The Revolt Begins

As predicted, the rank and file revolt we had in Nevada last spring was not an isolated incident. The Hill reports:

For the first time in party history, members of the Republican National Committee have called their own unscheduled meeting without the aid of the Washington-based party apparatus.

Unlike conditions in Nevada, the leadership appears to agree the revolt is legal under the rules...

The unscheduled and unexpected meeting, plans for which were first reported by The Hill, was called by Emineth ( North Dakota ) and 21 other RNC members from 18 states, according to a memo from the RNC counsel’s office. Party rules stipulate a meeting must be called by at least 16 members from 16 different states.
A spokesman for ( the incumbent) Duncan would only say that the chairman supports members’ rights to hold such a meeting.

A host of candidates are in on it...

Those who signed the letter requesting the special meeting are either undecided voters or are backing other candidates. Several are public supporters of former Ohio Secretary of State Ken Blackwell or of South Carolina GOP chairman Katon Dawson. Dawson himself is among the signees.

Others are privately supporting their own candidates. Most notably, several private supporters of former Maryland Lt. Gov. Michael Steele were enthusiastic backers of the special meeting, and many signed on to make it happen.

So, dust off the flintlocks and assemble in the town square, it's time for the tree of liberty to be watered with the blood of patriots.

Poetry and Reason

Between the Democratic sweep in November, the continuing politics/religion debate, and the Christmas season, there are some disturbing developments. The kick-off for the current round seems to have been the passage of prop. 8 in California. In spite of that state's overwhelming Democratic majority, and gay people being mostly a Democratic constituency, the right, or privilege, to marry still lost. And yet, rather than have an inter-party debate as to why that happened, Democrats prefer to blame it on the Christian Right; specifically, the Mormons. The atheistic scientific rationalists are joining in the chorus now as well.

There is a trail of logic that leads to the idea of a created universe, whether the scientific rationalists want to admit it or not. Science can answer many things, but it is not equipped to answer everything. The scientific method, by definition, is limited. Beauty, love, romance...

Dear Sweetheart,
The chemical reactions and electrical impulses within my skull are causing me to ask you to be my Valentine.

Your collection of atoms,
Ron

I once saw a documentary about a group of scientists who were trying to figure out why songbirds sing. They found that it was neither territorial nor mating calls. There was no rational explanation for it. They concluded that song birds sing because they apparently enjoy singing. I don't know if that's really the case, but I do know that when scientists can't find a rational answer, they guess, just like the rest of us.

I choose to believe that Thomas Hardy summed it up best with The Darkling Thrush...

At once a voice arose among
The bleak twigs overhead
In a full-hearted evensong
Of joy illimited;
An aged thrush, frail, gaunt, and small
In blast-beruffled plume,
Had chosen thus to fling his soul
Upon the growing gloom.

So little cause for carolings
Of such ecstatic sound
Was written on terrestrial things
Afar or nigh around,
That I could think there trembled through
His happy good-night air
Some blessed Hope, whereof he knew
And I was unaware.

When atheistic Darwinian logic can explain poets, birds, and why I gain pleasure from both, I may rethink my spiritual sentiments. Until then, the universe just isn't rational.

Mob Museum Stimulus

Thanks to the Drudge Report, KNXT Radio is reporting that Las Vegas Mayor Oscar Goodman will be meeting with Senator Harry "Pinky" Reid soon to discuss local development projects to be included in the upcoming stimulus package. Among the projects is a "Mob Museum".

So, when Mom and Dad are in the casino throwing away their children's inheritance, little Jr. will be learning all about the exciting life of Murder Inc., and the lucrative profession of extortion. Who knows, with such an education maybe he'll grow up to be a New York City banker, or even a Nevada senator.

I thought we were going to be repairing bridges and making Pinky's office bio-degradable with that money. If we're just going to waste it on stupid idea's I have one too. For a million bucks I'll be glad to set up the prostitution exhibit. I could even make it interactive if you'd like. C'mon Senator, we were both 13 year old boys once. Remember?

Merry Christmas

8 And there were in the same country shepherds abiding in the field, keeping watch over their flock by night.
9 And, lo, the angel of the Lord came upon them, and the glory of the Lord shone round about them; and they were sore afraid.
10 And the angel said unto them, Fear not: for, behold, I bring you good tidings of great joy, which shall be to all people.
11 For unto you is born this day in the city of David a Saviour, which is Christ the Lord.

Princess Arianna Joins the 20th Century

I nearly fell out of my chair laughing this morning when I read this. I'm not usually one to read the Huffington post, I get enough aggravation, but it showed up in Real Clear Politics. It seems Arianna Huffington is aghast at all this "laissez-faire capitalism" we yanks have been practising all these years.

But while laissez-faire capitalism has been a monumental failure in practice, and soundly defeated at the polls, the ideology is still alive and kicking.

There is so much wrong with this sentence, one hardly knows where to begin. Let's start with the accepted history of our country that laissez-faire went out with the railroad barons. At least that's what I was taught in 5th grade. There is an excellent argument that we never had true laissez-faire. Personally, I think the only Americans to ever practice it were the native tribes. If you would like to hear about the relative merits of freedom versus government bureaucracy, ask any Native American how he feels about the Bureau of Indian Affairs.

Next we could examine the idea that one election means the end of something. As if Dwight Eisenhower's victory in 1952 spelled the end of social security; or Calvin Coolidge's election repealed the income tax. I guess everybody who voted for the other guy is going to disappear? Sorry Arianna, most of us don't qualify for the rapture either.

Not to sum up her ignorance in a single sentence, she continues:

It's time to drive the final nail into the coffin of laissez-faire capitalism by treating it like the discredited ideology it inarguably is. If not, the Dr. Frankensteins of the right will surely try to revive the monster and send it marauding through our economy once again.

Well, as long as she's pronouncing that Frankensteen, I won't be offended. For God's sake Arianna, read a book sometime will you? Frankenstein only dies in the movies. In the meantime, fire up the Jacob's ladder, Igor. We've got work to do.

The Trader

Any Edgar Allen Poe fans out there? Thanks to The Big Picture and Macro-Man.

Late one morning one December in a year we’ll all remember,
Writing Christmas poems had turned into quite a chore,
While I nodded, nearly napping, suddenly there came a tapping,
As of someone gently rapping, rapping at my office door.
“Tis some visitor,” I muttered, “tapping at my office door-
Only this, and nothing more.”

Open wide I flung the entry, stood there like an ancient sentry,
In there stepped a haggard trader who’d been up since half past four.
Not the least obeisance made he; not a minute stopped or stayed he;
But, with mien of lord or lady, walked in from the trading floor-
Stood next to a bust of Soros on a shelf well past the door-
Stood, and sighed, and nothing more.

Then this battered soul beguiling my sad fancy into smiling,
By the grave and stern decorum of the countenance he wore,
“Though thy P/L has cratered, you’ll get better soon or later,
Ghastly grim and somber trader wandering from the trading floor-
Tell me what thy problem is found upon the trading floor!”
Quoth the trader, “Nevermore.”

As he stood there slightly smirking, doubts I’d long felt vaguely lurking
My subconscience let emerge and push their way out to the fore.
“Though our P/L’s been stinking and our share price swiftly sinking
Surely I’m right to be thinking that the worst is in Q4?
When will we return to normal, back the way it was before?”
Quoth the trader, “Nevermore.”

“Come now, fellow,” I cried, shaken, “surely thou art quite mistaken!
There is sovereign wealth fund buying risky assets soon in store.
Banks will soon enough start lending, start consumers back off spending
Bring a swift and tidy ending to our all feeling quite poor.
Don’t you think that GDP growth soon enough will exceed four?”
Quoth the trader, “Nevermore.”

Was he simply trying to scare me, overwhelm me, or just dare me
To get out of my positions I’d put on the year before?
Though they trade at distressed prices, my sangfroid is cold as ice, as
I have made it through the crisis marking them at eighty four.
“Don’t you think if I hang on I’ll find a bid at eighty-four?”
Quoth the trader, “Nevermore.”

My portfolio’s diverse, moving on from bad to worse.
Managing a long-stock book had proven to be a chore.
As I glanced back at my screen I took on a pallid sheen
As the S&P careened below its key supportive floor.
“Will the Nikkei ever rally back towards where it was in ’94?”
Quoth the trader, “Nevermore.”

Then, methought, the air grew denser, perfumed from an unseen censer
Swung by Seraphim whose foot-falls tinkled on the tufted floor.
“Wretch,” I cried, “Satan’s thy master, he hath sent me to disaster
Tell me, who hath fallen faster, me or hedge funds shuttering their doors,
Causing panic on the streets of London, Moscow, and Lahore?”
Quoth the trader, “Nevermore.”

As the floor began to darken, a footstep I faintly hearkened,
Followed swiftly by another rapping beat against my office door.
In stepped an HR director, leering like Hannibal Lecter
‘Twas not my place to correct her as she told us what’s in store.
Then she escorted the trader by the elbow out and off the trading floor.
I saw him again- nevermore!

Conservatism Revisited

There is a good debate starting on E!! about the social conservative and libertarian make-up of the Republican party. I'm on the periphery of both groups, so I thought I'd chime in. The original column, written by Randall Hoven, is at the American Conservative Union Foundation.

Let's start with the fact that philosophy is not my best subject. I've tried several books and they all have one thing in common; I've never made it past page 50. On the upside, if you ever need to have your mind numbed before bedtime, David Hume is excellent. The only pure philosophy book I've ever finished was an abridged version of "Wealth of Nations". Adam Smith is the only philosopher, on any subject, that made any sense.

I read "The Libertarian Manifesto" back in the '70's and came away thinking they were basically right, but a little bit nuts. Privatizing the police and fire departments, with toll roads everywhere, didn't seem very practical. So government does have a purpose. We can all pay taxes for what we all use. Then Ronald Reagan came along.I'll admit, in 1980 I thought he was a bit nuts too. (Beat the soviet empire? Get real.) Many of the people in his first term seemed excessively idealistic, some scarily so. But, by 1984 I could see that things were getting better. America was back.

But, What of all those followers, specifically the Christian Right. Quoting from Mr. Hoven's column:

...I have no problem with "social conservatives" or the "religious right" and their supposed influence on the Republican party. I base this not on the Bible or historical authority, but on the love of liberty and the evidence of my own eyes.

This has been my experience also. The evidence of my experience is that Christians are the most temperamentally conservative people I know. The idea that they are secretly out to set up a Theocracy is laughable, but then the left has never been very good at scare tactics. There are far too many subsets of Christianity for the whole to agree on anything. Would it be a Baptist Theocracy, or a Methodist Theocracy? You can see the problem.

Another funny idea is that of the miserly, penny-pinching socialist. Mr. Hoven explains:

I'm still searching for the mythical creature that is the "financially conservative, socially liberal" politician...Using the National Journal's ratings of Senators in 2007, the correlation coefficient between "economic" scores and "social" scores is 90%. That means they almost always go together; financial conservatives are social conservatives and vice versa.

The fact is, Christianity is a big tent all by itself.

Timing is Everything

At roughly the same time yesterday that I was reading The Independent Institute and pulling this:

If you are prepared to throw them (principles) out the window when times are tough, then you never really held them in the first place.

President Bush was on CNN saying this:

"I've abandoned free-market principles to save the free-market system," ..."I am sorry we're having to do it,"

So are we Mr. President, so are we. The good news here, is that Americans can stop coveting an Ivy League MBA degree.

A Rising Star Sinks

Robert Higgs, writing for The Independent Institute has some interesting observations on the current bailout debate.

Everybody knows that the only way to find out who your true friends are is by noting who stands by you when you are down and out. Political principles work the same way. If you are prepared to throw them out the window when times are tough, then you never really held them in the first place. Principles are intended especially to guide our behavior in difficult circumstances. If they don’t do so, then our proclaimed principles stand revealed as having been nothing but rhetoric in the worst sense of the word.

A rising star in the conservative ranks has been Republican congressman Thaddeus McCotter of Michigan. His reaction to the no vote in the Senate last week:

“With the legislative opportunities now exhausted, I urge the president of the United States to immediately release Wall Street TARP funds to the domestic automakers to avoid their impending bankruptcy and its consequent devastation of working families and the depression of our American economy.”

A look at Congressman McCotter's money tree sheds some light on his rather liberal stance.

Chrysler Service Contracts, Inc., Political Support Committee, $14,000; Dealers Election Action Committee of the National Automotive Dealers Association, $32,500; Ford Motor Company Action Fund, $22,100; General Motors Corp. Political Action Committee $26,250.

$94,850 in total. Not bad for a few phone calls and a little after hours shmoozing. All of which brings up another conservative truism: The more things change, the more they stay the same.

Cartoonist Logic

One thing I've always liked about the Dilbert Blog is that he often warns his readers "never get your financial advice from a cartoonist." However, sometimes you just can't beat his logic. His three pillars of finance:

1)History always repeats.
2)Past performance is no indication of future returns.
3)Asshats are trying to steal your money.

These three truisms can explain any financial phenomenon. For example, if your financial advisor suggests that you invest in a market bubble that is about to burst, he will explain that the past is no indication of future results. Just because a Price/Earnings ratio of 45 has never been sustainable in the past doesn't mean it won't be perfectly safe in the future.

And when the bubble bursts and you lose half of your money, your advisor will explain it's because history always repeats. In other words, he's an asshat trying to steal your money.

For decades, a golden rule was to sell at a p/e ratio of 19. They rarely went over 20. It was one of the first rules I heard about when I started investing. Every old-timer I knew followed it. At the beginning of roaring '90's, with the dot-com's going through the roof, they went into the high 20's/low 30's. Before long, nobody talked about them anymore. Even the value stocks were over 20. I honestly don't know where they were this time last year, but there's an awful lot of them in single digits now.

Pinky, The Wayward Prognosticator

After the collapse of the Big 3 Bailout on Thursday, Our illustrious Senator Harry "Pinky" Reid took a shot at wall street analysis:

"I dread looking at Wall Street tomorrow. It's not going to be a pleasant sight,"

The Dow dropped 215 points at the open, but finished the day up 66.5 points. All in all, a pretty average day on the street by recent standards. But, thanks to Seeking Alpha, it wasn't just the bailout that investors were watching.

At 8:30 AM EST, one hour before the market opened,

Bernard Madoff, founder and president of Bernard Madoff Investment Securities, a market-maker for hedge funds and banks, was charged by federal prosecutors in a $50 billion fraud at his advisory business. The firm specialized in handling orders from online brokers in some of the largest U.S. companies, including General Electric Co (GE). and Citigroup Inc. (C).

But he wasn't just a large investor:

Madoff served as vice chairman of the NASD, a member of its board of governors, and chairman of its New York region. He was also a member of NASDAQ Stock Market's board of governors and its executive committee and served as chairman of its trading committee.

So Pinky The Prognosticator could have been partially right for the wrong reason, which I believe fulfills one of the requirements for a job at CNBC, or any one of a thousand investment newsletters. With a little more practice, he could even start his own blog.

English Christmas

I really like the old traditions, but unfortunately for me, most of my ancestors come from England- the land of odd food. Anorak, in their "20 Best Christmas Album Covers" provides a demonstration.

"In days of yore, when alcopops were but a dream, British children would make do with gigantic lumps of cannabis resin."

I don't know what that really is on that poor little girls plate, but it's definitely English.

Household Debt

I thought I might have some good news to report.

As of Sept. 30, the total outstanding debt for households shrank at an annualized rate of 0.8% from $13.94 trillion to $13.91 trillion, the Fed said in its quarterly flow of funds report. It's the first decline in household debt ever recorded in the report.

Upon further revue, the real reason for the fall:

Mortgage debt fell at a 2.4% annual rate to $10.54 trillion, as foreclosures mounted and fewer new mortgages were taken on.

It's difficult to increase household debt when you don't have a household. Meanwhile, credit card use continues unabated.

Other consumer debts, such as credit cards and auto loans, increased at a 1.2% annual rate in the quarter to $2.6 trillion.

Running up the credit card now might not be such a bad idea. With all the government borrowing, the value of the dollar will certainly fall in the future. It's a kind of 'spend it while you have it' mentality. As for me, I got rid of my last credit card years ago and am unlikely to get another one anytime soon.

The Ruling Class Speaks

In the DC Examiner, our own Harry Reid, champion of the common man, explains the best part about the new visitors center at the Capitol Building:

"In the summer because of the heat and high humidity, you could literally smell the tourists coming into the Capitol."

But it's no longer going to be true, noted Reid, thanks to the air conditioned, indoor space.

And that's not all. "We have many bathrooms here, as you can see,"

Wow, and bathrooms too? C'mon Ma, we's a-goin' to the big city. The little-un's never done seed a bathroom a-fore.

Thanksgiving 1863

Thanks to Pasadena Closet Conservative for digging up this little gem. There is always something to be thankful for.

The year that is drawing towards its close, has been filled with the blessings of fruitful fields and healthful skies. To these bounties, which are so constantly enjoyed that we are prone to forget the source from which they come, others have been added, which are of so extraordinary a nature, that they cannot fail to penetrate and soften even the heart which is habitually insensible to the ever watchful providence of Almighty God.

In the midst of a civil war of unequaled magnitude and severity, which has sometimes seemed to foreign States to invite and to provoke their aggression, peace has been preserved with all nations, order has been maintained, the laws have been respected and obeyed, and harmony has prevailed everywhere except in the theatre of military conflict; while that theatre has been greatly contracted by the advancing armies and navies of the Union. Needful diversions of wealth and of strength from the fields of peaceful industry to the national defence, have not arrested the plough, the shuttle or the ship; the axe has enlarged the borders of our settlements, and the mines, as well of iron and coal as of the precious metals, have yielded even more abundantly than heretofore. Population has steadily increased, notwithstanding the waste that has been made in the camp, the siege and the battle-field; and the country, rejoicing in the consciousness of augmented strength and vigor, is permitted to expect continuance of years with large increase of freedom.

No human counsel hath devised nor hath any mortal hand worked out these great things. They are the gracious gifts of the Most High God, who, while dealing with us in anger for our sins, hath nevertheless remembered mercy. It has seemed to me fit and proper that they should be solemnly, reverently and gratefully acknowledged as with one heart and one voice by the whole American People.

I do therefore invite my fellow citizens in every part of the United States, and also those who are at sea and those who are sojourning in foreign lands, to set apart and observe the last Thursday of November next, as a day of Thanksgiving and Praise to our beneficent Father who dwelleth in the Heavens.

And I recommend to them that while offering up the ascriptions justly due to Him for such singular deliverances and blessings, they do also, with humble penitence for our national perverseness and disobedience, commend to His tender care all those who have become widows, orphans, mourners or sufferers in the lamentable civil strife in which we are unavoidably engaged, and fervently implore the interposition of the Almighty Hand to heal the wounds of the nation and to restore it as soon as may be consistent with the Divine purposes to the full enjoyment of peace, harmony, tranquillity and Union.

In testimony whereof, I have hereunto set my hand and caused the Seal of the United States to be affixed.

Done at the City of Washington, this Third day of October, in the year of our Lord one thousand eight hundred and sixty-three, and of the Independence of the Unites States the Eighty-eighth.

Happy Thanksgiving.

Bipartisan Disaster

Once again Thomas Sowell explains the essential problem:

Too many people who argue that there is a beneficial role for the government to play in the economy glide swiftly from that to the conclusion that the government will in fact confine itself to playing such a role.

The government, having created the credit bubble, is furiously trying to keep it inflated. A decrease in credit leads to a decrease in employment. Politicians on both sides often define success by the number of jobs created while they were in office. The President-Elects latest plan to create 2.5 million jobs is a good example. Will the "H" for Hussein, in time, come to stand for Hoover?

Despite a myth that Herbert Hoover was a “do nothing” president, he was the first President of the United States to step in to try to put the economy back on track.

Herbert Hoover did what Barack Obama is proposing to do. Hoover raised taxes on high-income people and put restrictions on international trade, in order to try to save American jobs. It didn’t work then and it is not likely to work now.

Economic expansions and contractions have a long and complicated history in our country. The first financial panic dates back to 1788. There were many during colonial times. Government attempts to promote growth and soften the landings only serve to exacerbate the original problems.

The merger of commercial banks, home loan banks, and insurance companies are the root cause of the current dilemma. The pro-growth policies and home ownership mania combined to create the credit bubble. I haven't seen anything yet from anyone in Washington about easy credit being the problem.

M3 Update

Little wonder why the government stopped tracking M3. It's the total value of our country, expressed in dollar terms. M1 shooting up at the bottom, is the Treasury flooding the market with cash.

Somewhat related, I've been having trouble getting a table to load on this page all weekend. I posted it on AAB for those interested.

Quote of a Lifetime

Rob Kirby unearths a gem from the recent past;

…as told by [then] Federal Reserve Vice-Chairman, Alan Blinder on national television, “The last duty of a central banker is to tell the public the truth.”

I suppose that’s true of anyone in Washington.

I was looking forward to following the $750 billion bank bailout story. I subscribe to, and get a daily boatload of data from, the National Bureau of Economic Research (NBER). I receive daily emails directly from the Treasury Dept. I have several on-line sources for economic news. And yet, my original questions remain; how much have we spent? Is some of the money in the form of loans? What have we bought? How much did it cost? Are we making any money yet? Are they short-term or long-term investments?

Secretary Paulson promised transparency in testimony before congress. It looks pretty dark in there. So far, there’s nothing to follow. At what point do our representatives turn on their flashlights and take a look around?

The Real Cost of Bailouts

Now that the Republicans have started the gravy train chugging down the tracks, we can expect the Democrats to hop on board. It's important to remember the original problem. There is no shortage of cash. In fact, the better argument is that there is too much cash: credit is already too easy.Jonah Goldberg nails the the original problem, uncertainty:

One of the main reasons there’s all of this “money on the sidelines” out there among private investors is that Wall Street doesn’t know what the government will do next. Will it bail out the auto industry? The insurance companies? Which taxes will go up? How far will interest rates go down? How long will the federal government own stakes in the banks? Will more stimulus checks go out? If so, how big will the deficit get?

Uncertainty is what causes banks not to loan to each other. Uncertainty causes private investors to pull their money out of Wall Street. Uncertainty causes business owners not to take risks in new equipment or new workers.

Don Boudreaux, Chairman of the Department of Economics at George Mason University, explains the real cost of bailouts:

The number of different places from which these resources will be taken is large and spans a continent. So it's easy to overlook the fact that each of many productive firms from across the country will, as a result of this bailout, pay more for steel, machine tools, fuel, and other inputs they use in production. These other firms will contract their operations; they'll employ fewer workers; they'll produce less output.

On Cafe Hayek, Professor Bourdreaux points out the private investment during the Great Depression:


As government spending expands, private investment contracts. When government becomes active, the private sector stops. We'll hit bottom only when the government stops. That looks to be a long time from now.

Missing Person

I learned recently that my friend E!!-lizabeth's sister is missing. It's been almost a week now. There is more information here and here. If you're reading this and live in Michigan, or have readers or friends in Michigan, could you please pass this along. Krista is a student at MSU in Lansing.