Trump's Cover

When the shit hits the fan
I'll be sitting on the can
When the whip comes down
--The Rolling Stones

It must irritate dedicated statists to no end to hear Donald Trump constantly take credit for stock market performance since his election. Sure, many of Trump's first year actions such as regulatory cutbacks and the recently signed tax law are friendly to markets. But the past year's performance is merely an extension of a multi-year bull market of historic proportions that precedes Trump.

Smart statists realize that the seeds of this uptrend were sown during the depths of the credit collapse in 2008 when some of their own--central bankers and other policymakers--began implementing the most radical set of monetary and fiscal policies that the world has ever seen. Since then, markets around the world have been floating ever upwards on an ocean of liquidity.

Trump's pro-growth policies are being enacted at a time of peak central bank lunacy, thereby lending a parabolic shape to financial markets of all stripes.

Alas, statists can take comfort in the notion that Trump has given them an out. The president's policies and boastfulness serve to cover several years of radical interventionary actions by the State. Trump's actions create a diversion of sorts. And because the president has taken ownership of market performance, statists can offload blame to him when the whip inevitably comes down.

Government as God

"Aye, fight and you may die. Run and you'll live--at least for a while. And dying in your beds, many years from now, would you be willing to trade ALL the days, from this day to that, for one chance, just one chance, to come back here and tell our enemies that they may take our lives, but they'll never take OUR FREEDOM!"
--William Wallace (Braveheart)

In his Christmas column, Judge Nap asks several penetrating questions regarding the relationship between God and the State (what he calls 'government as god'). Let's list a few of them here.

What if many folks today have rejected the true God for government-as-god?

What if the government-as-god has set itself up as providing for all secular needs in return for fidelity to it?

What if this seductive offer has been accepted by millions of Americans?

What if the defiance inherent in the belief of government-as-god chills the exercise of personal freedoms for fear of the loss of government munificence?

What if Jesus came to set us free from the yoke of government oppression and the chains of personal sin?

What if freedom is our birthright, given to us by the true God, not by the government-as-god?

What if the most similar likeness between us mortals and the true God is freedom?

What if we have failed to preserve freedom and have permitted governments to take it from us?

What if we are not full people without full freedom?

If freedom is God's gift and Christ came to remove the yoke of government from our necks, then that means we possess the capacity, and the authority, to reclaim that freedom from the State.

New York Taxes

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

Since the passage of the tax cut bill, New York's Governor Andrew Cuomo has been complaining that the new law is unfair. For example, the new law caps federal deductions for state and local taxes to $10,000. Because NY is a high tax state, many high income residents will no longer be able to deduct the full amount of their state income taxes paid.

There is nothing unfair about this. After the 16th Amendment was added to the Constitution in 1913, both states and the feds can impose taxes on income. There is nothing that says that Congress can't impose a limit on deducting state income taxes paid from the federal tax bill. Congress is not forcing New York or other states to do anything. Moreover, the deduction cap is imposed equally across the 50 states.

What the new law does do is make high taxation states more apparent to its residents. Previously, state officials knew that the unlimited federal deduction of state taxes paid would soften the blow that residents would feel if state taxes were increased.

This is less likely to happen now. Higher income residents in particular will immediately feel the sting of high state taxes. They will be more likely to vote with their wallets (e.g., spend less on consumption or by move out of state) and/or at the ballot box to toss out high tax regimes.

This is why Cuomo is now reluctantly considering 'tax restructuring' within his state. He needs to cut taxes if he wants to remain in power.

Political and Personal Immorality

"To want power is corruption already."
--President Art Hockstader (The Best Man)

Ron Paul suggests that recent revelations about sexual misconduct among members of Congress should not be surprising. Because the welfare-warfare state is itself immoral, the system is likely to attract those who behave immorally in their personal lives.

The welfare-warfare state depends on a stream of resources confiscated from its citizens thru systematic taxation and monetary debasement. Laws prevent people from living their lives as they choose. Force is constantly threatened against those who choose not to obey.

The warfare side of the state is, of course, violence out in the open for all to see. Deaths, including deaths of innocents, are inevitable. As our founding ancestors understood, establishment of a permanent warfare state quickly leads to loss of liberty.

It stands to reason that the people most likely to want to handle the controls of the immoral state apparatus are those who are immoral themselves.

Delusion and Reason

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

At the beginning of his weekly letter, John Hussman proposes that delusions--such as those currently enveloping popular thought about financial markets, the economy at large, and Bitcoin--are not driven by failures in logic or reason. Instead, he suggests that delusional thinking results from 'distorted inputs' such as poor data gathering.

A different view is that the reasoning process includes front end activities that select and shape inputs for disposition by the human mind. If, for example, an individual exhibits a 'data gathering bias' that fosters collection of insufficient evidence that, when processed, leads the person to 'jump to conclusions,' then that person is not thinking rationally.

The reasoning mind understands the importance of information and evidence gathering prior to decision-making and will go to great lengths to ensure a sound basis for thought and judgment. The time and effort required to collect proper inputs is an important reason why humans tend to avoid reasoning process most of the time.

Claiming that delusional thinking does not reflect some deficiency in reasoning ability seems itself...delusional.

Jesus and the Police State

"I crossed this floor in spoken friendship, as I would speak to Arrius. But when I go up these stairs I become the hand of Caesar, ready to crush all those who challenge his authority. There are too many small men of envy and ambition who try to disrupt the government of Rome. You have become the victor and hero to these people. They look to you, their one true god as I called you. If you stay here, you will find yourself part of this tragedy."
--Pontius Pilate (Ben-Hur)

Author here observes that Jesus was born into a police state. His teachings subsequently undermined religious and political establishments to the point where He was crucified as a warning to not challenge the status quo.

The author then speculates about how government-imposed restrictions on liberty would have made the biblical acts of Christ more difficult to execute in the contemporary United States.

Perhaps He would have modified his actions. But there seems little doubt that the consequences would been similar. Death awaits those unwilling to compromise in the face of state-imposed threats of compliance.

The spectre of death awaiting those who challenge the modern day police state is a primary reason why it is so difficult to follow in Christ's footsteps today.

Immanuel

But when the time had fully come, God sent forth his Son, born of woman, born under the law, to redeem those who were under the law, so that we might receive adoption as sons.
--Galatians 4:4-5

God is with us once more.

Get Out of Jail Free

Jack Ryan: If I go down, you're going with me.
Robert Ritter: Wrong again. I have an autographed Get Out Of Jail Free card.
--Clear and Present Danger

A perk of being a bureaucrat, particularly a Washington bureaucrat, is the proverbial Get Out Of Jail Free card. More accurately labeled, it would be an Avoid Prison While Retaining Full Retirement Benefits card.

It works like this. Engage in wrongdoing. Get caught. Rather than be subject to prosecution, submit your 'early retirement' papers to your boss. The bureaucratic hierarchy signs off, and you subsequently walk out the door scot-free with full pension in-hand.

Reputations--institutional as well as your own--remain largely untarnished.

Optimism and Market Peaks

It's time for the good times
Forget about the bad times, oh yeah
--Madonna

Article suggests that the surge in optimism associated with signing of tax cut legislation could mark a stock market peak. It is certainly plausible. Measures of optimism haven't been this high since the dot.com era:

Cash levels in brokerage accounts are near all time lows:

Bears are too scared to be short. Indeed, the prospect of being short almost seems absurd.

All of this is bearish on the margin.

no positions

Headline Bias

I read the news today, oh boy
About a lucky man who made the grade
And though the news was rather sad
Well I just had to laugh
I saw the photograph
--The Beatles

One way to analyze media bias is to study how a particular outlet treats headline-worthy events of similar magnitude that are perceived to have been led by different political parties. Stories could be evaluated for both their placement and tone.

Consider, for example, how USA Today treated the Democrat-led passage of Obamacare:

Exclusive front page story, big fonts, pix with smiling faces, celebratory tone.

Contrast that to how the same outlet is treating the Republican-led passage of the tax-cut bill:

Shared front page story, smaller fonts, no pix, certainly no celebratory tone.

Not apples to apples events, some might say. Others contend that they are directly comparable. How to resolve such disagreement?

There are several ways to address such issues analytically. One would be to have a bipartisan expert panel that, using preset criteria, selects comparable headline-worthy events to be analyzed pairwise--as we imply doing above.

Another, probably better, way would be to pool, say, 100 events led by Democrats and 100 events led by Republicans that a bipartisan expert panel agrees meet a threshold for 'headline worthiness.' Then study the stories in each pool for their characteristics (placement, presentation, tone, etc.). Calculate the averages and compare the means.

Repeat for multiple outlets.

Finally, consider a measure of 'headline bias' to complement extant measures of media bias such as Groseclose's slant quotient.