Rebane's Ruminations

Pelline - 'Rebane is a BoS Shill’

George Rebane

Shill – (noun) a person who publicizes or praises something or someone for reasons of self-interest, personal profit, or friendship or loyalty.

Onion – (noun) a root vegetable that grows hidden from view, which when peeled reveals a monotonous succession of identical layer upon layer that provides no further illumination as to its contents while bringing a tear to the eye in the effort. 

From time to time Ruminations is graced by the comments of that intrepid editor of our beloved Onion, yes, Jeff Pelline.  In Jeff’s most recent contributions (here and here) he again grieves at how far below his expectations we local bloggers fall – presumably led by yours truly.

Having now taken Nevada County’s flagship newspaper to new levels in journalistic integrity and reporting accuracy, his reputation in the community has become known to all – he is truly a self-made man.

So it is with some gravity that the remainder of this community’s purveyors of information and comment must consider his recent assessment of us as being in a “bush league”.  But apparently the instructional content of Jeff’s comments has achieved such a level of detail and intensity that several blogs have summarily banned him.  I understand that the man must now use several computers in order to attempt a bypass of the established barriers.  As I have said, in this community his impact is hard to avoid.

The force of his personality was further underlined by the Onion’s receipt of a last minute ‘invitation’ to sponsor next Tuesday’s election night bash at the Miners Foundry.  Not being a bush leaguer like some of the other original sponsors, it was natural to leave the Onion in a class of its own.  But this was not to be, and after some frank discussion with the Foundry’s Exec Director Gretchen Bond (oh, to have been a fly on the wall), the newspaper was added to the list of sponsoring organizations.  All’s well that ends well since Ms Bond’s arm is again in a normal position, healing nicely, and no longer needs a sling.

Signs of Our Time

George Rebane

We Miss You Harry

George Rebane

Old Harry got more than he bargained for in April 1945 when they handed him the schnitzel, told him FDR had died, and that he had the watch now.  The Allies in Europe were closing in on Berlin, and Okinawa - one of the greatest battles of the war - was starting in the Pacific, and no one at home really paid any attention.  This ex-artillery officer from WW1 had no idea what he was getting into because, since they were sworn in three months before, FDR had used him mostly as stand-in for a potted plant in the old Executive Office building.

A correspondent sent me some Harry Truman vignettes that brought back my own memories of that Democrat president when I was much younger.  Reflecting on it now, I believe he was the only Democrat president in modern times worth his office, right-hand-of-God FDR included.  But then, you probably knew that.

“It doesn't matter how big a ranch ya' own, or how many cows ya' brand, the size of your funeral is still gonna to depend on the weather.”  HST

 

‘No Representation Without Taxation’

George Rebane

In ‘A Fair and Just Tipping Point’ RR covered the issue of what happens when most of our citizens become wards of the state – i.e. wards of those who pay taxes.  Now the cry rising from the successfully employed part of the nation is that the tipping point has already been passed, and that most eligible voters are already standing in line at the trough (29oct08 WSJ).  Yesterday Joe Biden’s galloping gums let the cat further out of the bag by revealing a lower threshold in the Obama tax plan for those “patriots” whose job is to fill the trough.  So the result is indeed that most of us will have representation without taxation, which begs the question – when would we ever want to stop being the walletsuckers of the “rich”?

 Garrett Hardin, a friend of neither the right nor the left, answered that question in “The Tragedy of the Commons”. 

Nate Beason on Board of Supervisors Raise

[gjr - I asked Supervisor Beason to expand on the recent raise the BoS voted for itself so as to give some needed background and nip any rumors in the bud.  For additional questions, Nate can be reached at his BoS email [email protected].  Many thanks to Nate for the prompt reply.]

George-
 
1. The BOS voted for a 2.3% COLA.  This is less than half the Social Security COLA (5.8%) for 2009. The last BOS increase was a 2% COLA in 2006.
2. The increase will become effective in Feb 2009.
3. If we are ever going to expand the opportunity for folks to serve on the BOS w/out the necessity of a second source of income, we need to gradually bring up the salary over time. Nobody on the current Board needs the money.
4. The county has $190 Million budget. The increase is @ $4,400/year. We are among the top six counties out of 58 that are not only financially solvent, but financially sound. We have a $19million reserve. Our state and federal legislators make 3-4 times as the BOS, yet they are billions in the red.
5. There are those who would prefer that we work for free. We average about 50+ hrs per week, and we spend a lot of time in Sacramento working to move forward on rural county issues. Quiet frankly, we are doing a lot of the work that our state legislators can't seem to get around to. We spend hours per week on a variety of boards, comissions, committess, etc in additon to our BOS work. We spend countless hours involved w/ community groups, constiuent issues and homeowners associations.
 
I made a six-figure income when I was in private industry. I would like to to think I'm worth $40k in the public sector.
 
I took a straw poll of 100 constituents during the past couple of weeks. Over 90% think the BOS is underpaid.
 
Hope this helps.

Communitywide Election Nite Celebration (updated 4nov08)

Dixie (of KNCO fame) is announcing the first communitywide election nite party at the Miners Foundry.  Details on Dixie Fix (but careful not to trip over JeffP's lower lip which seems to be sticking out a little in the comments).  This event, inviting citizens of all political stripe, sounds like a social experiment not to miss, especially since it will allow participants to imbibe various ethanol based concoctions.  I'm not sure that having glass bottles handy is a good idea when the returns get as tight as some of the celebrants.  If all ends in bonhomie, then the party should make national news.  Hell, it should make national news in any event.

[29oct08 update – I was sorry to see that Dixie has had it with JeffP’s comments on her blog, and now his priceless contribution is gone forever.  As witnessed by their written trail, I have found that certain people are their own best critics.  Therefore their own words should be saved as visible monuments to their character and upbringing.]

[4nov08 update - Was puzzled by the sudden absence of our beloved Onion from the list of sponsors tonight, especially after they muscled(?) on and announced their sponsorship in the newspaper.  Pascale at Yubanet sent me the following in an email, "Just looked over the comment log and saw your question. Yes, it is my understanding that The Union will not participate. I don't know why or when they withdrew. Nevertheless, Grass Valley Printers, Miners Foundry, KVMR, KNCO and YubaNet remain sponsors of the non-partisan event."]

How We Got Here

George Rebane

A current poll shows that 71% of Americans believe Obama’s economic policies will serve the country better than McCain’s policies.  Now I’m not even sure that 71% of Americans know what an economic policy is, let alone differentiate between those of the two senators.  But that really doesn’t matter does it?  The main thing here is that the poll confirms the Peter-Paul Principle and Bryan Caplan’s The Myth of the Rational Voter, and for our country there seems to be no turning back.

For those history buffs who are interested in reviewing the milestones on the road to our current financial crisis and its seemingly inevitable impact on the election, I am printing below a summary that I received through a correspondent.  I was particularly amused by the YouTube videos at the end of famous Democrats lambasting appeals for regulating Fannie and Freddie, the fragile behemoths that built up and then precipitated the whole mess.

The following is a condensation of a series from the Investor's Business Daily explaining 'What Caused the Loan Crisis':

Singularity Signposts – 27oct2008

George Rebane

Brainy Robots and Longer Unemployment Lines. This is one of the issues covered during the third annual Singularity Summit in San Jose last Saturday.  RR readers are familiar with this issue and the MSM and our government are blind to it.  Reading this report and its comment thread gives you an idea of the magnitude of the problem society will soon face, and the major elements of the debate it will spark when everyone finally wakes up to what is coming.

Expectation of Machine Intelligence Could Change Social Behavior was another topic covered at this year’s Singularity Summit.  I love their use of the word ‘Could’.  As more people understand what the Singularity will entail, more people will want to survive until it arrives and start making appropriate plans.  This can put a whole new wrinkle into the economies of the world as the speaker at the conference points out.  Again, something that you might want to get acquainted with as the world turns.  Of course, socialism has never been an environment for innovation, creativity, and hard work.  So we may not have to worry about the Singularity creeping up on us too soon.

Ruminations - 27oct2008

George Rebane

No matter how much they exaggerate, political cartoons do reveal values and perceptions of truth.  This morning our beloved Onion featured two revealing left-wing cartoons.  One showing Greenspan in the wreckage of “unregulated free markets” when any student of current events knows we have had no such thing.  The other showing McCain and Palin denying a destitute Uncle Sam cash by “redistributing wealth” through “tax cuts for the rich” and spending private money to buy a wardrobe for a candidate of middling means.  Only a socialist would consider tax cuts on lawful earnings as a government giveaway, no matter who the recipient is or how much of the tax burden they bear.

Bumper sticker.

‘Paradise Lost’ by Roger McGrath in the Nov08 issue of Chronicles details the careers of two California politicians – Mayor Gavin Newsom (SF) and Mayor Anthony Villaraigosa (LA) – who have ambitions to be our next governor.  McGrath cites chapter and verse of the background of these politicians.  Of particular interest is Villaraigosa’s support of “the liberation of Aztlan.”  You will not be disturbed by the MSM explaining to you the make up and workings of organizations such as MALDEF, La Raza, and MEChA.  (google these if interested; if not, then learn Spanish)  To Jimmy Carter is attributed, “Whatever starts in California unfortunately has an inclination to spread.”

Global Warming - GIGO

On NC Media Watch our intrepid applied scientist Russ Steele has done a great piece of work showing how temperature data from automated surface observation stations (ASOSs) across the country are being misused for political purposes in the great global warming fiasco.  Russ does a detailed analysis of the ASOS data from the Reno airport that demonstrates how urbanization - the so-called Urband Heat Island effect - completely explains away, in both timing and magnitude, the increase in the recorded temperatures.  The UHI effect and misplacement of ASOS units across the land account for most of the mischief in using this kind of data for concluding that we must now destroy our economies in order to "fight global warming".  (see also Anthony Watts' Surface Station Survey)  A cheaper start would be to relocate the ASOS units properly and then take another look at the claims the UN's IPCC and Team Gore are trumpeting around the world.  But why do that when their agenda is already being swallowed by even the likes of McCain?

A tip of the hat to Russ, and please queue the applause.

ps. GIGO? left as exercise for the reader with the hint in the figure.

Pick First, Pay (not much) Later

George Rebane

Democracy – a method of governance wherein the policies of the state are determined by the voting majority, which method lasts until the majority discovers it can vote itself unlimited monies from the minority.

This morning’s WSJ has a comparison of the McCain and Obama tax plans.  It cuts through the blather of the political ads, gets the data from the candidates’ websites, and summarizes it neatly in the nearby table.  Nuff said.

 

Russ Hits Nerve on Measures Y and Z

George Rebane

Russ Steele’s article in today’s Union (here) on the slow/no growth measures for Grass Valley is a must read.  From the comments it is drawing, he may have hit a nerve or two for advising GV folks to hang on to their wallets.  Tip of the hat to the Union for publishing this piece.  More on the cost of regulation induced delays from Russ (NC Media Watch) and a related piece on the North Star property in the Union (here).

And speaking of elections, check out Charles Krauthammer's piece ("I'd rather lose an election than lose my bearings.") in today's Washington Post.  

The Long-Term Investment Myth

George Rebane

We’ve all been advised to invest for the long term – buy quality and just hang on to it – for best results.  But all long term investments have to take buying power (aka inflation) into account.  The astute investor knows that inflation is a government assets tax and acts accordingly.  If we look at the inflation adjusted performance of quality stocks, as in the Dow Industrials, then most of us are in for a surprise.  The chart below (from Chart-of-the-Day) was sent by a correspondent.  (This is a semilog chart on which all equal vertical distances represent the same *percentage* gains or losses.)

You can play with the numbers yourself, but one thing becomes clear right away.  Since the beginning of the Great Depression in 1929, the Dow has now less than doubled.  This gives an effective annual yield of about 0.9% for the 80-year long term.  But you say that no one has an investment horizon that long, and you would be right.  So what would you pick as a more reasonable investment horizon – 10, 20, 30 years?  Well, it doesn’t take a rocket scientist see from the chart that your annual return for such periods depends greatly on when you bought in and when you decided (or life decided for you) to sell.

The main point here is that blind buy-and-hold strategies have an oversold reputation.  And this explains why all the brokerage services, newsletter gurus, and technical analysts continue to make money.  They claim to help you buy low and sell high – in short, they help you do what you’re not supposed to do, time the market.  As you can see, market timing is not something to casually toss out the window.  By the way, had you sold your 80-year investment when the Dow was recently at 14,000+, your annual return would have been about 1.3% - whoopee!

For an alternative investment strategy, which many of us today wish we would have practiced, consult the now-famous trader and math professor Nassim Nicholas Taleb in his ascerbic and fascinating to read essays Fooled by Randomness and The Black Swan. 

Ruminations - 23oct2008 [updated]

George Rebane

You see, it’s the government’s money, they’re just letting us use some of it for a while. Barney Frank, House Financial Services Committee Chairman on a 20oct08 CNBC interview said –"I think at this point there needs to be a focus on an immediate increase in spending and I think this is a time when deficit fear has to take a second seat . . . I believe later on there should be tax increases. Speaking personally, I think there are a lot of very rich people out there whom we can tax at a point down the road and recover some of the money." (video here) Note that when the money is earned by private individuals, the government needs to “recover” it so that it again resides with its rightful owner. The dictionary defines recover as “to get back or regain”. That should make it clear how most of Washington thinks about our assets.

From a correspondent - On Barack Obama's website he has a tax calculator (HERE).  Interesting though that if the calculator results say "You will probably not get a tax cut under the Obama-Biden plan" you are not solicited to join the campaign...  BUT, if you are under the income limits ("not-rich") and get a result of "Obama Tax Savings of $1,000" you are also solicited to join the cause... the non-rich are asked to "Stay Informed Get updates about the campaign and the issues that are affecting you and your family."  Note the soothing music.

Profundities from the executive suite department - “Uncertainty by its nature is unpredictable”, Pfizer CEO Jeffrey Kindler on the PBS 21oct08 Nightly Business Report. Well, yes.

[update]  "The American Carol movie will start showing at Sierra Cinemas tommorow, October 24th.  Show times are 1:15pm and 6:30pm.  I know many of you have already gone to Roseville and Auburn to see it but I think it would be a good idea for us to all get together and go see the movie, especially since the Getzes have listened to our requests to bring the movie to town. ... "  This came from a correspondent today. Jo Ann and I will be in the audience to see this spoof of the liberal side; heaven knows, we are constantly bombarded with Hollywood's version of the conservative experience and thought.  See trailer here.

The Truth Gap of Journalism

George Rebane

Two articles worth reading highlight the near-Orwellian state of communication and popular understanding in our nation. The first by Michael Boskin titled ‘Our Next President and the Perfect Economic Storm’ will appear in tomorrow’s (23oct08) WSJ.  It starts –

With their economies in recession and a credit crunch steepening the slide, policy makers around the world race to contain the damage. Calls for expansion of government spending, taxes and regulation, even for radical revision of our economic system, an end to capitalism, are rampant.

And most of the country’s electorate will make up its mind on the non-investigative reports of the MSM.  All this while we stand at yet another historical gateway to socialism while the world economy trembles.

The second piece is ‘Would the Last Honest Reporter Please Turn On the Lights?’ by Orson Card which starts –

An open letter to the local daily paper — almost every local daily paper in America:

I remember reading All the President's Men and thinking: That's journalism.  You do what it takes to get the truth and you lay it before the public, because the public has a right to know.

This housing crisis didn't come out of nowhere.  It was not a vague emanation of the evil Bush administration.

It was a direct result of the political decision, back in the late 1990s, to loosen the rules of lending so that home loans would be more accessible to poor people.  Fannie Mae and Freddie Mac were authorized to approve risky loans.

The facts are there and could be rebutted in detail by any reporter with access to the Internet.  Instead, almost the entire journalistic profession stonewalls this history or simply presents the lies of one party.  Even our own beloved Onion might put itself in line for the Pulitzer with a journalist worth the profession’s code of ethics – simply confirm or rebut the salient history of the last ten years (as presented by Card and a few others) using the easily available .gov websites.  Our country's future is worth the effort.

[update - Fellow blogger Russ Steele on NC Media Watch previously covered another aspect of Card's article which was pointed out to me by my ever vigilant wife.  Apparently I did not connect the dots, but then, Russ is a hard man to get ahead of in such matters, especially when we often labor in the same vineyard.] 

A Fair and Just Tipping Point

George Rebane

Carnegie-Mellon economics professor Adam Lerrick is the first to warn that Obama’s tax increase plan will finally make the payee Pauls outnumber the paying Peters in the country (Peter/Paul here).  RR readers are familiar with this possibility.  In his 22oct08 WSJ op-ed piece he writes –

Sen. Obama is promising $500 and $1,000 gift-wrapped packets of money in the form of refundable tax credits. These will shift the tax demographics to the tipping point where half of all voters will receive a cash windfall from Washington and an overwhelming majority will gain from tax hikes and more government spending.

We will finally get to the point of no return when it behooves more than half the voters to hire the more-than-willing government to be their goon to rob the “rich”.  And one party has its fortunes riding on being able to marshall such voters through the Big Lie that the higher wage earners have taken more than their fair share of the pie, and getting it back through another lopsided tax increase is the proper way to pay for all the promised government programs.  To make sure that even the considerable number of dim and dimmer in that constituency understand the message, Obama is “promising $500 and $1,000 gift-wrapped packets of money in the form of refundable tax credits” to buy their votes.  Of course, even with these tax increases the promised programs will not be covered and need to be paid through additional asset taxes (remember inflation?).  As Lerrick explains –

The plunder that the Democrats plan to extract from the "very rich" -- the 5% that earn more than $250,000 and who already pay 60% of the federal income tax bill -- will never stretch to cover the expansive programs Mr. Obama promises. 

All this will not come without consequence.  The top end of taxpayers making up the nation’s high earners and wealth creators is not equally filled with the dull and the dense (although there are some notable exceptions who might have another agenda).  Historically these taxpayers have reacted in predictable ways to excessive government plunder.  Lerrick again -

Calculating how far society's top earners can be pushed before they stop (or cut back on) producing is difficult. But the incentives are easy to see. Voters who benefit from government programs will push for higher tax rates on higher earners -- at least until those who power the economy and create jobs and wealth stop working, stop investing, or move out of the country.

Lerrick concludes with some observations about the world’s reaction to America’s inevitable decline under such policies.

Tomorrow's children may come to question why their parents sold their birthright for a mess of "fairness" -- whatever that will signify when jobs are scarce and American opportunity is no longer the envy of the world.

Ruminations - 21oct2008

George Rebane

PBS Frontline tonight aired ‘Heat’, its investigative report on global warming.  We were looking forward all last week to see how that left-wing medium, that claims to ask and answer “all the questions” we have, would balance such a report.  We were especially interested since lately the climate data disclosures and the reports of more and more independent (of the IPCC) scientists are pointing out serious problems with the notion of anthropogenic global warming (AGW).   I have to admit that I was surprised by their so-called investigation, because there was none of it.  Right from the pre-title lead in commentary it was an obvious propaganda piece complete with demonizing the Republican skeptics in Congress and the Bush administration.  No data, no science, no evidence; just close ups of accusers and believers, and lots of pictures of calving glaciers, belching smoke stacks, and smoggy skies – 'the debate is over, AGW is real'.  But one has to hand it to PBS, they know the care and feeding of their audience.  So much for fair and balanced reporting.

Change and Hope.  “Obama campaign selling Chicago election night coverage packages to news outlets” reads the headline over the Chicago Sun-Times report.  I guess this is one of the early signs of ‘change’ that Obama has promised us.  He is actually selling specific spots and camera stations to cover his election night victory rally to news organizations.  This is definitely an historical milestone in campaign financing, and shows that no matter how much socialism he has planned for the country, the man is not devoid of the entrepreneurial instincts of a capitalist.  Is the ‘hope’ part of his message that he may also someday support such instincts in the rest of us? 

What Free Markets?

George Rebane

The greatest weakness of capitalism is that it will game whatever system it finds itself in.  And that is also its greatest strength.

Viewed with a discerning eye, the above cartoon by liberal cartoonist Matson says it all about the state of our country’s markets.  But I don’t think it’s the message Matson and other left-wing critics of free markets want to convey.

Through a combination of expert and patient lobbying, inflicted on greedy politicians of mostly middling intelligence, markets have been bent by governments for as long as history records.  The American experiment has taken this dance to new heights of sophistication.  The result is a system of corporate welfare set up through byzantine laws, not to help out businesses in dire straits, but to insure that ‘them that got will keep getting’.  When we apply the above principle, the result is what we have today.

Bretton Woods 2 - What happened to 1??

George Rebane

Before this year is out most of the world will come to America to sort out the current financial crisis, and attempt to put in place a worldwide financial structure to replace the Bretton Woods agreement that was fashioned before the end of WW2 by 44 participating countries.  We have lived under (in?) Bretton Woods for over sixty years, and now it may be time to rethink how worldwide finances will operate in the age of globalization and seemingly irresistible ideologies (e.g. Islamic terror and climate change).

Students of history may be a little rusty on Bretton Woods, and many others have never heard of it.  George Friedman and Peter Zeihan of Stratfor have written a compact review of that agreement, and its influence and importance since 1944 – ‘The United States, Europe and Bretton Woods II’.  This is important reading for anyone who wants to understand some of the monumental changes that we and the world are facing in the coming years.  The following is an excerpt from the Friedman and Zeihan piece.

 

Obama's Unassailable Context

George Rebane

There is very little of Obama’s written record save his two presumptive autobiographies.  There he makes some statements which are outlandish to conservative ears, yet cause no discomfort to the liberal.  An example of these statements is found in a well-balanced entry in snopes.com here.  Clearly, the circulating emails containing the Obama quotes have been subject to some doctoring.

For a perspective from an astute and educated liberal, I asked my friend Dick Dickenson (former Washington Post political editor) to comment how these statements might influence his take on the Senator from Illinois given that Obama could have followed the more measured example of the late MLK in making his case.  With his permission, his response (minus salutations and closings) follows -

Into the Twilight with Honor

George Rebane

San Diego Union Tribune cites (here) that the consumer-driven recession has started in California and nationwide.

Over the past couple years, many economists have said the California economy would not experience a true recession until job losses spread from the real estate and construction industries into other segments of the economy.   That day has arrived.

Regardless of who is to blame (and someone always is because we know that there are no natural business cycles), a major part of our electorate will cast votes that strongly declare our country’s ability to tax ourselves right back into prosperity. 

We were taught by Bastiat, von Mises, von Hayek, … , and life, that when you tax something more, you get less of it.  Tax businesses more, they produce fewer jobs.  Look at the EU countries with almost no migration of small businesses into big business.  There the little guys regularly get waylaid in Tax Gulch as they try to drive their team up Corporate Mountain.  We note the coincidence that unemployment started going up right about when Congress changed party control.

People are beginning to get the idea of the benefits of wealth redistribution.  Both candidates’ recovery package (aka The Big Bailout) includes some form of restitution for those whose financial planning went a little awry.  It’s just neighbor helping neighbor with five to twenty in the federal pen if you try to short your neighbor.  More of liberal cartoonist Wiley’s non Sequitor cartoons here.

Finally, Joe the Plumber did most successfully what McCain/Palin were not able to accomplish on their own.  Perhaps this will open up the debate a bit more in the two short weeks left.  Here is Ramirez’s explicit statement of what the right is finally saying and the left is quietly celebrating while, of course, denying the whole thing.  (Have you noticed how Yahoo! has now joined the MSM.  Take a look at their list of political cartoonists here.  Can you find a conservative cartoonist in the list?)

Ruminations - 18oct2008 (updated)

George Rebane

* The transhumanist Humanity+ organization has launched the H+ web magazine (webzine 3.7MB pdf) to get the word out about humanity’s road to Singularity.  Its lead article highlights the current condition of ignorance about the topic.  Politicians are still promising to ‘bring back jobs’ that are gone forever.  Well, maybe not forever.  If we now start our country on the Long March to socialism, we will also be able to put brakemen (or brakepeople) back on trains, and buses on the road that require two operators like in China today.  You get the idea.

* Christians in Iraq, India, and Africa are being quietly killed on a regular basis for their religious beliefs by Muslims and Hindus.  The formerly Christian nations of Europe and the Americas react by enacting more laws that are sensitive to the practice of all religions save Christianity within their borders.  The secular humanists are thus killing two birds with one stone, while the docile Christ followers are busy searching for their next cheek to turn.

* Earlier this year KNCO invited me to become a guest commentator.  This weekend the station is running my editorial on ‘Peter and Paul’.  You can listen to its podcast here.

* [18oct08 update] The American Thinker has published the complete “Open letter from The Viscount Monckton of Brenchley to Senator John McCain about Climate Science and Policy.”  It is a monumental piece of work that covers the science, economics, and geo-politics connected with the coming catastrophe that implementing currently planned climate change policies proposed by both candidates will set in motion.  My only criticism of the Viscount’s effort to inform is that he does not emphasize enough the political motivations that are really driving this rush toward the cliff.  I post the link here for the RR readers who may have missed NC Media’s timely announcement of this important document.   

Obama: Breath officially toxic on 20 January 2009

George Rebane

As part of our country’s turn toward the Socialist States of America, Obama promises to declare CO2 as a toxic gas that will come under the 1990 Clean Air Act which will set ALL emission standards for this natural component of our atmosphere (Bloomberg).

Meanwhile the EU is doing the backward two-step in adopting economy killing policies connected with their promised greenhouse gas commitments.  People there started a little back of the envelope noodling, and quickly came to the conclusion that 1) it won’t work, and 2) it won’t make a difference.  But they know it will make them poor, and that the ‘science’ behind it is now looking dodgier and dodgier.  Here none of the politicians have yet taken out an envelope and turned it over.

Given the history of the USSR and the third world (don't know why we skip the ‘second world’), two hard and fast rules should always be brought into the global warming debate before we consider the plans now promised by both dufuses (or is it dufi or the Hebraic dufim?).  I’ve put these up in large print so that some of us older folks can read them without specs.

Climate Change Policy Rules (non-negotiable)
1. No developing country will adopt economy crippling policies to fight climate change.
2. No financially distressed (aka poor) country has ever been a successful steward of the environment.  Corollary1: poor countries are dirty, and poor big countries are really filthy.  Corollary2: If you’re bitching about the US pollution now, wait until we tank our economy – you ain’t seen nothin’ yet. 

[Tip of the hat to Russ Steele for the heads up.  I’m sure that NC Media Watch will also have more to say about this in its coverage of the entire climate change issue.]

Barack 'the Present’ – 1, Joe the Plumber – 0

George Rebane

Well, I think tonight McCain’s hash was settled along with that of Joe Wurzelbacher, would-be plumbing entrepreneur.  We all know how Obama responded to Joe’s concerns about being taxed out of starting his own business.  The smooth senator told ol’ Joe that he had already done well enough, and now Obama’s administration just wants “spread” some of Joe’s wealth around “to people who come behind you”. (video)

During the debate McCain missed several opportunities to point out Obama’s social engineering goals.  I was particularly struck by Obama’s answer that he would appoint/nominate judges who would be “fair and just” to the American people.  People like Stalin, Hitler, and Mao determined what was fair and just for their people.  We are a nation of laws.  American judges are supposed to render verdicts that adhere to the Constitution and the nation’s laws instead of their own opinions about fairness and justice.  It is our Congress that is supposed to make laws that are fair and just.  McCain said nothing.

The national debate about qualifications is now surreal.  Obama’s camp successfully questions Palin’s executive credentials with the pile-on press on his side.  And Obama himself has zero credentials in that department – it’s going to be all OJT for him (and us).  But McCain again was mum on that.  Speaking of leadership, Obama is the most partisan ‘present’ voting person in Congress, having ducked the hard ones all his public life.

Even though Drudge shows a hopeful straw poll in which McCain won the debate by more than 2 to 1, that is a temporary fiction.  Obama now has it in the bag unless he gets caught by the National Enquirer pulling an Edwards.  He should call his elves at Acorn and tell them to quit stuffing the voter registration rolls with the Dallas Cowboys’ offensive line-up before someone discovers that there are only eleven of them.

Meanwhile, the rest of us should prepare to bend over to accommodate the people who come behind us.

Mark to Madness and National Debt

George Rebane

RR readers have been kept up to date on the impact of FASB’s mark-to-market (MTM) rules on the current “Panic of 2008”.  Today the world’s security markets reacted very positively to the international quiver of bailout arrows fashioned over the weekend that included the Financial Accounting Standards Board’s “clarification” of MTM.  Wesbury and Stein, economists at First Trust, in ‘FASB Pivots on Mark-to-Market’ write -

While many accountants argue that mark-to-market accounting provides transparency, the markets know differently. Fair value accounting in the past year has caused nothing but problems, and in the end has created the opposite of clarity.  In illiquid markets, short-sellers can use fair value accounting as a tool to destroy the financial firms in which they are short. Short-sellers are sophisticated enough to understand that if they put a low-ball bid on securities held by the firms they are short this could force assets to be written down with mark-to-market accounting rules to the level of the low-ball bid.

The alternative to MTM is to price an asset according to ‘cashflow analysis’ which accounts for the present value of the expected stream of future cashflows (usually payments to the holder of the asset).  The markets have known and accepted this for decades.  Forcing MTM pricing of an asset has been a short seller’s dream because of the vicious positive feedback involved.  Wesbury and Stein go on to explain -

So far, the short-sellers’ view of the world has dominated, with many pundits arguing the “real” price of subprime loan pools should be down in the 20s, where the bids are found.  However, with at least 75% of subprime loans still performing, a cash flow analysis of these pools would allow them to be priced closer to the 70 cent offer.

What this means is that if financial institutions are able to argue cash flow analysis to the auditors, the fire sale write downs of illiquid loan pools will no longer erode financial market capital. This will not impede transparency because knowledgeable investors understand how to value assets. What they can’t deal with is the risk that an accounting rule could drive a firm out of business. The short sellers gorged themselves on this accounting rule, while potential investors ran away from it.

With this clear explanation we see how important rules and regulations are to orderly markets and an orderly society.  And also, how hard it is to fashion good ones that don’t have devastating side effects that can often become the main event that threatens the fabric of everything we value.  And, of course, our Congress, the world’s greatest deliberative body of dubious dufuses is the progenitor of all these rules and regulations.  But we always have to remember that it is we, a bigger body of unquestionable and unquestioning dufuses, who send them to Washington.

Moving right on to the grossly understated national debt that hides over four times its putative amount (about $11T) in unfunded liabilities (about $60T), the sum of future payments that our government has committed to pay designated recipients, I want to share a find with you. 

Last year Mike Hewitt, editor of DollarDaze.org, wrote an important article explaining the make up of our national obligations – who owes how much to whom.  It is one of the most clear, complete, and concise explanations of a very complex situation that uses well-designed graphics to help us all get at the important details.  Most definitely worth a read for anyone who thinks buying “low risk” Treasuries will keep their nest egg safe.  If not already, you will then know why the government has no choice but to destroy the dollar.