Wednesday, June 28, 2017

Time Stamp Time

"Time's up."
--David Levinson (Independence Day)

At a forum in London yesterday, Federal Reserve Chair Janet Yellen stated that she believes that the financial system is "much safer" today and that we are unlikely to experience another financial crisis in our lifetimes.

You'll want to time stamp those remarks. The crash clock is ticking.

Tuesday, June 27, 2017

Watch the SIG Pigs

I touch you once
I touch you twice
I won't let go at any price
--OMD

Confused about how the revised Senate healthcare bill stacks up against Obamacare? One way to gauge relative differences is to note how various healthcare special interest groups (SIGs) that benefit from the ACA are responding to the proposed bill.

For example, various medical trade groups, such as the AMA and hospital associations, oppose the bill. Members of these groups get paid by Obamacare. We can surmise that they will get paid less under the proposed system.

AARP is also against the bill. AARP, formerly the American Association of Retired Persons, constitutes that largest non-profit, and lobby, for seniors. Seniors, of course, consume more healthcare resources than any other demographic. Based on AARP's opposition, we can surmise that seniors will have access to fewer healthcare resources and/or pay higher prices under the proposed system.


Health insurers have generally been silent w.r.t. the Senate bill. Insurers have benefited handsomely under Obamacare (as demonstrated by UnitedHealth Group's stock price above). A provision of the Senate bill allows that insurers will be subsidized (read: bailed out) for losses that they might incur under the new plan. It seems straightforward to conclude that insurers will benefit even more if the Senate bill is made law.

To understand the likely consequences of any proposal in the era of socialized medicine, watch the behavior of the SIG pigs as they wallow around the public healthcare trough.

Monday, June 26, 2017

Lunatic Fringe

'Cause you gotta blame someone
For your own confusion
We're on guard this time
Against your final solution
--Red Rider

Events over the past couple of weeks reinforce a tenet of social identity theory. Members of a particular group will underweight actions deemed undesirable by in-group members and overweight similar actions taken by out-group members.

One way to rationalize this form of cognitive dissonance is to classify in-group members performing undesirable acts into a subgroup called 'the fringe.' By doing so, people can distance themselves from bad behavior that otherwise would be linked to them by their association with the group.

Self-esteem is thereby preserved without having to admit complicity with the wrongdoing or having to leave the group.

Voila! The mental stress is thereby wiped away.

Sunday, June 25, 2017

College Free Speech

"Mr Hart, you're still not speaking loud enough. Will you stand? Speak louder, Mr Hart! Fill the room with your intelligence."
--Prof Charles W. Kingsfield Jr (The Paper Chase)

Updated ratings of colleges w.r.t. free speech. A rating of 75 or higher seems associated with a speech and idea environments that are favorable.

Very few institutions clear this hurdle. In this region, Kentucky rates highest at 55. Most regional schools have insufficient data to be included on the list at this time. However, those with partial data sets do not look promising.

Speech restrictions go on-in-hand with lack of ideological diversity to restrain learning capacities at higher ed institutions.

Saturday, June 24, 2017

Repeal It Now

If it keeps on rainin'
The levee's gonna break
--Led Zeppelin

Extending yesterday's post, replacing Obamacare, instead of replacing it, is a fool's errand. We noted recently how insurance markets are drying up as capacity, predictably, leaves the system.

Pushing more people (read: demand) thru a system with withering supply naturally leads to higher prices (ECON 101). Bloomberg estimates that healthcare costs are likely to rise at triple the general price inflation rate. For seniors, that means spending $300,000 or more on health insurance premiums during their retirement years. Younger people, such as millennials, will shoulder a much higher cost as they subsidize health care expenditures of older people.

If the healthcare system continues to be state run, these estimates are likely to be too low.


Socialized medicine is a fantasy that will be destroyed either thru our own volition or by natural economic forces. Because those natural economic forces will take no prisoners in the name of re-balancing the system, better to repeal it now while we still have control and can avert true disaster.

Friday, June 23, 2017

Obamacare Plus

"I didn't realize this afternoon how much bargaining power I really had. It's not just that my 'no' keeps you out. My 'yes' puts you in."
--George Caswell (Executive Suite)

After a GOP faction was able to finally edge a version of their ill-designed healthcare bill thru the House last month, the Senate has been busy revising it in advance of its vote. Senate bill v.1 hit the floor yesterday.

It did not take long before the usual trio of Senators Paul, Cruz, and Lee along with Senator Johnson of Wisconsin to announce that they would not vote for the bill as written.

In a subsequent interview, Sen Paul explained that not only does the bill not repeal Obamacare as Republican campaigns promised, but it sprinkles in enough new goodies that instead of calling the GOP bill Obamacare Lite, it might better be viewed as Obamacare Plus.

Republicans cannot afford to lose more than two votes in the Senate, lest their bill dies on the vine.

Let's see whether the Tea Party line holds fast and stewards well the bargaining power in their possession.

Thursday, June 22, 2017

Gold and Political Risk

There's a room where the light won't find you
Holding hands while the wall come tumbling down
When they do, I'll be right behind you
--Tears for Fears

As these pages have observed, gold is a bet on disorder. This article notes that this disorder usually stems from political causes. Governments, in their quest to get bigger and to acquire power, inevitably look toward acquiring resources via the monetary system.

In the U.S., much of this government action began with the initiation of the Federal Reserve in 1913.


1913 $2.50 PCGS MS64 CAC

Gold is a way for citizens to keep their resources from being robbed by government action. It is insurance against political risk.

position in gold

Wednesday, June 21, 2017

Cuban Reversal

Better get yourself together
And hold on to what you got
Once the music hits your system
There's no way you're gonna stop
--Miami Sound Machine

One of the few bright spots in the Obama administration was the lifting of sanctions on Iran and Cuba. Last week, the Trump administration began reversing those policies with Cuba and, effectively, putting previous sanctions back in place.

While not all of Obama's reforms will be overturned, Trump will reinstall travel restrictions and once again make it difficult for US business to trade with Cuba. The president argues that such restrictions are necessary to penalize Cuba for its poor human rights record under the current governing regime.

But the effect of these sanctions is to penalize US citizens who would otherwise want to travel and trade with Cuba. Moreover, the benefits of voluntary exchange are likely to strengthen Cuban appetites for governance that respects life, liberty and property rights.

As do all policies grounded in sanction, the president's actions make both the US and Cuba worse off.

Tuesday, June 20, 2017

Disappearing Insurance Markets

Funny how I blind myself
I never knew
If I was sometimes played upon
Afraid to lose
--Talk Talk

Nice graphic showing time multi-year trend of insurers leaving the marketplaces arranged by the Affordable Care Act. Dwindling number of insurers means less supply and lack of competition to drive future efficiency gains.

As the articles suggests, some actions taken by the Trump administration are likely extending the problem.

But make no mistake, the negative consequences of Obamacare, including loss of supply, were all too predictable from the outset.

Monday, June 19, 2017

Rhetoric of Death

In my head, the voice is waiting
Waiting for me to set it free
--Russ Ballard

Of the many strategies that have unraveled on the left, one that has been laid bare for all to see is the practice of accusing political opponents of 'violent rhetoric' that subsequently spawns violent action.

When Democratic congresswoman Gabby Giffords was shot in 2011, leftists first claimed that the shooter had Tea Party ties which helped motive the crime due to the Tea Party's alleged violent underpinnings. When the associated mainstream media frenzy refused to reveal any Tea Party links to the shooter, accusations shifted to Republican Sarah Palin's recent communications that 'targeted' various Democratic political districts for action using a crosshairs motif. When it became clear that the alleged shooter had a long record of unstable behavior and affinities to the writings of Hitler and Marx, the party line shifted once more to the harsh political rhetoric alleged to be spewed by Republicans, and the potential of these words to compel unstable individuals toward violent acts.

The left has rolled out similar narratives in the face of other high profile events, including the Benghazi disaster and even the Boston Marathon bombing, to little avail.

That these narratives had no factual basis, of course, matters little to the left. They help rile the base thru processes of gaslighting and emotional capture.

Since last fall's presidential election, it has been the left that has been spewing increasingly violent rhetoric. The most eyepopping examples come from left wing entertainers. Snoop Dogg shooting a character dressed as Donald Trump in the head in a music video. Madonna confessing on stage that she has thought about blowing up the White House. A comedian posting a video of herself holding a bloody Donald Trump head severed ISIS-style. A NYC play depicting Trump as a modern-day Julius Caesar getting stabbed to death on stage.


Leftist groups have called for various programs of 'resistance' and even war. Demonstrations have morphed into riots.

Democratic politicians have gotten into the act as well. Claims to the effect that "People are going to die" have been uttered by Democrats in opposition to nearly all Trump and GOP actions. If Obamacare is repealed, people are going to die. If the US steps away from global warming treaties, people are going to die. Etc.


This past week, the tables turned even more on the left when a leftist partisan who was obviously plugged into this stream, as exemplified by his social media trail, shot up a GOP baseball practice and injured several, including the third ranking Republican in the House. Did someone who repeatedly heard that 'People will die' if Republican policies were implemented think that he could save lives by gunning down some GOP policymakers?


We'll never know for certain as the shooter is dead. And even if that shooter did take the words of others to heart, it is doubtful that he will be able to lay off blame for his actions when he stands accountable before God.

However, it is becoming apparent is that the derangement of the left is increasingly being expressed by a rhetoric of death, and that this rhetoric could inspire action. Individuals would be foolish not to prepare for the potential consequences should this behavior continue.

Sunday, June 18, 2017

Red to Bronze

"You know what we get to do today, Brooks? We get to play baseball!"
--Jimmy Morris (The Rookie)

One year ago the Cincinnati Reds retired Pete Rose's number and inducted him into the Reds Hall of Fame. Yesterday, the Reds once again honored Rose with a statue of Charlie Hustle laying out into one of his patented head first slides.


Pete was there being Pete. No prepared remarks. Speaking from the heart. Mixing it up with his former Big Red Machine teammates. Even spending time in the TV and radio booths.

Several times he indicated that he would love to spend more time with team, talking, for example, about hitting with Billy Hamilton and others. He wished he could set foot in the Reds clubhouse.

Of course, Major League Baseball has banned Pete from doing any of this.

It may go down as one the most foolish moves in sports business history. Locking out the game's greatest living ambassador and prohibiting him from doing what he does best: dedicating his being to advance the game of baseball.

Thankfully, MLB could not stop the conversion of the brightest Red of all into bronze.

Saturday, June 17, 2017

Amazon's Shark

"Here we go, Fonz, I'm heading for the ramp. Are you sure you want to do it?"
--Richie Cunningham (Happy Days)

Market bubbles often climax with a 'jump-the-shark' moment. The dot com bubble jumped the shark when internet upstart America Online (AOL) ponied up nearly $200 billion to buy media giant Time Warner. This buyout nearly top ticked the market in 2000.

Yesterday, Amazon announced that it was buying grocer Whole Foods Markets (WFM) for about $13 billion. While the size of the deal is nothing like the AOL/Time Warner whopper of yore, it speaks to the veracity of mega cap tech companies reaching into industries unlike their core markets--leading to the perception that tech is 'taking over America.'


Perhaps. On the other hand, it could merely be symptomatic of hubris fostered by stock prices that have been on a multi-year moonshot that are likely to reverse sooner rather than later.

no positions

Friday, June 16, 2017

Anonymous Sources

People say believe half of what you see
And none of what you hear
--Marvin Gaye

Last night, the Department of Justice issued a short release warning Americans about news stories built on information obtained from anonymous sources. The release begins:

"Americans should exercise caution before accepting as true any stories attributed to anonymous 'officials,' particularly when they do not identify the country - let alone the branch or agency of government - with which the alleged sources supposedly are affiliated. Americans should be skeptical about anonymous allegations."

Motivations for this release are unclear. However, we do know that the mainstream media have based their recent grapevine journalism campaign on anonymous sources. Anonymous sources cast an air of legitimacy to the publication of rumor, innuendo, and fiction as fact.

As the media has ratcheted up the anonymous source approach, awareness is growing among Americans about the risk of consuming information grounded in shoddy journalism. This is a positive development. People are learning to rely less on assumptions and second hand information in pursuit of truth.

Hopefully, the DOJ release helps speed that process.

Thursday, June 15, 2017

Catch of the Day.

Ellen Brody: What am I going to tell the kids?
Martin Brody: Tell them I'm going fishing.
--Jaws

As leftists appear to have moved over to the obstruction of justice pond, they might want to be careful about where they cast their lines and nets. Not only are these people increasingly seen as desperate and deranged political hacks, but by fishing in the obstruction pond they may well hook themselves.

In his congressional testimony last week, former FBI director James Comey claimed that Obama AG Lorretta Lynch sought to influence how the Bureau communicated with the public about the Hillary Clinton email investigation. Among other things, she told Comey to water down the Clinton investigation rhetoric and refer to it as simply a 'matter.'

Couple this with other actions, such as Lynch's now infamous tarmac meeting with Bill Clinton days before Comey publicly exonerated Hillary last summer, and you have the makings of a case that the Obama administration obstructed justice during last year's presidential campaign with Lynch acting as the point person to use law enforcement resources for political purposes rather than for purposes of justice.

Some legal experts, including Judge Nap, believe that enough evidence exists for a criminal investigation of Lynch into her involvement in the Clinton email investigation.

My sense is that the longer that Dems extend their fishing expedition, the greater the likelihood that they wind up as Catch of the Day.

Wednesday, June 14, 2017

Bullets and Baseball

"How do you like someone shooting back at you?"
--Rafe McCawley (Pearl Harbor)

This morning a gunman opened fire on Republican congressmen as they were practicing on an Alexandra baseball diamond for the upcoming annual game against congressional Democrats at Nationals Park. One congressman, House Majority Whip Steve Scalise (LA) was shot in the hip. Several others, including two Capitol Police officers and an aide, were also reported as sustaining non-life threatening injuries.

Details are still emerging on the shooter, who was wounded and taken to a local hospital under custody where it is now being reported that he has died from his injuries. What does seem apparent from the accounts of several congressmen on the field is that the shooter was using an AR-type rifle and got off at least 50 rounds (implying multi mags) as players on the diamond scattered and sought cover.

The Capitol Police officers who returned fire and brought down the shooter were there because Scalise's leadership position merits a security detail when he travels locally.

Clearly, if guns were not on the scene to fire in a self-defense capacity, then this baseball field quite likely would have become a killing field.

Tuesday, June 13, 2017

Misplaced Celebration

Trim life shadows flicker and fall
But you still can't turn away
Get up and run before you stall
Before the edges fray
--Ric Ocasek

One of the more amusing vids I've seen in some time:



Also a lesson in misplaced celebration. The runner surely thought the crescendo of cheers as he neared the finish line was for him and he let up and lost his focus as he sought to pump up the volume.

No matter what the situation, stay the course and power thru the tape.

Monday, June 12, 2017

Obstruction by Design

Be running up that road
Be running up that hill
With no problems
--Kate Bush

During the Obama administration, Republicans were accused of obstructing political progress. Now, those on the Trump side of the ledger are decrying Democrat obstructionism.

Our founding ancestors would be pleased.

Their fear of democracy and discretionary rule by dominant coalitions motivated the framers to do what they could to make consensus difficult.

Despite what mainstream media and political pundits might have us believe, gridlock in Washington is not an exception to be overcome by unity and cooperation. Gridlock is the rule and by design.

Sunday, June 11, 2017

Bad Mojo

"The truth is, we're all part of it now. Banks, consumers...we're moving around money in circles. We take a buck, we shoot it full of steroids, and we call it leverage. I call it steroid banking."
--Gordon Gekko (Wall Street: Money Never Sleeps)

On several occasions since he has taken office, President Trump has taken credit for increased stock prices. He is not the first president to do so. In fact most do--particularly when higher stock prices can be woven into campaign rhetoric.

But it is extremely bad mojo to do so.

As we know, interventionary forces designed to prop up markets ultimately give way to ever-persistent natural forces intent on wiping out excess and revising prices to reflect true value. The thing of it is, the timing of this 'decompression' is unknowable.

In the case of the Obama administration, enough drugs were shot into the system to prop markets up for virtually the president's entire tenure. In the case of the Bush administration that preceded him, the engineered housing bubble popped at an inopportune moment, thereby draining both asset prices and GOP election hopes in the 2008.

What makes Trump's end zone dance particularly foolish is that he is doing it so early in his tenure. Touting the effect of his policies on stock prices at this stage of the game practically guarantees markets will punish his hubris while he's still on the clock. Measuring nearly ten years in length, this particular phase of interventionary 'steroid banking' policy is so long in the tooth that markets could reverse hard at any time and for any reason.

When prices do begin to spill, of course, Trump's naysayers will take their turn at the podium and point fingers at the president for market declines.

All the while it will have been the cumulative efforts of a century of bipartisan interventions that rest at the root cause of the problem.

Saturday, June 10, 2017

Fished Out

"Now what?"
--John Finnegan (Deep Rising)

Seems this lake's all fished out.


Where will Dems cast their lines next?

Friday, June 9, 2017

Independence Meme

Jim Malone: What I'm saying is, what are you prepared to do?
Eliot Ness: Anything within the law.
Jim Malone: And THEN what are you prepared to do?
--The Untouchables

In his commentary following yesterday's farcical congressional testimony of former FBI director James Comey, David Stockman discusses Comey's repeated invocations of the FBI's 'traditionally independent status in the executive branch.'

This is a false and dangerous view of any agency within the federal government--particularly one that possesses extraordinary police power. As these pages have recently observed, when federal bureaucrats are not directly accountable to voters, they are free to pursue their own agendas. They govern without 'consent of the governed.' 

Agencies such as the FBI must be politically accountable lest they become a policing arm of the deep state reminiscent of J. Edgar Hoover's feds.

As Stockman observes, however, Comey's behavior over the past year suggests that he doesn't believe the independence meme himself. He has subordinated his actions and those of the bureau to the political will of others. Indeed, it was his violation of protocol for the sake of politics that merited his dismissal by not one but two presidents.

Comey's behavior and his subsequent termination suggests that the state may not be as deep as some may presume.

Thursday, June 8, 2017

Virginia's Resolution

Benjamin Martin: May I sit with you?
Charlotte Selton: It's a free country. Or at least it will be.
--The Patriot

Tara Ross notes that yesterday in 1776, Virginia statesman Richard Henry Lee introduced a resolution to the Continental Congress proposing that the colonies separate from Great Britain. Virginia legislators had been sensing that America was in 'a state of extreme danger' and concluded that they should either a) completely submit to the will of the British tyrants, or b) break away from Crown rule.

Once the Virginia legislature had written its resolution, Lee forwarded it to John Adams of Massachusetts. Adams received it warmly and with some amazement, as he knew that other colonies were coming to similar conclusions.

In fact, Adams would later suggest that the fact that people in various states came to the same realization at the same time was no accident. It had to be the hand of Divine Providence that was guiding America toward liberty.

A more secular view might suggest that people in the various colonies were merely being driven by the same natural laws to throw off tyranny in favor of freedom.

In any event, after Lee presented the Virginia resolution to the Continental Congress, declaring that 'these United Colonies are, and of right ought to be, free and independent states," Adams seconded the motion.

A few days later three committees were appointed. One was to draft a declaration of independence, a second was to draft a plan for a confederation of the several states, and a third was to prepare a plan for allying with foreign nations. Meanwhile, delegates headed home to meet with their state legislatures and deliberate their authority to declare independence.

Less than a month later, our First Law was passed.

Wednesday, June 7, 2017

Deep State

"You just don't get it. These people can make us disappear."
--Nina Chance (Murder at 1600)

In a recent television interview, Senate Minority Leader Chuck Schumer warned President Donald Trump about crossing intelligence officials: "Let me tell you, you take on the intelligence community--they have six ways from Sunday at getting back at you."

This is one way to view the 'deep state.' The deep state consists of unelected federal government bureaucrats who, because they are not directly accountable to voters, can pursue their own agendas without fear of reprisal. Bureaucrats and their agencies become more deeply entrenched as they accumulate power independent of elected officials. The Federal Reserve is an example of a deep state agency.

Intelligence agencies also possess capacity for deepness. Since they monitor communications of everyone, including government officials, they can accumulate 'dirt' that can be used against opponents that threaten deep state livelihood. Moreover, intelligence agencies are versed in counter-intelligence practices capable of deceiving large groups of people. They are also capable of inciting or committing acts of physical violence.

The primary goal of the deep state is to maintain power regardless of what political party holds elected office. Trump, being a Washington outsider who has signaled that he will not play ball with the deep state status quo, presents a clear and present threat to these bureaucrats.

Schumer knows it. Others in Washington know it.

However, the more the people of the US develop an awareness of the deep state, then the greater the likelihood that the deep state is in jeopardy.

Perhaps this is Trump's purpose.

Tuesday, June 6, 2017

Redistribution, Not Insurance

I can always find someone
To say they sympathize
If I wear my heart out on my sleeve
--Billy Joel

Prof Galles explains why state sponsored health insurance is not insurance at all. It is simply a program of redistribution.

Insurance, he notes, is about reducing risk in the face of uncertain events. Insuring things that would happen for certain, such as routine checkups in a doctor's office, offers no risk reduction. Yet coverage for such events is required under most state sponsored health plans.

Stated differently, regular health maintenance does not fall within the proper scope of health insurance policies. When healthcare resources are drawn from an insurance pool to service routine needs, the insurance is not reducing risk to society at large. Instead, costs are likely to increase as there are no added benefits to outweigh the added cost of insurance administration.

Risk reduction is also difficult because of the fact that healthcare services covered by insurance induces over-consumption. When most health care costs are borne by third parties, then those covered by those insurance policies will want more and better services causing them to consume far more resources than they would have if they paid out their own pocket. This is the essence of moral hazard.

As Galles observes, this is why 'lunch insurance' doesn't exist. If someone else is paying your bill, then you will be prone to order more extravagantly than you would otherwise.

There is also the problem of mandating coverage for services that some people would never pay for out-of-pocket. For example, people certain that they would not need them would not ask for a quote for birth control or addiction service coverage. Yet, state sponsored health insurance programs are full of such mandates.

Mandates that require coverage of those more likely to get sick, such as old people or those with pre-existing conditions, clearly demonstrate that state sponsored health care is not about risk reduction. Rather than pooling those with similar circumstances, state sponsored plans force healthy people into plans. Consequently, policy pricing cannot reflect actuarial risks as healthy people pay less and sick people more than they would otherwise. Healthy people are thus forced to subsidize the sick.

All of this has been compounded by government misinformation that has masked massive income redistribution as programs for overcoming insurance market failures and reducing heartless harm on the sick. Honesty is, of course, impossible when trying to promote state sponsored health care.

Monday, June 5, 2017

Dems Suddenly Like Debt Ceiling

"That's right. Brantley is Whitfield. Whitfield is Brantley."
--Brantley Foster (The Secret of My Success)

Hard not to chuckle in amusement over the blatant hypocrisy. Democrats now threatening to not raise the debt ceiling in an effort to thwart Republican tax cut proposals.

In any event, here's hoping that Dems are successful at keeping the debt ceiling where it is, and that Republicans retaliate in the future by not raising the debt ceiling in lieu of future progressive-led agendas.

While things are upside down, perhaps Dems will ultimately lead the way in reducing the debt ceiling...

Sunday, June 4, 2017

Partisanship and Hypocrisy

"Listen, I'm a politician, which means I'm a cheat and a liar. And when I'm not kissing babies, I'm stealing their lollipops."
--Jeffrey Pelt (The Hunt for Red October)

The blatant hypocrisy exhibited by politicians and their partisans has long captured my attention. But I shouldn't be surprised, really. People who belong to groups are likely to use different yardsticks for assessing behavior depending on whether they are judging in-group vs out-group members (including themselves).

Moreover, as political stakes escalate, groups are increasingly prone to pulling out all stops in order to maintain control over the strong arm of government and to keep power out the hands of their opponents. This would include eliminating all scruples about acting with duplicity.

The greater the political stakes, the greater the political partisanship. The greater the political partisanship, the greater the hypocrisy.

Saturday, June 3, 2017

Climate for Change

Look in the mirror
And you see how you've been taken
You won't surrender
But now your heart is breakin'
--John Waite

A primary objective of the Left is to throw so much 'chaos' at the Trump administration that the president is so busy dodging blows that he can't get his agenda accomplished. The mainstream media narrative would like people to think that this strategy has been successful.

However, Trump has already delivered on several promises. Appointment of a supreme court justice is probably number one of the list. On his first full day in office, Trump pulled the US out of the Trans Pacific Partnership. He has also rolled back various regulations by executive order.

In his latest accomplishment, last week Trump withdrew the US from the Paris Accord. The Paris Accord is a non-binding agreement among nations to adopt 'clean energy' sources and reduce fossil fuel emissions in the context of the 'global warming' proposition.

Trump's rationale for leaving is that the agreement hinders US jobs and economic growth.

Of course, the president's move has left watermelon socialists aghast worldwide.

How can Trump simply withdraw the US from the Paris Accord by executive order? Because that's precisely how we got into it. Rather than submitting the agreement to Congress for approval, then President Barack Obama, per his constitutional authority regarding treaties, simply signed an executive order to commit the US to the agreement.

Because the agreement never went thru the legislative process on the way in, the previous president essentially empowered his successor to do the same on the way out.

Friday, June 2, 2017

Snake in the Grass

You can't concern yourself with bigger things
You catch the pearl and ride the dragon's wings
--Asia

Easy to understand example of how licensing keeps people out of work and protects incumbents from competition. A teenager mows neighborhood lawns in an Alabama town. Someone working for a rival service threatens to report her to town officials because she is cutting grass without a license. A license costs $110.

The teen either has to pony up the fee and manage associated bureaucracy or leave the industry.

It should be readily apparent that licensing limits entrepreneurial actions of upstarts. It also tends to impact marginal workers the most.

Which is fine news for those already in the industry.

Thursday, June 1, 2017

Whack-A-Mole Censorship

I try so hard not to get upset
Because I know all the trouble I'll get
--Til Tuesday

Make no mistake, current efforts by the Left to shut down media commentators that they do not like is an admission that the Left cannot compete in the market for ideas. They fear that their own ideas will be rejected in uninhibited exchanges of thought. Therefore, they seek to interfere in markets where competing designs are likely to be judged superior.

Unfortunately for these people, the market for ideas has never been less controllable. Shut down a voice on one venue, and the voice subsequently pops up elsewhere.

The Left is playing a game of whack-a-mole censorship.

Wednesday, May 31, 2017

Pending Home Sales

And I remember how we'd play
Simply waste the day away
--Madness

Found the timing of this piece curious as I've noticed anecdotal evidence of pending home sales declines in my neighborhood. In fact, several properties that were listed as pending almost as soon as they were posted are now back on the market.


Article suggests limited supply and associated higher prices as key factor in pending sales decline. Perhaps, but I'm now seeing properties listed at prices that would have been lifted by buyers a few months ago now sitting there.

Small sample of higher end market to be sure, but has caught my attention nonetheless.

Tuesday, May 30, 2017

Political Violence and Government Importance

Benjamin Franklin Gates: Of all the ideas that became the United States, there's a line here that's at the heart of all the others. "But when a long train of abuses and usurpations, pursuing invariably the same Object, evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government and provide new guards for their future security." People don't talk that way anymore.
Riley Poole: Beautiful. I have no idea what you said.
Benjamin Franklin Gates: It means. if there's something wrong, those who have the ability to take action have the responsibility to take action.
--National Treasure

This article posits that, to curb political violence, government needs to be made less important. This proposition ignores the idea that, in a democracy where majorities claim legitimate control of human action, peaceful reduction of government scope is unlikely.

Instead, conflict will continue to escalate between parties seeking to gain control of the strong arm of government until society devolves into chaos.

The reverse of the article's proposition seems more valid. To make government less important, political violence may be necessary. Witness, for instance, the American Revolution.

Monday, May 29, 2017

Lost Generation

"I can tell you now one reason why I think you've been having hard luck. I saw it in your faces last night. I can see it there now. You've been looking at a lot of air lately, and you think you ought to have a rest. In short, you're sorry for yourselves. Now, I don't have a lot of patience with this 'What are we fighting for?' stuff. We're in a war--a shooting war. We've got to fight. And some of us have got to die. I'm not trying to tell you not to be afraid. Fear is normal. But stop worrying about it and about yourselves. Stop making plans. Forget about going home. Consider yourselves already dead. Once you accept that idea, it won't be so tough."
--General Frank Savage (Twelve O'Clock High)

Saw one of my favorite movies last nite, Twelve O'Clock High. The film is a story about the early days of strategic bombing in northern Europe during WWII. A 'hard luck' bomb group is failing, and a veteran general is sent in to turn things around. From where I sit, this is one of the best management movies ever made, particularly in the context of turnarounds.


The film is also a reminder of the utter waste of war in terms of human life. Bomb groups at that time sought to put up 21 planes per mission. Casualties were considered 'good' when 19 of 21 planes returned from a mission. Losses were frequently much worse. With the requirement being 25 completed missions before a bomber crew's tour was done, it should of little surprise that fear was high and morale was low when loss rates/mission were 10%+.


By the end of the war, the Eighth Air Force, which undertook most bomber and fighter plane missions for the United States in northern Europe, had realized more than 47,000 casualties, including 26,000 dead. Seems inordinately high until one realizes that casualties pile up quickly when each heavy bomber that went down carried a ten man crew with it.

Memorial Day finds me thinking about a particular subset of the Silent Generation--call it the Lost Generation of human potential.

Sunday, May 28, 2017

Cultural Appropriation

Beatrice Pullman: You'll be the death of me with these pancakes.
Delilah Johnson: I'm glad you finds 'em to you taste, ma'am. 
Beatrice Pullman: I've never tasted anything so good in my life. How do you make them?
Delilah Johnson: It's a secret. Them pancakes is my granny's secret. She passed it down to my mammy, and my mammy told me. But I ain't tellin' nobody. No sir.
Beatrice Pullman: I don't blame you. I wouldn't either.
Delilah Johnson: Down South, my mammy was famous for her pancakes. White folks come from miles around just to taste 'em. Yes'm. It's a secret and it's gonna die with Delilah.
--Imitation of Life

As our entitlement mindset has escalated, it was probably only a matter of time before people in one group began accusing people in other groups of 'cultural appropriation.' In this context, cultural appropriation is seen as having customs and routines 'ripped off' by people perceived as not belonging to your group. You view this as theft--them profiting at your expense.

In Portland Oregon, for example, white people who run restaurants that serve ethnic cuisines have been put on a 'white-owned appropriative restaurants' list. The list's authors use the 'white supremacist culture' moniker to accuse the restaurateurs of unjustly using, for example, Mexican recipes to produce food that customers like.

"These white-owned businesses hamper the ability of [people of color] to run successful businesses of their own by either consuming market share with their attempt at authenticity or by modifying foods to market to white palettes. Their success further perpetuates the problems stated above. It's a cyclical pattern that will require intentional behavior change to break."

Local media are embracing the 'appropriation' concept.

Boycotting white owned ethnic restaurants seems to be the preferred strategy for trying to limit the competition. Seems only a matter of time before movements to sue for intellectual property violations are conjured.

What this is really about, of course, is trying to use bigotry to one's advantage.

Unfortunately, the last thing likely to be considered by this group is head-to-head competition on the merits of product, service, and peaceful exchange.

Saturday, May 27, 2017

Fiction as Fact

People say believe half of what you see
Son and none of what you hear
--Marvin Gaye

Timely example of media influence on politics. Recent survey data show that nearly 60% of Democrat respondents believe that Russia tampered with vote tallies in order to get Donald Trump elected president. Moreover, 35% of Independents and 15% of Republican respondents also indicated belief in Russian tampering.


This is despite no supporting evidence and multiple on-the-record denials by FBI and DHS officials.

What there has been, of course, is a deluge of grapevine journalism that has been reporting rumors and hearsay related to Russia and Trump to information consumers.

The above results are consistent with strategic information transmission research. When consuming information presented by politically motivated media, people can be fooled into believing lies.

Friday, May 26, 2017

Politics, Media, and Influence

"I'll make public opinion out there within five hours. I've done it all my life. I'll blacken this punk so that he'll--You leave public opinion to me. Now, Joe, I think you'd better go back into the Senate and keep those senators lined up."
--James Taylor (Mr Smith Goes to Washington)

Heard a proposition recently that Democratic Party and their strategists do not control the mainstream media. Instead it is the opposite. MSM predominantly shape the Democratic Party and their strategists.

The theory might be explained as follows. Intellectuals and their associated intelligentsia control the large media pipes for putting their socialist ideology in front of information consumers. Research suggests that not only will leftist journalists distort information conveyed thru the pipe, but they will likely grossly exaggerate it in order to influence consumers.

Even if consumers know that media is biased left, they are still likely to be influenced by it. One reason is that information consumers generally underestimate the extent to which media sources are operating strategically. This would hold true even for seemingly sophisticated media consumers such as politicians.

Sprinkle in propositions regarding the dominant direction of resource dependence in media:politician relationships, and you have the makings of an interesting theory. 

A more general form of the theory might posit that any influential media source with a particular political ideology is likely to influence political parties that share some of those beliefs. When that is the case, the media source 'hooks' the party and that party can be subsequently shaped. 

That would suggest, for example, a Fox News:Republican Party dyad that parallels the originally proposed MSM:Democratic Party dyad.

Thursday, May 25, 2017

Unitary Executive Theory

FBI Director Voyles: Are you asking me to ignore a suspect, Mr President?
The President: If the press...gets wind of what you're after and starts digging, I'll be--we'll be crucified.
FBI Director Voyles: So you're asking me to back off?
The President: Back off and chase the real suspects. Ignore it for a few weeks, that's all.
--The Pelican Brief

In the context of allegations that Donald Trump obstructed justice by interfering in various DOJ and NSA investigations, Judge Nap discusses the concept of the unitary executive.

Unitary executive theory holds that the president is the chief executive officer of the federal government and, therefore, everyone in the executive branch works for him. Because the president is the only one in the executive branch that is accountable to voters, there can be no people in the branch who are not under the chief executive's authority. It this weren't so, then vast areas of governance would not be accountable to the people. This would violate the right of people to be governed by the consent of the governed.

Under unitary executive theory, the director of the FBI and other directors of various agencies in the executive branch serve at the pleasure of the president. They are obliged to follow all orders and requests of the president or resign. Upon resignation, they may reveal the reasons for the resignations.

In opposition to unitary executive theory is the argument that people who serve underneath the president have an ethical duty to pursue wrongdoing even if the president demands or requests that they 'back off.' This is especially the case if the president is suspected of being involved in the wrongdoing. This argument posits that the president does not need to intervene because he ultimately has the power of the pardon, and can constitutionally terminate sentences of those who may be convicted of crimes prosecuted by executive branch agencies.

Here is an informative give-and-take between the Judge and Juan Williams on the matter in the context of Trump's troubles.

Wednesday, May 24, 2017

Widespread Unmasking

Evey Hammond: Who are you?
V: Who? Who is but the form following the function of what and what I am is a man in a mask.
Evey Hammond: Well I can see that.
V: Of course you can. I'm not questioning your powers of observation. I'm merely remarking upon the paradox of asking a masked man who he is.
Evey Hammond: Oh. Right.
--V for Vendetta

Deranged media are using the escapades of Donald Trump as an excuse to ignore stories that truly hold blockbuster potential. One involves growing evidence that the NSA under the Obama administration illegally unmasked the identities of US citizens in their surveillance of digital communications. A newly released FISA court order finds that what amounts to illegal searches were 'widespread' and created a 'very serious Fourth Amendment issue.'

The FISA court findings were the outcome of a hearing dated October 26, 2016--just days before the presidential election. Why the findings were 'sealed' until now is not explained in the article and unclear to me.

The discoveries and their timing cast additional suspicion on previous administration's possible use of surveillance apparatus to gain information about political adversaries.

Grapevine journalists, of course, prefer to discount factual court documents in favor of rumor and innuendo.

Tuesday, May 23, 2017

Compassion by Gunpoint

Feed the babies
Who don't have enough to eat
Shoe the children
With no shoes on their feet
House the people
Livin' in the street
Oh, oh, there's a solution
--Steve Miller Band

Penn Jillette states it well. Pointing guns at people and forcing them to surrender wealth to help the poor is compulsion not compassion. Forced charity is an oxymoron.


Charity involves voluntarily helping people on one's own. This is true compassion.

When you stand accountable before God, it seems likely, as Jillette put it, that you'll "get no moral credit for forcing other people to do what you think is right."

Calling it compassion equates to rationalizing robbery. When you vote in favor of strong armed government agents to do your bidding, the voting booth becomes a lever of aggression.

And you become a principal of violence.

Monday, May 22, 2017

Political War and Markets II

"Goddammit, when is somebody going to go on the record in this story?"
--Ben Bradlee (All the President's Men)

Following up on last week's missive involving all-out political war and markets, Fleck had additional exchange with 'Mr Skin' about the issue. Mr Skin writes in big blocks of text, but I want to reprint the exchange once again as published in its entirety because I plan to reference some of it in future posts.

Mr Skin: I am not a special trump fan - (more of an extreme case of Hillary phobia) - but the witch hunt going on now is almost exactly the same "play book" they (media and Democrats) used against Nixon. Given that many of today's "pundits" or self-proclaimed "political analysts" plus biased media editors and reporters were in kindergarten or not even born when Nixon blew up, they have no context for pursuing this thing, regardless of substance. This "thing" will not go away. In fact, even without anything tangible to hang something on, "they" don't need anything. Just make something up, spin it well out of context, broadcast the "accusation", thus attempting to force a denial, that in turn will be spun, twisted, "inflamed-on-social-media" for all the idiots to absorb, leading to more "sponsorship" for the witch hunt. The progression of time, heading toward the off year elections, merely aggravates Trump's problem. The Grahams and McCains, plus several other "fearful" or outright leftie congressional Republicans (RINOs - Republicans in Name Only) render Trump's "New Reality" - "It-Ain't-Happening-Dude". When he was elected I figured he may have a few months of peace, probably not any sort of "honeymoon", but I never thought his political opponents would, in effect, deliberately try to sabotage his presidency from day one. The "Rachel Madow" media lunatics and the "Maxine Waters" political lunatics are understandable but it also seems that everyone has out the "long knives". When the Nixon "playbook" started, there were mostly mild suggestions that he might be vulnerable. It took a while for the momentum to build up to the point where everyone piled on. The media always had a "thing" about Nixon, from his days as Ike's VP back in 1956-60. He was perceived as "slick" or phony and had earned the title "Tricky Dick". BUT, their displeasure was nothing like the outright venom shown Trump. Nevertheless, "they" started after him right after he was inaugurated in 1973. The relentless barrage of negative "Nixon Stories", filled with innuendo and speculation, gained momentum into 1974. He resigned in late summer of 1974, whereupon a market already down more than 25%, simply went straight down into September. The big indices lost about 50% from day one of the "witch hunt" in early 1973 until the bottom in September 1974. Of course, there were economic problems along the way, such as an oil embargo, but the assault on the President was unprecedented in modern times and it scared the wits out of both domestic and foreign investors.

Great opportunities grew out of that bear market. And our little money management firm was lucky enough to be in the right place at the right time. Today's "players" have never seen values like those found in late 1974. For context, consider Polaroid - the greatest growth stock since RCA in the 1920s. It had a lock on instant photography (doomed by Texas Instrument's digital revolution a few years later). PRD traded at 149 at the top in early 1973. It bottomed at 13+ in late 1974. It had no debt, and the stock price was not only lower than its working capital per share but also lower than its NET CASH in the bank. In effect, you got paid to own it, and EPS was $1.50. The most absurd value was Boeing - whose market cap was LESS THAN the selling price of three 747 airliners. Of course, such "stone age" stories are forever irrelevant these days, given direct sponsorship of markets by CB bureaucrats, but if enough panic hits a market, similar stories will appear again.

Fleck: So, the bottom line is you think the die is cast, that now, this will be 4 years of hand to hand media/Trump combat nearly 24/7 and that will take its toll at some point? Do I have that right?

Mr Skin: Yep. I think the media will keep trying to outdo each other going after Trump and his enemies will never give up looking for a way to destroy his agenda. Reagan was wildly popular and "they" even tried to get him. When Woodward and Bernstein went after Nixon, and gained "fame" by running a President out of office, "journalism" became a career ambition for a whole generation of "giant killers". The big question is whether the underpinnings of the stock market can remain strong if the "witch hunt" theme keeps playing. Of course, we have grown a new crop of "players" over the last few years, including a Fed (Bullard, etc.) that seems to panic every time the market dips. In any case, I can't see any logical reason for investors to ignore the possible threat that "they" might actually do serious damage to the political process. The whole thing makes me want to puke.

Sunday, May 21, 2017

Grapevine Journalism

"If that's all you got, you got nothing."
--Detective Harlan Regis (Murder at 1600)

Mainstream media are largely engaging in grapevine journalism. Reporting rumors and heresay. Treating innuendo as fact. Reciting fictional narratives. Reporting stories before corroborating them.


Grapevine journalists trap words in order to promote political agendas. They traffic in empty claims.

Saturday, May 20, 2017

All-Out Political War and Markets

It ain't nothing but a heart breaker
Friend only to the undertaker
It's an enemy to all mankind
The point of war blows my mind
--Edwin Starr

Fleck avoids politics in his daily commentary except when he sees politics as influencing market movements. Recently on Ask Fleck, a well-regarded contributor affectionately known as 'Mr Skin' shared his assessment of the Washington turmoil and its potential effect on markets. In response to several reader comments about the the post, Fleck posted his own missive yesterday.

I want to reproduce it in its entirety because Fleck captures what he terms the 'all-out' political war and its prospective impact on markets well, I think.

"Several people commented on [Mr Skin's] views on the Trump witch hunt (most favorable, but some not). However, I'm only posting this one so that I can clarify what I think the big point is that Mr Skin was making, that being the all-out warfare now underway.

"First, Trump has flaws, plenty of them. That isn't new news. What is new is the near hysteria from the MSM (and many politicians) about virtually anything he does (e.g., many Democrats and Republicans said Comey should go, due to what he did during the election campaign, and now most of those same people are defending him because Trump canned him, in their mind, for the wrong reason). But, the fact is, it almost doesn't matter WHAT he does. This group of people is against it, period.

"Second, Trump is a thin-skinned egomaniac and that will continue to cause problems. BUT, even given his flaws, he should at least get a fair shake on news items. Yet he does NOT (which of course gets him even madder). People who hate him feel like he couldn't possibly have beaten Hillary without somehow 'cheating' (i.e., the Russians stole the election) and they are mad as hell and want revenge, when in fact he beat the Republicans, Hillary, and the MSM because the so-called silent majority was fed up with how the country has been run.

"Now, WHY this matters is because the market ran up to the moon on hopes he would accomplish things that he could never have achieved even if he were a saint (which he ain't), but the absolute hatred on the part of the Democrats, MSM, some Republicans and the GOVERNMENT BUREAUCRACY means that he will be lucky to get any meaningful legislation passed for quite some time, if ever. At some point, the market will have to adjust to reality (and it will tank) and then maybe some people will see that the economy sucks. Of course, Trump will lose it even more when he gets blamed for all of that, too.

"So, this bit of politics looks like it will matter to markets, potentially in a big way, which is why I am addressing it. This could become a very big deal, as an all-out war among these various groups, which is what is taking place, is not only NOT bullish, it is very bearish, period."

Friday, May 19, 2017

Idea Markets and Interference

"And where once you had the freedom to object, to think and speak as you saw fit, you now have censors and systems of surveillance coercing your conformity and soliciting your submission."
--V (V for Vendetta)

Ideas are fungible and, like goods, naturally trade on markets. When these markets are free and unhampered, ideas trade liberally between buyers and sellers seeking to mutually benefit from the exchange. Competing ideas are considered, discussed, revised. Some ideas win, others are rejected.

Those fearful that their ideas will be rejected may be tempted to interfere with free, uninhibited exchange of thought. They seek to regulate trade by restricting what can be said and by whom. They want to restrict access to venues for broadcasting ideas. They twist words, quote out of context, report events in incomplete or dishonest manners. They try to shout down speakers with differing viewpoints.

When ideas can't compete on their own merits, then the purveyors of those ideas will seek to shut down markets where competing designs are likely to be judged as superior.

Thursday, May 18, 2017

Exhausting Possibilities

Inspector Richard: You're not too tired?
Jessica Kamen: Oh yeah, for sure. I could probably sleep for a week.
--Kiss of the Dragon

Domestic stock markets lost a couple of percent yesterday. Popular cause assigned to the slippage was the turmoil in Washington.

While Trump and the hysteria that he sponsors might help ignite selling, the truth is that this is a market has been operating under its own manic brand for quite some time. When that mania exhausts itself, then any news can reverse the trend. And once the trend is reversed, all news will be seen as bad by market participants.


Whether yesterday constituted the 'this is it' moment remains to be seen. Note that a down day of similar magnitude back in mid-March fostered no material follow-on effect.

Technically, yesterday's decline did no significant damage, and markets are bouncing moderately this morning after opening slightly red. Bears, who have been in hibernation for months (years?), will need more than yesterday's action to crawl out of their caves in size.

no positions

Wednesday, May 17, 2017

Obamacare's Greatest Impact

Ever have that feeling
Almost broke in two
Said that you were leaving
Like you do, like you do
--ABC

Judge Nap suggests that the greatest impact of Obamacare may be that it convinced more Americans that healthcare is an entitlement to be provided by government (i.e., provided by forced labor of others). The Judge conceptualized Obamacare as a stool with four problematic legs.

Constitutional leg. The premise that the federal government has lawful power to regulate the delivery of healthcare.

Legal leg. The premise that the federal government is obligated to provide health insurance to everyone in America.

Economic leg. The requirement that everyone in the US purchase and maintain health insurance.

Orwellian leg. The requirement that all health care providers in the US shall retain all patient records in digital format and the the federal government shall have access to those records.


None of those legs were repaired/replaced by the recently passed GOP-led House healthcare bill. That same GOP-led House voted multiple times to repeal Obamacare when they knew that it had no chance of making it thru the process.

Such fecklessness occurs when politicians sense that voters think that the public treasury has become the public trough.

Tuesday, May 16, 2017

Defying State Sanctity

Step into a life of maybe
Love is hard to find
In the church of the poison mind
--Culture Club

Interesting piece by Jeff Tucker on the root cause of Trump Derangement Syndrome--the left's ceaseless hysteria over the the actions of Donald Trump and his administration. Tucker thinks that the left, and really statists of all stripes, sees Trump as a threat to the institution of government.

Government is the statists' preferred tool for achieving their aspirations. Statists have at least 100 years invested in building government's image not as a taker, but as a giver. The president is seen as a high priest of political process with a duty to reflect the sensibility of government as good.

Trump is an outsider who, since his early days on the campaign trail, made it clear that political correctness is not part of his M.O. Unlike his predecessor who carefully adhered to institutional protocol, Trump has done anything but. Among other things, observes Tucker,

"[Trump] overthrew the respective establishments of two parties, tore right into the legitimacy of the national press, humiliated every expert who predicted his demise, and is now stumbling around Washington like a bum in a jewelry store."

As Tucker notes, Trump has not cut back on the size of the state in any meaningful way, and many of his policies (e.g., healthcare, infrastructure spending) largely preserve or increase central government scope.

What Trump is doing is ruining the statist vision of how a president should act, thereby discrediting a sacred institution in the eyes of many. As institutional prestige associated with the federal government declines, so does the state's legitimacy in the eyes of many.

For many statists, this is simply unacceptable. Trump is a threat that must go. The conclusion that many disciples have reached is that saving the old faith requires that this president be removed from office. Thus, impeachment chants from the statist church grow louder by the day.

Monday, May 15, 2017

Lions and Sheep

"Ever wonder why fund managers can't beat the S&P 500? 'Cause they're sheep. And sheep get slaughtered."
--Gordon Gekko (Wall Street)

Not a bad way to express the principle of not taking anything personally.


Don't run with the mindless herd.

Sunday, May 14, 2017

Liberty and Safety

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

Several versions of the below quote are attributed to Franklin.


The real issue is not whether liberty is deserved in such an instance. It is whether liberty is even possible.

Saturday, May 13, 2017

Rank Amateurs

"Hornbeck, I'm getting tired of you. You never push a noun against a verb without trying to blow up something."
--Henry Drummond (Inherit the Wind)

People who have had a subject that they know something about covered by the media are likely to agree with Hayek. Journalists, being one type of intellectual that traffics in ideas, are prone to be rank amateurs in the subjects that they cover.

Journalists have presentation skills. They tend to have little content skill. As such, journalistic coverage is prone to error and incompleteness.

It is also prone to bias. Lacking deep smarts in the subject matter, journalists will be prone to lean on their view of the world to fill in the holes.

The resulting product is therefore likely to be slanted.

Friday, May 12, 2017

Finding Yuri

"Tom is that one who saw you at Susan's. He's known about you all along, isn't that right? We do know what that means. If Commander Farrell is the man who was with Miss Atwell, then Commander Farrell is the man who killed Miss Atwell. And we know that the man who killed Miss Atwell is Yuri. Therefore, Commander Farrell IS Yuri, quod erat demonstrandum."
--Chief of Staff Scott Pritchard (No Way Out)

In the 1987 film No Way Out, the Secretary of Defense kills his mistress in a fit of jealous rage. His chief of staff concocts a scheme that accuses an imaginary Russian spy with code name 'Yuri' of the murder. Yuri is proposed to have used the mistress to access US military secrets.

The Secretary and his chief bring in a young navy commander to head an investigation. By dumb luck, it turns out that the commander was also having an affair with the mistress, and before long evidence emerges that could implicate him in the murder.

The conniving politicians celebrated their good fortune. Their cover-up might work. It appeared that there was a Yuri who could be blamed for the murder. Their fictional story was becoming fact.

Thirty years later, it seems like the Left is embracing a similar storyline. To divert attention from a political disaster, people on the Left seek to offload blame on a fictional Russian nemesis. A witch hunt is underway in search of a scapegoat. Maybe, just maybe, a Yuri will emerge.

Perhaps the Left should keep in mind that finding Yuri did not auger well for the antagonists on the silver screen.

Thursday, May 11, 2017

Comey's Self-Destruction

Sam Crandall: Good luck. I hope the fish are biting.
Chip Hardesty: I was kinda hoping they wouldn't be.
--The FBI Story

Judge Nap observes what the mainstream media fails to grasp (or admit) about the firing of FBI director James Comey by President Donald Trump. Comey dug his own grave.

As the Judge recounts, Comey's handling of the Hillary Clinton email scandal was highly unprofessional and violated policies that have been in place in the DOJ and FBI for decades. One rule says that if the FBI chooses not to indict someone, then it passes the determination on to the DOJ silently. Procedure does not permit the Bureau to publicly announce that a person is not going to be indicted, and then present evidence against the person.

This is, of course, precisely what Comey did last July 5. By doing so then and on subsequent dates (here, here), Comey politicized the FBI, and injected himself and the institution into a presidential election.

Once an institution becomes politicized, then it is like tossing bleeding fish into water inhabited by sharks. Politicians circle the bait and then attack, thrashing about and sinking their teeth into their institutional prey for political gain.

Comey's also damaged the culture of the Bureau. By breaking off an investigation that appeared to many agents as headed toward indictment, Comey fostered conditions of internal mutiny that motivated further disjointed actions by the Bureau chief.

There is no doubt that James Comey's mismanagement of this case, and perhaps others, constituted grounds for dismissal. The important question that few seem to be seriously asking is what took so long? Why didn't Trump fire Comey on his first day in office? Why didn't Barack Obama fire Comey last summer?

By postponing the proper course of executive action, both presidents permitted the situation to escalate into something worse.

Wednesday, May 10, 2017

VIX Tricks

I'll hold on to you
Till the mountains crumble flat
I'll hold on to you
Until you figure out just where you're at
--Ric Ocasek

As indicated by the 20 yr chart below, the Volatility Index (VIX) has moved below 10 and is marking historic lows. The VIX measures how much investors are willing to pay for options--particularly put options for hedging or protecting long positions.



When the VIX is high, as it was during the 2008 credit collapse, then investors are willing to pay thru the nose for options. As such, the VIX can be construed as a measure of fear.

When the VIX is low, as it is now, then investors are willing to pay little for option protection. In fact, recent reports suggest that buying option protection is increasingly seen as a waste of money. As such, the VIX can be construed as a measure of complacency.

Although the measure currently suggests a fearless, highly complacent market, experience suggests that the VIX is not a good forecasting tool. Stated differently, a fearless, complacent market can continue in that direction for some time.

What we do know is that, when sentiment turns, it is likely to turn on a dime. Increasingly fearless, complacent sentiment helps explain Minsky's theory that stability breeds instability.

Be ready.

Tuesday, May 9, 2017

Money Supply and Inflation

New car, caviar, four star daydream
Think I'll buy me a football team
--Pink Floyd

Frank Shostak discusses the relationship between money supply growth and inflation. In the 'olden days,' inflation was defined in terms of money supply--not prices. Growth in money supply that exceeded productivity growth was considered inflationary.

While the definition of inflation has since shifted toward a focus on price-related outcomes, shouldn't the relationship between money supply and modern 'measures' of inflation such as the consumer price index (CPI) be straightforward? After all, more money chasing a set amount of goods should raise prices, right?

As Shostak notes, not necessarily. One thing that could cloud the relationship is change in productivity. As productivity improves, prices naturally decline. Thus, it is possible that in an era of improving productivity that growth in money supply may translate into higher prices.

Stated differently, higher prices from more money in circulation could be offset by lower prices from productivity gains.

It is also possible that popular measures of price inflation such as the CPI might not capture the effects of money supply growth. Since the credit collapse, for example, much of the growth in money supply engineered by central banks around the world has been confined to the banking system. The effect has been a surge in prices of financial assets rather than in prices of consumer goods.

What is safe to conclude is that growth in money supply distorts prices and generally makes them higher than they would be otherwise.

Monday, May 8, 2017

Higher and Lower Ed Bias

Gone are the dark clouds that had me blind
It's gonna be a bright, bright, sunshiny day
--Jimmy Cliff

Column re-plows much ground covered on these pages about the left skew of the ideological spectrum on higher ed campuses. The article's title suggests that parents 'prepare' their offspring for the ideological that they will experience.

It is likely that kids have already been prepared, however, as many have been immersed in leftist educational settings since kindergarten. While this is particularly true for kids who have come up thru public school channels, minds that have been developed in private school settings have also been subject to significant skew as well.

In fact, many students will move from lower to higher ed and sense no difference in ideological position of the institution at all.

Sunday, May 7, 2017

Healthcare Delusion

Drawn into the stream
Of undefined illusion
Those diamond dreams
They can't disguise the truth
--Level 42

A common argument among proponents of socialized medicine is that, with healthcare costs so high and going higher, large portions of the population would not be able to afford healthcare if they had to pay full price out-of-pocket.

I am not sure whether these people are ignorant about the wholly predictable effect of socialized medicine on healthcare costs or simply choose to look the other way.


We've shown the above chart before. Healthcare prices have been increasing at rates greater than the CPI for decades. But it hasn't always been this way. There was a time when people paid for much of their healthcare out-of-pocket.

The divergence in prices began with the onset of Medicare and Medicaid in the 1960s. It was easy to prognosticate at that time that healthcare costs were destined to go thru the roof.

People who cheer for the current government controlled healthcare system and/or desire even more state involvement are fooling themselves if they believe that this 'solution' makes healthcare more affordable for all. This delusion may be funded, literally, by the current arrangement of spending other people's money on healthcare.

I wonder if these people would feel the same way if they knew that those 'other people' were their children and future generations.