Monday, October 22, 2018

Public Opinion as Law

In a big country dreams stay with you
Like a lover's voice fires the mountainside
Stay alive
--Big Country

Courtesy of Amity Shlaes, count James Fenimore Cooper among early American writers who understood the dangers of democracy.
As Cooper observes, democracies tend to substitute public opinion for law. "No tyranny of one, nor any tyranny of the few, is worse than this." This is discretionary rule.

Whether exercised by the many or the few, tyranny is tyranny.

Sunday, October 21, 2018

Socialism and Violence

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

Socialism is never peaceful. To achieve their goals, socialist regimes must force people to either do things they don't want to do or not do things they do want to do.

Stated differently, socialism contradicts natural law.

Increasingly violent tendencies of socialists should be no surprise. Socialism is grounded in violence.

Saturday, October 20, 2018

Full Employment?

Standing in line, marking time
Waiting for the welfare dime
'Cause they can't buy a job
--Bruce Hornsby & the Range

Several nice points made here by David Stockman regarding so-called claims of 'full employment.' One reiterates what these pages have previously discussed. There continues to be a huge divide between the 'headline' unemployment number (a.k.a. 'U3') and the labor force participation rate.


The number of people currently out of the work force amounts to nearly 17 million. More noteworthy is that that number has not declined despite 'generational lows' in the U3 number.

One would also think that if, as former Fed chair Alan Greenspan claims--that this is truly the tightest labor market that he has ever seen--that wages would be quickly rising per ECON 101. But that's not what we see. Average hourly earnings hourly earnings have gone nowhere for decades.


Full employment? Things just don't add up. Stockman suggests the problem relates to how unemployment is measured, which we'll discuss in an upcoming post.

Friday, October 19, 2018

Politically Tainted Research

Magic and technology
Voodoo dolls and chants
Electricity
We're making
Weird science
--Oingo Bingo

Interesting piece describing various 'hoax' articles published in academic journals. These articles were submitted by authors seeking to rout out political bias of journal editors. Journal editors, and the editorial review boards that support them, are the gatekeepers who decide what manuscripts get published and which ones get rejected.

The basic proposition of hoax authors is this. If we write our manuscript using all of the politically correct concepts and rhetoric that we know that the editorship prefers, then it does not matter whether the article is grounded in good science or not. Instead, we believe that manuscript will be accepted for publication based on style rather than on substance.

This proposition proved correct. The fields targeted by the hoaxers, such as gender studies, critical race theory, and sociology, offer low hanging fruit for demonstrating the house of cards, from a scientific standpoint, that many of these so-called academic disciplines are based.

However, political bias in the article review process is by no means limited to these fields. While it is usually more subtle, political bias is observable in my disciplines as well. For example, I have been working on a project that explores the impact of regulatory uncertainty on operating decisions. Combing through articles published in various journals that focus on regulation, I frequently encounter innuendoes promoting the altruism of the state and the 'fact' of man-made global warming.

From where I sit, the most concerning example in the piece is the one near the end that involves the rejection of an article by a journal after it was published in that journal. Huh? A math prof from Georgia Tech developed a novel mathematical explanation for the 'greater male variability hypotheses' and submitted a paper to a respectable journal that, after peer review, accepted the paper for publication. Once published, however, academics who were offended by the political implications of the paper subsequently pressured the journal editor to 'unpublish' the piece--and write an apology to journal readership to boot. First hand account of this incident of 'academic activism' can be found here.

This case raises an obvious question. How many papers grounded in good science have been rejected by journals because the authors did not kowtow to the political tastes of the editorship? Worse yet, how many studies were never completed or never converted into manuscripts for similar reasons?

Every paper not published because of conflicts with political orthodoxy impedes progress toward truth through inquiry.

Thursday, October 18, 2018

Less Bad Is Not Good

"I think that when statesmen forsake their own private conscience for the sake of their public duties, they lead their country by a short route to chaos."
--Sir Thomas More (A Man for All Seasons)

Two GMU economists who should know better trot out the tired 'less bad' voting argument. If you vote for a Libertarian Party candidate, they warn, then you are actually reducing liberty.

The argument goes like this. In democratic, 'first past the post' voting designs, Duverger's Law tells us that two parties will dominate the ballot and that the probability of third party candidates winning is slim. In all likelihood, then, you are throwing your vote away when you vote for third party candidates of any stripe.

Those with libertarian persuasions are being extra foolish, however. Because, per Duverger, only Republican or Democratic party candidates are likely to win, and the Republicans are 'obviously' more supportive of liberty than Democrats, then libertarians are actually voting for less liberty when they pull the lever for Libertarians instead of Republicans.

This is the twisted logic of the political mind.

Both of the dominant political parties run on platforms that reduce liberty. Although one party may seek to reduce liberty more than the other, a vote for either reduces liberty.

Picking the less bad choice still leads to bad. Why compromise with evil?

Wednesday, October 17, 2018

Miseducation About Democracy

If looks could kill
They probably will
In games without frontiers
War without tears
--Peter Gabriel

These pages have observed that one mechanism for leftists to cope with the cognitive dissonance associated with Donald Trump's election as president is to claim that his victory was illegitimate since he did not win the popular vote. An intuitive extension of this delusion is to call for an end to the Electoral College. Many leftists are making such a call.

To the extent that some Americans might view subjecting presidential elections to a national popular vote, Prof Williams suggests that miseducation by the school systems is a primary culprit. This miseducation begins with the premise that the United States was founded as a democracy. As these pages have frequently observed, Prof Williams notes that the United States was founded as a federal republic, not a democracy. The word 'democracy' does not appear in either the Declaration or the Constitution. He includes classic quotes from Madison, Randolph, Adams, and Hamilton all voicing contempt for democratic designs.

Williams goes on to discuss the Electoral College as device for upholding a republican form of government and for breaking the grip of majority rule votes in presidential elections.

That few people can coherently explain our founding ancestors' logic against democracy and their corresponding efforts to thwart it constitutes ignorance of fundamental civics--miseducation that leftists seek to exploit today.

Tuesday, October 16, 2018

Pledging Allegiance

Will it be yes
Or will it be sorry?
--Paula Cole

Battle for the 200 day moving avg is clearly underway in both the SPX...


...and the COMP.


The outcome will determine whether the black boxes will maintain their fidelity to the upside. A decisive break below the 200 day would signal that their allegiance has shifted to the downside.

no positions

Monday, October 15, 2018

Everything Bubble

"It's clear as a bell to those who pay attention. The mother of all evil is speculation--leveraged debt. Bottom line: it's borrowing to the hilt. And I hate to tell you this, but it's a bankrupt business model. It won't work. It's systemic, malignant...and it's global."
--Gordon Gekko (Wall Street: Money Never Sleeps)

Ten years after the credit market meltdown, Ron Paul observes that we are not better off economically. In fact, we are worse off.

Huh? With all the positive economic headlines popping up daily, and stock markets just a couple of percent off all time highs, how can we be worse off?

The problem is leverage and debt--leverage and debt that are multiples higher than the leverage and debt of 10 years ago that nearly took down the financial system.

Today's leverage and debt were spawned by the most aggressive central bank monetary policies in the history of the world--as well as by government policies of bailing out all nearly all institutions that, thru their reckless borrowing and lending practices, nearly tanked the system last time.

Whereas during the last cycle easy money and credit poured into the real estate market, this time around easy money and credit has poured into everything. Credit cards, student loans, cars, housing (again), stocks, and, of course, government. As RP notes, "Federal debt is over 21 trillion dollars and expanding at tens of thousands of dollars per second."

What we have is an Everything Bubble. The crisis potential of this Everything Bubble, when it pops, promises to dwarf the meltdown of 10 years ago. The more accurate comp will likely be the Great Depression.

Sunday, October 14, 2018

Insurance Gone Wrong

Those changing years
They add to your confusion
Oh and you need to hear
The time that told the truth
--Level 42

Article here reiterates a point these pages have made before. Healthcare markets have bastardized the concept of insurance. Insurance markets are supposed to be markets for risk management. Risk constitutes potential, not certain, loss.

Risk is not associated with routine expenses. Groceries, oil changes, utility bills are everyday costs that cannot be insured because there is no way to price policies to pool risk in a manner that does not simply transfer economic costs from one entity to another.

Similarly, many health care costs are not legitimately insurable as well. Regular doctor's visits, flu shots, maintenance drugs, etc constitute regular expenses that cannot be managed by risk pooling. Instead, insurance reimbursements for routine medical bills are simply subsidies being paid to one person by another person.

Unfortunately, subsidized markets lack competitive pressure for improvement. Thus, costs for most healthcare products and services rarely decline.

On the other hand, catastrophic medical occurrences like contracting cancer or treatment following a sudden heart attack are the types of events that insurance was designed to manage. Their low probability/high cost nature means that risk pools can be designed in a manner that health insurance programs can actually create economic value to individuals and society at large.

Unfortunately, combining legitimately insurable health care risks with those costs that should not be covered dilutes the true economic benefit of health insurance. It also obscures opportunities to truly reduce economic impact of risky health care events (through better insurance program design + improvements in treatment + reduction in catastrophic event occurrence) over time.

Saturday, October 13, 2018

Militant Left

We'll be fighting in the streets
With our children at our feet
And the morals that they worship will be gone
--The Who

Some people are voicing surprise at the recent escalation in the militant nature of the left. But it should be no surprise. Leftists are statists. When they sense that their statist institutions are being threatened, leftists will do what they can to neutralize the threat.

In pretense that the state does not act aggressively, however, leftists will rarely begin with overt force. Instead, they will follow a familiar progression that unfolds as follows:

Social pressure. Public ridicule, belittlement, etc. aimed at embarrassing or shaming the target into 'voluntarily' removing the threat.

Legal action. Laws, law suits, arrests, impeachment meant to keep the threat at bay.

Physical violence. When the previous two measures don't work, then overt physical force is employed against the threat.

Because leftists are collectivists, they mistakenly believe that ridicule and shaming work against members of out-groups just as effectively as against members of their in-group. They fail to realize that out-group members are often less influenced by rhetoric than leftists are. As such, no matter how loud the left shouts--and they have been shouting--little social pressure is actually exerted on out-groups. Consequently, this tactic has been largely ineffective in quelling recent threats to the state.

Until recently, running to the courts to obtain legal recourse against state threats has been an effective fallback tactic. However, since President Trump took office, he has been nominating judges for benches from the Supreme Court on down that promise to tilt the balance of judiciary power away from leftist agendas.

Because legal channels are also failing them, leftists are increasing turning to overt violence as a preferred measure for preserving the state. This explains rising militant tendencies of the left.

Friday, October 12, 2018

Follow Thru

I saw the world crashing all around your face
Never really knowing it was all just mesh and lace
--Modern English

Got follow thru on Wednesday's melt when an afternoon sell program lopped about 400 points off the Dow in short order. Yesterday's 500+ pt loss found both the Dow and SPX south of their 200 day moving avg.


However, this morning woke to jiggy futures and after a gap open the SPX currently sits...on its 200 day moving average.

Not sure this gap open is what the bulls really want to see but, for now, it appears the algos are trying to determine whether the 200 day is a valid line in the sand for technical support. Should the answer be negative, the robots will likely skee-dat-al back to the south.

no positions

Thursday, October 11, 2018

Going Down

I'm sick and tired of you setting me up, yeah
Setting me up just to knocka, knocka, knocka me down
--Bruce Springsteen

The indicators now seem prescient. Big down day in stocks yesterday with major indexes down 3% or more. Dow down more than 800 points and closed on its lows.

Many indexes, including the Nasdaq, Russell 2000, and the Trannies have now broken below their 200 day moving averages.


Early follow this morning thru finds the SPX sitting top of its 200 day:


Am wondering how the robots respond. Algos have been buying the trend higher for years. Do they sell the trend lower as well?

no positions

Wednesday, October 10, 2018

Open Season

I must've dreamed a thousand dreams
Been haunted by a million screams
But I can hear the marching feet
They're moving into the street
--Genesis

Breitbart project documents nearly 600 acts of violence and harasment against Trump supporters and associates. Acts range from shooting Republican senators on a practice baseball field, to beating up people on the street wearing Trump shirts, to threatening remarks made about the president.

The list likely under-reports the number of incidents. For example, the assault against Rand Paul at his home in Kentucky last year does not appear on the list as far as I can tell. Also, because the mainstream media has largely been derelict in its reporting duties here, there are surely some incidents that simply have not been documented.

Open season has been declared on Trump supporters.

Projecting where this goes from here is not pleasant.

Tuesday, October 9, 2018

Safety Net Gone

I say, we can go where we want to
A place they will never find
And we can act like we come from out of this world
And leave the real one far behind
--Men Without Hats

Interesting comments from bond guru Barry Habib attached to Art Cashin's morning comments today. As to why long bond rates have ripped higher so quickly, Habib opines:

"A major cause of this is that the Fed safety net is gone. It didn't take long - right after October 1. Along with ECB buying cuts.

"Here's the interesting thing - more volatility ahead for yields rising and less volatility for them falling! That's because without the safety net, yields will behave more normally. It's been a long time, but the Fed buying has muted the selling in bonds and rise in yields. That's gone now. And when bonds were rallying, the Fed buys juiced it. That's gone too. So the rally will be less than we have been accustomed to, and the sell offs will be deeper. It will feel different, but it's finally now going to be 'normal.'"

What he's saying is that unnatural underlying bid to the bond market coming from central banks is going away as quantitative easing programs are discarded in favor of quantitative tightening. With the safety net gone, bond prices will fall much quicker as they seek their true, unmanipulated value.

Monday, October 8, 2018

Piling Up

Your face appears again
I see the beauty there
But I see danger
Stranger beware
--Animotion

Last week we noted weakness in the banks, small cap stocks, and long term bonds--in addition to lack of broad market participation as major indexes rise--as potential 'tells' of a market turn. Let's add the Dow Transports to the list today.


After marking new highs a couple weeks back, the Trannies have rolled over, easily slicing thru the 50 day moving avg. The 200 day MA remains a coupla percent below.

Bearish indicators are piling up...

no positions

Sunday, October 7, 2018

Socialist Destructionism

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

In the first part of this article, Tom DiLorenzo reviews Mises's masterful critique of socialism w.r.t. the objective of destroying existing society. After that has been accomplished, so the socialist mindset goes, then promises of a vague utopian alternative can commence.

But that utopian alternative never materializes. It can't, said Mises, because socialism "does not build; it destroys. For destruction is the essence of it. It produces nothing, it only consumes what the social order based on private ownership of the means of production has created...each step leading toward socialism must exhaust itself in the destruction of what already exists."

As DiLorenzo observes, this situation has played out over and over again in socialist regimes--from yesterday's Soviet Union to today's Venezuela. The primary mechanism of destruction is capital consumption. "Socialism and destructionism...propose to use up capital so as to achieve present wealth at the expense of the future...The policy of destructionism is the policy of the spendthrift who dissipates his inheritance regardless of the future."

Gaining support for destructionism requires inciting the masses through agitation, begging for votes, stirring up electoral excitement, street riots, and terrorism. Intellectuals and intelligentsia become "recruiting agents for socialism." They must call for the righteous destruction of all cultural values that block progress toward the socialist ideal.

Viewed in the light of destructionism, modern day attacks on Western culture institutions should not be surprising. 

Saturday, October 6, 2018

NAFTA 2.0

You should've been gone
Knowing how I made you feel
And I should've been gone
After all your words of steel
--Steve Perry

One of President Trump's first actions when he took office was to withdraw the US from the Trans Pacific Partnership (TPP) negotiation. This was a victory for free, rather than managed trade. Trump subsequently signaled that he might also withdraw the U.S. from the North American Free Trade Agreement (NAFTA).

Instead, the president has negotiated a 'NAFTA 2.0' with Mexico and Canada. The new deal, officially dubbed the U.S.-Mexico-Canada Agreement (USMCA), constitutes a revision of the previous agreement between the trade bloc.
As Ron Paul observes, the 1000 page treaty enumerates various sweetheart deals and procedures for economic meddling. If this were truly a free trade deal, the document would be less than a paragraph long, as it would amount to simply a declaration that government would get out of the way of people from different countries engaging in voluntary exchange.

After all, truly free trade does not require a treaty.

Friday, October 5, 2018

Peak Performance

Until it ends
There is no end
--Cyndi Lauper

Jason Goepfert plots every instance that the Dow has closed at a 52 week high with less than 50% of NYSE stocks above their 200 day moving average. Stated differently, the graph shows the instances where the DJIA marked new highs while the broad market was in a bear market.
Not a timing mechanism to be sure (see 1999 runup), but the data suggest we're closing in on a major peak.

no positions

Thursday, October 4, 2018

Bond Yield Breakout

Long bonds were pummeled yesterday. Ten Year yields decisively broke thru resistance to levels not seen since 2014. This morning yields touched 3.2% before pulling back.


Elongating the time horizon indicates that the long term downtrend in T-note  yields has clearly been broken. A band of resistance rests above current levels in the 3.5-4.0% range.


One would think that it will take a while for yields to chew thru that overhead supply. If yields would happen to quickly push thru those, then that would be telling.

no positions

Wednesday, October 3, 2018

Russell Weakness

But when I saw her smile across the crowded room
Well I knew we'd have to leave the party soon
As the band began to play out of tune
--The Hooters

Those feeling bearish about domestic stock markets at this point are probably looking for signals that the trend may be about to change. A few of those signals seem to be appearing, e.g., higher interest rates, weakness in financials.

There is also a long held tenet that bull markets on the verge of flipping over will demonstrate weakness in the most speculative segments first. One of those segments is smaller cap stocks.

The Russell 2000 has indeed shown some weakness recently--certainly underperforming the larger cap indexes which are close to marking all-time highs. Technically, a multi-month uptrend in the RUT has broken down:


To be fair, however, this weakness is very short term. When time horizon is elongated, the breakdown shown above seems less onerous in the larger scheme of things:


That said, tremors often precede earthquakes.

no positions

Tuesday, October 2, 2018

Victimhood Markets

I heard about you and that man
There's just one thing that I don't understand
You say he's a liar and he put out your fire
How come you still got his gun in your hand?
--Eagles

Victim mentality and victimhood culture go hand in hand with markets for victimhood. On one side of the market are the sellers--people who want to trade their position as a victim or perceived victim for something of value.

Victims might value material wealth, as in the case of an accident victim suing for damages. In other cases, victims might welcome psychic income from people who sympathize with their victimhood. Victims might also gain social status if the culture tends to worship or otherwise elevate victimhood.

On the other side of the market are the buyers--those who seek to benefit from the victimhood of others. Overt examples are ambulance chasing attorneys who take on victimized clients under the auspices of obtaining a slice of a legal settlement.

More subtle are charitable people who wish to help others perceived as victimized. In exchange for their assistance, charitable people gain psychic income from the satisfaction of helping others. If they believe in God, charitable people might also gain a spiritual sense that they have strengthened their case for progressing to the afterlife.

Increasingly active on the buy side of victimhood markets are political factions. These groups seek to leverage the victimhood of others to gain political capital that will help them advance their agendas. By acquiring elements of victimhood and the emotional capture that comes with it, political factions calculate that they will gain votes or similar assets that they can ultimately convert into control of the strong arm of government.

When political factions are involved, victimhood markets are a means for gaining power and authority over others.

Monday, October 1, 2018

Caution...Or Not?

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

Although major stock indexes are running toward new highs this am, hard to see them capturing the flag without participation by the banks.


Following a lift when it needed to a couple of weeks back, the bank index has once again flipped over and is marking new lows as it heads toward the bottom of the trading channel. Today's heaviness (see that inverted hammer in yellow?) in the midst of a broad lift in the tape is a signal that strength is being sold in this sector.

Because rhythm has largely left the markets, perhaps all of this means nothing anymore. In the 'old days,' however, weakness in the banking sector on a big up for the overall tape would constitute a significant caution signal.

Sunday, September 30, 2018

No Market Rhythm

At night when you turn off all the lights
There's no place that you can hide
--Miami Sound Machine

Among several interesting remarks made by Stan Druckenmiller in this interview snippet was this one concerning algos and price distortions:

"These algos have taken all the rhythm out of the market, and have become extremely confusing to me."



The commentator subsequently observes that the machines, which now manage a very large fraction of dollars currently in US stock markets, have been buying the uptrend for years. We really haven't seen them sell to any large degree...yet. He asks Druck how he is protecting himself against the downside when the indicators that help him tune into market rhythm are not working.

Druck replied that while he will trust his skills and instincts, "I will say, and I have proved it to my own detriment the last few years, the minute the risk/reward gets a little dodgy, I get a little more cautious than I would be without this [algos] in the background."

Add to this Fleck's comments in his Friday Rap:

"Based on conversations with friends of mine who have been successful at the investing business for 30-plus years, every one of them is frustrated and feels like they don't know anything anymore. In fact, I made a comment to one recently where I said, 'I feel like I knew more when I started out in the investment business in 1980, when I literally knew nothing, than I do about the market today, because it makes so little sense.'"

Massive distortions by central banks coupled with automated trading have destroyed sense-making, intuition, rhythm. It may take a crash before market rhythm returns.

Saturday, September 29, 2018

Lynch Mobs

"Are we going to hang him, or beat him to death?"
--Jenkins (Hang 'Em High) 

A vivid symbol of discretionary rule is the lynch mob. A group of people seek to attack someone without a trial because the group believes that the person has committed a crime.


The target is tried in a court of public opinion rather than in a court of law. This is done because the groups senses a traditional legal process would either a) take too long, or b) result in a 'not guilty' verdict.

In the lynch mob process, the 'trial' is usually loud and emotional. The verdict, if the mob has its way, is always 'guilty' and the punishment is administered swiftly. In the aftermath, the lynch mob justifies its action in the name of 'righteousness.'

As recent events demonstrate, modern day lynch mobs continue to run roughshod over the rule of law.

Friday, September 28, 2018

Psychosis, Delusion, and Social Networks

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

Psychosis is a mental condition where a person has difficulty determining what is real and what is not. A common symptom of psychosis is delusion. A delusion is a false belief--i.e., a belief that is held with strong conviction despite the presence of superior evidence to the contrary.

Events over the past few weeks have me wondering about the capability of social networks for amplifying psychotic tendencies in people who are prone to delusion. Immersion in social networks can lead to 'echo chamber' effects, where ideas and beliefs are reinforced through circulation and repetition without serious consideration of competing ideas or disconfirming evidence.

Such unchallenged reinforcement serves to fortify delusion. Consequently, individuals who are susceptible to psychosis emerge from social networking experiences more convinced than ever that their dream world is in fact reality.

Thursday, September 27, 2018

Breaking Bad

The less we say about it the better
Make it up as we go along
Feet on the ground, head in the sky
It's ok, I know nothing's wrong
--Talking Heads

Yesterday the FOMC announced that it would raise its fed funds rate target another 25 basis points to 2.25%. It is the eighth increase since late 2015. The last time the fed funds rate was increased to 2.25% was January of 2005 on the way to a peak of 5.25% before the Fed began furiously cutting rates in response to the last credit crisis.


The Fed is behind the curve as always. Real rates remain at historic lows that historically correspond to deep recessions. This despite nearly all data suggesting economic strength and rising wages. Meanwhile, balance sheet assets accumulated during the various QE bond buying sprees have barely declined.

A couple of days back a frequent contributor on Fleck's Q&A observed that "rising rates eventually break credit bubbles."

Stated differently, central banks eventually break the bubbles that they themselves blow.

Wednesday, September 26, 2018

Disclosure for Journalists

"I can think of three reasons why you wouldn't want to do that, judge."
--Billy Ray Valentine (Trading Places)

In the financial services sector it is common practice to have pundits, analysts, et al disclose any positions they have in the securities they discuss. By doing so, consumers of financial information are made more aware of potential biases in the people generating such information. Those biases might slant the information to be consumed in some way.

Why aren't similar practices adopted by the media--particularly those reporting on political issues? Isn't it reasonable to have journalists disclose their political affiliations and contributions so that readers are more aware of potential for bias and slant in the information that they consume?

Perhaps, but I can think of at least three reasons why such disclosure is unlikely. One is that it would quickly reveal just how tilted the entire profession is to the left. Although this tilt has been recognized by many for some time, there are still those who want to believe that their sources of information are objective. Overt political disclosure by those generating the information would destroy this fantasy.

Another is that customers are likely to be lost if journalists subsequently attempt to compensate for their biases by actually producing more balanced content. A large market for bias exists, and followers will defect if their preference for bias is not satisfied.

A third reason is that journalists might realize, per core tenets of signaling theory, that the only time that consumers of information will view their information as credible is when they report a) negatively about friendly political entities (as suggested by their political disclosure) or b) positively about political opponents.

That thought is most unpalatable to an interested media.

Tuesday, September 25, 2018

Natural vs Planned Diversity

I'm not expecting to grow flowers in the desert
But I can live and breathe
And see the sun in wintertime
--Big Country

Diversity is variety. It is axiomatic in nature. A principle of natural diversity is that it flows freely. It is not created by force.

Another principle of diversity is heterogeneity of distribution. Variety is not spread evenly. It ebbs and flows in states of concentration and dilution. It can be patterned and territorial. In fact, as the area examined gets more localized, we should expect to find less diversity as a general rule.

Natural diversity is also dynamic, meaning that variety occupying a particular location is likely to change as things evolve and progress. Today's mixture is not necessarily tomorrow's. 

Those who seek to impose a preconceived pattern or blend onto an area violate these principles. Planned diversity is not diversity at all.

Monday, September 24, 2018

Means to an End

President Art Hockstader: Oh, there have been moments where I've questioned your methods.
Joe Cantwell: Well, you got to fight fire with fire, Mr President.
President Art Hockstader: And the end justifies the means, huh?
Joe Cantwell: Yes, I believe that.
President Art Hockstader: Well, son, I got news for you about both politics and life--and may I say that the two are exactly the same? There are no ends, Joe, only means.
--The Best Man

The circus that the left has made of Supreme Court nominee Brett Kavanaugh's confirmation hearings is not about the nominee himself. Although leftists make it appear that they don't like him, it is not personal. It is business.

As Prof Williams observes, this charade is about the Constitution. The left despises the Constitution. If confirmed, Kavanaugh threatens to tilt the balance of the high court in favor of more constitutionally grounded rulings.

This is unacceptable to the left, and they will do whatever it takes to prevent this from occurring. Oddly, though, even if leftists believe they must try to take down the person to achieve their goal, it is not about the person. Other nominees would be subject to similar smear tactics.

Instead, the left sees it as merely a means to an end.

Sunday, September 23, 2018

Words vs Works

Why don't they
Do what they say
Say what they mean
One thing leads to another
--The Fixx

In last Sunday's second reading, James reminds us that claims of faith are worth little if we do not back them up with action.

"What good is it, my brothers and sisters, if you say you have faith but do not have works?...If a brother or sister is naked and lacks daily food, and one of you says to them, 'Go in peace; keep warm and eat your fill,' and yet you do not supply their bodily needs, what is the good of that?"

James is telling us that actions speak louder than words. Or, in his words:

"Faith by itself, if it has no works, is dead."

Saturday, September 22, 2018

Kangaroo Court

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

Over the past few years, colleges nationwide have established internal review processes for sexual misconduct and assault cases that essentially forego principles of jurisprudence in favor of expedience and political correctness. Several high-profile cases conducted in this manner have resulted in rulings against defendants based on accusations that were subsequently shown to be false.

Currently, progressives want to transfer a similar process to congressional proceedings. As stated here:

"What we're seeing is the importation of the famous kangaroo-court apparatus for adjudicating sexual-harassment and assault cases from college campuses--which often denies the accused basic protections of due process--to the U.S. Senate."

Some hope that our senators can keep the kangaroos from entering the building. However, it seems that kangaroos already occupy seats on the Senate floor.

Friday, September 21, 2018

Rates of Change

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

As attention centers on major U.S. equity indexes once again marking all time highs, Ten Year yields have quickly but quietly moved to the top of the multi-month channel. Currently they rest near the May highs of about 3.1%.


Do bonds smell a pick up in price inflation? Plenty of factors point in that direction (e.g., rising wages, tariffs/trade wars, $trillions on financial stimulus slowly leaking into consumer markets).

Whatever the reason, we can be confident that the higher rates go, the greater the headwinds for our leveraged economy and financial markets.

no positions

Thursday, September 20, 2018

Stalling in Desperation

Dr Charles Nichols: You're getting pretty desperate, aren't you Mr Girard?
Samuel Gerard: Oh yeah.
--The Fugitive

Statists are in trouble on multiple fronts ranging from probes into FBI/DOJ misconduct to a Supreme Court nominee who could tilt the high court's balance away from statist preferences. Their hope is that the midterm election will save their playhouse from destruction.

As such, progressives, neocons, and deep state bureaucrats--along with a complicit media--are banding together in a thinly veiled stall tactic to slow down several threatening projects. The idea is to delay progress until the November elections when, they hope, Republicans lose control of at least the House which, it is presumed, would subsequently cause threats against the State to disappear.

This is what desperation looks like.

Wednesday, September 19, 2018

Accusations Are Not Evidence

Tell you straight
No intervention
To your face
No deception
--Eurythmics

There seems to be a growing belief that accusations are evidence and that burden of proof lies with the accused. Only a weak mind, or one that permits lying to itself, would admit that as true.

Tuesday, September 18, 2018

Securities Industry Tax Payments

Here comes the rain again
Raining on my head like a tragedy
Tearing me apart like a new emotion
--Eurythmics

Interesting series by Jason Goepfert showing historical tax payments by NYC securities firms.
Previous highs in tax payments have corresponded to market tops.

no positions

Monday, September 17, 2018

Channeling Banks

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

After these pages noted that they had been trading conspicuously heavy, the banks proceeded to rally off support right on cue. However, after a two month lift took the bank index to the top of the multi-month trading range, it appears that the rally has fizzled. 


The index has now retraced about half of its gain in the course of a couple weeks. If it cannot hold this middle ground, then the bank index appears destined to retest the early July lows.

Seems like an 'old school' thought anymore, but it is difficult to see how the tape continues to lift without participation by the banking sector.

no positions

Sunday, September 16, 2018

Preemptive Bubble Blowing

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

Central planning hubris at its finest as former Fed chair Janet Yellen says that the Fed should inflate asset prices even more to make up for major busts. And she recommends that the central bank should signal that it will do so.

Naturally, the article does mention any potential downsides to a policy of preemptive bubble blowing, including ongoing economic distortions, massive inflation, and moral hazard.

Saturday, September 15, 2018

Anonymous Sources

I staggered back to the underground
And the breeze blew back my hair
I remember throwin' punches around
And preachin' from my chair
--The Who

Perhaps Time's 2018 Person of the Year should be the anonymous source. Without anonymous sources, the mainstream media would have few other sources to cite, and claims of many political operatives would go from being weakly substantiated to completely unsubstantiated.


The greater the ____, the greater the use of anonymous sources.

Some fill-in-the-blank possibilities: political interest, desperation to smear, propensity to lie.

Friday, September 14, 2018

In-Kind Media Contributions

"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)

Many people on the left wring their hands over contributions to political campaigns made by corporations. They seem less concerned about those contributions when they are made by corporations sympathetic to leftist candidates--particularly when those contributions are of the nefarious, in-kind sort.

Corporate entities like the New York Times and Washington Post, for instance, routinely endorse candidates and slant their content toward leftist issues. Why aren't these actions considered in-kind contributions and subject to campaign finance restrictions?

Or take a company like Google that operates an internet services business with characteristics of a public utility. Google's management, which is clearly biased left (as demonstrated by top management behavior following the 2016 election), could easily tilt its search machinery in favor of stakeholder political interests. In fact, accusations are growing that Google, Twitter, and Facebook routinely slant their operations toward leftist interests.

Due to their potential influence and reach, such in-kind contributions made by media outlets could easily be worth far more than most checks written to political campaigns.

If fairness and equity political process is truly a concern, then isn't there a movement to regulate in-kind campaign contributions by media?

Thursday, September 13, 2018

Gun Bans and Disparity of Force

Daniel LaRusso: You really think I can beat that guy?
Miyagi: No matter. Wacko teacher attitude rest in fist. Stupid, but fact of life. Win, lose, no matter. You make good fight...earn respect. Then nobody bother.
--The Karate Kid

When they are challenged, gun grabbers sometimes dial back their claims from "banning guns would eliminate shooting-related crime" to "banning guns would reduce the likelihood of crime." At first glance, the latter claim seems more reasoned and valid. But upon further scrutiny, is it really?

Suppose we have two people, A and B. Both of them carry guns. However, their motivations for carrying guns differ. A carries a gun to facilitate acts of aggression on others (e.g, theft, murder, etc.). B carries a gun to protect his interests from unwanted, violent intrusion by others.

As an aggressor or potential aggressor, A has a general preference for picking targets that allow him to exploit disparity of force. Disparity of force means that, in a violent altercation involving two of more parties, one party possesses capacity for bringing significantly more force to bear on the situation than the other(s). Greater force implies higher likelihood of victory in the altercation.

Like many criminals, A realizes that a gun gives him great disparity of force--assuming, of course, that his target does not carry a firearm as well. Therefore, A will tend to steer clear of people like B, preferring instead to prey on unarmed victims.

B's gun serves as a deterrent to crime. It decreases, rather than increases, the likelihood of crime--at least that of A on B.

Now, consider the situation where guns are banned by law. B, being a law-abiding citizen, surrenders his weapon to authorities. On the other hand, A, having little regard for the law, keeps his.

It doesn't take A long to realize that disparity of force has tilted more in his favor. Many people who were previously carrying weapons are now walking the streets unarmed. This emboldens B to commit more crime.

Moreover, this situation likely incentivizes more people to pursue criminal careers as it appears that likelihood of successful criminal acts has gone up. Black markets for guns will also surely intensify, along with their criminal potential.

Rather than decreasing the likelihood of crime, banning guns is likely to increase crime.

Indeed, this is precisely what empirical evidence suggests (e.g., here, here).

Wednesday, September 12, 2018

Confidence Means Caution

Things are going great
And they're only getting better
--Timbuk 3

These pages have recently observed the weak relationship between high consumer confidence and future economic growth. Instead, confidence appears to be a coincident or perhaps even lagging indicator. Stated differently, consumer confidence is more reflective of present or past economic growth rather than serving as a harbinger of future strength.

That linkage is shown pretty clearly in this article. Consumer confidence is at historical highs. In the past, such highs suggest that economic expansion is late in the cycle and that recessionary periods are approaching.
Jason Goepfert chimes in, noting the low historical returns in small cap stocks when small business optimism hits high marks like current levels.

Historically, then, high levels of confidence about the economy should not inspire euphoria...but caution.

Tuesday, September 11, 2018

Surprise and Preparedness

When my teeth bite down I can see the blood
Of a thousand men who have come and gone
Now we grieve 'cause now it's gone
Things were good when we were young
--Von Bondies

As I once again reflect on that day, the word that comes to mind this time is preparedness. Pearl Harbor, the 9/11 attack, last week's Fifth Third shooting. A common factor in nearly all massacres is the element of surprise. Perpetrators generally do not want to be expected. They prefer to take their victims by surprise.


I saw some tweets today claiming that threat of terrorism is all around us today. Others claim that we are far safer than 17 years ago today.

But neither claim is worth pondering much. Whether there is more or less risk now compared to then, there is risk. And if that risk is realized, then it is no longer a probability. It is a reality.

The best way to cope with that reality, whatever its chances, it to be prepared.

Monday, September 10, 2018

Stagflation Cometh?

Flying high above the sky
The battles down below look simplified
With no place to hide
--Karla DeVito

As people celebrate multi-year highs in many indicators of economic strength, guess what other measure is ringing the bell. The underlying inflation gauge is marking 13 year highs.


With labor demand and wages moving higher in a stagnant productivity world with trillion$ of stimulus in the system, it is only a matter of time before consumer prices take off.

The Fed will be behind the curve as usual (it already is). When they do take corrective action, they will need to raise rates--dramatically.

Higher rates, lower growth, higher prices...Can you say stagflation?

Sunday, September 9, 2018

Defying Custom

"I put no stock in religion. By the word 'religion' I have seen the lunacy of fanatics of every denomination be called the will of God. Holiness is in right action and courage on behalf of those who cannot defend themselves, and goodness. What God desires is here [points to head], and here [points to heart], and what you decide to do every day...you will be a good man...or not."
--Hospitalier (Kingdom of Heaven)

In last Sunday's gospel reading (Mark 7:1-23), the Pharisees and scribes challenged Jesus about his disciples' habit of not washing their hands before eating. Washing hands and cooking utensils was a custom of the elders. Not cleaning one's hands before eating could be viewed as a sign of defiance.

Christ rebuked the Pharisees, calling them hypocrites. He quoted Isaiah:

This people honors me with their lips,
but their hearts are from from me;
in vain do they worship me,
teaching human precepts as doctrines.

He is telling us that any worldly custom or man-made rule that contradicts God's law is not worth following

He concludes by telling the crowd that it is not what comes into a person from the outside that makes a person unclean. Evil comes from within. And so does goodness.

Defying custom may make not make us worldly friends. But if those customs interfere with us following Him, then they are better left behind.

Saturday, September 8, 2018

Four Minutes

Yeah there's a storm on the loose
Sirens in my head
Wrapped up in silence
All circuits are dead
--Golden Earring

The shooting at the Fifth Third building in downtown Cincinnati that left four dead (including the shooter) and two wounded share two characteristics common to rampage shooting events.

One is that it was perpetrated in a so called gun free zone. In fact, the Fifth Third building was so gun free that even the building's on site security guards carried no firearms. Gun free zones invite bad guys like the shooter who was, of course, was not gun free.

The other common characteristic is the time from first shot until police were on the scene. In this case it is estimated that it took about four minutes for CPD officers to arrive, engage the shooter, and put him down. While that might seem fast, response times measured in minutes for such shooting episodes are not unusual--particularly when they take place in urban areas dense with police.

Moreover, it is likely that those four minutes felt like an eternity to those who found themselves under fire and defenseless in the Fifth Third lobby. During that time, the shooter was able to get off 35 shots with a 9 mm handgun--meaning that he was able to reload once or perhaps twice using standard magazines. His gun then reportedly jammed which made him a bigger target for the four responding officers who nailed him with multiple rounds.

The problem facing all people in harm's way under similar circumstances is how to survive those four minutes. 

Friday, September 7, 2018

Coup Attempt

"I fear all we have done is awaken a sleeping giant, and fill him with a terrible resolve."
--Admiral Isoroku Yamamoto (Tora! Tora! Tora!)

Since Donald Trump's election, a coalition of statists from both left and right in tandem with a complicit media have been engaged in activities that can readily be seen as an attempt to undermine and overthrow a sitting US president. Regardless of whether this perception is accurate or not, I wonder if this coalition realizes that a growing group of US citizens sees what is going on as an attempted coup.

This is on my mind because it seems to me that the coalition is so desperate to get rid of Trump that it does not fully grasp the potential consequences of its actions.  The longer the perceived coup attempt endures, the greater the likelihood that any future president--particularly those who statists prefer--will face 'resistance' from the other side far greater than what we've seen in the Trump administration's case.

Stated differently, the coup attempt might poison the well of bipartisan cooperation for any future administration. Future calls for 'coming together' will almost certainly fall on deaf ears.

And should the coup attempt be successful in taking Trump out, well, I shudder to think what might occur.

There are those who believe that this is precisely the goal of this coup attempt--to tear down constitutional impediments to 'progress' so that new institutions can be erected for a greater good. But a strategy of disruption ignores the fact that it has been precisely the opposite strategy--one of gradualism facilitated by democratic process--that has lulled many to sleep while their liberty has been slowly expropriated in favor of the statists' agenda.

It also ignores the likelihood that a successful coup would awaken those sleepers to the reality that they have lost their liberty, and that they would be willing to engage in a revolution to reclaim it.

Were I a statist, I would not at all be confident that a coup that sparks a revolution against committed freedom fighters would be a winnable proposition.

Thursday, September 6, 2018

Democracy and Propaganda

"Why don't you pass the time by playing a little solitaire?"
--Dr Yen Lo (The Manchurian Candidate)

Ron Paul observes that propaganda has conditioned Americans to believe that democracy is associated with freedom and liberty. It isn't, of course. In fact the opposite is true. Democracy, defined as a process for making political decisions by force based on the desires of the voting majority, compromises the freedom of some for the benefit of others.


A favorite tool of propagandists is to manipulate language to create 'positive substitute symbols.' Take a word that people value in a positive manner (liberty), and gradually connect it to a new word (democracy) initially associated with a concept that people are prone to dislike (democracy = system of decision-making by majority force). With enough repetition, the negative connotation linked to the new word is likely to decline in favor of a positive connotation (democracy is a component of liberty).

Presto, the new word becomes cherished and people are berated for treating it in a negative light.

Perversely, then, if you don't support democracy today, then you are viewed as an enemy of freedom.

Wednesday, September 5, 2018

Fiat Money and Wealth Distribution

Back to life
Back to the present time
Back from a fantasy
--Soul II Soul

Nice graphic here on the effect of fiat money on distribution of wealth as reflected by income growth.
Sound money is the enemy of the state. It is the friend of the people.

position in gold

Tuesday, September 4, 2018

Pyramid of Ridicule

Slide your feet up the street, bend your back
Shift your arm, then you pull it back
Life's hard you know
So strike a pose on a Cadillac
--Bangles

Problems with the Cincinnati streetcar 'pyramid' continue. This article not only documents the continued decline in ridership as well as the reliability issues, but also the possibility that the streetcar's primary corporate sponsor, Cincinnati Bell (CBB), may pull its support.

In 2016, CBB signed a 10 year contract worth $3.4 million to put its name on the streetcar. The contract allows for CBB to terminate the deal if problems with the streetcar cause harm to the business interests of the company.

Having your name on the side of what has amounted to a pyramid of ridicule would seem to qualify.

Monday, September 3, 2018

Labor Plus Capital

Some days won't end ever
And some days pass on by
I'll be working here forever
At least until I die
--Huey Lewis and the News

Productivity is defined as how much output is generated per unit of input. Usually, the input of most interest is labor. As such, the most common expression of productivity is output per hour worked.

Suppose an individual produces 100 units of output in an hour of work. How to improve this productivity? One way is to improve the work process--a.k.a. 'work smarter.' Reduce wasted effort, combine steps, etc.

The other way is to develop tools that will help the worker do more. When digging holes in the ground, man first used his hands. Then he used a stick. Then a shovel. Then a back hoe.

Each one of these tools significantly improved how much earth he could move in an hour's worth of work.

The tools that combine with labor to produce output are known as capital. It is labor plus capital that jointly determine productivity and, consequently, standard of living.

Sunday, September 2, 2018

Normalizing Crazy

"Crazy is on the bus."
 --Danny Roman (The Negotiator)

Interesting point raised last Friday by Fleck. He believes that the best analog to the current stock market situation is Japan in the 1980s prior to its epic bust. In particular he feels that there is a parallel in the extreme investor confidence that accumulates when huge and prolonged deviation from norms becomes status quo.

"When something crazy lasts longer than anyone would think possible--and that could be a few months or many years--the duration can somehow sanction in people's minds whatever is happening, as if the length of time somehow adjudicated the ultimate outcome of the policies or the environment."

Stated differently, the longer craziness persists, the less crazy and the more normal it seems.


Meanwhile, the Nikkei remains well below its all time high of nearly 30 years ago.

Saturday, September 1, 2018

Tiger Hunting

Rising up
Back on the street
Did my time
Took my chances
--Survivor

The recent Tiger Woods interview reinforces the notion that the mainstream media plays the role of modern day pharisees seeking to trap people in their words.Snaps to Tiger for shutting them down.

Of course, some in the media couldn't handle the snub.

As this type of become all too common, the obvious question becomes why engage with the media at all?

Friday, August 31, 2018

Plantation of the Mind

"Go tell your folks how kingdom come in the year of Jubilee!"
--Sgt Major John Rawlins (Glory)

Candace Owens sees the Democratic Party combined with the mainstream media as a political plantation. The complex seeks to enslave the minds of black Americans by telling them who to love and hate, and what to believe. Anyone who questions the slave masters is subject to harsh punishment.

The Democrat-media complex is a plantation of social control. Its objective is to enslave minds. As Owens astutely observes, the business of social control hates freedom--as in freedom of thought.

Freedom of thought in pursuit of truth marks the escape route from the plantation. As minds are freed, Jubilee approaches.

Thursday, August 30, 2018

Outsourcing Crime to Government

Agent David Coppinger: Leary is what we nowadays call a wet boy.
Al D'Andrea: What's a wet boy, Frank?
Frank Horrigan: Leary's an assassin.
--In the Line of Fire

Some people hire agents to do criminal acts for them. A hit man commits murder. But that in no way absolves the principal who retained him.

Why, then, do the principals outsource crime? The criminal act may be sophisticated and require the skills of a specialist. The principal may not have the stomach for personally committing the crime. Or perhaps there is the hope that contracting with an agent will make it more difficult to trace the crime back to the principal.


Strong armed government agents commit crimes on the behalf of principals everyday. Theft, counterfeiting, kidnapping, slavery, murder. Does the same rationale listed above apply in this case? To some degree, yes.

Add another reason to the list, however. The reason is in actuality a rationalization. The rationalization is that when government uses aggression on others, it is not a crime at all. It is done in the name of national security. Or for the greater good. Or for [insert positive substitute symbol here].

Those who retain government agents to commit these acts see themselves as principals of good, not evil. They believe that they are absolved of any wrongdoing.

In reality they are outsourcing crime to government.

Wednesday, August 29, 2018

Can Media Bias Be Reduced?

"Mrs Garrison, you've got to stop them. Your husband created a new kind of journalism, and you helped him. Take a look at the first paper you ever printed. Quote: 'This paper will fight for progress and reform. We'll never be satisfied with merely printing the news. We'll never be afraid to attack wrong--whether by predatory wealth or predatory poverty.' You're not selling The Day, you're killing it."
--Ed Hucheson (Deadline U.S.A.)

Rarely a day goes by where I don't encounter commentary about the persistent state of media bias. A common question is this: Why can't [insert outlet name here] be more even-handed in their coverage?

At least two factors prevent reduction in media bias. One is the ingrained political ideologies of journalists and other people who create and report the 'news.' Viewing the world thru an ideological lens filters the data. Some data are filtered out which necessarily concentrates or biases what passes thru. Slanted coverage is bound to result--and persist as long as ideologies remain ingrained.

A less discussed, but perhaps more important factor contributing to persistent media bias in the long run is the strong market that has developed for biased media coverage. People generally gain psychic pleasure when they consume media that reinforces their view of the world. They feel psychic pain when media do not confirm their worldview. Because they generally prefer pleasure over pain, media consumers will gravitate to outlets that produce palatable content. Empirical evidence suggests that media markets have segmented accordingly.

Stated differently, as long as media outlets depend on resources, monetary or otherwise, from their readership, they will be reluctant to reduce biased content because they will lose readers (and resources).

Factors that slant media markets on both the supply and demand sides reinforce each other in ways that cause media bias to persist, and perhaps even escalate, over time.

Tuesday, August 28, 2018

Uncharted Territory

Look out on the street now
The party's just beginning
The music's playing
A celebration's starting
--DeBarge

The S&P 500 has joined the Nasdaq Composite in marking all-time highs. The Dow remains a couple hundred pts away from its high water mark set back in January.


Volumes have been trending lower. While buyers do not seem very enthusiastic, selling pressure is virtually non-existent.

Market participants are having trouble imagining what could possibly burn the market playhouse down. This, of course, is bearish in the end.

no positions

Monday, August 27, 2018

1850

"You see, grandfather scratched the Scott mills to life with nothing much but his bare hands."
--Paul Scott (Valley of Decision)

In 1850 the US was in the midst of a productivity-led expansion. The country's population had more than quadrupled since the turn of the century. Innovations were driving spectacular increases in productivity. Agricultural output more than doubled from 1840 to 1860 while the value of manufacturing and mining industries nearly tripled during this period.

1850 $20 PCGS XF40 CAC

A bottle of port cost about 10 cents while a pound of coffee cost about 80 cents. Pianos could be purchased for less than $200 and a routine doctor's visit cost $2. A new home in Brooklyn cost $2,500.

With a sound money and improving productivity backdrop, prices would generally remain stable or decline during the second half of the 19th century.

Sunday, August 26, 2018

Partial Justice

"If this thing reaches as deep and goes as high as we think it does, they'll do anything not to be exposed."
--Gray Grantham (The Pelican Brief)

Kim Strassel discusses the uneven hand of justice as it pertains to the Trump and Clinton campaigns.

"The country has watched the FBI treat one campaign with kid gloves, the other with warrants, wiretaps, and eavesdropping. They've seen the Justice Department resist all efforts at accountability, even as it fails to hold its own accountable. And don't get them started on the one-sided media.

"And now they are witnessing unequal treatment in special counsel Robert Mueller's probe."

As she correctly observes, Mueller's blindness to the national expectation of equal application of the law is undermining the legitimacy of his team's findings.

Saturday, August 25, 2018

Militia Clause

"The army is a broadsword, not a scalpel. Trust me, senator, you do not want the Army in an American city."
--General William Devereaux (The Siege) 

Ryan McMaken researches the rationale behind the Second Amendment with a focus on the 'Militia Clause' portion of the Amendment. The Amendment reads:

A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed.

Review of the debates surrounding the establishment of the Second Amendment finds that our founding ancestors had a more sophisticated view of gun ownership than is often assumed. In particular, they understood that a large federal military that stood in peacetime would threaten liberty over time. "When once a standing army is created in any country," said George Mason, "the people lose their liberty."

To counter the threat posed by a standing federal army, the founders envisioned militias in each state. These militias were not of the organized variety similar to today's National Guard. Instead, they were 'unorganized' militias composed of people who could capably bear arms and organize if need be to defend their states against intrusion by federal forces.

Importantly, the Second Amendment, similar to the First Amendment, was not written for the states. Rather, it was written as a restriction on the federal government. The states were still free to regulate weaponry in their own constitutions and legislatures. Most state legislatures elected to include provisions protecting private gun ownership--both as an element of the state's overall militia strategy and for personal protection.

Interestingly enough, those present at the Constitutional Convention in Philadelphia toyed with the idea of 'select militia' of specially trained citizens not unlike today's National Guard. However, they rejected it out of concerns that a select militia would pose similar threats to a national army.

McMaken ends by noting that, ironically, many 'defenders' of the Second Amendment today also enthusiastically support a strong federal military establishment--something that many of our founding ancestors would have found incomprehensible.

Friday, August 24, 2018

Social Media as Censors

Dream, baby dream
Of all that's coming and going
And you will find out in the end
There really is
There really is no difference
--INXS

Many complaints that social media outlets have been censoring content--particularly from conservative/right leaning commentators.
Should government intervene to force 'equal voices for all?' As long as the social media outlets are not being subsidized by government, then the answer is 'no way.' Providers of any good or service should be free to associate with whom they want.

If users of a particular social media outlet do not like how they are being treated, then they are free to go elsewhere. Poor quality service also signals opportunity for entrepreneurs to develop capacity to better serve user needs.

Just as a baker should not be forced to bake a cake for any particular customer, social media companies should be free to discriminate among users.

Thursday, August 23, 2018

Birthright Citizenship

Born down in a dead man's town
The first kick I took is when I hit the ground
--Bruce Springsteen

Several interesting points made here, including observations about birthright citizenship. In the United States, birthright citizenship refers to the notion that any child born on US soil is conferred American citizenship--regardless of whether the child's parents are US citizens or not.

The Fourteenth Amendment ratified in 1868 was intended to modify Article I, Section 2 of the Constitution pertaining to the Three Fifths Compromise. But the amendment contains five sections, and only Section 2 directly applies to the original Three Fifths language. The other sections of the fourteenth amendment must be construed as additions, not changes, to the Constitution because they do not supercede portions of the original legal document.

It is Section 1 of the Fourteenth Amendment that introduces the concept of birthright citizenship into the constitutional conversation via what now known as the Citizenship Clause:

"All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside."

The question posed by a portion of this article is whether birthright citizenship is what our founding ancestors intended. There is no explicit language concerning qualifications for citizenshipship in the original Constitution. The closest thing I can reference appears in Article II, Section 1 concerning eligibility for president:

"No person except a natural born Citizen, or a Citizen of the United States, at the time of the Adoption of this Constitution, shall be eligible to the Office of the President."

One train of thought argues that the framers adopted the English common law notion of birthright citizenship. But English common law focused on subjects, not citizens. Subjects born under the protection of the king owed 'perpetual allegiance' to the king in exchange. Birthright subjectship, not birthright citizenship, was inherited from the feudal system that defined relationships between master and servant.

The Declaration of Independence absolved the American people from feudal allegiance to the crown. This absolution represented a rejection of common law as a basis for citizenship. Instead of perpetual allegiance to a king, 'consent of the governed' is required. No individual can be ruled without his consent. As the author observed, "consent--not the accident of birth--is the basis for American citizenship." [emphasis mine]

The author asks, "Is it plausible--is it even remotely credible--that the Founders, after fighting a revolutionary war to reject the feudal relic of 'perpetual allegiance,' would have adopted that same feudal relic as the ground for citizenship for the new American regime?"

This is a reasonable question. If the answer is 'no,' then it calls into question the true constitutionality of the portion of the Fourteenth Amendment related to birthright citizenship