Ancient Chinese Thought for the Day

"The more artificial taboos and restrictions there are in the world, the more the people are impoverished...The more that laws and regulations are given prominence, the more thieves and robbers there will be." - Lao Tse

Beliefs and Theories: Religion vs. Science

Many years ago, I read Paul Watzlawick's How Real Is Real, which made a great point about the difference between belief and opinion.

Basically, a person's beliefs are immutable. A person will die before they change their beliefs. On the other hand, opinions can change over the course of a lifetime. Even the strongest opinions can be changed. (I am paraphrasing from memory as I could not find my copy of the book if my life depended on it.)

James Taranto of the Wall Street Journal had a quote today that reminded me of Watzlawick's book:

...science-minded people often scoff at those who do not "believe in evolution." The problem with this is not that they are wrong to defend evolution, but that they mistake evolution, a scientific theory, for a belief system. When you demand adherence to a set of beliefs, you are no longer doing science but something that has the form, if not the substance, of religion.

Too often, we tend to give science too much credit. In essence, we give science a blind faith that is undeserved, and frequently not even sought by the scientists involved.

When someone says, "I have a theory...", you will listen and give the person's supposition a fair hearing, usually accepting or rejecting said "theory" on it's own merits or demerits, with some weight lent to the person's credibility. But let a scientist give you a theory, and most people will more likely than not accept it on faith.

Let more than one scientist espouse a theory, and most people will take it as if Moses came down from the mountain holding tablets. It becomes gospel at that point.

I apologize for the religious terminology, but therein lies the problem: Too many people treat science as a religion.

Ironically, both science and religion have their theories. For example, is the Creation story a myth or a fact? Even among different religions, there is no agreement on this subject. If asked about this, most scientists would give you the "Big Bang Theory", or the "Evolution Theory", as explanations of how the world came to be. The problem in this discussion is that neither science nor religion have conclusive proof to back up their respective claims. That said, I personally lend more credence to science in this debate, but that is my OPINION.

When science gives you a theory, it should be remembered it is exactly that: a theory, to be judged on it's own merits or demerits.

If your religion told you that you needed to do something that wasn't logical, would you question why? If they came back with "God said so", that might be good enough, although I personally would want a little more than that. I might need philosophical backup to support my religion's belief. Even then, it might not hit my personal belief system, and remain limited to my opinion system. In other words, I would retain my doubts.

So when science tells you that you need to do something, would you question it? If they tell you "studies show...", would you immediately change your life? For many, the answer is a blind yes.

But what happens when later scientific studies disprove the original studies? You would think "once burned, twice shy" would apply to our views of science, yet how many times have scientific theories, backed up by studies, later get overturned, yet we continue to lend blind faith to science?

Even worse, what happens when scientists fudge the data, then hide the data, while using political machinations to keep opposing scientists from proving them wrong, as recently happened with the Global Warming theory? I am amazed that there are STILL people who believe the flawed theory of Global Warming blindly.

If you don't believe me, just visit Copenhagen this week.

Debt? What debt?

"Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren...America has a debt problem and a failure of leadership. Americans deserve better." - Barack Obama in 2006

I guess the federal debt is only a problem if you aren't the president? Otherwise...party on dudes! The tab is on "them"!




(quote from the Wall Street Journal website)

Why the U.S. will fail in Afghanistan

I can predict the failure in Afghanistan in two important quotes.

First, from SunTzu, the ancient Chinese military philosopher and author of "The Art of War":

If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat.

Second, from General Stanley McChrystal (the U.S. commander in Afghanistan), during Congressional testimony on Tuesday, December 8th (also as quoted by Slate's Fred Kaplan):

There is much in Afghanistan that I do not understand.

Fox News and Climategate Killed Big Journalism

“Poor Al Gore. Global warming completely debunked via the very Internet you invented. Oh, oh, the irony!” - Jon Stewart

What is sad in the above comment is the fact a comedian is discussing a scandal BEFORE ABC, CBS, or NBC news have even mentioned it. And they have yet to mention Climategate.

How does a scandal, that involves a scientific theory driving government policy decisions all over the world, get ignored by a major news organization? There was a time when any news editor worth anything would have been utterly ashamed to get scooped by another news organization on a major story, yet these organizations continue to ignore this story even AFTER Congressional investigations have been requested. How can this be?

There is only one answer, and it isn't pretty: The news media is no longer employing journalists. They employ propagandists. If you want to see or read journalism, look to the Internet.

I blame Fox News for this. The irony is that it wasn't Fox News Corp's NEWS shows that did it: It was their opinion shows. Whenever you hear Leftists talk about the evil of Fox News, they always mention the opinion shows: Bill O'Reilly, Sean Hannity, and Glenn Beck. And since Fox News gets the ratings, all the other news shows look to duplicate Fox's success.

But when you look at network news shows, they USED to be strictly about reporting the news. But they saw Fox's OPINION show success, and they sought to duplicate it. Unfortunately, the network news was filled with Left-leaning journalists, so they jazzed up the network news with Left-leaning opinions. Unfortunately, it didn't help their ratings, and made news anchors like Bret Hume seem absolutely objective.

By the time of Climategate, the network news was so beholden to the Left, they couldn't even report a news story they would have been tripping over themselves to get thirty years ago.

But now they have been scooped by a comedy show, which leaves the average viewer to look upon the naked kings and see them for what they really are: propaganda arms for big corporations who spew Leftist altruism in order to secure their own power.

Contrary to what the average news consumer has been told, the science behind Global Warming theory has NOT been settled, since it was never actually reviewed. Regardless of whether Global Warming is true or not, the news consumer can look upon the news purveyors with a critical eye, and see the naked bias.

What worries me is HOW the news consumer will choose to interpret this event. Will they merely turn away from the liberal news organizations who lied to them? Of course, but then...do they turn JUST to Fox News for telling the truth? I suspect many of them will. However, I personally hope they use this event to teach them to view news stories with a discriminating eye. Never trust any single news source on it's own.

The irony in the case of Climategate is that it is a news story at all. Anyone with a brain in their head could see the great flaw in Global Warming theory. It doesn't take into account the heating and cooling of the single greatest source of "global warming": the sun.

Unfortunately, big media put all their eggs in the Global Warming basket, and to report that it might be wrong would make them look like what they are: fools. So rather than report something that makes them look wrong, they choose to ignore the story and hope nobody notices. Maybe they are right. Just speaking for myself, it has been years since I watched a network news broadcast.

Quote of the Day: Social Justice

"Since this is an era when many people are concerned about "fairness" and "social justice," what is your "fair share" of what someone else has worked for?" - Thomas Sowell

The Light Bulb on Climategate

Anyone out there still under the anthropogenic Global Warming delusion?

It may be difficult to come to terms with the fact you have been duped by some climate scientists, but as the Washington Post reports:

Electronic files that were stolen from a prominent climate research center and made public last week provide a rare glimpse into the behind-the-scenes battle to shape the public perception of global warming.

...In one e-mail, the [Climate Research Unit of the University of East Anglia's] director, Phil Jones, writes Pennsylvania State University's Michael E. Mann and questions whether the work of academics that question the link between human activities and global warming deserve to make it into the prestigious IPCC report, which represents the global consensus view on climate science.

"I can't see either of these papers being in the next IPCC report," Jones writes. "Kevin and I will keep them out somehow -- even if we have to redefine what the peer-review literature is!"

In another, Jones and Mann discuss how they can pressure an academic journal not to accept the work of climate skeptics with whom they disagree. "Perhaps we should encourage our colleagues in the climate research community to no longer submit to, or cite papers in, this journal," Mann writes.

And these are just a few examples for the public to wrap their heads around. Yes folks, the science is not only "not settled", it has had a huge hole blown in it by the simple fact that scientists were using every political means available to them to silence detractors, from intentionally keeping the data used for their research away from potentially skeptical researchers, to applying pressure to peer-review journals to keep the opposing research from being seen.

But don't feel bad. Here's the first Climategate joke from James Taranto at the Wall Street Journal:

Q: How many climate scientists does it take to change a light bulb?
A: None. There's a consensus that it's going to change, so they've decided to keep us in the dark.

Stop the country! I wanna get off!

Headlines from Drudge:

Climategate: 'Greatest scandal in modern science'...
Call for Congressional investigation...
Paper: Junk science exposed among climate-change believers...

And the pièce de résistance:

Obama: 'Step closer' to climate deal...

Can our glorious leader be any more clueless? NO HE CAN'T!

Global Warming and Prostitution

“Climate change could reduce income from farming and fishing, possibly driving some women into sex work and thereby increase HIV infection." - Suneeta Mukherjee, Philippine representative of the United Nations Food Population Fund

What is funny about the inherent stupidity of that comment, is the article (link here) which includes it actually gives the REAL problem causing the high levels of prostitution in the Philippines:

Of the 92 million Filipinos, about 60 percent are living in coastal areas and depend on the seas for livelihood, said former Environment secretary Dr. Angel Alcala.

Alcala said that “we have already exceeded the carrying capacity of our marine environment."

But as the sea’s resources are depleted due to overpopulation and overfishing, fishermen start losing their livelihood and women are forced to share the traditional role of the man in providing for the family.

So explain how "overpopulation and overfishing" are caused by the myth of anthropogenic Global Warming?

Actually, I have figured out one side effect of Global Warming: It fries people's brains. Unfortunately, it is not the heat, but rather the inherent stupidity of the concept of Global Warming.

The American Principate

I was reading about the Roman Emperor Alexander Severus on Wikipedia, who was noted as the last emperor of the Roman Empire's Principate period. What struck me was the significance of the Principate period (from Wikipedia):

"The Principate is characterized by a concerted effort on the part of the Emperors to preserve the illusion of the formal continuance of the Roman Republic."

After the Principate, Ancient Rome went through nearly a century of upheaval, before it entered the period of the Dominate, which was the "despotic" last phase of Ancient Rome.

As I watch the United States government continue, with impunity, to erode the rights of Americans, it occurs to me we are living through the American Principate, where our government is characterized by a concerted effort on the part of our political oligarchs to preserve the illusion of the formal continuance of the American Republic.

Knowing the history of Ancient Rome, I have to wonder: Who will be the American "Alexander Severus"? Based on Alexander's biography, Obama certainly fits the bill in one respect:

"...when campaigning against...Germania, Alexander Severus apparently alienated his legions by trying diplomacy and bribery, and they assassinated him."

However, on the whole, Obama's reign doesn't resemble Alexander's:

"The luxury and extravagance that had formerly been so prevalent at the court were put down; the standard of the coinage was raised; taxes were lightened; literature, art and science were encouraged; the lot of the soldiers was improved; and, for the convenience of the people, loan offices were instituted for lending money at a moderate rate of interest."

All things considered, I suspect we have at least another leader or more to go before we reach the end of our government's pretense of republicanism. But with Obama's ineptitude, I may be surprised sooner.

Break America Now!

A simple question for everyone: Regardless of your political persuasion or ideology, regardless of where you live, regardless of your religious or personal philosophy, what do you think the odds are of the U.S. government doing what YOU believe is right, in your lifetime?

If you are liberal, do you honestly think the U.S. will stop fighting wars in oil countries? Consider the fact we have the most liberal president since Jimmy Carter in office now, and we are STILL in Afghanistan and Iraq. LBJ's "military-industrial complex" is alive and well, and will continue to be around for the rest of our lives.

If you are a social conservative, do you honestly think you will see a legal ban on abortion? Until Roe vs. Wade is overturned, it is not happening. You will never get enough votes for a Constitutional Amendment.

If you are a fiscal conservative, do you honestly think the U.S. government will ever show any kind of fiscal responsibility? Sorry to dash your hopes, but as long as there are sheep who will vote for any buffoon who brings home the pork, the government punch bowl will continue to overflow with other people's money, including yours. As long as we have a Federal Reserve which will happily enable our legislative spending habits, the party will continue, and you and your children will pay the tab.

If you are a civil rights liberal, I have one word for you: Guantanamo. And I bet you are loving the prospect of people being jailed for not having health insurance! I have some more news for you: These violations will not end, as our federal government gets more power.

If you are a socialist, you may get your dream of universal health care, but it will look more like Britain than some of the smaller European countries, simply because we don't have enough health care providers to take care of 300 million people. So you will get higher taxes, long waits, and STILL have poor quality health care. Since the wealthy will go outside the system for their health care, you STILL won't have "equality".

Frankly, unless you long for the good old days of the old Soviet Union, odds are you are not happy about something the U.S. government is doing. You can expect to be that way for a long time, because no matter what you want, there is someone else who doesn't want it. THAT is why state's rights are important.

THAT is why secession from the union is more important now than ever before.

Mulling "Rogue"

With the release of Sarah Palin's new book Going Rogue, I do have some thoughts on her.

Overall, there are some things I like about her (she seems to be a small government conservative), and other things I dislike (her fundamentalist beliefs make me question how fiscally conservative she truly is, since most fundamentalists have no problem with using government to their own ends, much like liberals).

During last year's election, I found it humorous how political pundits basically classified her as a rube, while promoting a presidential candidate with even less experience than Palin. I think we would do better with the rube in the White House, since the intellectually elitist Obama has proven to be a complete failure.

But that was never the choice, which is why the Republican ticket lost. John McCain had the taint of Washington on him, as he flip-flopped and nuanced his way to a loss. While Palin made plenty of mistakes, I can't look at them and say I wouldn't have made a few of them myself. McCain's mistakes were in their subtlety, whereas Palin's mistakes were more from her brutal honesty.

One can question whether Palin is smart enough to be president, and one can question her qualifications based on specific issues, but I don't think one can disqualify her based on honesty.

Marxism of the Night

I had "Marxism of the Day" before, so this was only appropriate...

From A Night at the Opera, the infamous contract scene:

Chico: Hey, wait, wait. What does this say here, this thing here?
Groucho: Oh, that? Oh, that's the usual clause that's in every contract. That just says, uh, it says, uh, if any of the parties participating in this contract are shown not to be in their right mind, the entire agreement is automatically nullified.
Chico: Well, I don't know...
Groucho: It's all right. That's, that's in every contract. That's, that's what they call a sanity clause.
Chico: Ha-ha-ha-ha-ha! You can't fool me. There ain't no Sanity Clause!

(hat tip to Wikipedia)

The Death of Capitalism

A poll from the BBC signifies the end of free market capitalism, and the rise of centralized government power:

"Twenty years after the fall of the Berlin Wall, a new BBC poll has found widespread dissatisfaction with free-market capitalism.

In the global poll for the BBC World Service, only 11% of those questioned across 27 countries said that it was working well."

With the death of capitalism also comes the death of freedom. Perhaps not yet, but it is only a matter of time. Once government controls the means of production, and the world's people have forgotten that free market capitalism IS the means of production, then what is to stop the government from going further?

If I can make you work WHEN I want, HOW I want, and for HOW MUCH I think you should make, why should I stop there? Once I have this control over your life, what other controls can I apply to you?

Free market capitalism allows you to do ANY job you want and are capable of doing, and make however much money other people are willing to pay you for it. Now if I can make you believe THAT is a bad thing, I do believe I can make you believe anything!

Freedom of religion? Separation of church and state fixed that. We have a new religion in town: secularism.

Freedom of the press? The press is already dead. Heck, they LOVE this idea anyway!

Freedom of speech? We will need to control the internet. After that, we may have the perfect totalitarian state.

I know, you'll say "How does the death of free market capitalism lead to all this?" Just consider who will make ALL economic decisions? The government, of course. And since you have already allowed them to control your economic lives, why on Earth do you think they would stop there? Just because they used altruism to sell you this pile of manure, don't think they actually practice it!

I can hear the politician whispering the sweet nothings in your ear now, "You are fallible. You make mistakes. Let me take care of you. Life will be so much easier..."

Free Trade vs. Protectionism

"If Joe the American sells blankets to Mary the American for $15 each, and if an opening to trade allows Mary to buy Chinese blankets for $5 each, then three things happen:

1. Mary is better off by $10.
2. Joe is worse off by at most $10—because Joe can always match the Chinese price if he wants to, taking a $10 hit. On the other hand, he also has the option of getting out of the blanket business, which he’ll choose only if he prefers it to taking that hit.
3. Frieda, another American, who might not have been willing to pay $15 for a blanket, picks up a Chinese blanket for $5 and goes to bed warm tonight.

Of these, only the second effect is bad for Americans, and it’s got to be outweighed (or at least matched) by the first effect. The third effect is pure gravy." - from Steve Landsburg's website, thebigquestions.com

Using this example, the protectionist argument says we need to protect Joe. Unfortunately, protectionists only have two hammers for this nail: tariffs and "buy American".

Tariffs, as we have learned from the historic example of Smoot-Hawley, only lead to tariffs against us. In other words, we protect domestic production at the expense of exporting production. It is a classic case of cutting off one's nose to spite your face.

As for the alternative protectionist strategy of "buy American", it completely ignores Frieda, and forces Mary to spend more than she otherwise would have. Since we live in a free country, then "buy American" is a meaningless appeal to patriotism, which usually falls on deaf ears when a consumer is forced to make hard economic choices (i.e. spend $5 vs. $15) for two comparable products.

Instead, protectionists should look towards the roadblocks which our government has put in front of our manufacturing sector:

1. The Minimum Wage: Fortunately, dollar inflation is about to make the minimum wage irrelevant soon. But what purpose does it serve? No one would work for less money than they need to live. The minimum wage is a "feel good" law that only screws up the economy by artificially inflating wages.

2. Corporate Taxes: The U.S. has the second highest corporate tax rates in the world (only Japan has higher). Next time you want to complain about companies moving operations overseas, or complain about the death of American manufacturing, why don't you spend some time complaining about corporate taxes FIRST? On a related note, you do realize that corporate taxes only get passed along to consumers in higher prices?

3. Environmental Regulations: While I won't say that all environmental regulations are bad or unnecessary, can you honestly say you know and understand the environmental requirements of our corporations? Of course you don't. Like most voters, you simply assume that the government wouldn't make an environmental regulation if it wasn't necessary, or at the very least beneficial in some respect.

I won't say that any of the above three items is the only reason we can't compete, but you can't have all of them and expect to be able to compete with other countries who don't hamstring their manufacturing sectors like we do.

Money for Nothing

“I think the general broad principle is simply that people who are paying for their own expenses aren't subsidizing folks who simply choose not to until they need money and then suddenly they expect free money. That's -- that's basic concept of responsibility that I think most Americans abide by...penalties are appropriate for people who try to free ride the system and force others to pay for their expenses.” - Barack Obama

Actually, Barack Obama did NOT say that. I took a quote of his (quote link here)about penalties for not having health insurance, and made it about money in general.

This does beg the question: Why is it appropriate to have penalties for lack of health insurance, but NOT lack of money? It would seem to me, in the grand economic scheme of things, you need to have money before you can have insurance, n'est pas?

Mind you, we ARE talking about health insurance, NOT health care, so don't go off on a tangent about denying people health care. This is about money.

But here is a thought for Obama. If you want penalties for not having health insurance, why not try the ultimate penalty: Denial of health care.

Marxism of the Day

"Outside of a dog, a book is man's best friend. Inside of a dog it's too dark to read." - Groucho Marx

You weren't expecting something from Karl, were you?

The Blank Wall

John Stossel nails the true meaning of the 20th anniversary of the fall of the Berlin Wall:

There was one bad thing about the fall of the USSR: We lost a very visible bad example of big centralized government.

With Washington now turning to central planning to “fix” healthcare, clean the environment, and “create” jobs, it’s helpful to have role models of failure. They remind citizens of the politicians’ arrogance.

For the young, the example of the Soviet Union resonates less and less.

On the bright side, Stossel does have this to say:

We do, however, still have North Korea, Cuba, State Motor Vehicles Departments, K-12 education, and the Us Postal Service.

That said, I don't have Stossel's faith that the young will recognize government incompetence when they see it. After all, there is still the problem of government education.

Separation of School and State

"Suppose that newspapers were run by government and funded by taxpayers, and that each American was assigned to read only the newspaper published in his or her local area. Clearly, the resulting quality of journalism would be atrocious.

Would anyone seriously suggest that this problem would be solved if only there were better schools of journalism, or higher pay for journalists, or more people who are “called” to journalism, or newspaper readers who take more active roles in digesting and interpreting the news? Surely not. All sensible people would understand that these fixes would all fail as long as newspapers faced no competition – indeed, as long as journalism is produced by the state." - Don Boudreaux

The above was a letter to the New York Times editor, on the subject of education. It is also one of the finest points I have heard made in the neverending discussion of how to fix our education system.

But reading it gave me an idea: We need a Constitutional Amendment, along the lines of the 1st Amendment, which will separate the federal government from ANY involvement in our schools. I would suggest something worded as follows:

Congress shall make no law respecting any establishment or form of education, or abridging the rights of the people to acquire education in any manner. Congress is also restricted from providing any funds for the purpose of education.

I can hear the squeals of protest already, but think about it: If the federal government cannot provide funding, they cannot put strings on it either.

Also, do we really need to funnel money for college educations through the federal government? Last time I checked, there are still many people in the U.S. without a college education. So exactly how do federal scholarship funding and college loans actually help ALL of us? There are plenty of private scholarship funds out there which could do the same job as the federal government. If people believe in providing scholarships for college educations, let them donate their money to the private scholarship funds, rather than have their money taken from them under the implied threat of government force which supports our income tax system?

In addition, without having to send education money to the federal government, there will be more money available in the private sector to enable the EXACT amount of education funding we need, rather than the amount our legislators THINK we need.

Finally, in K-12 education, let the states and local school boards decide how education should be done, rather than having to promote some federally mandated curriculum, which has done nothing to help the state of education in this country. (Although I think the states should only be involved in education funding, NOT in the actual business of education. But that is a separate discussion.)

We have tried everything in public education, and NONE of it works. It is time to remove the federal government from the education system completely.

Quote of the Day

“I carry with me a personal conviction that nothing can be allowed to interfere with our determination and our resolve and our conviction." - Hillary Clinton

This begs the question: If something were to interfere with our conviction, would she still have the same conviction, or would she need a new conviction, or would she just change her conviction to fit the new situation?

I think my resolve is waning...


(Hat tip to Bloomberg.com)

Money and Gore

It is nice to see a leftist rag like the New York Times finally admit that Al Gore is making a fortune from Global Warming. However, I don't think it detracts from his message, any more than Global Warming sceptics lose credibility when they have oil company investments. While it might paint their messages in a different light, it does not take away from the inherent truth or lies contained therein.

The political tactic of "killing the messenger" does not work in scientific debates. Even if a person has an ulterior motive, their message must be taken at face value, and must be refuted on it's own value or lack thereof.

You don't need to attack Gore to debunk the Global Warming theory, which is still ignoring several important factors:

1. It fails to account for how changes in the sun impact our atmosphere. We have seen a correlation between sunspots and the Earth's temperature. Yet Global Warming theory places carbon dioxide as a more important factor on the Earth's atmosphere than our planet's PRIMARY source of heat?

2. During the period of the dinosaurs, Earth's atmosphere contained larger concentrations of carbon dioxide than it currently does, yet both flora and fauna flourished. If Global Warming is so horrible for the Earth, then how do they account for this?

You don't need to attack Al Gore to find the holes in his message.

Classical Liberalism versus Anarchocapitalism

According to Jesus Huerta de Soto (in his essay "Classical Liberalism versus Anarchocapitalism"), the great flaw in the Founding Fathers' thinking was "their ideal is theoretically impossible, as it contains the seed of its own destruction, precisely to the extent that it includes the necessary existence of a state (even a minimal one), understood as the sole agent of institutional coercion."

When you consider how the Founding Fathers viewed the differences between republics and democracies, you can see the flaw in their thinking. For example:

"The two great points of difference between a democracy and a republic are: first, the delegation of the government, in the latter, to a small number of citizens elected by the rest; secondly, the greater number of citizens, and greater sphere of country, over which the latter may be extended" - James Madison

As long as people view the government as some anomolous "other" entity outside of themselves, then any government is doomed to failure, regardless of whether it is a monarchy or a democracy or a representative republic.

Madison was right about one thing: The larger the government, the less connected to it will be the people under it. As long as people feel no responsibility for their own government, they will inevitably seek to use government towards their own ends. We see this today with the proliferation of special interests, ranging from the lowest welfare recipient to the highest CEO on Wall Street, with all of them seeking to get their cut from our government.

Another example:

"Remember, democracy never lasts long. It soon wastes, exhausts, and murders itself. There never was a democracy yet that did not commit suicide" - John Adams

What Adams forgets is how the Ancient Roman republic devolved into dictatorship. Representation did not protect the people from the follies of poor representative leadership (which handed over dictatorial powers to Julius Caesar, and then Augustus Caesar), leading to the Empire, and the inevitable fall of Rome.

Jesus Huerta de Soto's essay does get the part right about how no government has ever succeeded over the long term, and the Founding Fathers were wrong to assume they could do what had never been done before. However, de Soto does fail to deal with one problem: other governments.

As de Soto describes it, anarchocapitalism does sound like a great idea, until you start to consider: How do you protect it from other ideologies, and more specifically other governments? Inevitably, some dictatorship will come along and use force to enslave an anarchocapitalist "government".

Unless anarchocapitalists are willing to live like the people in Afghanistan, which is really the only comparable system to what they propose that has actually shown an ability to defend itself along with an ability to maintain their political/cultural system, then anarchocapitalism is doomed to failure. The only difference will be that anarchocapitalism's failure will come from outside of itself.

No beef in global warming stupidity

From the timesonline.com:

People will need to turn vegetarian if the world is to conquer climate change, according to a leading authority on global warming.

In an interview with The Times, Lord Stern of Brentford said: “Meat is a wasteful use of water and creates a lot of greenhouse gases. It puts enormous pressure on the world’s resources. A vegetarian diet is better.”

Let us assume for the moment that Lord Stern is correct, and we follow his absurd advice.

Everyone stops eating meat from cows and chickens and other domesticated animals. Of course, based on Lord Stern's argument about these animals using too much water and creating greenhouse gases, I assume we will be discontinuing the consumption of milk and other dairy products, since their continued consumption would create no net reduction in water usage or greenhouse gases. So no more cheese, milk, eggs, etc.

After we go on our strictly vegetarian diet, what will become of all these farm animals? If we release them into the wild, most of them will die, although some might survive, continuing to use water and create greenhouse gases. No, we will have to slaughter all of them. Who knows which cow fart might lead to the end of the world as we know it?

Naturally, unemployment will rise as all dairy workers will be out of a job. On the bright side, Global Warming will be creating more arable land in currently cold climates, so there will be plenty of farming jobs available. We will need them too, since we will all be consuming more vegetation. However, if Lord Stern's plan works, even this avenue for employment might be closed. This also means there will be less food available for the world's current population. But the deaths of millions is fine, since they will also be creating fewer greenhouse gases. It might even solve the unemployment problem!

When all is said and done, assuming Lord Stern is correct, we will save the planet from Global Warming, but have fewer people and jobs, and all dairy animals will be extinct.

This reminds me of the old Sam Cooke song:

Don't know much about history,
don't know much biology.
Don't know much about a science book,
don't know much about the french I took.
But I do know that I love you,
and I know that if you love me, too,
what a wonderful world this would be.

Global Warmers like Lord Stern definitely "don't know much", but will they still be calling it a "wonderful world" after they get done with it?

Quote of the Day: Global Warming Edition

"We cannot predict weather accurately for more than a week, why should we allow the same predictions to be accepted for all of the future? The answer is we should not." - George Giles (from lewrockwell.com)

The perfect description of our government's current efforts:

"Things will get better-despite our efforts to improve them." - Will Rogers

Toss out the bums

It is time to toss out the bums. No, I don't mean our elected representatives, or the president. Rather, I mean the PEOPLE responsible for electing these morons and looters.

It is time to toss out the voters.

Before you say I can't do that, shall I remind you there is no such thing as a "right to vote"? While there are laws which prevent discrimination in voting privileges, there is no actual "right to vote" anywhere in the Constitution. Feel free to prove me wrong, because you can't.

So back to the idea of tossing out the voters. This is easily done: just ban everyone from voting. This also has the side benefit of eliminating the whining every four years that someone was denied their voting rights, since no one will be able to vote!

As Clint Eastwood would say, "I know what you're thinking...": Who would run the country? Not that it matters to any of you, since you ARE the people responsible for the mess we are in, but the exact same people who run the country now. You didn't seem to care when our elected officials were taking bribes (in the form of campaign donations) to support a financial system that made many people wealthy (not you, of course), so why would you care if they remain in power? Let's remove the pretense that any of our elected officials will actually lose in the next election, because the overwhelming majority of them won't lose. Re-election for incumbant legislators in in the 90th percentile of probability.

But here is the best part: If we make our current Congress and President permanent, they won't have to give us health care, and they can go about the business of actually attempting to fix what is wrong with this country, instead of handing out free candy like health care to try and make their jobs permanent. You didn't honestly think they were planning to give us health care out of the goodness of their hearts, did you?

No wonder you voted for these morons and looters...

H1N1: So what?

Here is the story from FoxNews.com:

CDC: 87 Children Dead From H1N1

Federal health officials said Friday that 11 more children have died in the past week, bringing the total up to 87.

The Centers for Disease Control and Prevention says about half of the child deaths since September have been among teenagers.

According to the same Centers for Disease Control, in 2005, 1,377 children died from cancer.

In order for H1N1 to even get close to the number of children killed by cancer 4 years ago, H1N1 would have to kill approximately 107 children every week for the rest of the year.

Even then, you are only talking about roughly 0.00045% of the U.S. population.

While I sympathize with the parents who have lost their children to H1N1, from a macro perspective, this news story is insignificant.

Move along people, nothing to see here...

The Real Solution to Health Care Reform

Economics reminds us of one simple rule regarding any good or service: If you offer people something they want at a cost of less than it is actually perceived to be worth, they will acquire more of it than they need. Under the rules of supply and demand, the cost is out of alignment, forcing the demand to exceed the supply, which will lead to insufficient supply to meet the demand. In a normal free market situation, the price would increase to pay for the needed increase in supply to meet the demand.

Unfortunately, when the price is set by the government, there is no mechanism to increase the supply without subsidization by the government.

On the issue of health care, there is a way to avoid the whole supply and demand problem which universal health care causes: Only provide those medical procedures and drugs which nobody wants. In other words, provide catastrophic health care only.

No one is going to use too much chemotherapy for their cancer treatments. No diabetic is going to use more insulin than they need (at least not intentionally). No one with a slipped disk in their back will be actively trying to acquire too many spinal surgeries to correct the condition. And people with heart conditions won't be begging for that extra triple bypass surgery.

On the other hand, do we need to pay for abortions? How about every case of the sniffles?

We need to draw a hard line, and let the health insurers take care of the little things, like preventive medicine.

Out sick

If my blogging seems a little light lately, there is a good reason: I am suffering from a sinus infection. There is nothing like sinus congestion to make my mind even more muddled than it already is.

Sorry folks. No deep thoughts from me for awhile. Hopefully, I will be back in action later this week or early next week.

One last Helen Keller joke

What did Helen Keller say when she found out they put her statue in the U.S. Capital? Nothing, she's dead!

Sorry, I couldn't resist.

The Economic World War

With the growing din of rumors of many countries planning to end the use of the dollar as the world's trade currency, what are the implications?

If this were to happen, expect trillions of dollars to return to America. While U.S. exporters will benefit from the weakened dollar, inflation will increase by a huge amount.

But the curious aspect in this is China's involvement. According to the US-China Business Council, China exported $252 billion in goods to the U.S. in 2008. Overall, China exported $1.4 trillion to all countries. By letting the U.S. dollar fail, China would be risking up to 18% of it's export economy. While it would be unrealistic to expect U.S. imports from China to drop to zero, it would undoubtedly cause a drop in China's export business here.

Here is where it gets interesting. If China maintains their currency peg to the dollar, they could make their goods even cheaper on the world market, and still maintain their export trade with the U.S. But then China would be in the driver's seat economically, allowing them to de-peg their currency from the dollar slowly, allowing them to grow their economy away from a reliance on the U.S. export business. Chinese goods will grow in cost at a rate close to our own inflation rate.

In case you have not already guessed it, the U.S. economy will be a huge mess. While our export businesses will thrive, import businesses will dry up. The price of gas will shoot up, hurting our economy in multiple ways, with the most obvious being the increased cost of goods and services.

Let us not forget, the Federal Reserve will have it's hands tied by our heavy government debt burden. If they increase rates, they will also increase the government's cost of financing our debt, thereby digging our debt hole deeper. If they don't increase rates, inflation will soar.

Technically speaking, the U.S. will be in the middle of a perfect economic storm: heavy government debt with reduced tax revenue, soaring inflation, and weakened domestic businesses leaving unemployment high (and possibly growing). If the Democrats manage to pass universal health care, they will be forced into heavy rationing of it long before they had hoped. With Social Security and Medicare debts coming due as more Baby Boomers retire (or are forced into retirement by unemployment), our government debt burden will increase even more.

In summary, we are screwed if the dollar is removed as the world's trade currency.

Random NFL Thoughts

I recently moved, so this was the first weekend of this NFL season that I got to sit down and watch some games. Some random thoughts about what I saw:

1. Bears QB Jay Cutler is awesome. He may not be Mr. Charisma, but the guy knows how to run an offense. You can watch him reading the defense, looking off receivers, and then gunning the ball where it needs to be. Cutler has the brains and the natural ability to be a great NFL quarterback for years to come. The Bears are lucky to have him.

2. The Oakland Raiders have HUGE problems. Their defense might be good enough for them to win some games, IF they had an offense. They have no passing game to speak of, which leaves their running game at the mercy of opposing defenses. It is going to be an ugly year for Raider fans.

3. The Jets defense is one of the best I have seen since the Ravens in 2000. If their offense was even mediocre, they would be dominant. Unfortunately, QB Mark Sanchez is a work in progress.

4. The Saints running game will end any Super Bowl hopes they have eventually, although the quality of the NFC might allow the Saints to slip into the Super Bowl, where they will get dispatched.

An Ideal America

I am stealing the following post in it's entirety from Mises.org, because it reflects my own beliefs perfectly. It was originally written by Leonard Read in November, 1954:

Every person should be free
-to pursue his ambition to the full extent of his abilities, regardless of race or creed or family background.

-to associate with whom he pleases for any reason he pleases, even if someone else thinks it's a stupid reason.

-to worship God in his own way, even if it isn't "orthodox."

-to choose his own trade and to apply for any job he wants — and to quit his job if he doesn't like it or if he gets a better offer.

-to go into business for himself, be his own boss, and set his own hours of work — even if it's only three hours a week.

-to use his honestly acquired property or savings in his own way — spend it foolishly, invest it wisely, or even give it away.

-to offer his services or products for sale on his own terms, even if he loses money on the deal.

-to buy or not to buy any service or product offered for sale, even if the refusal displeases the seller.

-to disagree with any other person, even when the majority is on the side of the other person.

-to study and learn whatever strikes his fancy, as long as it seems to him worth the cost and effort of studying and learning it.

-to do as he pleases in general, as long as he doesn't infringe the equal right and opportunity of every other person to do as he pleases.

The above, in a nutshell, is the way of life that the libertarian philosophy commends.

It is the way of individual liberty, of the free market, of private property, of government limited to securing these rights equally for all.

Leonard E. Read

After reading that, ask yourself: Is this the America in which I live? Is this the America in which I WANT to live?

In case you doubt it, the America about which Read is talking is NOT the world sought by most Republicans or any Democrats. Keep this in mind the next time you vote for a Republican or Democrat just so you don't "waste your vote" on a third party. Is it more important to vote for a winner, or vote for someone who espouses what you believe?

Ken Lewis cashes out

As a former employee of Bank of America, I have a few thoughts on the news of CEO Ken Lewis's retirement.

First, when I worked there, Lewis seemed to be a reasonable CEO. He always seemed to do what was best for Bank of America, from fostering internal growth after the Hugh McColl era of heavy acquisitions (including the NationsBank/Bank of America merger), to eventually doing some good acquisitions of his own, including MBNA and Fleet.

But last year was the beginning of the end for Lewis. First there was the head-scratching acquisition of Countrywide. Why acquire a subprime mortgage lender in the middle of the mortgage market's meltdown?

Then there was the Merrill Lynch acquisition. While I don't entirely blame Lewis for that fiasco, he should have been more upfront with investors. If he had doubts, and made them public, it would have put pressure on Ben Bernanke to not take punitive actions against Bank of America. Instead, Lewis became spineless at a time when Bank of America needed strong leadership.

Frankly, I don't have any sympathy for Lewis.

As for Lewis's successor, the Board of Directors is allegedly looking internally for a successor. Of the names mentioned so far, I cannot really speak to them, as I don't have any real experience working for any of them there, nor have I heard anything that would lead me to a reasonable speculation on their chances of success.

However, I would throw one name into the mix: Floyd Robinson, president of Bank of America's consumer real estate and insurance services division. I worked under him when he was involved with marine and recreational vehicle dealer financing. While he was meticulous, arguably to an extreme, he got results. Generally speaking, Robinson was the kind of executive you would bring in when you needed to make an organization more efficient and profitable.

While he might not be popular with the shareholders (he is NOT charismatic), I personally would feel safer as a shareholder if they elevated Robinson to CEO. He would clean up Bank of America and make them leaner and more profitable. That said, I doubt he will get it, although I would buy stock in Bank of America if he did.

Economic Forecast

The following predictions are based on a lack of significant world events, such as a major terrorist bombing in the U.S. or an Iranian war. Any events like those immediately changes the scenario to significantly worse than what I am predicting.

The stock market will continue rising through at least October. After that, it will run into a brick wall, as high unemployment will keep demand for consumer goods down, thereby keeping a lid on earnings. Large businesses can only add in so much efficiency before they need sales to improve. Without increasing sales, they will be faced with flat earnings, and the markets will begin to flounder.

In addition, real estate prices will either stay the same or begin to drop this Fall, as the main real estate season has ended. This will add more pressure to the equities markets. Next year will see another round of home foreclosures/defaults, as many adjustable mortgages come up for re-pricing. If the Federal Reserve raises rates at the beginning of 2010, this could impact the mortgage rates, increasing foreclosures and defaults significantly.

Speaking of the Federal Reserve, they are the wild card in the economic deck. If they decide to keep rates too low for all or most of 2010, we could see a short economic recovery accompanied by a huge burst of inflation, which in turn would push us back into recession. On the other hand, if they raise rates too far too fast, it could kill the housing market. This is just speculation on my part, but I would expect the Fed to dip their toe in the pool with a small rate increase in January, just to see what happens. They will follow this with low to medium-size rate increases through June. Then we will see the economic havoc commence.

Specifically, we will see the rise of stagflation. As commodities begin to react to the excessive money supply, their prices will rise significantly. This in turn will bring economic growth to a screeching halt. The Federal Reserve will predictably reduce their rates once more, which will only exacerbate the problem with commodity prices, which in turn will keep the economy in a slump. Ironically, if the Fed would take the opposite approach, they would probably succeed in righting the economic ship eventually, although somewhat painfully at first.

Another aspect which will be ignored will be the tight credit conditions in the banking industry. Mind you, I consider this a good thing. However, when the government increased bank reserve requirements, they created the tight credit we have. Even a light loosening of the credit would allow for some economic growth, however artificial it might be. Without it, expect any economic growth to be small, if there is any at all.

Because of this, the stock market will drop, possibly even crash, in 2010.

Politically, I expect Obama's health care plans to continue to meet stiff opposition in Congress (especially the Senate), as "blue dog" Democrats are confronted with angry constituents who oppose the public option which more liberal Democrats insist upon. However, their opposition won't save them as the economy comes crashing down. The good news is the Democrats will lose control of the House in 2010. The bad news is the Republicans have no better ideas, but at least will stymie Obama's grandiosely stupid plans. On the bright side, with deadlocked and ineffective government, the economy MIGHT be able to gain some traction by 2012, although I doubt it only because the Federal Reserve will continue to feed the stagflation. Expect Obama to be a one-term president, with a massive sweep out of incumbant politicians in 2012.

For the next 4 years, and possibly longer, your best investment bets will be commodities, such as oil and precious metals, and foreign stocks, ETF's, and mutual funds. I personally recommend China, as they seem to be preparing best for what is about to happen, by purchasing precious metals to shore up their currency, as well as turning the direction of their commerce inwards to their domestic economy.

Is Socialism dying?

From Steven Erlanger at the New York Times:

A specter is haunting Europe — the specter of Socialism’s slow collapse.

Even in the midst of one of the greatest challenges to capitalism in 75 years, involving a breakdown of the financial system due to “irrational exuberance,” greed and the weakness of regulatory systems, European Socialist parties and their left-wing cousins have not found a compelling response, let alone taken advantage of the right’s failures.

But is Socialism really dying?

Europe’s center-right parties have embraced many ideas of the left: generous welfare benefits, nationalized health care, sharp restrictions on carbon emissions, the ceding of some sovereignty to the European Union. But they have won votes by promising to deliver more efficiently than the left, while working to lower taxes, improve financial regulation, and grapple with aging populations.

Europe’s conservatives, says Michel Winock, a historian at the Paris Institut d’Études Politiques, “have adapted themselves to modernity.” When Nicolas Sarkozy of France and Germany’s Angela Merkel condemn the excesses of the “Anglo-Saxon model” of capitalism while praising the protective power of the state, they are using Socialist ideas that have become mainstream, he said.

The truth is, the so-called "right" has just adapted their policies to the Socialist ideal. They still have not resolved the inherent problem with Socialism, which was best described by Margaret Thatcher several decades ago:

"Socialist governments traditionally do make a financial mess. They always run out of other people's money."

Socialism never bothers to reconcile the conflict between the welfare state and capitalism, which is necessary to pay for the welfare state. Without the economic growth which capitalism provides, the only way to pay for the welfare state is by printing money, which is the government's equivalent of an individual trying to pay all their expenses by credit card, while not having a job. Without capitalism, there is no tax revenue, and you end up in an old style communist system, where there is no production incentive.

So far, the Socialists have managed to balance their welfare state with their capitalism to avoid the fate of communism. But their growth rates have become anemic as their burdensome tax rates keep capitalism on life support. You cannot take the production of half (or more) of your economy and expect it to grow.

In addition, the more welfare provided, the less incentive there is for people to be productive. Why work when you can get almost as much money on welfare?

Someone has to pay for the welfare state. But what the world's recent economic collapse has taught the Europeans is that their golden goose cannot support their lifestyle of leisure in this modern age of world trade. Between economic pressure, and government taxation, capitalism's golden goose needs some TLC too. If the goose dies, Socialism dies with it, because somebody has to pay the bills.

Drop health care now!

Do you want to know why we have nearly 10% unemployment, with possibly more in the future, as our economy stumbles along like an auto accident survivor? Obama is pulling a Nero by fiddling with health care while our economic Rome is burning. While health care is a large portion of our economy, it is not and nor will it ever be all of it. By ignoring the rest of our economy for the sake of taking over this portion, Obama has brought the rest of our economy to a halt.

Consider what you would do if you owned a small or medium sized business (from which most of our economic growth comes). Would you hire anyone now, knowing the government might require you to provide health insurance to them? Would you expand your operations without knowing what new employees will actually cost you? Would you open a new business in this economy?

The longer Emperor Obama spends on his health care folly, the longer it will take the economy to recover.

MSNBC spins tires for Obama

In trying to provide support for their beloved leader, MSNBC has a headline on their website that blatantly supports Obama's "Smoot-Hawley" tire tariff against China:

With Chinese tires, it's buyer beware
Amid trade tiff over Chinese tire imports, some concerns about quality

Sounds bad, huh? Unfortunately, when you read the article, the information actually supports the quality of all but one Chinese tire manufacturer.

Exhibit A:

Last year the National Highway Traffic Safety Administration launched an investigation into defective tire valve stems produced by a subsidiary of Shanghai Baolong Automotive Corp. The company sold 300 million valve stems which were susceptible to cracking, potentially causing the tire to deflate, a problem which led to one fatality, according to NHTSA.

That is ONE FATALITY out of 300,000,000 valve stems. Please show me an industry that can produce results like that?

Exhibit B:

Two fatalities were attributed to defective tires made by Hangzhou Zhongce Rubber Co. because of tread separation. The tire importer issued a recall for the 450,000 tires it had sold.

TWO FATALITIES out of 450,000 tires sold? If you consider there is an average of 1.5 fatalities per 100,000,000 miles driven in the U.S., and you assume four of those tires were put on every car (meaning 112,500 cars were riding on those tires), and you assume those tires were only supposed to be driven for 10,000 miles (extremely conservative), that means those tires were responsible for 1 fatality for every 562,500,000 miles driven, which is significantly ABOVE the average in the U.S. In fact, I would go so far as to say drivers of cars with those specific Chinese tires on them are actually SAFER than the typical American driver.

Exhibit C:

Consumer Reports magazine tested 23 affordable all-season replacement tires, seven of them made in China, reported Gene Petersen, tire program leader for the magazine. Of those seven, six finished in the top half of the field, he noted.

They included tires from brands such as Toyo, Cooper, Pirelli, and Kumho. “Because these tires are being built with the companies whose names are on the tires, the same specifications that would apply to a tire made in the U.S. would apply to a tire made in China,” said Petersen.

Sounds to me like they are making good quality tires in China.

But wait! Car and Driver Magazine found a bad brand:

But that was seemingly not the case for the Chinese-branded Ling Long tires tested by Car and Driver magazine. The Ling Longs wore a tread pattern identical to that of a popular Yokohama tire, a visible semblance that could cause consumers to assume similarity of performance.

That assumption would be wrong. The magazine found the braking distances and cornering grip were much worse for the Ling Long tires than for any others in the test, requiring an extra 22 feet — one and a half car lengths — to stop from 50 mph than the best tires.

So Car and Driver found one bad tire brand (although we don't know from the MSNBC article whether the test was scientific or not), and MSNBC can happily proclaim "buyer beware" of ALL Chinese tires? Even though Consumer Reports (a far more reputable firm than Car and Driver) found 6 of 7 Chinese tire brands rank in the TOP HALF of 23 different tire brands they tested? Even though the fatality rates for Chinese tires are significantly LESS than the national average for automobile fatalities?

MSNBC is shameless.

Who's Disadvantaged?

Frequently in many domestic political issues, such as the debate over health care, we hear the poor used as an excuse for the institution of progressive political programs. Of course, when people argue against the progressive ideas, they are accused of being insensitive to the poor (that is one of the kinder accusations you are likely to hear from progressives), as if the benefit exists outside of any costs.

Even though progressives don't like to hear about costs, they still happen anyway. Whether you raise taxes, or charge fees, or come up with some clever scheme like cap-and-trade, someone has to pay for it.

One of the most politically popular ways is "soak the rich". Even when wealthy people like Warren Buffett support it, it ignores one economic reality: You are taking money away from economic investments. Economic investments create jobs. The more jobs there are, the lower the unemployment rate, and the greater leverage workers have in obtaining better salaries.

In addition, politicians tend to only soak the rich so much, because if they were to REALLY soak the rich, their campaign donations would drop. So they create oppressive tax rates on one hand, and then add in tons of deductions on the other, to effectively allow the wealthy to protect their money (as well as their future political donations).

Naturally, there is only so much the rich can be soaked. Eventually, they will move their money overseas to tax havens, or find ways around the oppressive taxation. Then the progressives have to move to the next most popular golden goose: Corporations. The only problem with this one is that the added costs to businesses have to come from somewhere. Here are the usual victims:

1. Customers. If a business can raise prices to cover their tax costs, they will. When taxes are levied on all businesses, that is usually what happens since even their competition faces the same increased costs.
2. Employees. The workers are the ones who usually face the axe for the added cost of minimum wage increases (Yes, that is a tax, since government gets it's cut of increased income) and other taxes. If a tax is oppressive enough, and the cost can't be passed along to customers, cutting the workforce is the lazy manager's solution. In addition, some companies will move operations overseas to where the labor costs are cheaper.
3. Inefficiency. Unfortunately, adding efficiency is the hardest thing for any business to do, and in many cases takes longer than the business has to accomplish it before the tax takes effect. Most businesses try to do this anyway just to increase profits, so this isn't usually a viable option.
4. Profits. This is the one progressives shoot for, but is rarely possible with ever-shrinking profit margins. In addition, this ends up hurting the shareholders of public companies, who include many pension funds and 401k funds, paid for by regular workers.
5. The business itself. In cases where none of the above are possible, sometimes the business cannot continue. That means loss of jobs, as well as job opportunities.

The next most politically popular way to acquire funds is simple, yet invisible: Print more money. This solution also has it's limits, in the form of inflation, which causes prices to go up. The voters, thanks to public education, are never smart enough to figure out that the higher prices they are paying are due to the actions of their politicians. The politicians can get away with it by blaming greedy corporations, and no one is any wiser.

Finally, the last solution is to raise taxes on ALL taxpayers. The problem with this solution is the burden it places on average Americans. How are you helping the poor by placing a greater burden on the middle class? How are you helping the poor by making more people poor?

All of these solutions have created one major unseen burden on the American people. Consider a married couple with a child or children. By taking money out of their pockets, whether directly or indirectly, the government makes it more difficult for them to support their family. Eventually, the couple faces a tough economic choice whereby BOTH parents must work, and the child/children must be relegated to daycare. With all the government regulations on daycare centers, plus the high liability insurance costs daycare centers face, daycare has become prohibitively expensive, adding yet another burden on working parents, which means even more time spent working and less time with their children.

At a time when too many parents already spend too little time with their children, we want to add to their economic burden with more government taxes? In the case of health care, we want to shift the high cost of health care from the private sector to the public sector? Economically speaking, the best case scenario is the government takes over health care and cuts costs by cutting the overall quality of health care for all Americans. That is NOT what anyone wants in the health care debate.

This leaves the alternative of shifting the "free buffet" of health care from the private sector, which limits the availability, to the public sector, which will give it away to everyone, who will proceed to take advantage of it, causing the demand to exceed the supply and raising the costs for the public sector, forcing politicians to utilize one of the means I described above in order to pay for the neverending rising health care costs.

Little Johnny can forget about seeing mommy and daddy for now. They will be busy providing health care to the poor.

Laffer's Warning

Economist Arthur Laffer, from the Wall Street Journal today:

In 1930-31, during the Hoover administration and in the midst of an economic collapse, there was a very slight increase in tax rates on personal income at both the lowest and highest brackets. The corporate tax rate was also slightly increased to 12% from 11%. But beginning in 1932 the lowest personal income tax rate was raised to 4% from less than one-half of 1% while the highest rate was raised to 63% from 25%. (That's not a misprint!) The corporate rate was raised to 13.75% from 12%. All sorts of Federal excise taxes too numerous to list were raised as well. The highest inheritance tax rate was also raised in 1932 to 45% from 20% and the gift tax was reinstituted with the highest rate set at 33.5%.

But the tax hikes didn't stop there. In 1934, during the Roosevelt administration, the highest estate tax rate was raised to 60% from 45% and raised again to 70% in 1935. The highest gift tax rate was raised to 45% in 1934 from 33.5% in 1933 and raised again to 52.5% in 1935. The highest corporate tax rate was raised to 15% in 1936 with a surtax on undistributed profits up to 27%. In 1936 the highest personal income tax rate was raised yet again to 79% from 63%—a stifling 216% increase in four years. Finally, in 1937 a 1% employer and a 1% employee tax was placed on all wages up to $3,000.

Because of the number of states and their diversity I'm going to aggregate all state and local taxes and express them as a percentage of GDP. This measure of state tax policy truly understates the state and local tax contribution to the tragedy we call the Great Depression, but I'm sure the reader will get the picture. In 1929, state and local taxes were 7.2% of GDP and then rose to 8.5%, 9.7% and 12.3% for the years 1930, '31 and '32 respectively.

The damage caused by high taxation during the Great Depression is the real lesson we should learn. A government simply cannot tax a country into prosperity. If there were one warning I'd give to all who will listen, it is that U.S. federal and state tax policies are on an economic crash trajectory today just as they were in the 1930s. Net legislated state-tax increases as a percentage of previous year tax receipts are at 3.1%, their highest level since 1991; the Bush tax cuts are set to expire in 2011; and additional taxes to pay for health-care and the proposed cap-and-trade scheme are on the horizon.

We CANNOT provide health care for 30 million people without raising taxes, either directly or indirectly. Our economy CANNOT afford a tax increase at this time, with nearly 10% unemployment (closer to 20% if you count the underemployed and those who have quit looking for work).

Providing health care for 30 million people doesn't do us any good if they cannot find jobs to pay for simple necessities of life like food.

If Obama is lying about not raising taxes to pay for his health care plan, and I have every reason to believe he is since he has before, then we need to stop this public option nonsense immediately. Frankly, I would even go so far as to end the business deduction for health insurance. But I will settle for simply ending the socialist stupidity from the Democrats.

The Fast Boat to Chinese Stocks

For any of you interested in the Chinese stock market, here is some analysis on some small/micro cap Chinese stocks.

For the record, I prefer stocks with low P/E's (they MUST have positive earnings), low debt, reasonable profit margin, in a good industry with room for growth, with various other criteria depending on the industry (for example, if the company is in a competitive industry, I want to see them turning inventory fast).

My current holdings (in no particular order):

1. AMERICAN ORIENTAL BIOENGINEERING INC (AOB): Chinese pharma.
2. CHINA DIGITAL COMMUNICATIONS GROUP (CMTP): Lithium battery manufacturer. One of my personal favorite stocks which has already made me a lot of money.
3. CHINA SUN GROUP HIGH TECH COMPANY (CSGH): Another battery manufacturer. I am waiting for them to dip so I can buy more, but they never dip enough for me to do it.
4. CHINA INSONLINE CORP (CHIO): Online insurance sales. Trading in a tight range at the moment (between 90 cents and $1.10). Still cheap for the price. When it breaks out, it should break out big.
5. CHINA INFORMATION SECURITY TECHNOLOGY INC (CPBY): Security software development. As the Chinese Internet grows, they can only get richer. Considering they already have government contracts, this is a "money in the bank" stock.
6. CHINA YONGXIN PHARMACEUTICALS INC (CYXN): Chinese pharma.

Now for some other stocks reviews (again in no particular order):

1. China Clean Energy Inc (CCGY): A cash bleeder. I'm not sure there's enough there to allow them to grow, aside from an intriguing business plan. Unfortunately, I'm sure biodiesel is being researched by every oil company on the planet, since adding biodiesel to their current oil reserves is a no-brainer.

2. Puda Coal Inc (PUDZ): If you are looking for coal exposure in the Chinese market, this is a good stock for you. Personally, I am not fond of the coal market. Even so-called "clean" coal is worthless, since the energy output is vastly reduced. In other words, you have to burn more clean coal to get the same energy output you would get from regular coal, which means the clean aspect is negated. This means the future for the coal industry is limited, at best.

3. Telestone Technologies Corp (TSTC): Wireless communications equipment manufacturer. Sounds good, right? Unfortunately, they are only turning inventory a little over 2X, which is low for both the industry (20X) and the sector (13X). While they have little debt and a low P/E, they have to get more efficient in managing their business before I get interested.

4. Perfectenergy Intl Ltd (PFGY): Dead company walking. This company is bleeding cash BAD! Sure they have no debt, but they will need some soon at the rate they are going. SELL!

5. China Growth Development Inc (CGDI): A fascinating little stock. Through one subsidiary, they sell sun care products in Florida. Through another subsidiary, they build and operate commercial real estate in China. A strange combination admittedly, but they make it work. The numbers (from Vanguard):

Price: $0.40
P/E: 7.47
Current ratio: 0.83 (a little light)
Long-term debt to equity: 0
Total debt to equity: 0.16 (outstanding)
ROE: 6.37 (could be better)
Sales vs. 1 year ago quarter: 11.93% higher (good sign)
Price to book: 0.50 (say WHAT?! Amazingly low)
Net profit margin: 17.57% (sweet!)

Although I am not a fan of real estate exposure, commercial real estate would have to drop in China by half for this stock to be reasonably valued. For a 40 cent stock, this one is hugely undervalued. While growth potential is limited, it is definitely a "buy" at this price.

6. China Med Technologies Inc (CMED): This company specializes in in vitro technology. On the plus side, they make a lot of money, and they are growing (sales vs. 1 year ago have increased 92%). On the downside, they lose money overall because of their high debt (54% higher than their assets). If they could get their debt situation cleaned up, this could be a great stock to own. If heavy debt loads don't concern you, this is a solid "buy". But count me out.

7. Jiangbo Pharmaceuticals Inc (JGBO): My jaw hit the floor when I saw the financials on this one. This is the kind of stock where you ask, "Where have you been all my life?" Check out these numbers (from Vanguard):

Price: $10.83
P/E: 5.02
Current ratio: 4.12
Long-term debt to equity: 0.04
Total debt to equity: 0.10
ROE: 38.03 (over twice the ROE for the industry)
Sales vs. 1 year ago quarter: -8.45% (this stock's only downside)
EPS vs. 1 year ago quarter: 4,783.83% (translation: This company has improved their efficiency significantly)
Price to book: 0.99 (in other words, if they liquidated tomorrow, they would still be worth more than their current stock price)
Net profit margin: 24.36% (almost twice the margin for the industry)

Be still my beating heart! I think I am in financial lust.

Fear of Death

From CNN.com (bold parts from quotes added by me):

Research released this week in the American Journal of Public Health estimates that 45,000 deaths per year in the United States are associated with the lack of health insurance. If a person is uninsured, "it means you're at mortal risk," said one of the authors, Dr. David Himmelstein, an associate professor of medicine at Harvard Medical School.

The researchers examined government health surveys from more than 9,000 people aged 17 to 64, taken from 1986-1994, and then followed up through 2000. They determined that the uninsured have a 40 percent higher risk of death than those with private health insurance as a result of being unable to obtain necessary medical care.

I love news stories like this. So those without insurance have a 40% higher risk of death than...100%?

I am sorry to break the news to all of you, but WE WILL ALL DIE. Remember the old saying about "death and taxes"? It is true.

With a 100% certainty of something happening, it is IMPOSSIBLE to go higher.

But let us dig a little deeper into the sob stories portrayed as examples in the article:

For years, Paul Hannum didn't have health insurance while he worked as a freelance cameraman in southern California.

One Sunday, Hannum complained of a stomachache which alarmed his pregnant fiancée, Sarah Percy. "He wasn't a complainer," she said. "He's the type of guy who, if he got a cold, he'll power through it. I never had known him to complain about anything."

Hannum thought he had a stomach flu or food poisoning from bad chicken. On Monday, his brother saw him looking ashen and urged him to go to the hospital. "He had a little girl on the way," his older brother Curtis Hannum said. "He didn't want the added burden of an ER visit to hang on their finances. He thought 'I'll just wait,' and he got worse and worse."

By the time Hannum got to the hospital and was admitted to surgery, it was too late.

Paul Hannum, 45, died on Thursday, August 3, 2006, from a ruptured appendix.

I can relate to this guy, except for one thing: I buy my own catastrophic health insurance policy. That aside, like him, I prefer toughing out little illnesses, because they usually go away. Unlike him, if I know I am sick, I won't use my finances as an excuse not to go to the ER if I have to go.

He died because he was cheap.

For 10 years, Sue Riek suffered from back pain, but couldn't afford medical care.

When a mid-life divorce left her single and without health insurance, Riek started a home-business selling make-up on eBay to support herself and her two daughters.

Riek, who lived in Charlotte, North Carolina, didn't qualify for Medicaid. And she couldn't afford a $5,000 monthly insurance premium, said her eldest daughter, Kaytee Riek.

"I don't know if she felt trapped, but it was a constant in her life -- struggling outside the health care system to exist," her daughter said.

Riek took comfort in her faith and regularly attended church. Then one Sunday, she didn't show up.

The next day, September 3, 2007, her daughter received the call telling her that her 51-year-old mother died from undiagnosed heart disease -- a condition treatable with lifestyle changes, medication and certain medical procedures.

"I feel incredibly strongly that she would still be alive if she had been able to regularly see a doctor," said her daughter.

Anyone remember Jim Fixx? He was a famous runner who died from an undiagnosed heart condition.

There is no guaranty that a doctor would have diagnosed Riek's fatal condition, and there is nothing in the story to indicate that she had any kind of history that would have led a doctor to that diagnosis.

But let us assume for a moment that she would have been diagnosed correctly. Then what? She MIGHT have lived longer (it is still possible she could have succumbed to a heart attack), but not forever.

Elizabeth Machol, 25, told her mother she felt tired. She had just moved into a new apartment in Santa Rosa, California, with her boyfriend and thought the fatigue was from the move and her cat Bert, who would keep her up at night.

Her mother, Marlena Machol told her to go to the doctor's office, but Machol was reluctant. Machol worked at a movie theater and didn't have health insurance. Her parents were still paying her medical bills from a previous condition and she was worried about the cost.

A few days after their phone conversation, Machol collapsed in the bathroom. She never regained consciousness.

One day after her 26th birthday, Machol was declared brain dead.

After signing papers to donate her organs, her parents kissed her face, held her hands and said goodbye to the daughter who had played the violin, organized her own fashion show and taught neighborhood kids how to swim. The coroner's office could not determine the cause of death.

Let me get this straight: A coroner could NOT figure out why she died, yet a doctor MIGHT have been able to if she had gone to see him while she was alive? Considering coroners can be a lot more invasive in their procedures, I find it hard to believe that a doctor would stumble on the proper diagnosis by blind luck.

Death at an early age is always a sad thing. But it provides no excuse to enslave the entire medical profession. Medicine, at it's best, may only extend life, NOT eliminate death.

Thought for the day

"Even though I do not believe we can extend coverage to those who are here illegally, I also don't simply believe we can simply ignore the fact that our immigration system is broken...That's why I strongly support making sure folks who are here legally have access to affordable, quality health insurance under this plan, just like everybody else.

...If anything, this debate underscores the necessity of passing comprehensive immigration reform and resolving the issue of 12 million undocumented people living and working in this country once and for all." - President Barack Obama

I wonder if Obama is really trying to say that 13 year old El Salvadoran prostitutes brought to this country illegally really should have free health care. I am sure ACORN would approve of that.

Too big to succeed? Part II

On Monday, I asked, "A year after the Lehman Brothers failure, and almost a year after the initial TARP program which was rolled out to save our financial industry by saving those businesses which were "too big to fail", one question remains: What was done to prevent this from happening again in the future?"

Today, Foxbusiness.com answers: Nothing at all.

Consider these figures: At the end of 2007, the four biggest U.S. banks -- Citigroup (C: 4.34, 0, 0%), JPMorganChase (JPM: 44.96, 0, 0%), Bank of America (BAC: 17.63, 0, 0%) and Wells Fargo (WFC: 28.82, 0, 0%) -- held 32% of all deposits housed in FDIC-insured banks. By June 30 of 2009 that had climbed to 39%.

And consider the leverage these banks hold over consumer lending in the U.S. According to government data, between them these four banks now issue about half of all mortgages approved and about two-thirds of all credit cards.

All of this begs the question: If these banks were too big to fail a year ago and they’re even bigger now, how is the U.S. any better off today than it was last September, when the collapse of venerable banking giant Lehman Brothers looked like the beginning of the next Great Depression?

And if you think you can trust our government knows what it is doing by allowing these banks to continue with "business as usual", consider Fox Business's analysis:

The problems with "too big to fail," according to those seeking reform, can be broken down into two parts.

First, it is now painfully clear that any single bank whose failure poses a threat to the broader U.S. economy has grown too big for its own good, not to mention that of its clients, as well as the nation.

Second, banks tagged as too big to fail are then free to operate under the assumption that the government will always come to their rescue, a belief that will likely lead to the same risky actions that brought the world’s economy to its knees a year ago.

In other words, there is absolutely NOTHING to encourage these banks to manage their risk. Obama can say that he won't bail them out again, but do you trust a politician to actually take a hard stand based on principle, especially considering he has already supported multiple bailouts? Do you trust Congress not to go screaming for a bailout?

Frankly, this is a MUCH bigger problem than health care in this country. It would take all 30 million uninsured Americans to have catastrophic illnesses tomorrow, to equal the economic devastation of these four banks failing.

President Obama, you are asleep at the wheel. WAKE UP! No matter how much money you get in campaign donations from these banks, if one of them fails, you WILL be held responsible in the next election.

The real ACORN news story

If "guilt by association" would doom a politician, Obama would have been downed by Bill Ayers. So why should a news story about an organization which is connected to Obama, and which receives federal funding undoubtedly thanks to Obama, be close enough to him to be considered politically toxic? As Toby Harnden of Britain's Telegraph explains it:

If there’s one story that’s had it all in the past week it’s the series of undercover reporting stings that have uncovered the true nature of ACORN - the Association of Community Organisations for Reform Now. It’s got sex, misuse of taxpayer funds, the condoning of illegal activity by officials and connections to Barack Obama.

I missed the part in there where this should not be considered news?

Ironically, Jon Stewart of Comedy Central's The Daily Show explains the real ACORN story best:

The Daily Show With Jon Stewart	Mon - Thurs 11p / 10c
The Audacity of Hos
www.thedailyshow.com
Daily Show Full Episodes Political Humor Healthcare Protests

Yes, the real story is that no one in the alleged Media covered it, except for Fox News.

But let us give credit to the Woodward and Bernstein of our age: James O'Keefe and Hannah Giles at biggovernment.com. Granted, the ACORN story isn't Watergate. But considering the overwhelming majority of our Media couldn't report the ACORN story, even when it was handed to them, do you honestly think they could uncover a Watergate-style story?

Boortz was right

"When Obama becomes our (czar) President any utterance of disapproval with any proposal he floats before the congress will, of course, be racist. It is going to be a fun four years." - Neal Boortz in October 2008

"...Wilson’s shocking disrespect for the office of the president — no Democrat ever shouted “liar” at W. when he was hawking a fake case for war in Iraq — convinced me: Some people just can’t believe a black man is president and will never accept it." - Maureen Dowd (of the New York Times) in September 2009

"I think an overwhelming portion of the intensely demonstrated animosity toward President Barack Obama is based on the fact that he is a black man." - Jimmy Carter in September 2009

"My sense of the teabaggers is more complicated: they are primarily working-class, largely rural and elderly white people. They are freaked by the economy. They are also freaked by the government spending--TARP, the stimulus package etc.--that was necessary to avoid a financial collapse. (I'm not sure Keynes is taught in very many American high schools.) But most of all, they are freaked by an amorphous feeling that they America they imagined they were living in--Sarah Palin's fantasy America--is a different place now, changing for the worse, overrun by furriners of all sorts: Latinos, South Asians, East Asians, homosexuals...to say nothing of liberated, uppity blacks.

In that sense, Barack Obama is the apotheosis of all they fear." - Joe Klein (of Time Magazine) in September 2009

Boortz was right.