Wednesday, April 16, 2014

Federal Land Ownership

"Why, land is the only thing in the world worth workin' for, worth fightin' for, worth dyin' for, because it's the only thing that lasts."
--Gerald O'Hara (Gone With The Wind)

Map showing the fraction of state land that is owned by the federal government. Fed land ownership is concentrated in the west.

Professor Williams has suggested that the federal government could give this land away to citizens in exchange for making good on entitlement promises that otherwise cannot be kept.

Interesting idea. Another idea is to simply sell it and use the proceeds to pay down federal debt.

Tuesday, April 15, 2014

One Third Slave

Should five percent appear too small
Be thankful I don't take it all
--The Beatles

On average, Americans must generate about four month's worth of wages in order to pay federal and state taxes. This makes the average American 1/3 slave.

Taxpayers are today's fractional slaves.

Monday, April 14, 2014

Liberty Preference

"So, here's to the men who did what was considered wrong, in order to do what they knew was right...what they KNEW was right."
--Benjamin Franklin Gates (National Treasure)

As Jefferson elequently wrote, each of us has been endowed with the inalienable right to liberty. Liberty is defined as the freedom to pursue one's interests absent forcible intrusion by government.

Although each of us is equally endowed with the right to liberty, we are unequal in preference for liberty. Stated differently, some people value liberty more than others.

Those who value freedom highly will protest whenever liberty is impaired. They will naturally be unwilling to surrender or compromise, as they are sensitive to the slippery slope that carves this path. As suggested by Patrick Henry, those who value liberty highly are willing to die for it.

Those with lower liberty preference cannot understand the protestations of those with high liberty preference--at least in the early stages of escalation of state power. People with low liberty preference may be willing to cede liberty in favor of security--however temporary that concession might be. This group is likely to label those with high liberty preference as radicals, and publicly ridicule their dissident behavior.

Perhaps there is some merit to this situation. Without some degree of social restraint, liberty-minded people would likely be in a constant state of revolution in order to regain even small amounts of liberty lost.

As despotic government grows, however, the liberty preference of more people is engaged. When Jefferson' (Locke's) train of abuses gets long enough, then liberty preference reaches critical mass and revolution is put in motion to throw off the tyranny.

Once again, it seems, our Creator demonstrates the wisdom of axiomatic diversity. By endowing individuals with different preferences for liberty, God creates a balance between stability and change. Those with lower liberty preference keep the system from flying out of kilter every time government takes liberty from individuals.

Those with high liberty preference are the canaries in the coal mine of sorts, as they are the first to recognize tyranny and voice early warnings of growing despotism that others cannot sense. The louder this group chirps, the closer the system is to revolutionary change.

Sunday, April 13, 2014

Captain and The Cutch

City lights and business nights
When you require a streetcar
Desire for higher heights

Easing back into the game over the past few years, I've naturally been on the lookout for the top talent. Because I'm particularly drawn toward hitters with style, it's hard not to admire the sweet lefty strokes of the two Gonzales--Adrian of the Dodgers and Carlos of the Rockies.

But in terms of all 'round ability including off-the-field composure, two players have stood out. Mets third baseman David Wright is one of them. In his 10+ major league seasons, Wright has put up numbers that project toward the HOF. His demeanor on and off the field makes him the classic role model type. They call him Captain America for a reason...

The other is Andrew McCutchen. The Pirates centerfielder won the NL MVP last year although this seemed in arrears as he put up impressive numbers in 2012 as well. McCutchen is the consummate five tool player. It's a joy to watch The Cutch chase down fly balls in the alleys and round second in pursuit of a triple. Off the field, he's super active in the community and enjoys engaging the fan base.

These are the players that I'd point out to youngsters and say, "Watch how these guys do it."

Saturday, April 12, 2014

50 Years of Federal Spending by Category

All last night sat on the levee and moaned
Thinkin' about my baby and my happy home
--Led Zeppelin

Nice little review of the last 50 years of federal spending by select category. The elephant in the room is entitlement spending which now consumes nearly 15% of GDP compared to less than 5% in 1964.

Also noteworthy is military spending. When I ask my students what fraction of GDP is currently spent on military, they typically guess 20% or more. However, even during the Cold War and Vietnam, US military spending did not top 10% of GDP. Now it is under 5%.

The other series worth mentioning is interest expense--which has actually declined during the last couple of decades. How can that be when we're borrowing more than we ever have? It's because interest rates have been suppressed by central bank actions.

Such suppression only lasts until the Fed loses control of the bond market. When the Fed can no longer manipulate bond prices, then Treasury yields will explode higher.

And before you know it, the federal government will have money for little else than funding interest payments on our debt...

Friday, April 11, 2014

Fibo's Voices

Don't look back
Yesterday's gone
Don't turn away
You can take it on
--Russ Ballard

The bulls gave it the college try today, twice trying to push 'em higher toward recapturing the 1840 flag intraday. Both times, however, those rallies fell apart, and the indexes closed near the lows.

Let's invite our buddy Fibonacci to voice his two cents on the tape. Using last October's lows and the recent all time highs as reference points, we are approaching a 38% retracement at SPX 1800ish. This area constituted resistance back in Nov/Dec before it was taken out pre-Xmas. Because resistance, once pierced, generally offers price support, the bulls may be able to find a branch or two to grab onto to stop their slide right around here.

If not, then it's hard for the technician's eye not to gravitate to 1740. This level corresponds not only to a 62% Fibo retracement, but also to the early Feb lows.

Below that is basically a 80 handle drop straight down to SPX 1680.

position in SPX

Volatility Picking Up

You're beggin' me to go
You're makin' me stay
Why do you hurt me so bad?
--Pat Benatar

After it appeared that the bulls successfully defended SPX 1840 with a 1% up day on Wednesday, the bears blitzed back yesterday with a 2% down day, and easily broke through the 1840 maginot.

The action also consituted an 'outside day' to the downside (technically bearish).

This morning, bears pressed their bets and have now surrendered much of their early gains to obstinate bulls.

Volatility is picking up as bulls and bears slug it out in a battle for control of the tape.

position in SPX

Thursday, April 10, 2014

Legislating Leisure

If you ever get annoyed
Look at me I'm self-employed
I love to work at nothing all day
--Bachman-Turner Overdrive

New labor agreement obliges French workers to ignore work-related emails once the work day is officially over. This is on top of other government-imposed restrictions that includes a 35 hour work week cap.

What employers in their right minds would want to operate in such a hostile environment?  Well, some might do so out of patriotism. Others, having been institutionalized in an environment where people are not free to make their own decisions, might simply continue to comply with governmental mandates. Still others may perceive market opportunities that outweigh the negatives of operating in such a hampered system.

Beyond such groups, we can be sure that capacity will leave the system--or never enter to begin with in the case of entrepreneurs who decide to look elsewhere for opportunities.

Workers willing to work outside of government mandated parameters are also hurt. Like minimum wage laws, rules that force workers to do something that they would not freely do serve as forms of compulsory unemployment.

Those who applaud laws that mandate leisure reveal themselves as fools. Although people generally prefer leisure over labor, leisure is generally enjoyable to the extent that goods and services are available to consume while at rest.

Someone must produce those goods and services. If that production is impaired, then the quality of leisure declines.

When leisure is legislated, standard of living falls.

Wednesday, April 9, 2014

Bond Chart Taper

I've been looking so long at these pictures of you
That I almost believe that they're real
I've been living so long with my pictures of you
That I almost believe that the pictures are all I can feel
--The Cure

Rather than the QE-related bond taper, I'm eyeing the taper pattern in 10 yr bond yields.

Not perfect, but similar to a 'flag' or 'pennant' pattern of technical lore. Textbook technical analysis posits that these patterns typically resolve in the direction of the primary trend--which in this case suggests higher bond yields.

Shouldn't be long before we learn how this one turns out.

no positions

Tuesday, April 8, 2014


Move over Babe
Hank 's hit another
He'll break that 714
--Bill Slayback

Forty years ago I sat in front of our first gen color TV and watched my favorite baseball player, Hank Aaron, break Babe Ruth's home run record. Aaron had tied the record four days earlier in Cincinnati on Opening Day.

The replay today looks exactly the same. Downing's 1-0 pitch. The classic, almost magical, Aaron swing. Buckner climbing the fence in left. Tom House catching the ball on the fly in the Brave's bullpen.

Some memories get better with age. Others stay the same, because they're already the best.