys.  I mean seriously, if you had to make fun of people for a living, could you do better than the doofus trifecta of Pelosi, Reed, and Obama?  And Joe Biden has been comedy gold for decades.
*** like national bankruptcy, only faster.

And now for the good news

The aforementioned dollar bounce is here and in full force. Gold is off $40 today (and 10% from the high), oil is down, and the dollar looks like it may pass back to the good side of 80 on the NDX (79.93 and climbing). This is very good news for Americas who enjoy such luxuries as eating food and heating their homes during the winter. If you're looking to buy stocks, the good news for you is that they are going to be significantly cheaper very soon. 

How long it lasts I have no idea*, but I for one intend to enjoy it while it does.

* but probably not as long as we should all hope it does, for reasons that you are doubtless sick of hearing.

What Visas are for

I'm amazed we need a change in law for this:

[New York Rep. Anthony] Weiner is sponsoring a bill that gives models “of distinguished merit and ability” their own visa classification (P-4 status) which would group them with entertainers and athletes.

...models coming to work in the U.S. compete with high-tech workers for the same type of H1-B visa. The problem is that there are only 85,000 available visas and typically 165,000 applicants. In other words, each visa given to Gisele Bundchen, Kate Moss or Naomi Campbell means that one fewer biotech researcher or computer technician can enter the country.

As the competition for visas has gotten tougher in recent years, the number of models granted permission to enter the country has waned...

Now I'm not sure how one objectively measures the merit or ability of a fashion model. In fact, I know so little about the "industry" that I've only heard of two of the three mentioned above*. But any rule that keeps a) rich people, b) smart people, or c) beautiful women out of the US is bad policy.

We have about a million legal immigrants and another million in illegal ones every year, but we can only carve out room for 85,000 H1-B workers? That's crazy. It ought to be 5x that. We ought to be making brain drain, money drain, and beauty drain national policies.

So long as people want to come here, we ought to be picking the best ones, and as many of them as we can get. Before we take the poor, huddled, befuddled masses, we ought to be looking for engineers, multi-millionaires, and entrepreneurs. We ought to be seeking out guys like Madieu Williams and Kofi Kingston, the Swedish Bikini Team, or those Chinese who are hard-working and clever enough to accumulate $55,000 apiece in that communist hellhole and want to come here bad enough to risk it all to be smuggled in. Hells yeah, we'll take 'em all.

If we're going to take 2 million people** every year - and it seems we are, one way or another - then we ought to make an effort to take the kind of people we want living here.

* not coincidentally, the two who have been mocked on MXC. If Gerstenbunchen or whoever has, I don't remember it.

** 1,842,570. give or take a few Mexicans who declined to be counted.

Who you calling "we" Kimosabe?

I especially like the line, "showing the labor market was in much worse shape than we knew at the time."  As if no one could see that a) the BLS Birth/Death Adjustment numbers were absolutely incredible and therefore not to be believed*, and b) it is common practice for government to pass off rosy assumptions as data and then revise reality back in when and where no one is looking**.

Anyone who did not know the labor market was in worse shape than the government was saying*** was either not paying attention, is too dumb to have a job, or is a business journalist. For the latter to report numbers as reality when there is every indication they are false is malpractice and a disservice to everything a free press is supposed to represent. But who wants to bet journalists will be just as surprised at next January's "surprise" revisions too?

(hat tip: Mish)

* pretty much by definition, I guess.
** which is how the Stimulus managed to create or save exactly as many jobs as advertised even as the labor market went to hell in a handbasket.
*** And will continue to say; this is an adjustment to the past, not the present.  The labor market will be worse than the government is saying going forward as well, and for the same reasons.

Breasts AND bombs

A few years ago, a bunch of moonbats held a naked march* called "Breasts NOT Bombs," never imagining the two would merge:

Britain is facing a new Al Qaeda terror threat from suicide ‘body bombers’ with explosives surgically inserted inside them...

A leading source added that male bombers would have the explosive secreted near their appendix or in their buttocks, while females would have the material placed inside their breasts in the same way as figure-enhancing implants.

Experts said the explosive PETN (Pentaerythritol Tetranitrate) would be placed in a plastic sachet inside the bomber’s body before the wound was stitched up like a normal operation incision and allowed to heal.

Count this as one of those theoretical threats that, while it sounds scary, is even less likely to work than hiding C4 in your Fruit of the Looms.  Besides the costs and risks of major surgery, a theoretical female bomber would still have to smuggle a syringe filled with Triacetone Triperoxide on the plane and then stab herself in the boob with it hard enough to puncture the bomb. If you miss the packet, the "suicide" part of "suicide bomber" still works.

But theoretical as it is, it does illustrate one difficulty in trying to create perfect airport safety.  If enough people are willing to have explosives planted in their boobs to blow themselves and me up, some of them are probably going to succeed. On the other hand, I don't see a lot of planes falling out of the sky; it's a whole lot easier to blow up a marketplace in Pakistan than a terminal in Butte.

While this is not a big threat, it is an attention-grabbing one**. The attention-grabbing part will be what determines how much time and money the government throws at the threat. And if you were concerned about about how intrusive searches are presently, now they've got a really good*** reason to give Grandma a mammogram right there in the boarding area. After all, she just might be a boob bomber. 

* Why is it that moonbats always want to march naked?  War marches, gay pride marches, it doesn't matter, you'll see half the marchers with their asses hanging out of leather chaps and the other half wearing nothing but blue body paint. Say what you want about the Tea Parties, at least they manage to keep their clothes on.

** The amount of attention grabbed seems inversely proportional to the actual danger. The silly complaints about a few terrorists being found not guilty in civilian courts is a fine example. And how much press was given to the 200 Americans who didn't die in the Christmas Bombing compared to the 12,992 who accidentally suffocated during the year?

*** theoretical.

Happy Groundhog Day

Carry Nation rolls over

Via email:

You and a guest are invited to a wine tasting for current and retired faculty. Enjoy hors d’oeuvres, learn about and sample a variety of wines and have your questions answered by wine professionals...

I'm not sure what it is with wines and Kansas colleges, but this is the second or third similar tasting  I've seen recently.  Maybe I'm just noticing them more or something, or maybe there's a secret society of wine-tasting consultants who have just come to the conclusion that colleges* still have too much money...

Totally unrelated: Am I the only person who thinks Carry Nation looks a bit like Herbert Hoover?

*Well, people at colleges, anyway.