Wednesday, October 26, 2016

Disrespect for the Past

Nathan Algren: What does it say?
Katsumoto: I belong to the warrior in whom the old ways have joined the new.
--The Last Samurai

Some people discount lessons learned in the past as old and out of date. Rather than being an extrapolation of past knowledge and innovation, progress, to these people, begins here and now.

One problem with this position is that it ignores that man has been mining for truth for thousands of years. People from previous generations have unearthed important nuggets that we can learn from. If we do not learn from them, then we must, as it is appropriately said, reinvent the wheel. Why should 'progress' involve having to relearn truths that our ancestors toiled to reveal?

In fact, productivity and the very progress that many of these people seek is bound to suffer as we waste time and other resources REgressing backward to previously trodden paths on the road to truth.

While it is certainly possible to get needlessly hung up in past actions and events, failing to apply truths discovered by our predecessors is wasteful. Considering the capacity of humans to learn by observing others, disrespect for the past amounts to consummate ignorance.

Tuesday, October 25, 2016

Politics and War

"War is a continuation of politics by other means--von Clausewitz."
--Captain Frank Ramsey (Crimson Tide)

Nineteenth century military theorist Carl von Clausewitz famously posited that "war is not merely an act of policy but a true political instrument, a continuation of political intercourse carried on with other means." (1976)

Jeff Tucker suggests that rearranging the general's thoughts results in another true proposition: politics is the continuation of warfare by other means.

Politics can be seen as the process of gaining control of the strong arm of government for personal purposes. Politically charged environments therefore crowd out peaceful cooperation in favor of violent force.

Its forcible, decivilizing nature cloaks politics in its warlike character.


Clausewitz, C.V. (1976). On war. Princeton, NJ: Princeton University Press.

Monday, October 24, 2016

Tick Top, Tick Top

Dr Alexander Denny: You know you don't have to do this.
Doug Carlin: What if I already have?
--Deja Vu

ZeroHedge wonders what these page wondered yesterday.

Does the AT&T/Time Warner merger top tick the market as did AOL/TW did two bubbles back?

no positions

Sunday, October 23, 2016

Ma Bell to Marry Pa Cable

Come up off your color chart
I know where you're coming from

It appears that AT&T is buying Time Warner Inc for about $85 billion in cash and stock. The deal would symbolize a long era of consolidation that began not long after AT&T was 'deregulated' and busted up in the 1980s.

Why all of the mergers? For one, cheap credit provides the ultimate consolidation currency. Moreover, there is market power to be had for incumbents seeking to protect their franchises from entrepreneurial entry in this heavily regulated (despite the 'deregulation' claim) sector.

I remember when AOL bought Time Warner for a hefty $182 billion in 2000. Does that mean that AT&T is getting a deal at 50% off? Hardly.

I do wonder whether this deal signifies a coming trend reversal in, for example telecom combos or cheap credit driven buyouts, as did AOL when it top ticked the dot com bubble by paying thru the nose for Time Warner.

Saturday, October 22, 2016

Duverger's Law

"Son, this is a Washington DC kind of lie. It's when the other person knows you're lying, and also knows you know he knows. You follow?"
--Robert Leffingwell (Advise and Consent)

A previous post speculated that there must be research in political science suggesting that in democratic election systems grounded in majority rule (a.k.a. "first past the post") two political parties dominate the ballot. The theoretical principle, it turns out, is called 'Duverger's Law.'

Maurice Duverger was a French sociologist who wrote about the effect in several works in the 1950s (e.g., Duverger, 1954). A quick scan of academic reference databases that I have access to finds dozens if not hundreds of papers evaluating his theory.

After 60+ years of academic testing, Duverger's Law as a general predictor of two party dominance in majority rule election processes still stands.


Duverger, M. (1954). Political parties: Their organization and activity in the modern state. New York: Wiley.

Friday, October 21, 2016


The deception, with tact
Just what are you trying to say?
You've got a blank face, which irritates
Communicate, pull out your party piece
--The Fixx

Accusations from Trump and now from WikiLeaks that the US presidential election has been rigged.
Cries of blasphemy emanate from the people accused of...doing the rigging, naturally. Such rhetoric is 'dangerous,' they shout. It threatens the American institution of democracy, they drone.

Many of the same people have, of course, had no problem challenging the legitimacy of past elections. No issues with seeking to destroy other American 'institutions.'

Perhaps the most delicious irony is that the Clinton campaign, after disparaging Trump for suggesting that the US election is rigged, turns around and suggests that Trump & Co are working with the Russians to...rig the election.

The theatre involved suggests that the lady et al doth protest too much, methinks.

Thursday, October 20, 2016

Debt, Entitlements, and Economic Decline

I'm travelin' down the road and I'm flirtin' with disaster
I've got the pedal to the floor, my life is running faster
I'm out of money, out of hope, it looks like self-destruction
Well, how much more can we take with all of this corruption
--Molly Hatchet

It took until near the end of the third presidential debate before a moderator questioned the candidates about their positions on the federal debt and the entitlement programs that are its primary drivers. That the question took so long to be asked reflects the sorry state of the State.

As expected, neither candidate proposed or debated fresh ideas on debt or entitlement program reduction. In fact, both candidates, by either direct reply to the debate question or by indirect implication from previously stated platform policies, intend to champion entitlement program expansion should they occupy the big chair.

Our Thelma and Louise moment draws ever closer.

Wednesday, October 19, 2016

Targeting Assange

"People should not be afraid of their governments. Governments should be afraid of their people."
--V (V for Vendetta)

Few people have done more to expose the crimes, corruption, hypocrisy. lies et al of governments worldwide than Julian Assange, founder of Wikileaks. Similar to Edward Snowden, Assange has become a true enemy of the State.

US officials, including Secretary of State Hillary Clinton, have had conversations about eliminating Assange:

Now, it appears that the statists are working in concert to shut him down. Whether they are successful remains to be seen.

Regardless, Assange has opened eyes. If those eyes remain open, then Assange will have created a tremendous legacy.

Tuesday, October 18, 2016

Incentivizing Supply

"The almanac says it's time to start plantin'."
--Myra Fleener (Hoosiers)

A few years back I was bullish on commodities, including the 'ags'-- i.e., agricultural commodities such as corn, wheat, beef, etc.). The basic thesis was this. Developing countries are going to need much more food as they continue to grow and there is not enough supply to feed the world's growing appetite.

While ag prices certainly had their time in the sun, the last couple of years have brought steadily declining prices. Steady price declines have certainly not been limited to agricultural commodities. See, for example, crude oil.

My mistake was ignoring one of the most fundamental theorems of economics: higher prices incentivize supply. In this article, the axiom is stated in dairy industry terms as "money makes milk."

As commodity prices lifted a few years back, unused capacity that was not economical at lower prices was brought out of dormancy. Moreover, new capacity projects become easier to justify and fund. Substitutes are also sought as buyers, for example, substitute higher priced steak with lower priced ground beef.

The kicker has been uber cheap rates which further motivate borrowing to build more potential supply.

It is possible that the other part of the bullish commodity thesis, high rate of money printing, will at some point overpower natural economic forces and jam prices of everything higher regardless of supply conditions.

Should that occur, however, ags would not be the best place to be. Gold and silver, given their innate characteristics, have proven to be the best plays on monetary debasement throughout history.

positions in gold and silver

Monday, October 17, 2016

Hillarygate's Spreading Stench

"Now, if you're brief is right and it ever reaches the light of day, the president loses any chance of re-election. The men around the president won't let that happen."
--Gray Grantham (The Pelican Brief)

The stench of Hillarygate continues to spread. Newly released FBI documents indicate that a State Dept official sought to pressure FBI agents to change the classification on documents found on Hillary Clinton's private email server in exchange for desirable overseas assignments for the agents.

As Judge Nap observes, this could be viewed as obstruction of justice, tampering with evidence, or straight bribery.

Meanwhile, more fissures are forming among disgruntled agents over the Bureau's handling of the Clinton case. This piece lays out several of the violations of FBI protocol associated with the case and quotes former agents who verify that, had they committed acts similar to Clinton w.r.t. classified info, they would be in prison.

One suggested that Congress should subpoena the ~25 agents involved in the investigation to testify about the direction they received from Director Comey and other higher ups.

While this case may not bust wide open prior to the election, it seems increasingly difficult to see how the Hillarygate cover up will be maintained.