The Audacity of Afghanistan (Dec. 7, 2009)

Posted in Afghanistan, China, Foreign Policy, Iran, Iraq, Military, O'Bama on December 7, 2009 by e-commentary.org

. . .

“We can’t leave and we can’t stay.  But we must leave, because we can’t afford to stay.  But we must stay, because we can’t afford to leave.”

“The graveyard of empires will be the graveyard of the American Empire.”

“And of many American kids.”

“At least in ‘Nam, the long shoreline allowed the Navy to provide much needed cover deep into the jungle.  The ‘stans are all remote caves and stone quarries.  We haven’t even started bombing and yet the whole place looks like it already has been bombed back to the Stone Age.  Charlie could move among a few countries.  Now they can move around the world.  My concern is not that we are signaling when we may leave in 2011, my concern is that they have ample notice to move to another theater.  The world is their stage.”

“The real concern is Pakistan and the Bomb.  And oil.  They don’t want anyone to deploy the bomb or to divert the oil.”

“And no real support on the home front again.  The populace is so disconnected from the sacrifice.  I don’t think I detested anything more than that draft.  The only way to bring the effort home is to reinstate the evil draft rather than the poverty draft.  It still steams me that even with the draft in place cowards like Cheney, Bush, Giuliani and the chicken hawks dodged the draft and then got to deploy kids off to get killed.”

“It’s all about the Bomb and oil.  The only possible way to fund the American effort is to quit funding their effort.  Implement the Terrorist Tax on fuel.”

“You have gotta pay to play.”

“Yet it comes back to the Bomb.  That remains the problem.  They got it.  The surge in Iraq was not military, it was economic.  The surge was a splurge of dollars to buy and bribe the locals for a cessation of violence for a short period of time.  The bribes worked.  The additional troops were incidental and marginal to the military effort, yet served honorably as the paymasters.  In Afghanistan, the US cannot begin to bribe all the tribal leaders and followers and buy peace.”

“The villagers are no different than the villagers in ‘Nam.  They are just trying to get through the day.  At night, when the US leaves, they receive visitors.  They need protection from their own.”

“The US is borrowing money from a very problematic source, China, to put troops in Afghanistan to influence activities in Pakistan so that Pakistan does not deploy the Bomb on India.  The US cannot ask for or accept Indian troops to be stationed anywhere near Pakistan soil, yet a few rupees to support the cause are in order.  Now Iran is bracketed by US troops on both sides, yet the US cannot afford to pay for the grand endeavor much longer.  The tactic mistakenly described as ‘terrorism’ is a greater threat to Europe than to the US, yet the Europeans are not making a commensurate contribution.”

“And because the American people are not making any sacrifices, they are not invested in the discussion.”

“We cannot afford to maintain the American Empire.  Pass the Terrorist Tax.  When the first Bomb is deployed, admittedly a few things will change.”

. . .

Bumper sticker of the week:

Vietnam:  LBJ’s ‘Nam;

Iraq:  Bush’s ‘Nam; and

Afghanistan:  O’Bama’s ‘Nam

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Less Government Regulation Series: Google (Nov. 30, 2009)

Posted in Antitrust, Civil Rights/Civil Liberties, Google, Internet, Less Government Regulation Series, Privacy, Society, Technology on November 30, 2009 by e-commentary.org

“Nine years ago, you purchased the book ‘Privacy Issues Today.’  Another critically-acclaimed work purchased by others who purchased this book is available for only $29.95.  Just click below and we will bill the credit card on file.”

A courtesy or a curse?  This solicitation may not be from Google, yet the same problem with privacy is lurking.  You can drive to the store, purchase a pickle, pay with cash and leave only your image on the closed circuit cameras in the store and perhaps in the parking lot.  If you pay with a credit card and/or provide a customer identification number, there is an electronic fingerprint.  However, those records typically are static and rarely mined for information.

In response to a typical search request, you might be informed:

“Did you mean: (one of our advertisers)”  (Note:  Not all of the top responses are advertisers.)

A person today cannot not use Google.  Google cannot not make a record of the search history.  Google is collecting far more information than any public or private entity should be allowed to collect, retain, sell and inevitably manipulate.  The computer motherboard has become the new Big Brother.

Possible copyright violations by Google can be and are being challenged publicly.  By contrast, invasions of privacy are usually done privately and are far more elusive to detect and remedy.

In economics, a “natural monopoly” occurs when, because of the economies of scale of a particular industry, the maximum efficiency of production and distribution is realized through a single supplier.  In some cases inefficiency may occur.  The electric utility is a prototypical “natural monopoly.”  The usual market does not support two entities providing electricity in one market.  Thus one entity is allowed to operate a monopoly subject to government regulation.  Google has emerged as a natural monopoly.  Or perhaps a traditional monopoly.

Government regulation should be eschewed, they say.  They are correct.  Government regulation on a good day is often bad.  It is time for a serious debate on the need to regulate Google.

Before it is too late.  Although it may be too late.

Bumper sticker of the week:

In mathematical terms, a google is 100000000000000000000000000000000000000000000000000000000

0000000000000000000000000000000000000000000;

In privacy terms, a Google is 1984.

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Domestic Economic Terrorism and National Security (Nov. 23, 2009)

Posted in Bailout/Bribe, Economics, Economics Nobel, Education on November 23, 2009 by e-commentary.org

. . .

“Their secret badge gives them away.  They sport the tell-tale ‘White Bling-Bling’ – the porcelain American flag on their blue serge suits.”

“And are themselves among the most vocal boosters of the ‘war on terror.’”

“They really are the economic terrorists.  And irony is not their strong suit.  I never fail to be amazed that the economic terrorists are roaming freely within our borders.  Their economic shenanigans produce absolutely no real economic, financial and/or fiscal benefit of any kind for anyone but themselves.”

“Look at it from their perspective.  They acquire a thriving company created and developed by others over years or decades, loot any funds for themselves, vest it with unbearable debt, fire the employees and ramble on to the next victim.  You have to admit that they are doing something.”

“There is no justification, no explanation, no rationale, and no excuse for their activities.  They steal from the public and ultimately loot the public fisc.  Can you name three individuals who have legitimately made a fortune in the last decade?”

“By name?”

“The robber barons of old actually produced something.  They produced a railroad or a newspaper or a steel plant and then endowed a university and a foundation.  Today’s economic terrorists are above the law because they own those who make the laws and those who interpret and enforce the laws.  The profitable universities exist to vet and supply obedient new recruits.  The Nobel Committee awards their mathematical sophistry.  The federal government rewards and bribes and bails out the players at every turn.  Everything is working against us.”

“And there is nothing you can do about it.  Nothing.”

“There are at least six major cavils with their exploits.  These economic terrorists threaten the efforts of generations of Americans who worked and sacrificed to:

form a more perfect Union,

establish Justice,

insure domestic Tranquility,

provide for the common defense,

promote the general Welfare, and

secure the Blessings of Liberty to ourselves and our Posterity.”

“And thwart the pursuit of happiness.”

“That too.  Willfully destroying the American economy is also willfully destroying America.  That is a threat to American security.  That is treason.”

. . .

[See the “e-ssay” dated Nov. 27, 2006 entitled “Higher Education Tomorrow” discussing the pipeline of privileged kids pouring into I (investment) banking, the “e-ssay” dated Feb. 23, 2009 entitled “Close the Harvard Business School,” the “e-ssay” dated Oct. 6, 2009 entitled “Skip the Nobel in Economics?,” and the “e-ssay” dated Feb. 9, 2009 entitled “1000 AUSAs” suggesting that a return to the rule of law or a turn to the rule of law is warranted.  That will require the courts to issue many warrants.  The other “e-ssays” collected under the “Categories” for “Economics” and “Federal Reserve” among others provide additional pieces of the puzzle.]

Take it easy Thursday.

Bumper stickers of the week:

Support the “War on Terror”: Indict an Economic Terrorist

Better to know the judge and to own the lawmakers than to know the law and adhere to it.

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V, W, U, S or . . . L: The Shape of Things to Come (Nov. 16, 2009)

Posted in "L" Shaped Economy, Economics on November 16, 2009 by e-commentary.org

Everything that goes down must go up, they say.  It is one of Newton’s or Van Braun’s laws.  Some are saying that the performance of the economy will resemble the letter “V.”  Down then up.  Some say a “W.”  Down then up then down then up.  Some say a “U” with perhaps a long trough then up.  Some say an “S” because the fundamentals are so squirrelly. The logic undergirding the arguments is that the economy will recover because it has always recovered; that is what economies do.

What if the economic performance will be reflected by the letter “L?”  Lima.  Loser.  Down then flat then flat then flat.  What if the economy never recovers or only partially recovers?  Past economic recoveries are explained by scrutinizing the economic fundamentals at the time.  The problem now is that the American economy is fundamentally broken.  None of the optimists can posit a model that reflects the actual fundamentals in the economy.  Everyone would like to see a recovery, yet there does not seem to be anything that will drive and sustain the economy in the intermediate run.

The federal government owes staggering sums to the Chinese, etc.; corporations owe staggering sums to their bond holders; Americans owe and owe and owe staggering sums.  The threats to the economy are far greater than they were in the Fall of 2008 when everyone got apoplectic.  Uncollectable credit card debt, growing housing foreclosures, vacant commercial real estate and hollow corporations obligated for trillions in debt are among the coming economic tsunamis.

Invest in a wheelbarrow.  To haul your bread (money) from your banker to your baker to buy a $100 loaf of bread.

[See the “e-ssay” dated Oct. 22, 2007 entitled “Greed on Steroids” that discusses among other matters the looming intermediate term problems with leveraged buyouts and the consequences for the economy in particular employment.]

Bumper sticker of the week:

“Everything that goes up must come down.  But there comes a time when not everything that’s down can come up.”      George Burns

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Consume, Don’t Invest? (Nov. 9, 2009)

Posted in Consumerism, Economics, Society, Spending on November 9, 2009 by e-commentary.org

We have been consuming far too much for far too long.  And now someone is saying that we should start consuming more?

Homes are amassed as investments.  (“We will double our money in three years.”)  Wine, etc. is acquired because it is a good play.  (“These bottles will pay off big time at maturity.”)  Art is not art because it is artistic, it is art because someone will part with more money for it.  (“I hadn’t heard of him either, but it will only go up in value especially when he dies.  . . .   Frankly, I don’t like his stuff either.”)

Seems that one should pick up a home to provide comfortable and affordable living space.  Purchase wine to enjoy.  Collect art to delight, shock, evoke, challenge, inspire, threaten, entertain, etc.

Consume responsibly; invest wisely.

Bumper stickers of the week:

Work, Buy, Consume, Die.         Why?

Home appreciated home.

A home to inhabit, wine to imbibe, art to admire.

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Sagacious Financial Advice From A Financial Sage (Nov. 2, 2009)

Posted in Bailout/Bribe, Economics on November 2, 2009 by e-commentary.org

“Son, I’ve got two pieces of advice for you.  One, never let your investments out of your sight.  Two, never give your money to someone else to invest.  And while we are at it, a third piece of advice.  Never trust a banker.”

The work “banker” is derived from the word for “bench” because individuals waited on a bench to obtain a loan.  We may need to bench the bankers.  The entire economic system is premised and predicated on trust and yet the entire American economic system is built on deception and mistrust.

Bumper stickers of the week:

Re-enact The Glass-Steagall Act

Never Trust a Banker (What about a credit union officer?)

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Less Government Regulation Series: Homebuyer Tax Credit (Oct. 26, 2009)

Posted in Automobiles/Automobile Industry, Housing, Less Government Regulation Series, Taxation on October 26, 2009 by e-commentary.org


A clunker of an idea.  The Homebuyer Tax Credit is another terrible scheme.  The government allows individuals to take an $8000 credit for the purchase of a home.  The government should quit trying to implant everyone in a single family house and instead allow individuals to live in a structure they can afford.  The mortgage interest tax deduction and the exemption from income of $250,000/$500,000 on the sale of a personal residence under defined circumstances should be rescinded.  The real estate market must be allowed to settle down rather than being jump-started with federal money.  Meddling is muddying the mess more.

And, once again, the deficit-loving Republicans are also behind this raid on the public fisc.  Senator Johnny Isakson (R-GA), a free-spending “socialist” from Georgia, is supporting the extension of the act.

Seems that the houses and cars are being sold to buyers who were already planning to acquire a house or a car anyway.

[See the “e-ssay” dated August 3, 2009 entitled “Less Government Regulation Series:  The Terrorist Tax Again” discussing among other things the clunker program for cars.]

Bumper stickers of the week:

Like giving steroids to a grandmother

Government Tax Credit: Get A Home Without It

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Doin’ Okay, Sort Of (Oct. 19, 2009)

Posted in Bernanke, O'Bama on October 19, 2009 by e-commentary.org

The O’Bama administration has now gestated for nine months.  His campaign cobbled together a consortium of often conflicting constituencies, so some if not many disappointments in many quarters are inevitable.  O’Bama is challenging so many entrenched interests and discovering that even the President is hamstrung by other institutions and individuals.  He has been informed regarding those he must consult before a decision is made.

Most of the appointments to date are appointing (Clinton, Holder, Gates, Locke, Salazar, Shinseki, Chu, Bernanke*); a few are very disappointing (Geithner, Summers, Bernanke*).  Appointing solid heads at three (State, Justice, Defense) of the Big Four agencies (Treasury) is a positive start.  Sotomayer is a skilled and sound jurist.  O’Bama’s creation of the Council of Goldman Sachs Advisors (CGSA) will prove disastrous.  And some things don’t change.  The revolving door of appointees becoming lobbyists and vice versa does not seem to have stopped spinning.  His administration is full of technicians and devoid of intellectuals.

His two books are in part veiled campaign literature.  His exam questions and answers as a law professor at the University of Chicago in his early years are much more revealing.  He never wrote anything lengthy commenting on the work of the economists at Chicago, favorable or unfavorable.  He may continue a long line of Americans, in and out of government, who really do not understand economics.

He has now taken title to the two wars.  If there is a strategy or are strategies, it or they should be shared.  America simply cannot afford to maintain its empire and must focus its finite energy and limited resources on national interests.  He dissed the Dalai Lama and disregarded America’s uncertain commitment to human rights to keep from disappointing America’s Banker, China.

Instead of awarding the Nobel Peace Prize as a golden watch to a septuagenarian, the Committee awarded it to a person who is creating golden opportunities in the September of his life on his watch.  The Committee awarded aspiration rather than perspiration.  He is working hard.  Much is left to be done.  He now has the international gravitas to remind the world that peace is only possible if, in some circumstances, the right war is pursued purposefully.  Yes, others were more deserving and likely will not be around to receive the prize.  And of course those who want America to be at war everywhere all the time remain furious.

The Olympics?  O’Bama offered his dos centavos.  The Committee decided to award it to Rio.  Great choice.  South America has never hosted the Olympics.  He did not fail.  The process worked.

A second term is somewhat akin to a second marriage, the triumph of hope over experience.  By 2012, experience may triumph over hope.  A campaign to maintain let alone expand his Party’s numbers in the early stages of the Depression II will be as great a challenge in 2010 as getting elected was in 2008.

Bumper sticker of the week:

Still hopeful

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Dow: 10,000 To 5,000?: The “FUBAR Bubble” (Oct. 12, 2009)

Posted in Economics, Federal Reserve on October 12, 2009 by e-commentary.org

“Ten thousand.  And they say the good times are rolling. ”

“It’s just another bubble.  We uploaded the ‘dot.com bubble’ and then constructed the ‘real estate bubble.’  Now the Republicans and Democrats in an ironic act of unintended bipartisanship are inflating the ‘FUBAR bubble’ which will only inflate the economy and precipitate a sustained jobless Depression.  Combine unaccountable spending by Congress and unacknowledged spending by the other Congress, the Federal Reserve, and you create the ‘FUBAR bubble.’”

“How can everyone forget in a year?  I don’t know what to do with my money.  Everyone is dumping their money back into the market.  It’s tempting.  What else do you do?”

“I don’t know what to do.  Remember that no one wants to remember something negative, so one simply does not remember.  All the federal borrowing is not even ‘crowding out’ private investment because there is no real private investment in anything productive.  Most of the reported corporate profits are either federal money infiltrating the economic system temporarily or savings resulting from cost cutting not expansion.  Jobs are being slashed to slash costs that ends up costing the economy.  Add a Trillion dollars of uncollectable credit card debt and the coming commercial real estate collapse to the scenario and the scene gets ugly.”

“What about deflation?  No one has a job.  No one has money.  No one can buy anything.  Oil prices are down.  Copper prices are down.  Aluminum prices are down.  Prices will go down?”

“Down plus down plus down plus down plus down does not seem to add up to up.  I’ve watched the slide.  Yet people spend and consume.  They need to eat and wear clothes and clothe themselves in a house and acquire that most elusive good – status.  There are boatloads of money floating around out there and no limits on personal credit.  However, there are not enough goods to acquire.  The government can print bread (money), but it cannot print bread.”

. . .

“The Fall of 1999 seemed so blissful.  There was a feel and the smell of easy money in the air.  And talk of a 36,000 Dow.  That bubble was made of thin air.  What was in the water?”

“Everyone was giddy; I was uneasy.  I have not been able to share in all the excitement.  We were raised to believe that a P/E (Price/Earnings) ratio of 12 is desirable, 16 is tenable and 20 is tenuous.  The share prices were huge and there simply were no earnings and no real prospects for earning.”

“Those were the days.”

“Even I got caught up in a calculated slice of it.  Can you imagine if a person could have ‘shorted’ the entire United States economy in October, 2007 when the Dow/Murdoch hit fourteen thousand?  Someone could have made one trillion dollars and then bought Congress and cleaned up the mess.  The dot.com collapse was largely benign because it immediately impacted those who had ridden the rise which contained the consequences.  The continuing real estate collapse is having much more sustained and pernicious impacts because it is a steady and slow burning fuse.  The ‘FUBAR bubble’ is breaking the economy.  The ‘Federally Underwritten Bankruptcy of the American Republic’ is the last bubble.  There is nothing left to stimulate.”

[See the “e-ssay” dated Dec. 4, 2006 entitled “When The Bubble Burst” addressing the relatively modest consequences resulting from the decline of the “dot.com bubble” and the troubling and continuing impact of the collapse of the “real estate bubble.” See the “e-ssay” dated July 23, 2007 entitled “The Dow Jones (the Murdoch?) Hits 14 K In A Hollow Economy” discussing the stock market on the edge of a precipitous collapse.]

Bumper sticker of the week:

Please, just give us just one more run up and we won’t blow this one.

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Skip the Nobel in Economics? (Oct. 6, 2009)

Posted in Awards / Incentives, Economics, Economics Nobel on October 6, 2009 by e-commentary.org

Nobel Prizes are announced in the next week.  This may be the year not to award the Sveriges Riksbank Prize in Economic Science in Memory of Alfred Nobel.  Okay, there may be some deserving recipients.  Maybe.  However, the discipline and the profession are failing.

Macroeconomic models are founded on fallacious assumptions about “rational” behavior and thus their conclusions are unfounded.  An individual is greedy but not rational in a predictable way.  Few individuals act in a “self-interested” way which is adequately defined as gilded greed undergirded by thought, reflection and calculation.

The “quants” on Wall Street may be quaint.  They are the economists who purported to be able to assess and manage and even eliminate risk using complex and inscrutable formulas.  There is always risk; the only question is who assumes the risk and suffers the downside.  Asserting and rewarding the proposition that “2 + 2 = 5” does not mean that “2 + 2 = 5.”  The quants and their kin were engaged in fraud perpetrated with numbers and formulas rather than with letters and syntax.  The Nobel Committee rewarded their efforts; the government rewarded their failures.

Someone interested in pursuing a Piled higher & Deeper (Ph.D.) in economics must buy into the established orthodoxy of a school and a school of thought.  Someone matriculating at a university is endorsing a worldview that is not based on an accurate view of the world.  The free-for-all culture in economics departments does not promote or provoke unrestrained free thought.  Economics departments are profit maximizing; they will produce whatever is rewarded.

Or they should give it to someone who knows something about economics and has conveyed a few sound ideas.

Bumper sticker of the week:

If all economists were laid end to end, they would reach the wrong conclusions.

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