Ken Nelson

Ann Barnhardt, a successful long term broker in the futures and options markets decided today that she could no longer take her customers money in good faith:

The futures and options markets are no longer viable. It is my recommendation that ALL customers withdraw from all of the markets as soon as possible so that they have the best chance of protecting themselves and their equity.

She then adds:

The rule of law is non-existent, instead replaced with godless, criminal political cronyism.

I’d have to say that things really aren’t looking “up”.

The Tea Party represents all the people working, producing, and PAYING for everything, while the Occupy movement represents all the people wanting to TAKE things from those who have earned them.

TakiMag.com

I don’t think about China much. I’m a busy fellow. BUT  I knew they had nukes. And Herman Cain did not.

I don’t understand why Presidential candidates need to espouse on things they don’t have firm opinions or knowledge of.  I’d be happy to accept  “I’m not ready to discuss that, I’m more focused on my 9 9 9 plan now”.

But the gaffe did get me thinking about China. And, frankly, they don’t worry me.  Oh sure, if they wanted they could take Taiwan. Or Japan. But why would they go to that trouble when they could just let a few hundred million “volunteers” absorb the Asian provinces of the old Russian empire?

So when I think about China, I think less about nukes, and more about Greece.  And in particular how little old Greece is putting a hurt on all of Europe just because they let them borrow money and screw around with their currency.

Sound familiar?  Well, we’ve got a lot more debt with China than Greece did with the EuroFools. And they’ve been holding their currency at wacky rates so they could make stuff and lend money to us so we could buy it.  And we are rapidly proving ourselves to be as irresponsible as Greece. I’d say we have China just about where we want them…

So if I were in charge, I wouldn’t worry too much about China. I’d worry more about getting our systems (free market, hard work, democracy) back in order so we can capitalize on their fall.

Greeks – even those fiercely opposed to Pasok from the left and right – are resigned to the fact that the country faces years of painful restructuring. The real question at issue is a) under whose control and b) in whose interest?

Those are the questions for Greece. But they apply to us as well. Greece is just farther along the failure trajectory.

Obama, to me, isn’t really a socialist. Well, he is, but that isn’t what drives his decisions. He is a cronyist acting on behalf of his cronies, financial supporters and voters.  He is willing to accelerate our failure as long as his team does better than the others.

So, under Obama, and the DemocRATs,  failing solar companies, General Electric, unions, public employees, will get larger slices of a shrinking pie.

It makes no economic sense. But economic value isn’t his standard.

Two views on what “government should give”

Ace describes the difference pretty well:

As someone said, both groups don’t like crony capitalism, but OWS wants to keep the cronyism and ditch the capitalism. The Tea Party, the opposite.

That sums it up well.  I, too, don’t like the Wall Street shenanigans, but it only matters when I can’t say NO to it.  I can fire a Wall Street business, except when they are spending government money taken from me, given to them, in return for campaign support.

I really only worry about things I can’t say no too – government being the only large example.

Good synopsis of government math:

“Evidence illustrates that there is a persistent robust negative relationship between the level (and expansion of) government expenditures and the growth of GDP.  Our findings indicate that a 10% increase in government expenditures as a percent of GDP results in approximately a 1 percentage point reduction in GDP growth.”

Read the whole thing…

Spot on…

Right now, idealistic young Americans are gathered together to fight injustice and build a better world.

Sure, they’re a little dirty, and maybe some of their language is a bit rough, but they’ve left behind family and friends, as well as the creature comforts the rest of us take for granted, to make a stand for what they believe in.

It’s just too bad that today the mainstream media is focusing on the spoiled, incoherent clowns of Occupy Wall Street and ignoring our young fighting men and women.

Read the whole thing.

Probably not worth $1 an hour to me.

RealClearMarkets ahs an interesting article advocating the ‘negative income tax’ as a way to make 30 million new jobs in 5 years.

Another summer, with job growth lagging population growth? That’s bad. A closer look at the long-term historical data reveals something far more disturbing. We’re 30 million jobs short of full employment. Can we put 30 million people to work in the next five years, and end this economic malaise? Yes, we can.

Basically, you set a minimum wage. But you don’t require employers to pay it. They work a deal with the employee, for, say, a $1 an hour, and the government picks up the difference to the minimum wage.

The author says this would be cheaper than the recent stimulus and would actually put people to work, breaking the chain of long term unemployment.  But I don’t tihnk it would be because the stimulus stops, this doesn’t. And wouldn’t. It amounts to a new government program, and they never stop.

The idea is interesting, but I have concerns.  For instance, what happens when the millions of people currently making $8 bucks an hour, now are fired and rehired for a $1 an hour?

And what do you do with long term people never worth $8 an hour?  Does this replace welfare?

Finally, It seems unlikely that somebody worth $1 an hour to me will miraculously be worth $3 or $4 an hour. People don’t change that fast.

So, keep the ideas coming, but I’ll pass on this one.

That actually pays taxes…

The odd thing is that she posts to a site wanting MORE government.  Could she be so crass as to want more government but not to pay for it?  Hmmm… maybe.

My suggestion… try marriage.  Maybe give estmen.com  a shot….then all this is HIS problem. (-:

I left college with no debt and excellent job prospects in the worst recession since the depression (the one before this one).  Admittedly we had a President that actually liked the country, so maybe I did have an easier go of it.

http://www.calwatchdog.com/2011/08/27/existing-pensions-also-will-be-cut/

It’s obvious that pensions for future government workers are being cut, and will be cut further. But California state and local governments’ unfunded liability for future pensions now is so large, $884 billion, that those already retired will see their pensions cut as well.

It will be very difficult, politically, for politicians in a California town to spend 70% or 80% of their budget on retirees they never met and that often live in other states.  Especially when many of those are young enough to continue working.

Is this unjust?  I’m not sure that matters. If they don’t have the money, something has to give.  But philosophically, I’ve got no problem ditching pensions that were political payoffs. Sure a “contract” is a “contract” but I, as a citizen, am not interested in contracts made between corrupt public unions and corrupt politicians bought by corrupt public unions.

Public money needs to be spent on the public good. That test doesn’t end just because some union boss and the politician he owns signs a “contract”.

Were things 12% better, or different, 1 month ago?  I’m dubious.

I’ve a confession to make… the stock market makes no sense to me. 

Why?  Let me flip the questions… why would it make sense?

I buy “shares” in a company.  I’m now an “owner”. Except I have no control.  Other people, inside and outside the company, have more information than I do. I can vote, but my vote is meaningless, as compared to, say some large pension fund that bought a big hunk.

The “value” of my holding is dependent on what other people think of the company. But what they think is based on what they think other people will think.  And the weird self-dependent circle continues on and on.

Our nation has made serious financial mistakes. These are known numbers, and have been known for ages. So on Monday, after a ratings agency finally says “uh oh” the market tanks. Then it bounces up and down in wild swings, when essentially the macro picture hasn’t changed a lick. It makes no SENSE!

It’s uninformed speculation on what other people, the mob, will think.

How would I change it?  I’d have stock value be mathematically tied to the book value of the company. Book value being derived from assets, cash on hand, and likely receivables and other measurable, unmanipulatible values.

I would still permit speculation, but I would tax it heavily.  Ownership above, I probably wouldn’t tax at all. Nor would I tax the accumulation of value, and the sharing of value (dividends) at all.

You would still have to guess about company performance, but you wouldn’t be guessing what other people would think of it.

Speculation always ends badly.

In case you wonder why we Tea Partiers are fighting the professional political class in D.C….

Via Powerlineblog.com

John Boehner is lying to you. Just like Obama. Just like McConnell, just like ALL of them.

Here is why….his big “bill” with the 850billion in “cuts” is just a cut in desired GROWTH.

Put another way

“If we JUST CAPPED SPENDING– spent the same amount next FY as we did this FY, the CBO would score that as a $9.5 trillion dollar cut.”

If the folks the Tea Party sent to Washington fall for this then we are pretty much wasting our time with all this “voting” nonsense.  Just stay home, let it collapse and pick up the pieces.

And I just found a plan I like… how about we just SPEND WHAT WE SPENT in 2009?  That government was PLENTY BIG enough.

For now… I’m willing to let the debt ceiling hit and immediately start spending on only what is necessary.

We did, alas, get very creative with our fiat money and derivatives.

Hint… the basic problem is unproductive investments with too much focus on healthcare services, more expensive ways to provide worse educations, and a focus on innovation in things that please the senses.

This last one sucked, didn’t it?  We’ve had them before, for instance in the 80’s, we had the S&L Crisis (Google it).  And didn’t something happen back in the 30’s?  And oh yea… the Dutch had some problems with tulip bulb futures as far back as the 1600’s.

What is at the heart of ALL financial meltdowns? 

The future. Or, money from the future, or promised to the future.
Other people. Or, more precisely, their money.

Combine the future and other people’s money and you get crazy wacky why the hell did we do that bubbles that eventually pop and are called “meltdowns”.

We have three primary mechanisms for spending future other people’s money.

The Federal Reserve
The U.S. Government
Banks

Don’t want any more financial crisis?  The minimum needed is to make banks hold reasonable reserves of collateral to their outstanding loans.  Maybe 7 to 1.  15 to 1, as some banks got to later in the stages of this current meltdown, is too much leverage and systemic risk.

Another simple change is to make banks face risk for loans they sell that don’t perform. Do not force, or incentivize banks to loan to bad risks.  Do not use banks for lame attempts at social reform / “spreading the wealth”.  Eliminate government backed deposit insurance because it makes people and banks too careless with money.  Do not bailout banks or their depositors. Make a bank something you want to trust, like an insurance company.

So that eliminates future meltdowns. Not hard right?

Okay, now the hard one. How do we fix the current one?  This becomes, quickly, a “who gets smacked” question.

My preference?  Reward those who were prudent. Let those who went crazy with future, other people’s money, pay.   That includes financiers (by not bailing them out).  That includes home buyers who used funky mortgages. And that includes banks that issued those mortgages and didn’t hold them.

My “meltdown” handling plan socks it to the reckless:

• Eliminate all Fannie Mae transactions over the last 8 years and devolve them back to their issuing institutions.
• Eliminate any bailouts for banks or other financial institutions.
• Eliminate government backed deposit insurance.
• Make home losses from short sales/ foreclosures taxable income to their borrowers.
  They speculated and lost. Pay up.

If you were part of the problem, pay up.  If you weren’t, you will suffer indirectly, but at least you know you weren’t part of the problem.

It will be ugly. And the details can vary.  But if you reward the prudent, and punish those who took excessive risk at the public weal, then you will solve the crisis in a fair manner with the SIDE BENEFIT of minimizing future financial risks.  Once burned, twice shy.

Now…. when I look at what we’ve done, we’ve essentially done the opposite. We rewarded the risk takers, kept in place the systems causing the systemic risk (mainly government rules and entities), and through QE2 and other measures are punishing those that saved for their future rather than borrowed from it.

Pretty dumb. But, also, alas, as we work through our nations problem solving we will find it pretty typical that the response is exactly opposite of the right way forward.