Tuesday, August 31, 2010

Ron Paul questions whether there's gold at Fort Knox, NY Fed

Gold baby, gold... This is a very good idea. Of course good ideas usually do not see the light of day on Capitol Hill.

What if there was no gold in Fort Knox? Right now, at this moment, it doesn't matter. But the second after the audit was released it would spark all kinds of craziness in the markets and this is why this bill will have "difficulties."

Remember, gold is the only investment you can make for your great grandchildren. It has held its value at a stable level for nearly 5000 years. It has also been valued at similar levels across very different cultures from the Chinese, Rome, the Incas, Aztecs, Timbuktu, etc...It's God's money.

Rep. Ron Paul (R-Texas) said he plans to introduce legislation next year to force an audit of U.S. holdings of gold.

Paul, a longtime critic of the Federal Reserve and U.S. monetary policy, said he believes it's "a possibility" that there might not actually be any gold in the vaults of Fort Knox or the New York Federal Reserve bank.

The libertarian lawmaker told Kitco News, a website tracking news about precious metals, that an audit was necessary to determine how much the U.S. maintains in gold reserves in case the government were to use gold to back the dollar.

Click here for the story.

Saturday, August 28, 2010

Is Ben Bernanke like Robert McNamara?

By Nick Sorrentino

In the shadow of the Grand Tetons Ben Bernanke again assured the world not to worry, the Fed wasn’t in fact “out of ammunition.” There were still many weapons in the Federal Reserve arsenal.

Sure there are many things the Fed can still do, some more QE, the Fed Chairman climbing into his helicopter as he said he would and raining hundred dollar bills upon the public, etc. But really what is the exit strategy?

Its fair to say that now is no time to be considering an exit strategy. (Fair, but unwise.) We are in the midst of an economic war after all and the fighting seems to be intensifying. How can one think about exiting the war at this point? Truly this is putting the cart before the horse many would say, including the shamans at the FED, at least publicly.

The thing is if the economic crisis is a war, it is increasingly starting to feel like Vietnam, or Afghanistan. We are in an economic quagmire with no end in sight.

Bernanke increasingly sounds like that genius of a generation ago, Secretary of Defense Robert McNamara. Lets just ramp up operations Benanke says. Lets just drop some more economic bombs. The Fed is the most powerful economic force in the world, surely it should be able to solve this economic challenge using that vast tools at its disposal.

Unfortunately, like McNamara was by say 1966, Bernanke is now hemmed in. Each additional action just makes the situation worse. It escalates the economic “war” which in the end demands a radically different tack for “success.”

McNamara supposedly came to see that his own strategies in Vietnam would not work toward the end of his tenor. This conclusion came of course after the death of tens of thousands of American soldiers.

I wonder if Benanke now feels the same. I wonder if he sits in his office and feels the futility of his efforts, and indeed how he has made things worse, or is unable to come to this conclusion because his ego will not allow him to. I would love to know.

So now Bernanke says that the Fed will redouble it’s efforts in the face of a deepening economic trough. But by doing this he will have to increasingly debase the economy. Sounds almost like Bernanke subscribes to the old “you’ve got to destroy a village to save it” theory.

In some ways Robert McNamara had it easier than Bernanke. Sure American prestige and power was at stake in Vietnam, but the war could be ended. We could always just pack up and go home, which in the end we did.

This is not an option for the Fed in the current economic quagmire. There is nowhere for Bernanke to retreat to. When armies feel cornered, when things are going badly and the options increasingly begin to run out, the leaders of armies often resort to undisciplined and rash decisions. There is simply no other choice. It is either this, or utter defeat. No leader of an army wants to be defeated. But to be vanquished is the worst kind of defeat.

The Fed and it’s Keynesian army now face complete defeat. I wonder if Bernanke knows this yet. It took McNamara a decade to come to terms with his debacle. We can’t afford the same luxury with Bernanke.
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Thursday, August 26, 2010

Retiree Ponzi Scheme Is $16 Trillion Short: Laurence Kotlikoff

Social Security just celebrated its 75th birthday. Love it or hate it, it has done its job and should retire. We need a new system, the Personal Security System, which retains Social Security’s best features, scraps the rest, and covers its costs.

Social Security’s objective -- forcing people to save for retirement -- is legit. Otherwise millions of us would seek handouts in our old age.

But Social Security has also played a central role in the massive, six-decade Ponzi scheme known as U.S. fiscal policy, which transfers ever-larger sums from the young to the old.

Click here for the piece.

Tuesday, August 24, 2010

Double dip? No its a bumpy depression.

Economy Caught in Depression, Not Recession: Rosenberg

Positive gross domestic product readings and other mildly hopeful signs are masking an ugly truth: The US economy is in a 1930s-style Depression, Gluskin Sheff economist David Rosenberg said Tuesday.

And from a few months ago...

Monday, August 23, 2010

Radical Britain: Most departments to be cut 25%

Is London calling? I hope so.

Of all the politicians elected to high office in the West in the past few years, David Cameron seemed the least revolutionary. There was certainly none of the thrill of Barack Obama’s elevation. Even set against his peers in Europe, Mr Cameron seemed to offer less disruptive √©lan than Nicolas Sarkozy and a less intriguingly ruthless career than Angela Merkel. Here was a pragmatic toff, claiming the centre ground back from a Labour Party that had lost its vim. When Mr Cameron failed to win the election outright in May and had to share power with Nick Clegg’s Liberal Democrats, many feared a government as underwhelming as his election campaign.

Yet within its first 100 days the Con-Lib coalition has emerged as a radical force. For the first time since Margaret Thatcher handbagged the world in 1979, Britain looks like the West’s test-tube (see article). It is daring again—not always in a good way but in one that is likely to be instructive to more timid souls, not least Mr Obama and his Republican foes.

Click here for the story.

Sunday, August 22, 2010

In Striking Shift, Small Investors Flee Stock Market

A "staggering" 33 billion dollars was withdrawn from domestic stock funds during the first 7 months of 2010. Gee I wonder why?

Do you think its because those who held on, or were trapped in the market for the previous year are more than happy to get out with 65% of their initial investment?

Do you think it's because they now look at the stock market and have even less idea of what moves it than they did before, when we supposedly we had a "market based" system- you know back before the hand of the government so blatantly manipulated every bit of the economy by sheer force?

Or do you think that maybe this 33 billion is actually needed by folks to cover things like car payments, mortgages, and groceries.

It's probably all three reasons, plus about 100 more. But the most important thing that struck me in the linked article was how the NYT referred to 33 billion dollars as a "staggering" number. It's a big number to be sure. But in relation to the numbers that are routinely thrown around these days by the Feds and Wall Street 33 billion hardly seems staggering. I mean it used to raise my eyebrow. But now it's got to be 100 billion before I really start paying attention.

Yup the "new investing normal...


Click here for the story.

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Friday, August 20, 2010

This is important. The guy is kind of a tool. But his talk is valuable.

Kevin Libin: Bureaucratic ‘bullies’ foil annual libertarian retreat

I would not have put the word bullies in quotes.

Peter Jaworski wasn’t born in the cradle of freedom, but his mother says she hid illegal, anti-Soviet pamphlets in his baby carriage, covertly passing them out to fellow dissidents on the streets of Wroclaw, Poland. When local police sent an order to his father to report to them for unspecified reasons, the family used a permit to travel to Germany and fled, eventually settling in Orono, Ont.

Since coming to Canada, Peter has celebrated freedom with more enthusiasm than most. He helped found the Institute for Liberal Studies, a libertarian advocacy group; he’s writing his PhD thesis about concepts of ownership rights; and every summer for the past 10 years he’s hosted the two-day Liberty Summer Seminar on his parents’ acreage. There, a few dozen libertarians — past attendees have included Conservative Cabinet minister Jason Kenney and Ontario Cabinet minister Randy Hillier — camp out on the idyllic grounds, hear a handful of pro-liberty speakers, tap their feet along with some freedom-minded musical acts, and enjoy Mother Jaworski’s cooking.

At least, they used to. This past July may have been the last, as the libertarians met their nemeses in the flesh: bureaucrats armed with a red tape roll full of regulations that may not only shut down the seminar for good, but threaten to hit the Jaworskis with as much as $50,000 in fines for using their property for reasons unapproved by government.

Click here for the story.

Thursday, August 19, 2010

Time to grow up

By Nick Sorrentino

We in America have always fought getting older. My parents generation especially. The baby-boomers never wanted to get old. This is why so many have sought to extend adolescence into senior-citizen territory.

As a kid I can remember the boomers “coming to terms” with aging. I remember The Big Chill, and yuppies, and hearing how great Woodstock was etc. It was as if the baby-boomers saw themselves peak at 22 years old and couldn't let go.

This isn’t healthy. We live for a period of time and then we die. It’s what happens, and what has always happened. We are a part of a string that extends back for eons. We are part of a cycle.

We as a country have run from adulthood. Witness Bill Clinton. I remember as a kid when he was elected thinking the guy seemed a bit immature. But then I thought to myself that this was probably what people thought about Kennedy and the other leading presidents of succeeding generations. I now think that assessment was wrong. Clinton was immature. I think he remains immature.

The same could be said for George W. Bush. He, like Clinton liked to have a good time, (not that there is anything wrong with enjoying life, don't get me wrong) and just never seemed like a “leader.”

Obama makes Clinton and GWB look like the heights of maturity, which is a crying shame.

We now as a country are mired in a debt black hole. We have to make very hard decisions to pull ourselves out of this tractor beam of destruction. Who is going to be willing to put their political life on the line to save this country? I don’t see anyone volunteering. Where are the grown ups? Where are the people who will lead this great republic out of the current storm of ignorance and poor management?

I pray that the new generation is willing to take up the yoke. It’s not really fair. The baby boomers got to enjoy the rising post World War II tide. They got the money, and the security, and the opportunity. Now a new generation must put the house back in order. If we do not, there will be no house to tend to, and that is not acceptable.

America is an experiment. The natural tendency is for humans to be ignorant and ruled over by powerful elites. This is how 99.9% of people who have ever lived, have lived. America has been different (at least in degree) by and large. But this is only because of periodic moments of extraordinary leadership, from both our “leaders,” but also from the citizenry.

Don’t fall for the “America is just another country,” stuff. We are exceptional when we choose to be.

Perhaps we are too tired. Perhaps an American Renaissance is too much to ask for. But I don’t think it is.

Hard decisions will have to be made and we as a country must commit to the hard work of rebuilding this country. I am committed to it. I hope you are too.

Time to grow up.

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Just some early morning thoughts.

I live outside of Washington DC, just beyond the leafy suburbs, right on the edge of the countryside.

Where I live is an interesting mix of Federal Government employees and old horse money. Not a bad place to live, and an area that is probably slogging through the current recession better than most places due to it’s proximity to the Federal trough.

But even here, there are real cracks emerging.

I recently sat with a friend of mine who runs a business and he lamented that over the past year things have been steadily drying up. As people have begun to max out their credit cards, without fresh infusions of new debt backed money, things have slowed. He is very concerned, because there seems no light at the end of the tunnel.

Despite what we have been told, there is no recovery. About the only thing (aside from metals) that has rallied over the past year and a half is the stock market because the Fed has infused the market with funny money.

What I see on the ground is an eroding of the long held assumptions in this country about the economy.

Lets see…Housing always goes up. Buy and hold. A college education is “good debt.” Only crazy people retire to Costa Rica…

Things are changing.

Housing is continuing to spiral down. Buy and hold is a crazy philosophy in a time where returns in the stock market have been flat to negative for 10+ years. College educations now are a dime a dozen and paid for by (formerly) easily obtained debt which then anchors the former “student” to a life of servitude. Costa Rica is filling up with retirees from the States who are trying to get out with what they have left.

South Florida and Glendale Arizona are not far enough any more…

This video almost makes all the other nonesense spewed on MSNBC worth it. Ratigan expains the Fed

Monday, August 16, 2010

Next Dot.Com Bubble: Treasurys?

One bubble was driven by a technological innovation that would change the way businesses and consumers do business and interact. The Internet was and still is a positive force in our lives. It just played perfectly into Wall Street’s tendency to inflate the asset prices of anything associated with the next big thing. But technology, home ownership or tulips are not driving a bubble unfolding right now.

Fear is.

Click here for the story.

Friday, August 13, 2010

Tuesday, August 10, 2010

Live free or buy

This (below) is a good article on living a more simple life. A less expensive life. A more enriching life. A happier life.

I am convinced that most possessions are a bigger pain in the hind quarters than they are worth.

Take for instance new cars. I drove by a dealership the other day and they wanted 30K for a new, not particularly fancy, family sedan. 30K is the cash price. If one finances it it is a good bit more than that. For most people this purchase is simply asinine given that a nice used car, just a couple of years older than the new one, can be had for say 12K. Simply put if one buys new cars one is a sucker.

I've been a sucker. Thankfully I learned.

As I read the following article I flashed back to a Capital Gang show I watched in the mid-90s, when Mona Charen was one of the talking heads. For those who don't know her she is Republican.

At the end of the show each pundit got to pick something to bitch about. This week Mona decided to bitch about Disney.

She had just bought the Lion King tape, if I remember correctly, and her beef was the ridiculous number of ads for other Disney videos, merchandise, etc, that her kids had to sit through to get to the actual movie.

I remember her saying something to the effect of, "No one ever said that capitalism isn't gauche."

Her statement obviously made an impact on me and it reflects my feelings on consumerist society pretty well.

Through boneheaded manipulation the US economy is/was driven 70% by the US consumer and their credit cards. That is why so many economists (the enablers of the boneheaded manipulators) have told people to go out and spend in this recession. We need people to buy extra bath sets at Linens N Things for the sake of the economy.

Look, I don't begrudge people who go buy SUVs or McMansions or whatever. Spend your money. I love capitalism. If this is what floats your bass boat, or Boston Whaler fantastic. Have fun. Seriously. If things are what are important to you buy away. It is literally your right.

But getting out of this mindset and letting others float the economy has real benefits.

She had so much.

A two-bedroom apartment. Two cars. Enough wedding china to serve two dozen people.

Yet Tammy Strobel wasn't happy. Working as a project manager with an investment management firm in Davis, Calif., and making about $40,000 a year, she was, as she put it, caught in the "work-spend treadmill."

So one day she stepped off.

Click here for the story.

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Monday, August 9, 2010

The Fed is looking to downgrade the US economic outlook. They are always of the bleeding edge.

One question I have is at what point will the media start referring to the “economic downturn” as a depression. And at what point will we turn to the people who understand how we got here and potentially know the way out?

The economic team at the White House is discredited. We, the people need to completely understand this, despite the fact that the White House will refuse to the bitter end to do so, or say so in public.

It is a hard psychological pill to swallow to realize that the world view that you have held your whole life, and the one that helped you rise to power, is wrong. Bernanke, Geitner, Larry Summers, and company rose to prominence on top of bubble economics. Now the surface tension on the global bubble is gone, and the only answer to this challenge is to re-inflate, but if only they could.

The universe has a funny way of correcting imbalances. Trees, as it is said, don’t grow to the sky. Now a forest can regenerate itself if it is allowed to. But the Fed and Treasury have refused to let the old trees fall, to allow the occasional brush fire of recession to burn through the underbrush and remove the dead wood of the economy.

We now have a completely unhealthy economic tinderbox on our hands.

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Sunday, August 8, 2010

Running for fitness is a statement

By Nick Sorrentino

I am a born again runner.

When I was in my teens I used to run all the time for soccer. I was also an avid surfer. The point is I was in shape.

But then college came. I started smoking. Came to like beer. (Which I still do.) And slowly I got fat. Not super fat, but certainly not in shape anymore.

Fast forward 10 years. My 3rd child was delivered by a doctor for whom I have a great deal of respect. In between contractions and my poor wife’s suffering, the doctor and I discussed fitness.

He was in his mid-50s and very fit in the physical sense, and having known this doctor over the last 6 years, (he delivered all 3 of my children) I sense mentally as well.

He is a runner. I mean a real runner. Big chunks of mileage.

After my son was born, very early in the morning, he went for a run in the rain. Running is how he charged his batteries and (I imagine) destressed.

His commitment to running made an impression on me. I decided that I would edge back into running. That was almost exactly a year ago.

I started slowly. Probably only a couple of miles a week. With time the mileage grew a bit, but I was inconsistent. Then winter came, and the only mileage I did was on the treadmill, and that was even more sporadic.

Another source of inspiration for me came from a long time friend and also a committed runner. I remember him in college, a bit over weight, but not by a lot, but now is perhaps 50 pounds lighter, or at least he looks it. He came to visit recently and amidst the catching up and comradery I realized I needed to really commit to running if I was going to do it.

The thing about running is that it is so simple. You put your body into motion and just go.

The friend that visited told me that humans have the greatest capacity for endurance running of any animal. He said there was a distance run in England that pitted humans against horses and the humans usually won. Apparently running is in our DNA. Some theorize that before we became farmers as a species our ability to chase far quicker game over very long distances was the key to our survival on the savanna. As I am beginning to run longer distances, over 5 miles at a stretch, I can feel this engineering. It feels great. It’s like my body is doing what it is supposed to do.

Me being me, though I also see a real political side to running. Hang with me.

Running is in some ways anti-establishment, though it is practiced by many deeply entrenched in the establishment, don’t get me wrong.

But to climb out of the car and into the sunshine is, as sad as it is, almost a political statement here in the suburbs of Washington DC.

To look at the sky and trees without a window between me and the outside is a good thing. As my body is pumping, I see a rabbit run off into the brush, and smile.

People drive by in their cars, often smoking cigarettes and I am thankful that I am not them. Not that I have anything against cars, especially fast ones. Cigs I have a problem with, but even they have their positives.

But to run is to be at least a little free, for a little while, and I am beginning to wonder if running regularly is a key to being the best we can be. I think it may be for me.

So what if we all got out and ran just a mile a day. That’s 15-20 minutes perhaps around the block, and for just a bit we freed our body and minds of the constraints that hold us back. We could wave hello to one another and actually get to know what each other looks like. My bet is that this daily moment of physical activity could do wonders for a society that has increasingly forgotten what a blue sky looks like.

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Friday, August 6, 2010

America Is at Risk of Boiling Over

In this piece from Peggy Noonan she rightly identifies a fundamental shift in the outlook of this great republic. She believes that most people in this country believe that their children will have it worse than they did. As she says...

"The biggest political change in my lifetime is that Americans no longer assume that their children will have it better than they did. This is a huge break with the past, with assumptions and traditions that shaped us."

I personally prefer to have a more positive outlook. In fact I choose to. Because I have too. I believe that my generation- the people in their thirties now- can be the "Getting America's Shit Together Generation." But it will take a colossal change in outlook.

Focus on your family and bringing your kids up right. Focus on your community. Get to know your neighbors. Plant a garden. Stop eating fast food.

And for God's sake stop living on that financial drug, credit.

All easier said than done that is for sure, but we've got to do this. The future of our country is at stake.

Click here for the piece.

Tuesday, August 3, 2010

Farming surges in state with new crop of devotees

Potts, who has a day job as an interior landscaper in office complexes, recently joined a surprisingly fast-growing occupation in Massachusetts: She’s a farmer.

Click here for the story.

Monday, August 2, 2010

About Me

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