Sunday, September 27, 2009

World Record Jump Video

As part of the Street Vibrations event in Reno Saturday, Ryan Capes set a new world record for motorcycle jumping at the Grand Sierra Resort.

I arrived at about 4 PM and the jump was scheduled for 6. There weren't many people there yet, so I had my choice of a long shot or a close-up. Since I had beat the crowd, and there were a lot of trees and lamp posts to shoot around, I went for the close-up near the take-off ramp.

Ryan made a number of practice runs, veering off at the last second, to get the speed right. His first jump was 287 feet, which set a new world record. Things were going well enough that he decided to try for 300.

Tuesday, September 22, 2009

The Renegade Fed

A major split has developed between the Treasury Dept. and the Federal Reserve. Fed Chairman Ben Bernanke has denied a request from Treasury Secretary Tim Giethner for a public review of the Fed's structure and governance. Earlier this year the Fed denied a similar request from congress. According to American Banking News:
Much of the impetus behind this initiative from the Treasury Department came from concerns over Ben Bernanke going far beyond his delegated authority, to bail out businesses like those in the auto industry, along with AIG and Bear Stearns, which aren’t part of its mandate. Of course bailing out the financial industry isn’t part of its mandate either, but these other industries are easier to identify as obvious to not being related to the Federal Reserve and its stated purpose.

Ironically, even with the Feds bogus claims of independence, many of the regional fed chairman were initially in favor of the review. They have now closed ranks and will be fighting against it. The Feds insistence on independence and secrecy, combined with the mounds of taxpayer money they are spending, is slowly isolating it.

Together with HR 1207, which would audit the Federal Reserve and currently has 290 cosponsors in the House, S.604 in the Senate has 27 cosponsors. Senators as diverse as Orrin Hatch of Utah and Barbara Boxer of California have signed on. Neither Nevada Senator Reid or Senator Ensign have said a single word about it. One might think that being on the side of the people would give either one a much needed PR boost. We'll see.

Friday, September 18, 2009

Bernanke's Inflated Market

There's not much argument that Ben Bernanke has been one of the more active Federal Reserve Board Chairmen. The "cash injections", covert buys of Treasury Notes, and some rather strange occurrences in the metals markets over the past year, has everyone outside the CNBC cheerleaders wondering if this stock market rally is real. A look at the straight line gain in the S&P 500 since March is reminiscent of the kind of charts convicted hustler Bernie Madeoff used to produce.

The tip-off that the recovery may not be as certain as claimed is found in crude oil prices. Crude oil started its predictable fall in August, but then a strange thing happened; instead of the typical post Labor Day crash, it went back up.

With gold over $1,000/oz., and Treasury bonds selling at auction at a brisk pace, it would seem that everybody is buying everything; Let the good times roll. Except, it can all be explained by a weakening currency.

Rising prices are only the result of reduced buying power of the dollar. If that's not inflation, then what is?

Monday, September 14, 2009

End The Fed: A Review

Congressman Ron Paul's new book, "End The Fed" is an excellent book, especially if you're of a libertarian mind. If not, there are still several good arguments for the abolition of the Federal Reserve Bank that could have mass appeal. Speaking as one who was sympathetic with Dr. Paul's rEVOLution in 2008, I can see that this book could be written off as the work of a crackpot by Dr. Paul's opponents. The good doctor just can't help himself from wandering off the main subject and onto some of the more esoteric avenues of libertarian philosophy. That's unfortunate as there is a core of truth here that non-libertarians need to realize.

The book starts with a simple explanation of what fractional reserve banking is and how it works. This is worth the price of the book all by itself. The idea that debt can be used as a form of collateral is central to the inherent dishonesty and ultimate instability of the system. It causes money to become unnaturally "elastic". Far from creating wealth as its proponents claim, this elasticity only creates the illusion of wealth. It causes new money to be created, but there is no corresponding new labor, no new production, and no new assets. This is the very definition of inflation. The ability to create inflation is the root cause of political favoritism, crony capitalism, corruption, military adventurism, massive public debt and a host of lesser ills.

An honest currency is a benefit to any honest person, no matter one's political stripe. The economics of a sound currency cannot be separated from its moral justification. An honest dollar breeds honest business dealings, honest government, and an honest society. Accounting tricks and false promises breed suspicion and distrust. It's no coincidence that even socialist Senator Bernie Sanders is on board with the idea. I doubt if it was the free market argument or the strict interpretation of the Constitution that persuaded him. I can only surmise that it was the moral argument that he found convincing. The great mass in the middle could be persuaded as well.

Some may be asking, "If we abolish the Federal Reserve, what do we replace it with?" The answer is the same thing that all 50 state governments have, and every county and city government too; Nothing. Governments do fine with taxes, fees and bonds. There is no reason why the Federal Government could not do the same. Regulation of the money supply could easily be handled by the Treasury Department, which unlike the Federal Reserve, is accountable to the people.

The Federal Reserve Bank has been the bane of libertarians for decades. There are plenty of valid reasons outside of libertarian philosophy to abolish it. With the current financial mess, the Fed's record of failure is now apparent to all, and there is no simple reform or granting of new powers that will change that. This is no time to be preaching to the choir. It's the other 98% of America that needs to hear this, and now that we have their attention, it's important to remember the first rule of business: Don't scare the customer.

Tuesday, September 8, 2009

Recession: Round Two

Six months ago economists and financial experts debated three scenarios; 1) the stimulus would take until September to pull us out of recession, 2) the stimulus would be good short term, but after September it was anyone's guess, and 3) after September the stimulus would be over and the economy would get worse. The next few months will determine who gets bragging rights.

Many analysts are saying the recovery is "in sight", or "around the corner", but this amounts to so much wishful thinking for several reasons. Two things about the recent run-up in the stock market have been the low volume and the complete absence of small investor. Institutions, professional traders, and possibly cash injections from the Fed have been the only players so far. Without congressional reform of the system, there is no reason for the small investors to get back in the game.

Whatever one's opinion of the cash-for-clunkers program, one thing is certain; it's now over. Detroit will have to get back to selling cars the old fashioned way. New home buyers and people refinancing have largely played themselves out. Delinquencies on loans are still rising. The housing market is set for another stall. There are still the commercial real estate and credit card markets that haven't come into play yet.

At some point the Fed is going to pull the plug on the bailout bonanza and when they do, a lot of investors will pull the plug with them. Sooner or later, the Fed will also need to raise interest rates, unless the plan is the complete destruction of the dollar as a viable currency. Raising rates in a downturn is what they were hoping to avoid, but it looks like they have only postponed the day of reckoning.

I wish I could be optimistic. I used to enjoy playing the stock market and I hope to get back in one day. But, I see more hard times ahead. Good luck everybody.

Thursday, September 3, 2009

JP Morgan/Chase Bails Out California

California's much heralded IOU's will be redeemable with interest at Bank of America between Sept. 9th and Oct. 9th. Wells Fargo will accept them between Sept. 4th and Sept. 30th, but will only credit interest above $5.00. According to American Banking News, three other banks, Citibank, Bank of the West, and Union Bank have announced similar programs, but no dates or particulars are given. IOU's can also be redeemed at the Treasurer's office in Sacramento, or by mail at Attn: Registered Warrant Desk, 915 Capitol Mall, Sacramento, CA 95814.

In lieu of tax refunds, California handed out 457,238 IOUs totaling more than $2.37 billion between July 2nd and August 31st. The State of California has now received a "cash-flow infusion" courtesy of JP Morgan/Chase of $2.8 Billion. All of which raises an interesting question: If the State of California fails to make its payments to JP Morgan/Chase, could the bank the start foreclosure proceedings on the state, and throw the government out in the street? Just asking.

Wednesday, September 2, 2009


Are we still arguing about federal health insurance? Sorry, I tuned out for a while. It seems the "debate" has moved off of death panels and such, and into the realm of presidential popularity, or lack thereof. Former conservative, David Brooks thinks that the misnamed Obamacare may be the reason for the drop in the president's poll numbers. He goes on to say, drum roll please, that the president might be too liberal.

Jonathan Chait of The New Republic thinks that's silly. The bone of contention is this Brooks quote:
Voters often have only a fuzzy sense of what each individual proposal actually does, but more and more have a growing conviction that if the president is proposing it, it must involve big spending, big government and a fundamental departure from the traditional American approach.

Mr. Chait's interpretation:
...voters are not going to follow the details, and in fact they’re going to be pretty highly misinformed. People make up their minds based on crude heuristics.

In effect, they're both right, and I'm a good example of it. I haven't read the bill(s), nor do I intend to. Having an insurance salesman explain medical coverage is complicated enough. Having a congressman explain it is beyond my level of patience. There are two things I know for sure about it; it was written by congressmen and it is over 1,000 pages long. There's no doubt in my mind, that should I ever attempt to read it myself, I would find every manner of political favoritism, kick-backs, and under the table dealings that only the US House of Representatives is capable of producing. Mr. Chait, stumbling over the truth, says as much:
The legislative sausage making process never makes anybody look good.

Might I suggest less sausage making then? I'm sure it's possible to help people who need it, while not helping those who don't. Congress is the last place I would look for such an outcome.