Tuesday, May 31, 2011

A Crony Capitaism Recession

I wrote this for a local paper.

By Nick Sorrentino

The good news is that there won’t be a double dip in the economy. There won’t because we never climbed out of the first dip. We are in a bumpy depression. There are ups and there are downs, but generally we are in a solid decline economically.

It is true that the stock market has gained much of the ground back that it lost in 2008. But it is still down by more than 10% from prior highs. The S&P 500 has been down for the past 4 weeks.

On CNBC this week David Blitzer, Chairman of the Standard and Poor’s Index Committee said, "Home prices continue on their downward spiral with no relief in sight."

The dollar continues to decline though there was a slight bump up after we took down Osama Bin Laden in early May. That is why gas prices are at $3.75 a gallon and not $4.10 a gallon.

But this is unlikely to last. The dollar will probably continue to weaken, and as it does the price of a gallon of gas priced in US dollars will go up. Goldman Sachs is predicting $5.00 gas by July.

This, while 1 in 7 Americans are on food stamps. 1 in 4 American children are on food stamps. The sad truth is that the EBT card rolls are getting longer 2 ½ years after the initial crash. Some areas in the South and Midwest are much worse than the national number.

The unemployment rate officially stands at 9%. This is bad enough, but when factoring people who no longer qualify for unemployment (because it ran out,) and those who are chronically underemployed, the rate is much higher. Some believe the real number to be in the 20% range.

I know quite a few people who would love to work, but can’t make it happen. These are people with skills and educations.

Why is this? Why hasn’t there been a robust turn around? The experts in Washington are doing everything they can to help those of us who live out in the hinterlands, right?

They bought back our old cars, you know the ones that didn’t have a car payment, so we could buy new cars at inflated prices, which did have car payments.

They instituted the First Time Home Buyer Tax Credit of $8,000 so that people without a house that was going down in value could also enjoy the special pleasure of watching their biggest investment depreciate in front of their eyes.

Don’t forget that they nationalized GM and Chrysler and Freddie Mac and Fannie Mae. Yep, the experts bailed them all out with your money, now they limp along as “zombie” companies.

Then there’s Wall Street, which was also bailed out with your money. Funny, all the “experts” making the calls in Washington also come from Wall Street. Not that I have any problem with investment firms. I am a rabid capitalist.

Unfortunately to be for many financial firms these days is not to be for “capitalism.” It is to be for “crony capitalism,” or corporatism. In capitalism one can win or lose. In crony capitalism, so long as one has the right connections in government one need not fear real loss. Uncle Sam is always there to save a well connected and generous (with campaign contributions) firm in trouble.

It should come as no surprise that Chairman Dodd of the Senate Finance Committee got a sweetheart deal on his mortgage from Countrywide Financial. Nor should it surprise us that after the University of California system, Goldman Sachs was Obama’s biggest donor in 2008. This is the way it is.

So for some, the Great Recession, really has been great. So long as one is in the club the money sun always shines. For those on the outside things look considerably less bright.

Sunday, May 29, 2011

Socialism is worse for the environment than capitalism

This is a post in Ed Dolan's blog. It is an excerpt from the 40th Anniversary edition of his book, TANSTAAFL (There Ain't No Such Thing As A Free Lunch.)

In the post he discusses how property rights are key to a cleaner environment. If everything is the commons as it is in socialism everything usually ends up tragedy.

He sites the example of the Aral Sea (among others) in what was the Soviet Union. Once the 4th largest lake in the world, it is now the 31st largest due to the diversion of rivers by the state for collectivist agriculture.

It wasn't evil corporations that caused perhaps the greatest ecological disaster in the world, it was central planners acting in the "public intereest."

Click here for Ed's blog

Thursday, May 26, 2011

Wednesday, May 25, 2011

"Inflation is clearly back" Costco CEO

So the Costco CEO is joining the Walmart CEO in saying that costs are going up. Good bet that costs on daily goods are going up. Horay!

Resistance is NOT (yet) futile, thanks to Rand Paul

This article was in Salon. Not exactly a libertarian journal.

Senator Rand Paul: "We go week after week in the Senate and do nothing. I feel like sometimes I should return my check because I go up, they do no votes and no debate. Look at this horrendous debt crisis - we don't debate that either.

Click here for the story.

Tuesday, May 24, 2011

Don't lend to Illinois Treasurer says- We're not a good risk.

Illinois chief fiscal officer said Monday he is willing to dial up the bond houses and finance companies to alert them that lending the state more money, as Gov. Pat Quinn has proposed, would be a "major risk."

' 'If I need to send letters o the rating companies to tell them the treasurer of Illinois is opposed to more borrowing, I'm going to do that," said Republican Treasurer Dan Rutherford.

Click here for the story.

Friday, May 20, 2011

JP Morgan investing in gold mines- In Afgahnistan! Who's going to protect these mines?

A team of bankers starts to tap the country's vast mineral riches, with help from the Pentagon.

From CNN Fortune

Click here for the story.

Tuesday, May 17, 2011

What is a libertarian?

I wrote this for a local newspaper.

By Nick Sorrentino

What is a libertarian? This is a question that is often asked of me. People know that I identify myself as a one and so feel comfortable asking me. There is a simple answer and it goes like this.

Don’t mess with me, and I won’t mess with you. I don’t care if you are gay, of a different religion than me, smoke pot, or are a communist. It doesn’t matter to me the libertarian. I am concerned with actions that have consequences, not private behavior that impacts no one other than the individual or another consenting adult.

Live and let live. This is the essence of libertarianism. It’s an uncomplicated philosophy that is useful in nearly every corner of human life.

Does this mean I have to tolerate you acting like a jerk in my front yard? Absolutely not. If you take your Trans-Am for a joy ride through my fescue, I’m calling the police. You violated my right to be left alone and destroyed my property.

Libertarians are the ultimate conservatives in some ways. We actually believe in small government. Many of today’s so-called conservatives do not though they say that they do.

Some conservative see no reason at all not to use the government to compel others to live as they see fit. Many conservatives were for the draft for instance, and are for drug laws, and the “Patriot Act.” They do not see our civil discourse as a conflict between those who would rule more versus those who would prefer not to be ruled. They instead see politics as a battleground between 2 gangs, the jackasses and the elephants, for the power levers of the state.

Libertarians don’t think the state should be used to make you do anything that you don’t want to do, assuming you mind your own business.

Sometimes people think libertarians have a lot in common with modern liberals or “progressives” as they now call themselves. In some ways we do. We both think the War On Drugs is a mess. We both think gay people should be able to live as they like. We both believe that war is nearly always a bad idea.

But libertarians differ from these folks because we believe that no matter how good an idea is from a social perspective, it should almost never be funded by the state. Universal healthcare? Most certainly not. Raising the debt limit? Don’t think so. More stimulus? You have got to be out of your mind.

It is often said that conservatives are for economic liberty (though even this really isn’t true these days) and more restrictive when it comes to “individual” liberty. Likewise it is said that that liberals/progressives believe in individual liberty but are generally for restricting economic liberty.

Libertarians see no distinction between such liberties. Liberty is liberty. Freedom is freedom. One either owns oneself and the fruits of one’s labor or one does not.

Naturally this disposition puts libertarians at odds with many in what used to be the political mainstream. We are both friends of and in conflict with both conservatives and liberals. Sometimes this makes us an ally, sometimes it makes us a foe, depending on which party wants to do what. But one thing is for sure, libertarians are always looked at with suspicion by both groups. If you think Ron Paul drives you liberals nuts, you should see the convulsions of ire induced in Huckabee and Santorum supporters with the mere mention of the good doctor’s name.

Even so, libertarian ranks are swelling like never before, even if some (mostly older people) still don’t really know what a libertarian is. Libertarian writers and political figures pack the houses on college campuses. The Students for Liberty far outstrip the passion of even the most rabid Obama supporters living on the quad. So if you don’t know what libertarianism is, or if you dismiss it, even after having read this piece, you’ve been warned. Libertarianism is about to make it’s prime time debut.

Live and let live. Get used to it America.

Monday, May 16, 2011

Mexican billionare says peso might soon be backed by silver

The Mexican central bank thinks we are being reckless. That is a clear sign that we are REALY screwing things up.

Mr. Price stated, “Well I think the central bank (of Mexico) is watching what the Federal Reserve has been doing with utter amazement because we have been down that path before and it led to our ruin."

Click here for the story.

Sunday, May 15, 2011

Head of IMF arrested on rape charges.

FOR months Dominique Strauss-Kahn has been mentioned as the top potential challenger to Nicolas Sarkozy when the French president comes up for re-election next year. Polls showed Mr Strauss-Kahn, the highly-regarded head of the International Monetary Fund, ahead of all other competitors. One even found that most French think he will win in 2012. But that was before police pulled him off an Air France flight minutes before it was scheduled to depart New York for Paris on Saturday.

Click here for the story.

Saturday, May 14, 2011

Where Keynes Went Wrong (Q&A with the Author Hunter Lewis)

In full disclosure I am working with Hunter to promote this book. Regardless anyone disposed toward libertarian economics would be wise to pick it up. The author lays out what Keynes says and then examines those words closely. In a time where Keynesians seem hell bent on driving the economy toward inflationary oblivion one had better be familiar with the intellectual fuel which drives the fiat engine.

Wednesday, May 11, 2011

Forbes Predicts U.S. Gold Standard Within 5 Years

This is quickly becoming a necessity. The Keynesians won't know what to do.

“What seems astonishing today could become conventional wisdom in a short period of time,” Forbes said.

Click Here for the story.

Friday, May 6, 2011

Huge sell-off in silver and other commodities. Opportunity?

By Nick Sorrentino

CNBC reports that silver is down to under $36. It nearly breached $50 about a week ago. This sell-off seems to have coincided almost exactly with the Osama take down. Interestingly both George Soros and Carlos Slim sold large silver positions at the same time. Or at least that is what was leaked.

The CBE also raised the margin limits 5 times in 8 days, forcing people to cover their positions. This is why you buy physical stuff people.

The point is there seems to have been a coordinated effort here to bring silver down, along with gold, and boost the dollar on the OBL bump.

Who knows, maybe not. But that's what I'd do if I ran the printing presses and the government and didn't care where my soul resided for eternity.

Remember also early in 2010 Soros said at Davos that gold was in a bubble and the gold market sold off. See HERE. This in January 2010.

Then, surprise surprise he turned around and doubled his position in gold 20 days later. This after prices had come down of course. See HERE.

I'll be watching to see if he moves back in. So will the world.

I think the sell-off is probably a blessing in disguise. In the short term the margin limit increases will have the continued effect of forcing people to cover thier positions, which will in turn force the price down, and then force more people to cover.

But for those who are buying silver not to make fiat dollars but to amass real wealth this is probably an opportunity.

Let's not forget guys that JP Morgan has a GIANT short position in silver somewhere in the mid teens. As silver gets more expensive the more they sweat. JP isn't about to let the SILVER LIBERATION ARMY take it down.

A year ago today the "flash crash" happened. This is my video made one year ago on the subject.

About Me

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