Friday, April 30, 2010

Don’t let social conservatives hijack the TEA party; if they do we may never get our Constitution back.

By Nick Sorrentino

Why do people dislike Obama so much? The establishment left seems to think, or at least says it thinks that it is because Obama is African American. In their eyes what the TEA Party represents is a reaction (in the Marxist sense) of bourgeois white people to times changing. These folks have never been for change and now that there is a black guy in the Oval Office, they are really pissed.

With smug derision the establishment media dismisses the grievances of the TEA Party as the grievances of those who long ago had been marginalized. How dare they insist now they have a voice. How dare they get in the way of the inevitable progression toward a full welfare state? This is what we have been waiting for. The media will be damned if a bunch of what they perceive as yokels, who have probably never even seen a New York Times let alone read one, derail the statist train.

The establishment media also perceives an existential threat. They have been the establishment for a very long time. Spouting a generally a left of center, but also generally pro-corporate, northeastern, perspective, they see that readership is down. Yet blogs sprouting up from points unknown (to them) somewhere between New York and LA are growing by leaps and bounds. The “peasants” with the pitchforks are getting together. This can not be a good thing they perceive, and it isn’t for them.

New news powers are emerging where before the establishment was unchallenged. Only 15 years ago there was no Fox News. I personally can not stand about 95% of Fox News’ broadcasting, but the point is that there used to be no alternative at all to the New York Times-CNN-Washington Post informational industrial complex. At least Fox does have a different point of view even if it is boneheaded.

Andrew Breitbart of Breitbart TV putting up 100k for proof of racist slurs made by TEA Partiers against members of Congress would not have happened even 5 years ago. The establishment perceives correctly that times are changing, but it is they who are vestiges of a bygone era not the TEA partiers necessarily.

The stakes are incredibly high. If the TEA Party is able to establish mainstream legitimacy- as it has to some degree- then there is a real challenge to the establishment. The whole discussion changes. Points of reference shift. In an effort to remarginalize the TEA party movement the establishment continually refers to the TEA party as a racist one. It is a “conservative” movement they say, not a classically liberal one as many within the movement believe it to be.

Of course some within the TEA party characterize themselves as “conservatives.” Many, in fact. This is a real trap for the TEA party, which at this point has a chance to restore the Constitution. We will waste this incredible opportunity to change the whole political conversation for a generation if the TEA party focuses on social issues, and not economic ones. TEA, stands for Taxed-Enough-Already, its foundation is one of economic classical liberalism, or libertarianism. If the TEA party instead embraces the tactics of the GOP and begins to emphasize social issues, the war in the end will be lost. The establishment will be able to make the case that the TEA Party is not in fact about a smaller state but about a group of people who just can’t stand cultural change.

Please, TEA party nation, don’t do this.

We should be against taxes, opacity in government, and the subtle tyranny of an ever growing bureaucracy.

We should be for personal freedom, large corporations being allowed to fail, entrepreneurialism, truly free markets, an end to deficits, and an end to the Federal Reserve which manipulates the economy and destroys the savings of everyday people.

If we hold to these principles we win. If however the TEA party goes down the “conservative” route instead of the classically liberal one we will lose, not to say betray the very spirit of the Republic.

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Thursday, April 29, 2010

Commercial real estate is getting hammered.

In March, the delinquent unpaid balance for CMBS (comercial mortgage backed securities) rose $3.23 billion, up to $51.05 billion from $47.82 billion a month prior, according to Horsham, Pa.-based Realpoint LLC.

Overall, the delinquent unpaid balance is up 268 percent from a year ago and is now more than 23 times the low point of $2.21 billion in March 2007. The distressed 90+-day, foreclosure and REO categories grew in aggregate for the 27th straight month—up by $2.57 billion from the previous month. The total unpaid balance for CMBS pools reviewed by Realpoint for the March remittance was $798.22 billion, up slightly from $797.1 billion in February.

More on this story here.

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Wednesday, April 28, 2010

Alert: Greece "Turning Viral" Sparks Search for EU Solutions

“This is like Ebola,” Organization for Economic Cooperation and Development Secretary General Gurria told Bloomberg Television yesterday. “It’s threatening the stability of the financial system.” The World Health Organization calls Ebola “one of the most virulent viral diseases known to humankind.”

Click here for the story.

Judge Napolitano on the Arizona immigration law

Monday, April 26, 2010

Sunday, April 25, 2010

Sins of Our Fathers

By Randy McKeen

Oh how far we’ve come in this world! Our ancestors wouldn’t recognize or understand our current world. Yet transport their forefathers of any century to their world and they could assimilate easily enough. The world can stand in awe of itself and it’s achievements. We no longer need to be an agrarian society. We’ve urbanized, socialized, educated, fed and saved more lives today than any in the past. Yet as we’ve advanced we haven’t just left behind archaic occupations and machinery we’ve lost what brought us this far. One of our greatest sins as humanity is forgetting we are human.

We have lost touch with the reality of our human condition because we are so blinded by our other successes. Humankind ignored several lessons in the last 100 years. One of the most prominent is the understanding of human nature. Our advancements in various fields of study do not intrinsically push our own collective minds above reproach. We all fail, falter, make mistakes and every other vice known to man. To assume we are no longer the same people who walked this Earth 100 or 1000 years ago is nothing but a foolish dream.

We must assume that greed will exist in the poorest and wealthiest; murderers are created out of slums and mansions alike, etc. It is imperative to remember that no environment is powerful enough alone to stop our vices from coming to the surface. It is a singular personal endeavor to overcome our imperfections. This lesson must be learned anew in every person and generation. No personal change of character can happen without the internal desire to transform.

No conversation can be had with anyone who doesn’t understand that one lost lesson. No liberal/progressive can have an educated discussion while they assume they are by their nature better than any person in history. No conservative will be approachable while they still see others as barbaric and unworthy. We were born of our fathers and we still have the selfsame sins to individually deal with.

In Army’s Trauma Care Units, Feeling Warehoused

A story from the New York Times, not my favorite paper. This story is quite good however and chronicles conditions in the Army Warrior Transition Battalion, used to help psychologically distressed GIs either return to duty or transition out of the service.

It is a sad story. GIs it seems return after serving their country on the front lines, seeing friends die, and living under excruciating levels of stress for years, to treatment that is inadequate at best and even possibly damaging.

We are still engaged in 2 major wars, though everyone seems to have forgotten this, and the casualties continue. The psychological causalities may be among the worst. Imagine leaving for Iraq, young and healthy, to return to your home so psychologically battered from war that you can barely function. Add being caught up in a bureaucracy that sees you not as an asset any more, but as a liability to be swept under the rug.

It seems to me that if this country can go to war, as wrong as that was in my opinion, at least in Iraq, it has an obligation to help its traumatized soldiers with first class care. The problem is that many within the Army bureaucracy seem to see these veterans as weak because of their injuries, not people who have sacrificed nearly all in their duty.

With no doubt, the situation is not as black and white as this. I am sure that there are deeply committed people caring for these soldiers. But it seems to me that we can do a better job. The problem is that the Army is a bureaucracy of bureaucracies and like all bureaucracies regards the individual with little respect, especially after they sign their rights away when they enlist.

Click here for the story.

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Friday, April 23, 2010

Go "find America." Whatever the hell that means.

If you are between the ages of 17 and say 23 read up.

If you are not a parent yet or married, two wonderful things I can attest, yet, if you are neither of these things pay attention.

Most people get one chance to check out if they are lucky. For Gods sake. Take it. The opportunity will be gone before you know it.

Save $10,000 or get $10,000 and take off. Just drive. Drive to some place you have never been before and then just keep driving. Once you have a wife, or a husband, kids, and a mortgage you only get to do this if you are rich. Even then you’re tied down in other ways. So go now. Don’t listen to the people who say you’re nuts. They suck. You live once.

Get high on the rim of the Grand Canyon. Go to the Village in New York. Stand on a glacier in summer. Drink till you can’t see, once, in New Orleans. Live life. See America, or the world, while you can.

Trust that despite rainy days spent on the side of the road with only cardboard as your protection it will be the best time you ever had.

Corporatism is bullish

So as time goes on and the bottom doesn’t fall out of the financial universe the bulls are feeling more and more confident. I don’t blame them. They should feel confident. The market has gone practically straight up since the March 2009 lows. Everyone on Wall Street is making money again. Things are good.

I suppose they are. The people who didn’t sell in the panic have been paid back. There seems to be life in retail. Perhaps the storm has gone.

But, big surprise, I don’t think so.

That is not to say that there is not money to be made in the market. There likely is, lots. Basically the Federal Reserve is laundering huge amounts of US currency through the Wall Street system as we speak.

You’ve heard that you can’t fight City Hall. Try fighting the Fed. Many have tried lately and nearly all have been crushed.

So I say, just accept that we are in a new reality. The US is now officially a corporatist state and the corporations that pony up to the government trough are the ones that will make the fiat money. So buy defense, prisons, and banks. You should do very well.

Thursday, April 22, 2010

Money finds its own level, just like water, too bad we don't let it.

By Nick Sorrentino

One of the frustrations with being an advocate of Austrian economics is how often it is ignored by the establishment, despite it's obvious use and accuracy.

Austrian economics gives one a prism through which the most recent economic debacle makes sense. At it's core the downturn is the same as every downturn since the beginning of the modern economic era. The central banks did not allow capital to find it's true interest rate and so with time this false reality broke down and the economy had to react. The fall between the central bank established cost of money and the natural cost of money is a disruption, or a recession.

When the economy travels the distance between the established interest rate and the natural interest rate of capital, businesses close, and people lose their jobs and homes, because the cheap money that fueled the pre-contraction "growth" disappears. The more disconnected the two rates of interest are, the worse the recession.

Recessions are not bad. They are just the economy seeking to find it's own level, much like water.

If we want to mitigate the business cycle, and by extension the severity of recessions, we must allow money to seek its own value level. Instead of periodic deluges produced by economic kinetic energy pouring over and bursting through Federal Reserve created economic dams , a free flowing currency would instead rise and fall by smaller amounts and in more predictable ways.

Allowing the Fed to arbitrarily set the value of money (even though it is an illusion and always fails) is pure folly. Allowing interest rates to fluctuate freely makes much more sense.

The problem with a free market in currency is that it increases transparency and accountability. These may not be problems for you and me, but they are for people in power.

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Wednesday, April 21, 2010

4/20: On National Weed Day, Has Legalized Pot's Time Come?

A day late. Great article.

Click here for the story.
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Monday, April 19, 2010

Why the TEA Party is happening now versus in the Bush years

Time Columnist Joe Kline accuses Beck, Palin of sedition

So this is the kind of nonsense that is coming out of the establishment press now? Below is a quote from Joe Kline from the Chris Mathews Show. The video link is also included.

"I did a little bit of research just before this show - it's on this little napkin here. I looked up the definition of sedition which is conduct or language inciting rebellion against the authority of the state. And a lot of these statements, especially the ones coming from people like Glenn Beck and to a certain extent Sarah Palin, rub right up close to being seditious."

Click here for the story and video.

I've got real issues with Palin as readers of the LER know, and I have some issues with Beck too. But this ongoing effort to marginalise a huge part of the population by the dying establishment media is unfortunate to say the least.

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Sunday, April 18, 2010

Ron Paul MD delivered the TEA Party into the world

It is interesting that there is a group of people within the TEA Party who continue to be uncomfortable with Ron Paul. They still cling to outdated concepts of what "conservatism" is.

It's very hard in my estimation to be for small government and leaving people alone if you are for locking people in jail for possessing cannabis, for example. Yet some in the TEA Party still seem able to justify such positions despite saying they are advocates of the Constitution. I think many people in the TEA Party's social conservative wing are coming to terms with issues such as this right now. We'll see how it shakes out.

Regardless it should be remembered that Ron Paul laid the foundation for this movement. The "conservatives" who now count themselves as members of the TEA Party Nation would be wise to remember that Fox News, and the Republican leadership have for years done everything they can to take Ron Paul down. Don't forget this.

From the Atlantic:
Ron Paul: Tea Party Godfather?

Thursday, April 15, 2010

The REAL cost of Taxes : From Cato

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South Park's 200th, litigious celebs and Mohammed: Matt Stone and Trey Parker

South Park is arguably the best written show on TV, and has been for a long time. Matt Stone and Trey Parker have made a very good living by telling the truth about American society through cartoons. Making money by telling the truth is a very good thing.

Last night their 200th episode aired.

Below is an interview with Stone and Parker talking about the 200th episode and how they feel about Comedy Central censoring the graphic representation of Mohamed.

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Wednesday, April 14, 2010

US bank accounting 'masks true debt levels’

Kudos to Max Keiser my favorite non Austrian economic thinker for calling this months ago. Basically the banks are playing a game of picabo with the debt they are holding. They are unloading it prior to reporting and then taking it back on after report. Max Keiser says that this is standard practice withing the banking establishment, especially since the crash.

For all you guys feeling good about the money you've been making in financials in past weeks, read this article.

Click here for the story.

Tuesday, April 13, 2010

Small US Businesses in No Hurry to Hire: Survey

This article is from CNBC. Basically it says that small business owners are not hiring despite what CNBC reports as a modest uptick in the economy. This is not good news, especially with fuel prices rising.

But Jan Hatzius at Goldman Sachs sees no reason for concern:

"I don't think it's that big a deal. It's clearly a weaker number and it illustrates the continuing gap between the large firms developing from the ISM survey and not much change in small businesses,"

So big businesses with access to government are doing OK, like say, firms like Goldman Sachs, but the smaller businesses without access to government largess are being crushed. Fantastic.

Its a good article but check out the comments at the end for a window into what small businesses are seeing. They are illuminating.

Such as this comment from "lawone."

"As a small business owner I see NO reason to hire or expand only to be penalized by this administration's tax policies and regulatory scheme. In fact we will down size here until the "climate" for business changes. I am simply tired of being vilified for being successful."

How many of these guys are just packing up and moving to Galt's Gulch?

Click here for the article

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Monday, April 12, 2010

McCain top 20 donors

Number 1 corporate donor: Merrill Lynch

Merrill Lynch $373,595

Citigroup Inc $322,051

Morgan Stanley $273,452

Goldman Sachs $230,095

JPMorgan Chase & Co $228,107

US Government $208,379

AT&T Inc $201,438

Wachovia Corp $195,063

UBS AG $192,493

Credit Suisse Group $183,353

PricewaterhouseCoopers $167,900

US Army $167,820

Bank of America $166,026

Gibson, Dunn & Crutcher $159,596

Blank Rome LLP $154,226

Greenberg Traurig LLP $146,437

US Dept of Defense $144,105

FedEx Corp $131,974

Bear Stearns $117,498

Lehman Brothers $114,357


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Obama's Top 20 Contributors

Number 1 corporate contributor: Goldman Sachs.

University of California $1,591,395

Goldman Sachs $994,795

Harvard University $854,747

Microsoft Corp $833,617

Google Inc $803,436

Citigroup Inc $701,290

JPMorgan Chase & Co $695,132

Time Warner $590,084

Sidley Austin LLP $588,598

Stanford University $586,557

National Amusements Inc $551,683

UBS AG $543,219

Wilmerhale Llp $542,618

Skadden, Arps et al $530,839

IBM Corp $528,822

Columbia University $528,302

Morgan Stanley $514,881

General Electric $499,130

US Government $494,820

Latham & Watkins $493,835


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Friday, April 9, 2010

Álvarez Paz's arrest is evidence of Chávez's abuse of the legal system and the silencing of his critics: By Václav Havel

The arrest of Oswaldo Álvarez Paz, a former president of Venezuela's Chamber of Deputies, governor of the Venezuelan state of Zulia, and presidential candidate, should concern the entire world because it demonstrates just how far President Hugo Chávez's regime is willing to stray from democratic norms.

Click on the paragraph for the story. Keep wearing those Che t-shirts kids.

If the stock market's up, it must be rigged...right?

Yesterday we posted a video of Charles Biderman making the case that the stock market is being manipulated. He still believes this but his investment stance has changed a bit since that video which was filmed in January. Here is a piece from March 31 outlining his bullish perspective.

It must be said Biderman does not seem to abandon his assertion that sketchy things are going on in the market, but he follows money flows and the money coming into the market continues to come in. Whether its the Fed, China, or alien investors from Alpha Centauri moving the dough in he seems to recognise that you can't fight whatever is.

TrimTabs' Charles Biderman is currently bullish on the U.S. stock market. Why? It's all about supply and demand.

Here is a piece from the LA Times offering the "reasonable" perspective on the market run-up.

If the stock market's up, it must be rigged...right?

We at the LER continue to believe that the current market is rife with fraud on all levels. But central banks in conjunction with governments are incredibly powerful. We continue to believe however that they are not stronger than the market, which we believe is governed by the rules of nature and not man.

We continue to see the current world economy as a bucket with a hole in the bottom with sand constantly pouring out of it. The thing is if the Fed has a beach from which it can shovel sand this situation could last for a long time.

It must be remembered also that the best performing stock market in the world in 2007 was Zimbabwe's, in the midst of rampant fraud and hyper hyper hyperinflation.

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Thursday, April 8, 2010

Why is the stock market going straight up?

Why is the stock market going straight up? Let's see…Unemployment is at 10% officially and probably near 20% unofficially. Credit is terribly tight and rates look like they are going northward. The price of houses in most places continues to go down. The average wage of those employed continues to decline. Foreclosures remain on the rise. Taxes are likely to rise in the near future. The country seems to be being torn apart at fundamental levels. Yet, the market continues to go up.

Take a look at what Trim Tabs CEO Charles Biderman had to say about the market a couple of months ago.

I am inclined to belive that this very serious man, who manages billions of dollars, may be on to something.

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Wednesday, April 7, 2010

With the Passage of the Health Care Bill, Our Constitution is on Life Support

The linchpin of the entire Leviathan state is the activist interpretation by the "modern" judiciary of the Interstate Commerce Clause in the Constitution. According to those who believe the the Constitution is malleable in its interpretation, virtually any economic activity, and increasingly even non economic activities, are subject to federal legislation. If there is a place where friends of liberty should focus their energies it is in fighting this fundamental ruling of the Supreme Court.

This is no new insight of course.

Click here for: With the Passage of the Health Care Bill, Our Constitution is on Life Support

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Monday, April 5, 2010

Oil at $85 and likely going higher

By Nick Sorrentino

One of the main reasons for the the economic crisis that started in the fall of 2008 was the rise in oil prices earlier that summer.

As huge parts of the population used what little credit they had left to fill the tanks of their cars (or SUVs) to get to work the consumer economy went into a nose-dive. The consumer economy in the United States at the time represented roughly 70% of the entire economy.

But why did we have this run up in prices? Usually we would expect to see such a run up in the midst of an economic boom, not just before the world economy blows up.

There have been many theories put forward to explain what happened, but I think the most compelling one is that the dollar price of oil rose not because there was huge of new demand for petrol, even factoring in China's meteoric economic rise, but because the dollar was weakening.

To do business in oil, one must do business in dollars, and one has the choice of trading in New York or in London. (Though small amounts can be traded in other currencies and in other places. Iran in fact just opened an oil trading center that does not do business in USD.)

Because the dollar and oil are so closely linked, there is a strong inverse correlation between the two. In fact:

President (of OPEC) Chakib Khelil said in late April (2008 just before the huge run up in oil prices and the following crash in the US stock market.) He told investors that, "[Oil] prices are high due to the fact of the recession in the United States and the economic crisis which has touched several countries, a situation which has an effect on the devaluation of the dollar, and therefore each time the dollar falls one percent, the price of the barrel rises by $4, and of course vice versa."

Though this is not exactly right, it is generally right.

As oil prices go up, the real value of the dollar in your wallet goes down.

Why talk about summer of 2008 now? Well, during the last run up in oil prices we were still just heading into a recession, so there were still people with credit to buoy the system along. Now we may be seeing a new run up in oil prices in the midst of a near depression.

Right now the US is acting like a spoiled kid with an unlimited credit card. So what if we are hopelessly in debt, put that new Obamacare program on the card. We'll pay it off someday.

But the Chinese are not stupid. They can see the dollar train wreck coming and are looking to exit without killing themselves in the process. They know that as baby boomers retire there won't be enough money coming into the IRS to offset the expenditures.

What am I saying? Of course there won't be there hasn't been for 30 years! But like a good suburban American family we have done a good job of juggling the economic balls in the air. The Chinese likely see Obamacare as one ball too many. So they are quietly selling the dollars that they can without creating a panic. They've been doing this for the better aprt of a year in earnest, though not too ernestly.

The new medical program is by no means the only reason the world is selling dollars, but is a major one. It just shows that the US does not give a damn about anything approaching monetary responsibility.

So as you watch the price of oil continue to go up in coming months even as the economy continues to sputter (and folks I could always be wrong) remember that the value of your bank account is going down in real terms at the same time.
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Thursday, April 1, 2010

Oil and Water: Obama supports another already subsidized industry

By Nick Sorrentino 4-1-2010

Often we libertarians and conservatives are weary of any talk of “alternative fuels.” These 2 words perk our ears in ways similar to the words “gun control” or “Teddy Kennedy.” They should not however.

Aside from those who are simply afraid that an embrace of alternative fuels means that solar powered hippies will rule the highways and force them to permanently park their Chevy Suburbans at the local recycling plant, most people who have an aversion to fuels such as wind, solar, geothermal, etc, dislike them because they demand government subsidies to work- currently.

But what we champions of the market often fail to realize is the extent to which the current oil based economy is subsidized by governments. Oil, when it was plentiful and easy to get at built its own market fairly quickly 100 years ago. In the decades since however oil has been subsidized and competitors regulated away by the government.

So it is unfair to characterize the current debate over fuel sources as one where oil is the good, free market choice and “alternative energy” as simply an example of another government sponsored boondoggle.

Over the years the oil industry has been one of the great beneficiaries of government largess. It is estimated that worldwide the oil industry will enjoy nearly $500,000,000,000 in government subsidies from various countries in 2010 alone. How can alternative energy compete in a marketplace where the main competitor is subsidized to this extent?

In addition, consider the American highway system created by the feds with taxpayer money which in turn encouraged the culture of the car, suburban “sprawl,” and the death of light rail in mid-sized cities. The highway system also encouraged segregation in places such as Chicago and Saint Louis by splitting off minority neighborhoods from the “white” parts of town. This colossal government program, this subsidized program, encouraged an unsustainable level of oil consumption by everyday people.

President Obama has now opened up much of America’s coastline to oil drilling much to the surprise of many on the left. Many of Obama’s traditional opponents have applauded the move. But really this is just an example of the bizarre things that happen in markets that are warped by government intervention. Conservatives and libertarians should be aware of this. The opening up of our coastlines to oil exploration is not a “freeing” of an otherwise freely operating market, it is just an example of the ongoing manipulation of a market that has been anything but “free” for many, many decades.

It is asinine that many continue to see the oil/alternative energy debate framed in terms of oil being “the fuel that people want” versus alternative energy sources being “the energy that must be subsidized and thus is not what people want.” Oil is subsidized far more than alternative energy, even now.

But that does not mean that we should increase subsidies for alternative energy. This will only morph the marketplace that much more, and in turn create unintended consequences that invariably will have to be addressed with more subsidization and regulation ad infinitum.

What we should instead strive for is a truly free energy market where the true cost of oil is expressed to the consumer. In so doing we will likely see that traditional and “alternative” sources of energy actually are much closer in real cost than we currently think. Who knows maybe solar will actually prove more cost effective in a truly free fuel market.

About Me

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Nick Sorrentino is the Editor of The Liberty and Economics Review and CEO of a social media management company.