Tuesday, January 17, 2017

No Capitalism Without Capital

Here comes the rain again
Falling on my head like a tragedy
Falling on my head like a new emotion
--Eurythmics

A reminder. Capitalism requires capital. Capital comes from economic resources that have been set aside (i.e., 'savings') rather than consumed. The progression is savings-->capital-->investment in projects that improve productivity and thus prosperity.

Capital does not come from a loan made by a bank from savings that it does not have. It merely pulls economic resources from other sources.

When savings are low or non-existent, there can be no capitalism.

Because we are in such a low savings environment, then the obvious question becomes: If our current economic system is not capitalism, then what is it?

Stew on that in search for truth.

Monday, January 16, 2017

Mediasaurus

Dr Ellie Sattler: So, what are you thinking?
Dr Alan Grant: We're out of a job.
Dr Ian Malcolm: Don't you mean extinct?
--Jurassic Park

Fitting sketch on the back of yesterday's post:


As the MSM model continues to crumble, a more appropriate inscription might read Mediasaurus Wrecked.

Sunday, January 15, 2017

Presidential Media Entrepreneurship

You, telling me 
The things you're gonna do for me
I ain't blind
And I don't like what I think I see
--Doobie Brothers

There was a time when presidents were highly dependent on the mainstream media (MSM). The MSM had monopoly positions on the pipes that conveyed information to the people. Moreover, if a president did not play nice with journalists, then the press could slant stories in manners that would influence public opinion away from a chief executive.

While such slant persists today, the MSM's monopoly position on the pipes is gone. In today's information age, consumers have more choices for obtaining information than at any other time in the history of the world. People who dislike the quality of information offered by one outlet can easily find other venues.

Although this weakens the MSM's position somewhat, presidents must still depend on the press at large so long as the president outsources the writing and distributing of content.

This, of course, is no longer necessary. A president can take to Facebook, Twitter, et al and publish his or her own content and bypass the MSM altogether. Moreover, if a president does not care for how the press his treating him or her, then he can publish his own rebukes on social media.

Donald Trump has been doing precisely this. Using primarily a Twitter account, he is taking his case directly to the people with no intermediaries. He has publicly praised the MSM for content and practices that he likes, and has publicly sanctioned content and practices that he does not like. The people get it straight from Trump. No journalistic filters in between.

In what can be seen as classic entrepreneurial behavior, Trump has recognized opportunity in taking a technology developed elsewhere and applying it to his situation. Consequently, he is reducing his dependence on the MSM and gaining more bargaining power. Should he decide to exercise more discretion in his availability for traditional interviews, press conferences, etc.--something that he has signaled that he might do--then he could reverse the tables on the MSM, effectively making the press more dependent on him.

The tizzy that this has created among the MSM and their lackies is of epic proportions. As it should be as Trump is trying to restructure the industry of political reporting right in front of their eyes.

Saturday, January 14, 2017

Repeal and Spend

What'll you do when you get lonely
And nobody's waiting by your side?
You've been running and hiding much too long
You know it's just your foolish pride
--Derek & the Dominos

The Senate bill known as Concurrent Resolution 3 has now passed Senate and House votes. This is the bill that puts in motion efforts to defund and repeal Obamacare.

Although repealing Obamacare is thought to be at the top of the incoming GOP agenda, you will note from the roll call results above that not all Republicans were 'yeas' on S.Con.Res.3. Rand Paul broke ranks in the Senate to spoil GOP unanimity, and nine Republican Reps including Thomas Massie joined House Democrats in 'nay' votes.

One concern voiced by some dissidents is that there is, as of yet, no firm replacement for Obamacare. This is not a good reason for delaying the repeal of Obamacare. Keeping bad law in place, regardless of intentions, continues to infringe on people's rights.

The other concern is that the overall budget for federal government spending contained in S.Con.Res.3 is forecast to raise the federal debt by $9 trillion over the next ten years. This is a good reason for voting no on this resolution.

The correct approach would be separate bills--one for repealing Obamacare and one for the overall federal government--so that each issue can be debated on its own merit.

That GOP leadership refused to separate these issues, when coupled with the Republican roll results, is revealing in terms of collective Republican Party priorities when it comes to cutting federal government spending.

Friday, January 13, 2017

Swiss Cash Kings

"I'll pay with cash."
--Darby Shaw (The Pelican Brief)

Last summer we discussed German preferences for cash. However, the cash kings of Europe and perhaps the world are the Swiss.


The value of bank notes and coins in circulation per resident in Switzerland is more than double the US. The Swiss like to use that cash for their purchases, paying for everything from monthly utility bills to cars using Swiss francs.

Many countries around the world cap how much cash can be used to purchase something before the transaction must be reported to the government. In the US, that limit is $10,000. In Switzerland, the limit is about ten times that amount.

While Swiss preferences seem out of step with 'progress' today, there are benefits to cash-only transactions such as anonymity. People who value liberty are likely to have a proclivity for physical cash.

Thursday, January 12, 2017

Obamacare and Wellness

Only shadows ahead
Barely clearing the roof
Get to know the feeling of liberation and relief
--Crowded House

Democrats have been seeking to raise popular resistance to Republican efforts to repeal Obamacare by sloganeering that repeal would "Make America sick again." Apparently, they are ignoring the data which suggest that Obamacare itself is not improving, and may be deteriorating, the US health profile.

Since the core of the ACA went into effect in 2014, death rates are up and life expectancy is down. Studies suggest that, although it increased use of healthcare services, the expansion of Medicaid eligibility under the ACA has had no impact on objective measures of health.

Economically, Obamacare has reduced employment and increased the national debt by hundreds of billion$. Health insurance premiums have also increased dramatically for many Americans, contradicting the president's personal assurance that Americans would $2500 annually under his signature law.

As we have noted before, all of this was sadly predictable.

The dust bin of history beckons...

Wednesday, January 11, 2017

Empty Claims and Journalistic Standards

I make my living off the evening news
Just give me something--something I can use
People love it when you lose
They love dirty laundry
--Don Henley

With yet another round of unsubstantiated assertions surrounding Donald Trump and Russia making the rounds among slanted media outlets this morning, it's hard not marvel at the traction that such empty claims get among both providers and consumers of such 'news.'

An empty claim is a an assertion that is not reasonably supported. In the context of news reporting,  support typically hinges on amassing significant amounts to hard facts or evidence that validate a claim as newsworthy.

An outlet with high journalistic standards would not report a claim as news unless it was certain that the claim was substantiated by fact. Otherwise, the outlet is trafficking in rumors or hearsay.

Currently, the popular term for trafficking in such rumors and hearsay is 'fake news.'

Why are empty claims so popular? Purveyors of empty claims know that misinformation can be effective. Consumers of empty claims, particularly those suffering from severe cases of cognitive dissonance, lap them up.

Journalistic standards are lowered so that markets for bias can be made.  

Tuesday, January 10, 2017

Of Pencils and Crayons

It's not in the way that you hold me
It's not in the way you say you're mine
--Toto

Our previous analysis of long term 10 yr yields suggested 3% as the level to watch. Bill Gross's technical analysis of the same data marks 2.6% as the Maginot Line in the sand.

May not mean much in the larger scheme of things, but perhaps it demonstrates the difference between drawing lines for technical analysis with a sharp pencil or a dull crayon.

I myself prefer the Crayola.

Monday, January 9, 2017

Political Disclosure for the Talking Class

No place for beginning or sensitive hearts
When sentiment is left to chance
No place to be ending
But somewhere to start
--Sade

It is telling that statists seek to regulate potential conflict of interest in certain professions such as finance, but shy away from regulating conflicts of interest among the talking class--namely journalism, education, and entertainment.

What if all journalists, for example, were required to reveal their political affiliations and contributions alongside all communications that they produce for public consumption?

As people continue to wake up to the political slant emanating from the talking classes, perhaps they will demand such not from the strong arm of government, but as a condition for voluntary exchange in free market systems.

Sunday, January 8, 2017

Replace With What?

In violent times
You shouldn't have to sell your soul
In black and white
They really, really ought to know
--Tears For Fears

Democrats chide Republicans for wanting to repeal Obamacare without presenting a replacement program. The reality, of course, is that plenty of alternative programs have been proposed by Republicans--but none are deemed acceptable by Democrats.

But the question of what to replace Obamacare with implies that there is an alternative form of socialized medicine that can be conjured to work better.


Fat chance, says Jacob Hornberger. All versions of socialized medicine predictably raise costs and prices, limit access, reduce quality and innovation, and ultimately chase capacity from the system. America's healthcare system has been in decline since the 1960s when the two major harbingers of socialized medicine in the US, Medicare and Medicaid, were born. Obamacare has merely exacerbated the problem.

The only long-term solution is to completely separate government from the healthcare system. Free market medicine is the alternative aligned with liberty and, by extension, prosperity.