October 13, 2011
I’ve been reading the Weekly Market Comment section over at HussmanFunds for a while now as one of my top few sources of insight on what is going on in our economy. A new post by John P. Hussman, Ph.D. goes up every Monday. Their quality and interest varies, but when he’s on a roll, I find myself re-reading the post several times throughout the week, seeking deeper understanding. A few excerpts from the October 10, 2011 post and links to other posts below:
“When Wall Street talks about the “failure” of a bank or other financial institution it means the failure of the company to pay off its own bondholders. It does not mean that depositors, counterparties or other bank customers lose money. A bank is essentially a big portfolio of assets, about 70% which are typically financed by depositors, customers and other liabilities, about 20% by the bank’s own bondholders, and about 10% with the capital of the bank’s stockholders. In a typical bank “failure,” the bank is taken into receivership by regulators, the liabilities to stockholders and bondholders are cut away, the remaining package of assets and liabilities is sold as a single entity to some other firm, the old bondholders get the proceeds of that sale, and the stockholders are wiped out. When investors willingly take a risk, and buy the stocks and bonds issued by an institution that goes on to mismanage its business, this is the appropriate outcome. Depositors and customers typically don’t lose a penny”
“If public funds are provided during a financial crisis, and it cannot be clearly demonstrated that the institution is solvent, the funds should be provided post-failure, as senior loans to a restructured institution where shareholders and existing bondholders have already been subject to losses. The interest rate should be relatively high, to encourage replacement of public funds with private ones. With few exceptions, when public funds are used to avoid major restructuring and shield private investors from losses, the result is almost inevitably a larger, less transparent, and more recklessly managed institution.”
“The same is true for government or “sovereign” debt. When Wall Street talks about “failure” of Greece, for example, it means failure of Greece to pay off its own bondholders. In trying to avoid this failure, Greece is instead forced to impose extreme austerity and depression on its citizens. From the standpoint of those citizens, Greece has already failed them painfully. Those are the choices – let bad debt “fail” or force depression on innocent citizens.”
“In 2008, the Federal Reserve created a set of off-balance sheet shell companies called “Maiden Lane” to buy undesirable long-term assets of Bear Stearns and other financial companies, justifying the purchases by appealing to Section 13.3 of the Federal Reserve Act. But if you actually read Section 13, it is clear that under the law, “discounting” means (as it has always meant) providing short-term liquidity by essentially providing a check-cashing service for obligations that are short-dated, well-collateralized, and promptly collectible. The Fed’s creation of the Maiden Lane companies to purchase bad assets was, and remains, illegal under the language and intent of the Federal Reserve Act.”
50% Contraction in the Fed’s Balance Sheet This is a great article on the Federal Reserve and it’s actions regarding interest rates and Treasuries. It’s a bit of a tough read, but if you can get through it and understand it, I think you will gain tremendous understanding of our current economic regulatory motivations and hurdles.
Handicapping QE3 This one has an in depth look at the results of the previous rounds of Quantitative Easing, and the likely timing and effects of a third round.
For the rest of his analysis, check out the full list of Weekly Market Comments here.
October 8, 2011
Those of you with facebook accounts have no doubt seen one or the other, possibly even both, of the above and below images (the one below had the caption Dare to be Stupid, Click LIKE & SHARE if people calling for “zero taxes” shouldn’t be using public streets and sidewalks .
The former is an Occupy Wall Street protest. I think there is a bit of validity in the picture in the sense that while government has a monopoly on force, you are allowed to avoid using the products of corporations you don’t approve of in order to vote with your wallet to change their policy. Even so, the Occupy Wall Street message, while vague, seems to be one directed at general wealth disparity of management, rather than opposition to any given company or product.
The latter is a Tea Party protest, with the implication that people shouldn’t be allowed to protest their government in public. These people paid for the things around them, regardless of whether they wanted to. While signs like “CUT TAXES NOT DEFENSE” are hard to defend in our current budget, the post is centered more on the validity of protesting, rather than the flawed message. The first Amendment clearly gives them the right to assemble and redress their grievances, and unlike OWS, they are on public property rather than private.
Both of these posts have tens of thousands of likes and shares. They are unhelpful. They lack substance. They serve only to increase partisan divides through snarky peer pressure.
These two political movements should be embracing each other. They both find their main opposition not in each other, but in the status quo. Ron Paul recently made the point that compromise is when you give up half of your beliefs. He said we need to be finding common ground with others issue by issue, rather than picking one of the two parties and sticking with it blindly. What do they agree on? That those in power are abusing it, that there is too much money in politics, and that the system is broken beyond the point where working within the established system will fix it.
They are both decentralized movements, which is both a strength and a weakness. Those in power (the combination of the two parties and their joint corporate masters) are ridiculing both sides on the airwaves. Photos like those above are shown as if they represent the views of the entire movement. On the other hand, without centralized structure, they are able to pull together a group of people who don’t agree on everything, without forcing any of them to compromise their beliefs. They are a hydra, much like many of the decentralized militant groups around the world. It’s hard to kill something that has no vital organs. And for each, the existence of the other alleviates that which has plagued every third party that has tried to spring up: the kingmaker excuses. If only one of these movements were to exist, the main party on the other side of the spectrum would get an easy win due to the split vote. If they are both strong, the two party system is out of excuses.
October 2, 2011
Just an update on some recent Ron Paul videos. First up we have a couple from Jon Stewart, who has given a boost of cred to both Ron Paul and himself by highlighting the coporate media’s fear of everything Ron Paul. Stewart shows once again that he earned his place as the most trusted journalist in America. Sometimes all you need is an observant nature and an unwillingness to be bought.
Stewart had him on again more recently. Below is the third part of the interview. The first two parts are there too, but were of less substance. Ron Paul needs to get better at explaining his positions to liberals. It isn’t that he wants to destroy all social programs and safety nets, he is just trying to get them back to a more local level.
There was also this interview on FOX, where he talks about working with the Democrats, and how compromise in the modern political sense is where you give up half of your beliefs. He instead is willing wo choose his allies issue by issue, and find common ground rather than concessions.
September 28, 2011
Ron Paul makes quite a campaign commercial. It’s interesting to see a candidate for president run on a platform of consistency, honesty, peace, liberty, and sincerity, and not have a single one of his opponents question his credentials on any of it. He faces only two obstacles: A corporate financed media who censors his victories, and a fear that a reduction in federal power would bring back the dark ages.
I urge my readers to help with these two hurdles.
On the issue of electability: If he wins the primary, Republicans will vote for him rather than Obama. Those supporters of Obama who are primarily anti-war will come around as well, since Ron Paul has far more credibility on the issue.
On federal power: Much of the power of the federal government is recent. For example, I see people recoil when they hear he wants to do away with the Department of Education, as if doing so would put us into a situation where all the schools closed and children never learned to read. The Department of Education was created in 1979. If you went to school after that, do you think you got a better education than your parents? Taking the power over education from the teachers and communities and putting into the hands of federal policy makers has taken the substance out of learning and left it cold. Ron Paul seeks to put the power back in the hands of states, communities, and teachers, not to end education.
Be heard. We can’t have the media convincing people that we don’t exist. We need to turn headlines like Poll: Romney leads New Hampshire, Huntsman in third, Perry in fourth into a rallying cry against a system trying to fix the vote for those in power.
September 27, 2011
Not since the advent of Unnecessary Censorship have I seen such an awesome video concept. For a taste of what it must be like for the deaf to watch Rick Perry speak, check out the video above. I look forward to many more future episodes of Bad Lip Reading.
And my sister talks to bigfoot, who’s her neighbor:
I will force spiders and badgers on the enemy!
Give that woodchuck a tuna melt: