- I'll Vote For Him But...

I can't imagine a bit of political theater that would be more fun than a Chris Christie - Barak Obama debate. The combination of Christie's straight talk and Obama's thin skin would be sure to raise many hysterical moments. There is even a "meaningful probability" that Christie will make him cry - and what could be more fun than that?

If Christie were to run, of course I'd vote for him in the general election. There is nothing in heaven or earth that would compel me to reelect anyone as wrong headed about how the world works as Barak Obama. No threat, no promise - nothing.

With all that said, I am not a Christie supporter for president. He's a blue state governor who combines the weaknesses of several other candidates. He's profoundly (and unapologetically) anti-gun, he's pro illegal immigration, and is on the liberal side of all kinds of "social" issues. He's been tough on the unions, but I think that's really because he's had no choice.

Give me anyone else in the field.

- The High Frequency Trading Bubble Explained

I had coffee yesterday with two senior investment bankers from a major money center bank. Among the topics discussed was the impact of HF on the financial markets. My take on it, as you may have figured, was not that HF is inherently bad, but that it was the ability to engage in trading for non-economically valid reasons that was causing the real problem.

"It’s a simplification” I said “but if you’re being paid 3 cents to engage in a trade, and the spread is only 2 cents, you’re a buyer – whether being a buyer is a sound decision for you or not. They say this creates ‘liquidity’, but it doesn’t really. Rules like that set off an avalanche of economically unsound trading, and that causes all sorts of problems like flash crashes, which discourage longer term investment.

Real liquidity only comes from one person thinking it’s the perfect time to buy, while another simultaneously thinks that it’s the perfect time to sell. And assuming both actors are rational, that circumstance only happens if the markets are multi-dimensional. You have to simultaneously have people engaging in trading with different holding periods in mind. The guy who thinks it’s the perfect time to sell may be thinking about the next 5 minutes, while the guy who thinks it’s the perfect time to buy is thinking about the next 5 years. That’s where you get real liquidity.

But if one actor only thinks it’s the perfect time to buy because of the rebate he’s getting, the system is already broken. He'll be prepared to act when no one else is, so he isn't creating 'liquidity' as much as he's creating volume.

Imagine you get a taxi rebate. You get paid $3 to get in a cab, and $3 to get out. You don't have to go anywhere in it. You just have to get in and out. In no time there will be teams of people jumping in and out of taxi's everywhere just for the rebate. There will be people who carry babies with them so that 2 people 'qualify' for the rebate etc. When their process gets efficient enough, they'll be so many of them, and they'll be hopping through taxi's so often that it will become harder for the people who actually want to use the cabs to travel. The rule has broken the market, even if it takes time for the actors to find a way to profit from it.

In a way, this is the same thing as the mortgage crisis. It wasn’t the banks writing mortgages the way the politicians insisted that was the principle cause of the problem. The core issue was that the politicians had set up rules which weren’t based on economic reality. They insisted that people be given mortgages who couldn’t afford them by imposing a political cost for those banks who wouldn’t play along. That non-economic incentive broke the market’s feedback mechanism, and created the problem which eventually blew up.

It was the same thing with the dot.com boom. The markets weren’t broken, the government had simply set tax rules relating to the treatment of options that were irrational, and the markets responded to them. It’s the same thing over and over in history. Every ‘bubble’ was actually caused by some ‘know it all’ mucking around with the rules to achieve some political result, and the bursting bubble was an unplanned side effect.

The same thing is going on in high frequency trading with the trading rebate.

High Frequency trading is a perfectly valid business. But right now a lot of people are making money at it who wouldn’t be if the rules were set up more rationally. So long as there is an incentive for people to trade for economically irrational reasons, the problems will continue and amplify. Eventually it will blow up, and we’ll all be treated to another set of speeches about how broken the capital markets are, by the very people who broke them in the first place.

It’s like the bull standing in the wreckage of the china shop, and telling us that it’s our own fault for keeping so many breakables around."

They both seemed to get the point. It’s a shame no one in Washington does.

- Ivan's Goat

There is a joke that gets a lot of play in our house, about the progressive/socialist mindset:

Ivan like other Russian peasants lived in the Russian wilderness, trying like his neighbors to eke out a living. But one day Gods blessings came in the form of an Angel who told Ivan he could have any wish he wanted. Ivan knew that a goat offered much benefit and so he wished for a goat. And thus it was that Ivan was the only peasant there that had a goat.

Each morning his neighbors would see him milking his goat, getting cheese from the milk, and using the goat for other purposes.

Many of Ivan's neighbors became jealous and as time went on their resentment grew worse.

But as luck would have it his neighbor Igor was visited by the same angel and she told Igor that he too could have any wish he wanted.

Igor thus wished that Ivan's goat would die.

I bring this up because we now know that Barak Obama would like to kill a few goats as well. It will hurt government revenue, and will hurt the people paying the higher taxes, and it will hurt the poor who will no longer get jobs from the people being taxed... but "fairness" will be increased so it's all OK.

- Only Half?!

Half of Americans think the government is a threat to the rights and freedoms of ordinary citizens.

I wonder what color the sky is for the other half (they probably all work for the government).

- Global Delevering

I’ve heard all manner of ridiculous analysis on the financial channels this morning, but what has caused all this global turmoil is clear. This is delevering. People are selling everything, to raise cash for margin and reserve requirements. It’s the same sort of thing that happened in 2008. And it means that if you have cash, there will be real bargains to be had, when the dust finally settles.

Greece is going to default, and whatever else happens, that means the Euro area will be going into recession. Since our own economy has all the strength of a man just recovered from malaria, we’ll probably be doing a double dip too. None of that has helped, but I don’t think it’s the principle catalyst for this sell off.

I think what brought this around was an expectation of QE3 which didn’t happen, and operation twist which did. We hadn’t had enough sell off in my opinion, to justify QE3 in the current political environment. But if and when the S&P 500 ticks down in the territory of 1,050 (which has been my QE magic number for months now) much of that opposition will evaporate. With his political star somewhat in decline, I doubt Rick Perry will be lobbing any new charges of treason toward the fed in the weeks to come either.

This will make a new policy initiative politically easier, and falling commodity prices indicating possible deflation will be used as justification. When you hear people tell you the fed is out of arrows, don’t you believe it. Once you add the Q to QE, there’s always room for one more.

The output from operation twist was really interesting. By flattening the yield curve the fed eliminated the US Treasury carry trade, the one totally risk free source of revenue for the money center banks. And although it increased the value of the treasuries they’re holding as collateral, it’s not so shocking to imagine that a finite reduction in future revenue would cause them to reign in risk in other areas. This is a risk reduction, undertaken by everyone at once.

So there were a few macro events conspiring to lower asset values, but if you’ve been following along at home, nothing has really changed. My peers have been waiting for the Greek default for a year, and it was never a secret that it would bring with it a risk of recession and deflation. The question is, now that it’s happened, what will policymakers do about it?

On the fiscal side the most effective route is simple – transfer assets and capital from unproductive activities like writing new EPA regulations and other bureaucratic guidelines, to productive activities like basically anything in the private sector. But it’s election time in the US so that won’t happen until next year at the earliest if Obama loses, and 2016 if he doesn‘t. Sound fiscal thinking has not been the hallmark of this administration.

Then, on the monetary side, like it or not, the answer is more liquidity.

My buddy Randy, my fixed income ‘goto’ guy thinks any more QE would be disastrous and will put the global fiat money system at risk. I disagree. (In fairness, he might feel differently if we face our second dip and falling commodity prices – I haven’t had a chance to talk to him) The state of affairs in Japan, who is a decade further along than we are, makes me believe the waterfall is further downstream than anyone believes, if it’s actually down there at all. And because that’s so, I think we have much further to run on the QE train before the end of the line is imminent.

The European waters are a bit muddier because it’s not clear who will be deciding what. something will change with the Greek default. It’s the financial equivalent of the immovable object and the irresistible force. It would be economic suicide for Greece to default on its debt and remain in the euro. The deflation there has already been unprecedented in modern history, and facing a total collapse, they would be fools to stay with the common currency.

The Greeks need liquidity, but the ECB won’t give it to them so long as it’s run by Germans. Or maybe they will….who knows. Things change on a moment by moment basis with the European ruling elite doing all they can to maintain their power, and the European public demanding that they had better do something else. This is further complicated by the fact that the “something else” is usually outside the authority of the institutions that the people are demanding it from. It’s all a great big cluster F--- in Europe right now. So naturally that remains the focus of the markets.

The knife is falling fast, but very soon I think it will be worth the risk to grab it. As an example, nearly everyone I know had returns on their personal portfolios above 50% in 2009. Thanks to this sell off, there is no reason 2012 can’t be the same.

- Don't Protect This Speech

Some video of a leftist demonstration on Wall Street this weekend, which is being depicted in leftist circles as police brutality. Personally it just made me laugh.



The traditional American leftist protest does meet the threshold for constitutionally protected speech, but I’m no longer convinced it deserves that protection. It’s not that I think the opposition should be silenced, on the contrary. If they had more to say about policy or for that matter anything meaningful or rational to say at all, I’d argue that they should receive more protection, not less. But the fact is, at this moment in American history they are as detached from reality as any homeless man ranting on a traffic island. And I believe that utter irrationality invalidates their claim.

Keep in mind; I don’t think they should meet some political standard here. That’s not the metric I’m measuring them against. I think it’s safe to assume that I would disagree with their views (if they were capable of voicing any) but that’s not my point at all. My point is that since they aren’t actually doing or saying anything lucid, they are really just creating a public nuisance. Even the New York Times feels they're not making much sense. And when your allies abandon you, maybe it's time to rethink your tactics.

If you’d like to see real political speech that I’m opposed to, but also believe should be protected, go to any union hall on meeting night or pick up a copy of ‘The Nation”. Even a public march can be a perfectly valid format. They have a pro-abortion rally in Washington DC every year which I think clearly meets that criteria. Those are all examples of people doing their best to persuade or inspire. I can’t imagine you’ll find anything that I agree with in any of those formats, but I absolutely think that they are forms of speech which should be vigorously defended. I find them irrational and completely unpersuasive, but I think they're absolutely entitled to state their case.

But the best thing you can say about these ridiculous spoiled rich kids is that they’re wasting our time. Their education about how the world works has been so deficient and they all have all been so thoroughly insulated from the realities of the world, that even the most generous observers can only describe them as irrational. Even devout leftists are calling them nonsensical - and that's a pretty low bar to expect them to clear.

These aren’t really political protests at all – they are a form of public temper tantrum springing from the infatilization of American society. These are kids who have so forsaken adulthood, that even their ‘revolution’ involves holding their breath and stamping their feet. I not only think the police acted appropriately in this case, but I think they could have acted more harshly.

Early in my career I had an experience with a similar Wall Street protest, that didn’t make any more sense than this one:


It was 1990, and I was living in Hoboken while working unspeakably long hours at JPMorgan on 60 Wall Street. Normally I was in the office before 6:00 AM but I had been there very late the night before and had overslept. So that day I was on my way in to the office at the embarrassingly late hour of about 8:00 AM.

When I reached the corner of Broadway and Wall st. about a block from the exchange, I noticed that there was a smallish protest going on and the commuters were giving it an awfully wide berth. The protesters had their arms linked and were blocking all the pedestrian traffic on Wall Street, just west of the New York Stock exchange building. There were no more than about 70 protesters and the police had them outnumbered. When I arrived, they were just watching the protesters scream at them, and were taking no specific action.

I had no idea what these people were protesting and I don’t think anyone else did either. They certainly weren’t communicating it to anyone. I assumed it had something to do with greed and hating the rich. But being neither particularity greedy nor rich, whatever it was I was quite certain that it had nothing to do with me.

I was just a little worker bee after all, not anyone that they would be concerned with. I wasn’t a Wall Street Fat Cat… I was a skinny kid with a head for math, mounting debts, and an unresolved compulsion to over achieve. I wasn’t even actually going to the Stock Exchange; I was just trying to get past it. Besides, at that time I very much saw myself as a member of the lower economic class that was just ‘passing’ on Wall Street. I was trying to make up for my lack of proper “Wall Street breeding” by working harder than anyone else, and hoping they'd let me hang around a while because of it.

At the time I was totally unconcerned with politics. I remember that my only concern at the time was how late I was and that looping around the block in that heavier than normal crowd would add another 10 minutes to my walk. So instead of fighting through the mob and coming in a different way, I slipped up to the protester on the far left side of the street furthest from the exchange, said “excuse me”, and tried to slip between him and the wall. This it turned out, was just the opportunity he was waiting for.

I guess he saw stopping my effort to gently slip past him as his chance to ‘make a difference’ and stand up to ‘the man’. So he looked at me with utter vitriolic spittle flecked hatred, and screamed in my face (from about 5 inches away) at the top of his lungs “NO F-ING WAY MAN!!!!!!!” as if my trying to get to my job as a lower level research drone was the the most vile act of a flailing tyrant. Then he broadened his stance, squared his shoulders and braced himself with his fellow protesters for what he was sure would be my coming assault.

I just stood there dumb-struck. I was totally perplexed and completely confused. Why in the world could this man be so angry with me? He was several years older than me and as far as I could tell, was probably making more money. I was after all, just a kid - late for work. I couldn't imagine what any of this had to do with me.

At that point I felt a hand fall gently on my shoulder. It belonged to the police sergeant (also about 15 years older than me) who until then had been standing just behind me with his troop of policemen. He calmly looked me in the eye and said ‘excuse me sir.”, as he stepped in front of me, courteously stretching a hand across my chest to insulate me from the protesters. He then waved his other arm in a beckoning manner, and the police who had been forming up behind him swooped in.

They started grabbing the protesters three policemen to one, and tossing them through the air at about waist height, into a large truck nearby. First grabbed was the bearded 30 something guy who had been screaming at me just seconds before. Once he went airborne, infantile bedlam broke loose among the rest of the protesters. It was strikingly easy to imagine them all as diapered three year olds in the middle of a nursery school, being forced to cope with some aspect of reality that they don't like.

Several fell to the ground as dead weight while pulling on the others. They were all screaming NO, and stamping their feet. None of this deterred the police in any way. After about 8 or 10 of them had been unceremoniously scooped off the pavement, the sergeant then waved me forward and personally walked me the 30 feet or so past their remaining number. He then tipped his hat to me, smiled a little, and told me to have a good day.

The reaction of the police sergeant left me even more dumb-struck. Up to that time my only contact with policemen had involved the phrase ‘What exactly do you think you’re doin here boy?” And I think it was the very first time in my life that a policeman had actually called me 'sir'. Until then it had never occurred to me that the police were ever going to be anything for me except a source of physical threat.

And it was that day, that moment really, that I became aware that my place in the world had changed in an important way. I realized that wearing a $30 tie meant the difference between being hand cuffed and frisked on the side of the highway by a South Carolina state trooper, and having a bunch of NYC riot police toss people through the air so that I can be on time for work. That realization changed me and my world view in an important way that day. So armed with my new realization about how my world had changed, I did what any rational person would do in that situation.

I went to work.

That was over 20 years ago when the New York Stock exchange and Wall Street were still the hub of the western financial wheel. But these days nothing much actually happens on Wall Street anymore. JPMorgan is now based on Park Avenue, and even at the exchange they don’t really do that much. But it’s still a magnet for these irrational leftist temper tantrums.

I don’t think the police should use tear gas because that might inconvenience innocent tourists in some small way. And so long as the protesters aren’t violent or destructive (and it doesn't seem that these were), I see no need for more violent police action either.

But I think mace is a perfectly appropriate response, and teaches these people that some aspects of reality can’t be avoided no matter how much they think they should. They can turn fire hoses of the stuff on them as far as I’m concerned. And good riddance.

Nonsense like this amounts to a 'protest' to the left because it's outdoors, and involves people screaming. But I think that overestimates them. If they have something meaningful to say, really anything to say, then they should be allowed to say it. But these people only cheapen the movement they think they're helping. They'd probably never admit it, but we'd be doing real political participants on the left a favor by simply macing these kids, and carting them all off to jail.

- An Example Of Disinformation

It seems to me that Paul Krugman claiming that there is no policy of class warfare is a lot like listening to Hamas say there is no war against Israel. The political reasons are obvious, and you never know... he might even believe it. But none of that makes anything he says even remotely true.

Remember, Yassar Arafat got a Nobel Prize too.

- I'm Coming Around On Rick Perry

With the Caveat that I will absolutely, certainly, without any question, be voting for whoever wins the Republican nomination no matter who it is, I'll admit that I'm starting to come around on Rick Perry.

Readers know that my primary political issue is self defense rights, but that's not really why I'm leaning toward Perry. This is really a two man race now. Bachman can't keep up on fund raising, and no one else was ever really close enough to being a major contender. So it's Perry and Romney. And playing my own devils advocate, I was thinking about what President Romney would be like.

He'd be sharp as a tack on the finance issues, and wouldn't need anyone to explain it to him. But the left would spend 4 years bludgeoning him and his Wall Street background, so he'd have to be real mushy in the regulatory department to placate them. And placate them he would.

In fact, I think he'd probably be all about placating the left. It would be 4 years of him being the kind of mushy politically expedient guy that Bush was when he advanced his deal with Ted Kennedy for the prescription drug plan. When the NYTimes and the Washington Post turn up the heat on Romney (and who in their right mind imagines they won't... after coddling Obama for 4 years they'll be rested and ready) I think he'll instantly become that guy who is for everything, except those things he's against, which he used to be for, but is now against. He'll do whatever they tell him to, within the limits of expediency.

In a word, I think Romney lacks guiding political principles, and the character to stick to them. I think he's more worried about being popular, and that's not the kind of President I want. I want someone who is confident of his place in the world and doesn't feel the need to ingratiate himself to the editorial writers. I don't think Rick Perry is under any illusions on that score. I think he expects to be vilified, and recognizes that there really isn't anything he can do about it.

Rush Limbaugh has this running story about 'winning from the right'. To paraphrase, he says that when politicians forget about the media (who are dramatically to the left of the general population) and run from right, even though the media hates them for it, they win. He has lots of examples of it, and I think he's right.

And I believe Perry will follow his advice much more than Romney. That's my main reason for leaning his way.

My fear is that if we vote for Romney we'll get a guy who believes he's smart enough to explain to us why we're all wrong on this issue or that issue, and how he can't stay to the right because he's too smart to be penned in by simple constraints like that. While Perry, I believe, is more likely to stick with his guiding principles.

Of course, Romney will be sticking to his principles too, but his only real principle is to say what will get him elected. And if I want someone to BS me, and treat me like an imbecile, I might as well vote for Obama.

- President Zero

...a very compelling Perry ad.

- Meanwhile In Obama's Universe

"The One" has come up with yet another 'new idea'... raising taxes. I know this sounds a lot like his last few ideas, but this time it's different. No really. No... REALLY. It's a totally different tax. Last time he wanted to tax rich people and this time he want's to tax.... well... rich people.

But here's one way that it's different... this time, Warren Buffet has said that it's OK. Warren Buffet is a business man so that means that this must be a business friendly tax on rich people right?

How tragic it is that we've sunk to this level as a country. We have a President who so despises the successful that he refuses to examine any fiscal policy that doesn't punish them in some way. If you are one of those people who thinks this is a sound economic idea, then I feel very sorry for you. It must be a horrible thing to have so much of your life driven by envy of others.

BTW, I hear that in the bizarro world where Democrats live, that there is nothing that gets people out there taking risks and generating demand like threatening them with a massive new tax increase. I guess we can exclude 'the rich' from that great economic recovery we have planned.

- A Total Lack Of Expertise

I am, if you will forgive my lack of humility, an expert in levered investing and investment risk management. I believe I can make that bold claim because I’ve demonstrated it. I’ve produced results which support it. I’ve competed for investment capital with the best investment managers in the world, and I’ve been successful. Oh I spent 20 years learning about it too, and I learned a ton. But until I actually started to produce real results, I’d have never thought to make such an arrogant sounding claim about myself.

So does that mean that I think I know everything about finance and investing? Absolutely not. In fact I can’t think of a single friend of mine who doesn’t know far more about their specialty than I do. I may be an expert in my little niche, but the fact is, it’s a really, really narrow expertise. And when all the other aspects of the financial markets are considered, I’m probably only a little more generally knowledgeable than average. There are a gazillion little details you need to know in order to be good at any of those other areas, and I don’t know any of them. Well – certainly not nearly enough to do them well.

But so long as I stick to my knitting and don’t wander too far from my specialty, I have every reason to feel confident of my continued success. Knowing as much as I do about my tiny little market segment gives me an advantage. And I can turn that advantage into a profit over others who don’t share my knowledge. The advantage is only temporary of course – I need to keep ahead of the pack. But I’m fairly smart, and very persistent, and that’s a formula that has worked for me so far.

It’s a shame the people in government don’t feel that way. But then again, being good at what they do isn’t really a high priority for them. In fact, the entire Obama administration and their agenda seem to me like a bunch of English professors deciding that they would like to do all the cool and exciting jobs too. And they want to do those jobs whether they actually know enough to do them or not, let alone whether they know enough to be successful at them.

They decided that they want to run a hedge fund that trades huge dollar amounts of bonds and derivatives and other cool stuff, so they turned Fannie and Freddie into one. They want to be venture capitalists investing in exciting new technologies, so they had the energy department give loans to Solyndra and all the other soon to fail ‘green technology’ companies. They want to do charity work that ‘helps people’ so they greatly expand the roles of government medical care and welfare programs. And they want to “help the little guy”, so the give massive legal advantage to organized labor.

But they don’t know about any of those things – they only know about teaching English. Actually, I think it remains to be seen if they even know about that. But whatever they do know, we now know for certain that they don’t know anything about running huge investment portfolios, or breakout technology companies. Managing our "investment in infrastructure (construction unions) education, (teacher's unions) and innovation (enviro-subsidies) doesn't seem to be their strong suit.

Their little adventure in playing dress up is going to cost the American tax payer something like a Trillion dollars before it’s over, and that’s if I only count the ‘stimulus’ bill. If I include the cost of Fannie and Freddie blowing up virtually the entire global capital markets, then it will be much, much higher.

This is one of the great advantages of the free market over a 'public private partnership' (which is when government bureaucrats and academics pretend to know about things that they really don't - so they meddle in private industry for political reasons). In the private sector everyone ends up specializing. And unless you’re good at what you do, you don’t get to do it very much or for very long. The risk of failure when you go into a new area is all on you, so the failures tend to be small and very effectively managed. And advancement isn't based on how good your speeches are or how wonderful your intentions are... it's about results. The free market is about real experts who can demonstrate their expertise, and produce actual results to support their claims.

But when government makes the economic choices, like Obama and the ‘progressives’ would have it, the world is run by people with little or no expertise. They are good at 14th century French literature, or some other obscure academic pursuit, but they don’t know how to do the things they end up actually doing. They are court jesters who have decided that they should be in running the whole kingdom. So the odds of failure for them are much higher than they would be under the free market.

But it’s not just that, it also means that the failures are massive. When government runs things, all the risks and all the costs are pushed off on third parties (the taxpayers) so the self indulgent “know it alls” who have been sprung from the teacher’s lounge feel no reason not to experiment. They are like teenagers in a Casino with a total stranger’s credit card. Why not bet big? It’s not like anyone is going to make them pay back Solyndra’s bad loans, or throw them in jail for mismanagement of Fannie and Freddie.

Right now much of America is being run by people who don’t have any expertise in what they’re doing. Oh, they say they do. And they probably even believe they do. But they have never produced any results to demonstrate it. And in the real world, talk is cheap, especially if it’s talk about how great you are.

In the private sector, If you can’t produce some actual results, then you won’t get anywhere. But in the public sector all you have to do is tell a story that gets people to vote for you. But elections have consequences. And in this case it’s like we had a vote and decided that the only people who are allowed to drive are those who don’t actually know how. We should be totally unsurprised when they end up in a massive crumpled heap at the bottom of some ravine.

And I personally wouldn’t mind expect someone has to pay to clean up that accident. And around here, its guys like me who always end up with the bill.

There is some admittedly modest good news about this Solyndra thing. At some point in the future, hopefully very soon, we will hear the last Democrat who isn’t ashamed to still be telling us how we need to let government handle our “investments in infrastructure, education and innovation.” I’ve been sick of hearing that from them for months. When we look at the results instead of listening to their words, it’s perfectly clear that they’ve been massive failures at all three. And hopefully those are the kind of results that people will remember.

- You Had Me at "Fellow Members"

No man who believes in allowing the people to arm themselves can be too interested in tyranny.

I'm not quite ready to jump in the Perry pool. Romney understands the capital markets better and the next president will have to do some very tricky dancing to keep things from falling apart. Romney is a politician with a career politician's principles. The wind blows left he goes left, it blows right and he goes right. But for all his spinelessness, he does understand banking.

But as I've said many times before, if I'm a one issue voter, this is the issue I'd pick. And in this video, rick Perry does not sound like someone who is going to try to equivocate away his gun rights view in the general election. He's more likely to say "Screw the NY Times." than apologize for believing in self defense rights. That attitude has a huge appeal to someone like me.

PS Larue really does make an outstanding product (ask anybody), and I think it's unspeakably cool to have a President who not only knows who they are, but what they do.

PPS I don't think I've mentioned this in this format, but I know the guy who at least claims to have talked Gov Perry into running. He's a gun guy.

- A "Fresh" Banking Idea

One idea that seems to be gaining momentum in political circles is the idea of a public bank. Obama wants an ‘infrastructure’ bank, California wants it’s own public bank. But if the Solyndra debacle should teach us one thing, it’s that government should really leave finance to experts.

Public banking is common in Latin America where it’s used as a more direct means to siphon taxpayer money into offshore accounts and foolhardy politically motivated projects. It’s a bank that focuses exclusively on bridges to nowhere, and projects like Solyndra. Since its public, it no longer has to be responsive to those evil shareholders, and the pressure to generate a profit is removed, allowing them to invest in projects that no free market enterprise would ever consider.

That seems like a great idea to politicians. Removing the burden of a profit unchains their hands and makes the political reality the only reality. But when the bill for that idealism is finally tallied, all it would mean is an institutionalized version of the stimulus plan. There is simply no way a government can run a bank any better than the private sector can.

From the moment it opens it’s doors, a public bank would be a bank that’s too big to fail, no matter what it’s size is.

I started my career at JPMorgan and the last bank I worked at was Chase. The fact that I list those as two separate items on my resume should give you an idea of how long ago it was. I am a Wall Street insider, but I haven’t been a banker in a long time. So I don't have any particular axe to grind there. I get that there are things about the big money center banks that are unpopular. "too Big To Fail' is unpopular at my house too.

But a public bank would take the things that many Americans hate about the big money center banks, and base their business around them. It would be like putting a union in charge of running a car company. All the decision making will be wrong, and it couldn’t possible be a long term viable entity. In the end it will cost taxpayers many times more than they expected, and the return they get for it, will be a hundred little Solyndra’s, financed by Freddie Mac and Fannie Mae.

Goldman is sometimes referred to as a giant squid. Well a public bank would be more like a thousand little squids. Eventually, it would be one for the face of every single American.

- A Word On Solyndra

What I don't understand is why this scandal surprises anyone. When I and all the other people on the right were telling you that green jobs and green energy were a waste of time and a hopeless boondoggle, what exactly did you think we meant? This company was chosen because of politics, not the rules of the free market. So what exactly did you expect?

And don't forget, there is another $837,400,000,000 that was spent on the stimulus and all of it was wasted too. I don't know where it went (it's possible no one does) but I do know what the return on it will be... the same as the one on Solyndra.

Oh... one last thing... you know what happens when a company goes out of business? they lay off their staff. There are a few green jobs that definitely weren't 'saved or created'. (What a total BS filled scam the entire Obama administration is.)

- You're Too Young To Die!!!

The picture above was just part of the headline on Drudge. I don't even know what the story was... something about how the first lady thinks we're all too stupid to decide what we want for dinner or something. No shocker there.

But what got me was the bit of graphics on the sign. Upon close inspection it's a kid jumping in the air or something, but when I first glanced at it I saw an image of a fully dressed man aiming downward with his arms stretched out in front of him, as if making a dive.

Since few swim fully clothed, I can only assume that he has finally decided that the guilt of eating a high fat, high sugar diet and leaving a massive carbon footprint in his wake has finally become too much for him. So like any good citizen interested in the issue of overpopulation and the future of the planet, he's finally decided to end it all.

Naturally it left me with a completely different idea of what 'Let's Move' was supposed to mean.

- Is That Fonzi Warming Up?

The most optimistic thing I've read for the American economy, in over three years:

A Democratic strategist said Obama has become such a problem for down-ticket Democrats that he was wary of encouraging candidates to run next year. “I’m warning my clients — ‘Don’t run in 2012.’ I don’t want to see good candidates lose by 12 to 15 points because of the president,” said the strategist.

Fonzi might not be barreling toward the ramp just yet, but he's at least warming up the motorboat.

- NewsFlash!!! Reality May Be Objective After All !!!

At least they Admit it now.

Eurozone crisis could rip EU apart: officials

- This Looks Exciting

There are guns out there like the P90 which try to reinvent the wheel. I personally don't care for that. This gun embraces the design model of the Kalashnikov (simpler is better) and uses a round which is one of the most popular in the world and has already been well proven in close quarter combat.

The 45acp isn't what I would choose as the caliber of my primary weapon. But it is the caliber I use for my primary pistol. (which as they say, is what you use when you're trying to fight your way back to where you left your rifle). And there is no denying that it's earned it's stripes. It was the round used in the 'Tommy gun', the 1911 pistol and countless policemen when given the choice, carry 45acp weapons as well.

Anyway, I like the general thinking behind this gun. They could still screw it up.... they could make the whole thing out of untreated iron or something. But given it's central design principles, I think it's got real potential.

- Too Big To Fail 2: Socialism's Revenge

Personally I thought TARP was a bad idea. Neo-Keynesians like those in the press love to say that the credit crunch was evidence of broken markets but it wasn’t. At least, it wasn’t until TARP broke them. By preventing failure TARP took the one absolutely essential component out of capitalism's economic equation and left the markets shattered. You can’t have ‘creative destruction’ without the destruction.

It’s no secret what the motivation for that was. Hank Paulson wanted to save the network of banks that served as the ‘private’ component of the Fed’s monetary policy infrastructure. It was his belief that if these banks were allowed to fail, the confusion and delay that would have resulted from their reorganization would have shattered the US economy and caused an unprecedented level of economic devastation.

Personally I think there were lots of ways to prevent those consequences without destroying America’s financial markets. But at this point those speculations are water under the bridge. The markets are now broken, and it’s no easier to get the fertilizer back into the horse now than it would have been in autumn of 2008. Banking was already the most regulated industry in the country, and with all those government regulators making decisions about how the banks were run, they weren’t really all that ‘private’ in the first place. Since TARP, it’s even tougher to figure out where the private portion of the banks end, and the government begins.

But there is a new fire in the sky, and this time it’s over Europe.

Europe’s banks are more heavily leveraged than those in America, and because of the unique structure of the EU’s monetary integration, there is no facility for them to put together a TARP for them. So when the asteroid of a Greek default hits the earth (and it’s certain that it’s going to) we are very likely to see what might have happened in America without a TARP.

It won’t be a pure test. The idea of individual economic liberty is regarded with deep suspicion in Europe. They like to give 'Democracy' lip service, but millenia of transmogrifying their tribal culture into modern political systems has left them much more socially stratified than we are here in the states. In Europe they have an elite and the plebs, and the two aren't often mixed. And their governments are much less apologetic about the way they prevent that mixing than ours is.

So Europe’s banks have always been much more integrated with government than those in America. This means that instead of a single bloated TARP program there may be a French TARP for French banks, a German TARP for German banks etc. That’s the way they’re betting at Jeffries, and I tend to agree with them. And if the banks are nationalized in that way, then the future outlook for the Euro is all but nil.

But it's not like the result will be trade-able. Sure the Euro will be falling to some fixed conversion rate with ... well with whoever. But if the Germans leave first or the Greeks will make all the difference. If the Greeks leave first, then the Euro will likely strengthen, but if they leave last it will weaken. It's like knowing that the car will stop running, but you don't know if the wheels will lock up or if it will explode into a ball of flame. So it's tough to know whether to run toward it or away.

Personally I can't wait for a Greek default. However it turns out, It will be a relief to know that reality can't be ignored forever simply because politicians want it to be.

- Big Hedge Fund News...

Bruce Kovner, chief of multi-billion dollar hedge fund Caxton Associates, is stepping down as CEO of the fund, and handing the reigns to Andrew Law, the current Chief Investment Officer.

Caxton, as many of you know, was one of my former employers, and Bruce's personal support was vital to my success there. I know Andrew Law in passing, but as he was based in London my contact with him was really minimal. My contact with Bruce however, was much more direct. It was he who personally decided to fund my trading strategy (over the politically based objections of his administrative staff) and since I made him money for his trouble, I'm proud to say that his confidence was not misplaced.

I can't say my own time at Caxton was always gratifying. Bruce stepped back from operational control of the firm in 2008, and the company had been shifting into 'Bruce Retirement Mode' for years before that. So the back office ended up dictating how the firm was run far more than the front. Settlement clerks and staffers would call traders and analysts and say "I'm sorry we know you can make a profit on it but you can't trade X because we don't have any way to handle the settlement." This sort of discussion was absolutely unheard of in the hedge fund world, but happened at Caxton all the time.

Some of us "front office" guys used to joke that Caxton was becoming a back office with a small trading operation. For someone like me that was counter-intuitive, and I didn't adjust well to it. Even the simplest of business decisions suddenly took on a political tinge that I had more than a little trouble coping with. I was usually focused on meeting goals not soothing people's feelings about it, so I ended up generating some hard feelings with a number of senior staffers. That sort of thing builds on itself after a while if you aren't careful.

All the same though, there were a number of truly extraordinary and brilliant people at Caxton during my tenure, many of whom I'm still proud to call my friends. Given how intensely political the firm had become, I'm surprised at all the talent they managed to recruit and retain. There were also a number of people who... well... let's just say they would probably do well in government work. (For those of you on the in - "remember the Vega.")

But on the whole and for all it's frustrations, it's hard for me to argue that I didn't benefit greatly from my time at there. It didn't end the way I'd have chosen, but it's hard to say that I'm not the better for it. My career is on a totally different path now, and I have Bruce Kovner to personally thank for that.

Caxton will be a totally different firm now, and I wish Andrew and all the people there continued success. Even those who I might not have seen completely eye to eye with. Life is too short to carry grudges. I hope you all feel the same way.

- Better Lock That In While You Can

Greek One Year Bond Yields now providing a 111% yield.



For the record... the title is a joke. You'll never collect on the 111% because the odds of a Greek default in the next year (coincidentally) are right around 111%.

- Misreading The Euro Situation

Upon reflection, I think I might be misreading the Euro situation. I still think it's on borrowed time (this seems to be becoming the prevailing view), but I've been thinking about this from a financial perspective instead of a political one, and that might be mis-coloring my take on it.

Up to now I've been publicly saying that I thought it made more sense for Germany to leave the Euro than for Greece to do it. This was because if Greece goes, then they'll be followed by Italy and Spain and Ireland etc as market discipline is enforced on each of those countries in turn. The result will be a euro that is shattered rather than cracked. From a financial perspective, this is stupid and will result in lost and lots of dislocation - far more than if Germany left and the Euro was then allowed to inflate as the PIIGS require.

But a financial solution is based upon the optimal outcomes, and politics isn't about outcome, it's about intention. The inevitable solution to the Euro crisis will be political not financial. So I think it's entirely possible that Greece is forced out, followed by the rest of the big spenders, even though it will be worse for everyone.

Greece cannot survive without a change to the euro structure. That's a foregone conclusion. The chickens (to quote a Chicago area clergyman) have come home to roost, and reality is knocking at the door. To imagine that Germany will take on any amount of pain that it isn't absolutely forced to in order to ease the transition of the Greeks is probably mistaken. Even if would mean even less cumulative disruption for the Germans as well.

The politicians will believe that they can avoid some portion of the consequences, right up to the edge of the waterfall. Once they go over, they'll believe they can avoid the consequences of hitting the bottom, and once they hit the bottom, they'll believe they can avoid the consequences of going under.

For these people, hope isn't guarded optimism about the roll of the dice, it's a mandatory worldview which involves ignoring all potentially negative outcomes. People like don't reach optimal solutions - ever.

- Andrea Tantaros: The Smartest Girl On FoxNews

It's not what you're thinking. Watch this bit of video from "The Five" and tell me that her idea about creating jobs isn't the most clever thing you've ever heard.

- The Shrinking Penalty For Frankness

Was there a debate last night? I didn’t notice. Some cable channel or something? Was any one interesting there?

Actually I saw a clip or two this morning on Squawk box. I watched Romney getting firmly behind ‘saving social security’, which since he’s been firmly behind both sides of every other issue, I would expect nothing less from him. And while I recognize that it’s a much more marketable position (or why else would Romney hold it) I don’t’ think Perry’s ‘Ponzi scheme’ position is the political liability the talking heads seem to think it is.

Maybe I’m unique, but for more than 30 years I’ve known that the government was going to screw me when it came to Social Security. I knew that when it was time to collect there would be some story. “No no,” they’d say, “we know you paid in like everyone else, but we meant that it was really just for minorities, or just for poor people, or just for people who are not like you. We’re terribly sorry you misunderstood, but… there it is.”

I’ve been expecting that talk from them for so long that anything else would genuinely surprise me. I don’t know when precisely it’s coming, but I don’t expect it to be handled in a speech. I expect it to be a form letter, followed by a phone call where some faceless officious bureaucrat tells me to F-off, in so many words. They’ll deliver the news individually, to just the people who they’ve decided don’t warrant the benefit any longer. They'll be careful not to let it snowball into a political groundswell.

When the government takes money from my paycheck, I think of it as stolen. I think of a government official shaking me down for a piece of the action like some supporting character from the Sopranos. They’ll allow me to drive on their roads and will send a police car by to fill out a form if if some liberal throws a brick through my window, but that’s really it. I get (and according to them am only entitled to) an absolute minimum of government service. And the vast majority of the money they take from me will simply be given to someone else, who they believe 'deserves it' more than I do. That's the way of the world in 21st century America.

Rick Perry is being criticized for saying that Social Security is Ponzi scheme... but I think that’s a technically correct characterization. What’s more, I don’t think saying so is the political liability that some people believe. If you're like me and you don't really expect to get anything for your money except a form letter and excuses, who cares what you call it? The truth is, we already know what it is. Just because Perry treats we citizens with enough dignity to tell us the truth doesn’t necessarily mean that he’s any more likely to deny us a benefit than anyone else. More than anything that issue will be decided by demographics and math.

I think in this election cycle there will be less of a benefit for saying the pretty but empty words, and less of a penalty for saying the hard truth than there has even been in my lifetime. I think the American people are thoroughly sick of being told what politicians think they want to hear. I think Christie has figured that out, and although it’s angered the press, it has not been received badly by the people. And if a politician can say the kind of things in NJ that Christie has without getting crucified, then calling Social Security a Ponzi scheme will play just fine in Peoria.

Remember, there are more people out there who believe exactly what I do on this topic. I believe that all that social security money has been stolen from me. When it comes time to pay me, all I’ll get is excuses. That’s my expectation. It's tragic that I get such a raw deal from my government, but to be honest, I'm getting used to it. And if someone running for president actually admits that to me, that alone may be enough to get me to vote for him.

- Even In China They Laugh At Bloomberg

How's that anti-gun campaign working out for you Napolean? Maybe you should have some private eyes infiltrate Brooklyn. At least it's in your city.

Mayors against illegal guns? How about Mayors against not letting your law abiding citizens be victimized by criminals who don't care about your idiotic gun laws?

- How Keynesian Stimulus Could Fix Things

Here’s the thing that almost no one will tell you about Keynesian stimulus. The truth of the matter is, if you make it large enough it will probably work. OK … hang on… I haven’t slipped a cog. Dr. Friedman isn’t spinning in his grave or anything. In fact he’d probably agree. But he’d still say (as I do) that it simply isn’t worth the cost.

Lets say we gave Paul Krugman his dream. We'll give him say...10 Trillion to hire people to dig holes, and another 10 Trillion to pay others to fill them in. Any child (even Krugman) will tell you that there won’t be any wealth created in that process, but it will get capital flowing. Those people will leave work every day and buy shovels, or gloves, or new boots or whatever and the people that make and sell them to them will generate wealth. So if you spend enough, there will absolutely be wealth created, and the Keynesian stimulus will work.

That’s the benefit. Now let’s talk about the cost.

Obviously 20 Trillion in new deficit spending couldn’t possibly be supported by our economy, but all that money will still have to be paid back. And paying back that money means higher taxes. It would require a level of future taxation which would bankrupt the nation. In fact, since so much of our current budget is applied to debt service, it’s accurate to think of that portion of our tax base as applying to past Keynesian stimulus. Our economic growth today is lower because we already spent the money in the past.

In that way Keynesian spending is just like an addictive drug. You build up a tolerance to it in the form of a greater portion of your existing tax revenue devoted to serving the debt of past stimulus. And at this point, the amount of deficit spending we’d need to feel the buzz we’ve so come to love, would be so large in it’s own right that it would very likely kill us.

So would another Keynesian Stimulus plan like the one the president is offering actually work? Well not in the size he’s proposing no. But if it were large enough... sure... it probably would yeah. But would it be worth it? Well since it would be so large as to destabilize the entire US economy I'd have to say no. It would cause rampant commodity inflation, rapidly rising interest rates, or both.

And even if it did work, the future tax level required to pay it all back would be so choking that we wouldn't survive it. So the very best case is that we'd last until the end of the next business cycle before utter economic collapse. That doesn't seem like such a great plan to me.

It's wildly inefficient. Even working from a clean slate with no past stimulus to make up for, it's still wildly inefficient. And at this point, we've already had too much Keynesianism to cope with the level of inefficiency that would be required to solve things.

It's like putting Gin in your diesel engine. It may work, but there are many better ways to solve things. And at this point any more of it will do more harm than good.

- Already Not The Hunting Season I Was Hoping For

This is the time of year that my thoughts typically turn to Deer and if time permits, Bear - but I've barely been out to shoot this year. To be perfectly frank about it, this year I’ve got more work around rancho RFNJ than I can manage.

First it was my bridge. I have a 16 foot bridge which spans the brook in my back yard and had been damaged last winter by a combination of a knot in the main support beam and a poorly placed falling tree. My buddy Rob came by a few weeks back and we fixed it together, adding 2x4 braces for the damaged beam and moving it a few feet downstream to save its supports from bank erosion.

Then there was 30 year old brickwork on my front stoop which was all but falling apart. Brickwork is expensive, even when done by illegal immigrants. So instead, I did a little research, learned something about it on youtube and patched the brickwork myself. The results weren't perfect by any means, but they were far better than the patch job that preceded it. And after a few months of dirt gathering on the new stuff to make it look like the old, I'm sure no one will be able to tell the difference.

Then there was Irene. She left us without power for 5 days, flooded my basement, and with a little help from my sweet but somewhat nervous dog, left my office carpet smelling like the world’s largest dirty diaper. We pumped out the water, threw out the mess from the basement (thanks again to Rob and his wife Jane) and pulled up enough of my office carpet to eliminate the horrid smell. (Our neighbor Mrs Kravitz is still complaining about the smell the carpet is emitting while out at the curb.) But the process cost us about 10 days which we had planned to devote to other projects and has left us all exhausted. Meanwhile, every time the lights flicker my wife exhibits the effect of post traumatic stress syndrome.

Next is my pool. We were going to replaster it in the summer but we thankfully decided to wait. Instead we had an ugly but serviceable pool through the hottest part of July and August. In hindsight, that was the way to go, but it means we need to get to it now. We had planned to be working on it last week, but with the power out, we were a little hobbled. So now it's at the top of the list, but the weather is giving us trouble. Plaster needs 48 hours of clear weather to dry, and another 24 to apply it. At the moment, that's proving problematic.

By the time we get done with all the prep work and meet the weather requirements for the plaster, it will probably be three weeks from start to finish. And that puts us very near October 1st – deep into the most important part of Bow season for NJ Whitetail. Normally I would rush straight out into the woods, but at that point my adventures in home ownership still aren't over.

When the pool is finished I have to come back inside and install my new hardwood office floor. As it stands it’s half ratty 30 year old carpet, half exposed plywood subflooring (with a vague smell of pee), so I think I'd rather get to it. This job will be complicated by the fact that the heaviest furniture in the house is in my office, and just moving all of it out may be a full day’s job. (With all the disorder added from emptying our basement during the flood, it may take another full day to figure out where to put it.) That will mean about another full week of work, but at least I won’t have to wait for the weather.

By then though, I’ll be well into October, and it will be too late to build a mock scrape like I had planned this year. (It’s a deer hunting tactic… look it up if you’re curious.) So I’ll have to go with a corn feeder, estrous doe and a decoy like I did last year, even though I won’t have nearly the same amount of time to devote to it. Getting out for Bear this year seems all but impossible... again. But with that new hardwood floor in my office I’ll have a perfect place to put the Bear if I ever get a chance to shoot one.

Then there is the pheasant hunting event I plan every year which requires some planning and arranging. We’re going big on this year’s hunt with as many as 16 people and 4 separate guides so there are all sorts of extra issues to worry about. Most of the hunters are guys who have been involved at least once before, but we have a few father-son teams this time, and a few first time hunters. So having it go well for everyone involved will probably be a bigger priority for me than just showing up and shooting. you'd be surprised how much work it takes.

So as it stands, my hunting season is already seriously hampered and it’s barely September. Hopefully a few things will fall the right way and I’ll have more free time than I thought, but at present, my 2011 hunting season is looking pretty limited. then of course, January will show up and I'll spend three months sitting around the house making a nuisance of my self for the Mrs.

Isn't it always the way?

- A Euro 'Hard Landing'

I think this is an excellent article from ZeroHedge, with a few caveats.

First, anyone that says they think Greece should leave the euro is either a fool, or they're trying to make a political point. Greece should not leave the Euro, because if they did, the hammer of the financial markets would instantly fall on Italy, then Spain, and Portugal, and Ireland each in turn (although maybe not in that particular order). Some elements of the German political elite seem to believe that they can expunge Greece and keep both the Euro and their competitive export advantage but it ain't so. If anyone is leaving the Euro it's Germany. Letting the Euro become the 'Italian Lira' of southern Europe, is all the markets will allow.

Secondly, with the speed at which the situation in Greece is degrading, a 'hard default' (a Lehman moment) in 2011 is quite likely, and if not...then in 2012 it's all but assured. The only real question is whether the rest of Europe's political elite can get something together in time to save everyone else. Greece is finished. All further discussions should start there.

Thirdly, in some ways this reminds me of a game of poker between actual reality (represented by the markets), and 'political reality'. Neither player has much of a hand but they'll keep raising the stakes until something bad happens. Something bad happening in the markets is a hard default, a banking failure, and a severe economic slowdown ala 2008. Something bad happening in the 'political reality' is violence.

I believe we're past the point where both can be avoided.


%%%%%%%%%%UPDATE%%%%%%%%%%

Oh jeez I almost forgot.... UBS agrees with me.

- The Euro Future... Don't Blink...

Yesterday Switzerland committed to a currency peg to the Euro, and it was described in the more hyperbolic media venues as the first shot of a currency war. Today that war claims it's first casualty. It's being reported that the Swiss President Micheline Calmy-Rey has resigned.

This is hardly the fall of the Berlin wall. The Swiss don't have much faith in politics and don't attribute much authority to any specific position. They prefer a relatively loose federation and local control. Centralization just isn't their thing. So to lose one president (if you take your cue from the market's lack of reaction) isn't such a big deal.

Rest assured, the political leaders in Italy, Greece, Germany and Spain will not be leaving so gracefully. To my American eyes it looks like they are clinging to their power with all the white knuckled determination they can muster.

Back when we were coping with the Lehman bankruptcy and the Credit crisis, I described it as 'watching a man fall down the stairs in slow motion. Little did I know... he could fall even more slowly than that.

- Send Jimmy Hoffa A Tea Bag

By now you've all heard what a classy guy Jimmy Hoffa is - threatening to drag Tea Party matrons through the bloody streets or some such. (The rhetoric he used was so violent that it frighted any accurate recollection right out of me... isn't that how it works?)

That Jimmy Hoffa is a two bit thug surprises no one. But his membership should remember who to thank when they get all those new union jobs at the new Ford plant. Oh wait a minute.... thanks (in part) to the contributions of organized labor leaders to the new civilized political dialog, Ford has decided to build their new plant in India instead.

Let's see the NLRB put them in a choke hold over that one.

Halfway through writing the above, my buddy Craig sent me a note about Hoffa's brave statement to slaughter grandma's to preserve entitlements or some such. (As you can see, I'm still coping with my earlier mentioned horror.) He had found a Freerepublic post by Mike Evers, telling people to send a TeaBag to Jimmy Hoffa to let him know who he's dealing with. Personally I think it's an excellent idea. It's the kind of genuine grassroots effort that the Tea Party is really known for.

The Freerepublic post can be found here.

And the address for that bundle of... class... Hoffa is here:

Teamsters General President James P. Hoffa,
25 Louisiana Avenue NW, Washington, DC 20001

- Euro Crabs In A Bucket

The Swiss have pegged the Swiss Franc to the Euro at 1.2 and have committed to buy all the EUR necessary to maintain that peg. For me, this immediately conjured the image above.

The thing about crabs is that if you only have one crab in the bucket, you need a lid. If you have two, you might still need a lid if one is much larger than the other. But as soon as you put that third crab in, you can take the lid off because none of them will escape. If one makes some progress the others reach up and pull it back down.

The three Euro crabs are Germany, the easy spending Mediterranean countries, and now the Swiss.

The most interesting thing about this peg as far as I'm concerned is the fact that it raises the stakes for the German leadership. With a Swiss Franc pegged to the EUR, it becomes even more politically costly for Merkel et al to admit defeat and toss out the euro themselves. The odds of an independent DM have just fallen significantly in my opinion.

In essence this Swiss decision is a bet on the status quo of European politics. It's a bet that whatever the cost, euro integration will continue apace. But if you are someone like me who believes that the sort of integration required is probably impossible, then it also increases the odds that the people of Germany will require force to regain control over their government.

In effect, it's packing the lid on to Europe just a little tighter, and letting the political pressure build a little more. I think it's safe to say that the longer this goes, the less likely it will be settled without violence.

- A Creation Myth Without A Creator

I'm reluctant to post a link to an uncommon knowledge video without posting the actual video, but I think this one is worth it. I see it as a sort of test of intellectual honesty.

In it, David Berlinski is talking about some of the issues concerning Darwinism, and I'm sure he's infuriating all the right people. He's talking about something real that can't really be disputed in my view. He's talking abut something bigger than the theory itself. but in many circles, asking the very question will bring derision, ridicule and dismissal. Question evolution in the teacher's lounge, and you'll get a reaction not too dissimilar to shouting "SCREW ALLAH", into a London mosque. (You had better wear your body armor.)

But since it so angers the people you say it to, I think this is a truly beautiful thing to say. I believe it reveals a fundamental truth about the people who listen to it. Those who claim to have open minds but really don't, will react to it with hostility while others (who are deemed by the intelligentsia to be 'know nothings') will view it as confirming something they always instinctively knew, but might have been unable to phrase so elegantly.

To end the suspense, he's not talking about the viability of the theory on it's own, only on the theory as it's treated in academia; as a replacement piece of mythology. He's criticizing it as a central tenet of the religion of science. I have my own opinions about what he says, but I'll leave that to you guys to assess. I will say though that I think it's a really compelling argument to make, and worth having a look at.


David Berlinski discusses why he thinks Darwin’s theory is flawed.

- Why NJ Needs "Right To Work"

I find I have to say this a lot lately, but I have no problem with labor unions, only the massive legal advantages that labor unions are awarded. Among those advantages are a series of laws which make union membership 'compulsory' once a union is voted in. In effect the unions become a 'monopoly' on labor. And like all monopolies, it's government force that keeps it in place.

If union membership wasn't compulsory, things would probably change. The most corrupt of the unions would probably just wither away, but if a union was offering a genuine benefit to it's members, I could easily see union membership rising. This might not suit my particular tastes, but if that's how people choose to have their money spent then far be it from me to argue. I'll always support the right of people to decide how to spend their own cash even if it's on something I don't personally care for. So if that admittedly unlikely circumstance were to actually occur, I could easily see myself arguing for greater union membership.

Unfortunately, in NJ that's all moot because the choice doesn't exist. Union membership in our state is still very much compulsory. If your workplace is unionized you either pay your union dues, or you don't work. In fact, the government will take the money directly from your paycheck on behalf of the unions, to avoid any mistakes. Non union labor is prohibited by law from offering competitive bidding, and if they offer it, the company (or the government department) is prevented from accepting it.

IN NJ, unions are a nice racket, with all but complete legal protection from outside forces. They can do what they like to who they like - which is why every business with a strong union that can move from NJ, already has.

Chipping away at that monopoly on labor and making union membership optional by not giving such a huge legal advantage to them is called the "right to work". It's overwhelmingly popular with the workers but far less popular with (guess who) union bosses. And in Wisconsin, those union leaders just spent 20 million bucks of member dues trying to recall legislators who weakened their position. But they tried to do it without actually telling anyone what they were really upset about:

Last month, Big Labor–launched recall elections, we were told, would wipe out members of the Wisconsin state senate who . . . well, it wasn’t entirely clear.

By looking at the television ads paid for with union dues, you wouldn’t have the slightest idea that’s what the fight was all about in the first place. “The millions of dollars in commercials in support of the Democrats did not talk about unions,” one Wisconsin union official wrote online.


Mark Mix goes on to give one of the most lucid explanations of the current state of 'right to work' initiatives, and if you read the whole thing, it's easy to see the advantage that this would have for NJ.

NJ is a strong union state. Unions are all about corrupting the political process, and NJ is nothing if not corrupt. In fact in NJ, I think it's fair to say that both parties are as corrupt as they can manage. (The arrest record of both parties does seem to support that view). But if NJ were to adopt "right to work" rules, it would defang the unions and over time, eliminate their bought political sock puppets.

The net result would be a more effective Democratic process, and a better (probably smaller) government.

- Political Truth In Advertising

My wife has become a big fan of the "The People's Cube". She cracks up at the over the top stalinisms: "We report... We Decide" and the like. And this bit from them is pretty good, and worth your time.

- Call Me Ishmael

I was telling someone last week that I really feel sorry for Obama sometimes. I think if anyone anywhere had explained to him how the world really works, he might have been able to understand it. Regrettably, he was instead inculcated in academia, where almost no one has any idea what drives the great wheel of life. Instead they have this great invented drama of the villainous rich, their victims the poor, and the redistributive heroes.

In fact, if he gets fired for his anti-business excesses and those of his staff, it will undoubtedly be the very first time he's ever been held accountable for anything he's ever done. That's the way it is with academics. When they get things wrong, it's always someone else who pays.

- Rolling Back The Green BS

The good news is that team Obama is rolling back the energetic EPA smog regulation which promised to boost energy costs and in the process kill jobs. But there is bad news too.

The bad news is that this means that Team Obama has always known that their BS green agenda would kill jobs and they did it anyway. It means that the great question of whether the Whitehouse was motivated by incompetence or malice is settled. They knew all along that their environmental polices would kill jobs but they felt that it was a small price to pay. Average Americans of course, paid it.

So now at least we know.

- Zero Job Growth

The failure of the Obama economic worldview can't be describe more succinctly than this:

Their position throughout this recovery has been that the U.S. can have the highest corporate tax on earth, a big regulatory crackdown, and a vast expansion of labor-union power, and still expect a positive jobs story because of cash-for-clunkers and green jobs. This jobs report indicates how much damage that view has done.


This is what you get when you have economic policy being guided by a combination of union bosses, environmental lobbyists, and officious academics who don't know any better than to listen to them.

- And Then There Was Light

...and near the end of the fourth day, Thomas Edison finally came through.

We once again have power here at RFNJ. Thanks to all the folks who offered help of various sorts, via email and the comment section. I'd like to especially thank Rob and Jane who toted the barge and lifted the 120lb bail with us in until fairly late last night. Now when we really do have to bury those bodies, the neighbors are fully acclimated and won't think to call the cops. (For the rest of you - it's probably better you don't know.)

Unfortunately we're still digging out here, so it's going to be a little while longer before I have anything worthwhile to say beyond this:

Stocks are overbought, precious metals oversold, and the odds are actually quite good that this is the month when the Euro dissolves. As for the Fed, if we get QE3 now it will be a weak and anemic thing, and won't even be able to get over the very limited bar of effective monetary policy.

We might get it, but I hope they wait a little longer to let the market sell off and silence some of the political criticism. Then they'll be able to do something that might have some limited impact. Acting now means they'll probably have to do something later too, and I can't imagine what the politics of that decisions will look like.

But enough of that fun, I have to go pack 5,800 lbs of wet cardboard into lawn and garden bags in order to fool my garbage carrier into carting it away. (There is never an illegal alien around when you need one.)