Thursday, August 31, 2017

Intervention Timeline

"And I hate to tell you this, but it's a bankrupt business model. It won't work. It's systemic, it's malignant, and it's cancer."
--Gordon Gekko (Wall Street: Money Never Sleeps)

Nice timeline of CB intervention over the past 10+ years.

Currently eyes turning to ECB and their anticipated reduction of asset buying this fall.

Wednesday, August 30, 2017

Cause for Pause

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

Conference Board survey indicates that 80% of Americans believe that stock prices will not be lower 12 months from now. Last time the public had similar sentiment was 2007.

Add to that record high specs in stock futes...

...and there's cause for pause.

position in SPX

Tuesday, August 29, 2017

Detective Gold

Private eyes
They're watching you
They see your every move
--Hall & Oates

Pretty breakout in gold yesterday above the technically important 1300 resistance level. Follow thru today as well.

Firming technicals in both gold and silver raises the spectre that the metals complex may be in the early stages of sniffing something out.

position in gold and silver

Monday, August 28, 2017

Silver Setup

I step off the train
I'm walking down your street again
--Everything But the Girl

Silver doing work against the intermediate term downtrend line.

Gotta think the trading bots will get long on a decisive move above resistance here.

position in silver

Sunday, August 27, 2017

Harvey Havoc

Rain, rain on my face
It hasn't stopped
Raining for days
My world is a flood
Slowly I become
One with the mud
--Jars of Clay

Harvey slammed into the Texas coast over the weekend as a Cat 4 Hurricane. Although declining winds quickly brought a downgrade to tropical storm status, Harvey has dropped a ton of rain. Some areas may realize four feet of rain before it is over.

Needless to say, flooding is widespread. Because the area is an epicenter to oil and gas, eyes are focusing on how related supply chains cope with disruption. In the map below, offshore dots are oil platforms, solid squares are terminals, open squares are refineries, and lines are major pipelines.

Many upstream facilities were shut in advance of the storm. Now nearby refineries are being taken offline. The generally lean nature of these supply chains exposes them to prolonged outages.

How prolonged the outage will be here remains to be seen.

Saturday, August 26, 2017

Communism and Fascism

And the parting on the left
Is now parting on the right
And the beards have all grown longer overnight
--The Whoe

Socialism is a form of economic organizing in which control of the means of production rests with the state. Rather than consumers ultimately dictating what gets produced and for whom (as in capitalism), bureaucratic planning boards make production and distribution decisions.

While the concepts of socialism have a long history that can be traced back to Greek philosophers, political frameworks for putting socialism in motion are more recent. Of the several frameworks proposed over the past two hundred-plus years, primarily by Europeans, two of them have popularly evolved.

The earlier form, communism, is credited to German born Karl Marx, although many of his concepts were drawn from developers in France and England. Communism espouses equitable distribution of resources in the name of the 'common good.' In its ideal form, property rights and class differences are non-existent, and individuals are supposed to produce according to their ability and consume according to their need. Of course, the strong arm of the state is necessary to confer such equity.

Communism as a political means for socialistic economizing became the rage among European academics and politicians in the mid to late 1800s--particularly in Germany. By the turn of the Twentieth Century, Germany had implemented several social welfare programs patterned on the Marxian ideal.

The devastating effects of World War I and its epilogue soured sentiment for communism among the German people--particularly the part about sharing wealth with comrades worldwide. Political activists, among them an ambitious Adolf Hitler, sensed opportunity in advancing a different brand of socialism--one with a reach that stopped at German borders. The idea was for government to concentrate resource control and distribution among various verticals that were controlled by the state. The proceeds would be shared inside Germany only.

Hitler's National Socialist (i.e., NAZI) Party became the template for similar movements in other countries. National socialism is also known as fascism.

One would think that, because they are both grounded in socialism, that communists and fascists would get along nicely. Historically, however, this has not been the case. In 1930s Germany, communists and fascists fought a bitter battle for power that was ultimately won by Hitler's Nazis. Surviving communists fled and took up residence elsewhere. Subsequently, World War II pitted Germany and it fascist neighbor Italy against the communists heavyweight Soviet Union.

While that war has long since ended, the battle between the two dominant brands of socialism continues, as is currently being demonstrated by street riots pitting fascists against their 'antifa' adversaries.

Friday, August 25, 2017

Institutional Masquerade

Col Robert Gould Shaw: What are you doing?
Col James M. Montgomery: Liberating this town in the name of the republic.

These pages have included a thread discussing the work of Tom DiLorenzo and his studies of Lincoln and the Civil War. In the context of current Monumental Hysteria, DiLorenzo once again presents compelling evidence of Lincoln's racist tendencies and his motivation for war centered around achieving the American System doctrine by keeping Southern States in the union--particularly as sources of tax revenue and as customer of Northern goods with few realistic options.

That this body of evidence, which has been built by many researchers, is so strongly ignored by the mainstream provides a sense of just how persistent the institutional masquerade has become concerning Lincoln, the Civil War, and, in current context, the South.

What particularly captured my attention this time around was the discussion near the bottom of DeLorenzo's piece about the war crimes committed by Lincoln and his generals. Particularly because this group opened Pandora's box for genocide and crimes against humanity in the next 150 years' worth of war, perhaps their statues and associated insignias, battle flags, war songs, et al. should be designated for destruction by those who believe they occupy the moral high ground as well.

Thursday, August 24, 2017

Diversion of War

Guy de Lusignan: Give me a war.
Reynald de Chatillon: That is what I do.
--Kingdom of Heaven

As both Ron Paul and Judge Nap observe, Donald Trump appears to be taking a cue from presidents in the near and more distant past.

When in need of a political diversion, choose war.

Wednesday, August 23, 2017

Contracting Expansions

Christy Wills: So tell me one more time what your solution is to this crisis.
Brantley Foster: We don't cut. We expand.
Sheila the Waitress: I agree. Expansion is a positive reaction to the universe. While retraction, or cutting back, or pulling off...those are all negative forces.
--Secret of My Success

Graph below shows annual increases in GDP following recessions for the last 60+ years. The most recent recovery stands out as the weakest.

Taken in context of the graph, however, the recent weak recovery is not a one-off event. Instead, it is a continuation of a long term trend. Recoveries have been trending down in terms of GDP growth across the study period.

Would venture a guess that the economic stimulus put forth to juice recoveries has generally escalated during this period. When viewed from thru this lens, more and more stimulus has led to less and less recovery.

As such, the picture portrays a less-bang-for-the-buck trend.

Tuesday, August 22, 2017

Robot Anxiety and Politics

Karen Thompson: Think it's better than it was--when people did all this work?
Jack Ramsay: Sure.
Karen Thompson: But machines always break down.
Jack Ramsay: Let me tell you how it is. Nothing works right. Relationships don't work right. People don't work right. People make machines, so why should machines be perfect?
Karen Thompson: Because they're machines.
Jack Ramsay: Yeah? Well, that's not the way it is.

Recent Brookings Institute analysis suggesting a link between 'robot anxiety' and last year's presidential election. Robot anxiety is the fear that robots will permanently displace workers. Although it has been around long before modern day technology, robot anxiety appears to be growing in part due to rapid advances in artificial intelligence which has some forecasting that machines will soon obsolete even knowledge workers.

Robot anxiety may also be growing because robots are being over-employed as regulations such as the minimum wage inaccurately tip economic calculation in favor of automation.

The Brookings study portrays the distribution of robotic installations across the US as uneven--i.e., some states are home to significantly more robots than others. Moreover, states that voted 'red' in last year's election carry a robot intensity (defined as robots/1000 workers)--more than double that of states that voted blue.

Because workers that fear for their jobs will seek political relief if need be, it is proposed that voters in key battleground (and robot-laden) states such as Michigan and Wisconsin pulled the lever for Trump partly due to his loud protectionist stance.

While the economic angle of permanent job loss has little merit, the political aspect of the theory may contain a kernel or two of truth. In the long run, of course, protectionism has long been a bipartisan endeavor here in the States.

Monday, August 21, 2017

Downside Position

You're looking good just like a snake in the grass
One of these days you're gonna break your glass
--Electric Light Orchestra

Took on my first downside exposure in some time last Friday. Environment feels pregnant with potential catalysts, and the technicals feel like they're running out of upside gas.

Token exposure, really, consisting of small index SPX short and some XLF puts. Relative value of out-of-the-money XLF puts seemed superior to SPY at the moment. Fundamentally, financial leverage will work against the banks, I believe, if prices get moving to the downside. Technically, just to retrace the Trump rally means that the banks need to fall 20%--which seems quite within the realm of possibility.

I like them out of the money right here as an expression of a potential melt.

position in SPX, XLF

Sunday, August 20, 2017

Monumental Hysteria II

"Well, I'm sorry if the truth offends you."
--Rhett Butler (Gone With The Wind)

Previously we discussed the loss of historical perspective possible when seek to remove or destroy historical monuments positioned in public places. However, there is a good argument that they should be removed. The argument is similar to the one made in favor of removing Confederate flags flying in public places.

By 'public places,' we mean government land, buildings, and associated infrastructure owned and operated by the government. This includes but is not limited to government buildings and public parks at the federal, state, and local levels.

The display of any monument or artifact of any kind--save perhaps national, state, and local flags which can be seen as a form of geographic affiliation--constitutes a form of speech. The government does not enjoy the same freedom of speech that we enjoy as individuals. If government was free to endorse an opinion, then it could employ its virtual monopoly of force to coerce others to abide by it. The entire purpose of the First Amendment is to keep government out of the business of speech.

Viewed from this perspective, all Confederate monuments should be removed from public places. But these monuments are just the focus du jour. This argument extends to virtually all public monuments currently standing that can be construed as expressing any opinion. The low hanging fruit would include shrines to religion, war, social issues, and particular groups including minorities.

That the logical extension of this argument includes consideration about the appropriateness of even the most basic of symbols, including the American flag, demonstrates just how little speech government should be engaged in.

A similar argument, btw, can be made for dismantling public schools as it is impossible to keep them value neutral.

Does that mean that all of the monuments to these groups and issues should be destroyed? By all means no. It means they should be privatized. As Ryan McMaken proposes, those upset with the removal of Confederate monuments from public grounds should lawfully obtain them from the government or their rightful owners (or make new ones, of course), purchase a chunk of private land--perhaps near a busy intersection, and put their statues there.

Saturday, August 19, 2017


"Do not judge, and you will not be judged. Do not condemn, and you will not be condemned."
--Luke 6:37

The popular word in politically correct circles currently is 'condemn.' As in "I condemn (fill in behavior)." There are also public outcries for others to condemn (fill in behavior).

Alongside Matthew 7 and John 8, Luke 6 above suggests that we be careful with how we sling that word around.

Friday, August 18, 2017

Monumental Hysteria I

Colonel Robert Gould Shaw: It stinks, I suppose.
Tripp: Yeah, it stinks bad. And we all covered up in it, too. Ain't nobody clean. Be nice to get clean, though.
Colonel Robert Gould Shaw: And how do we do that?
Tripp: We ante up and kick in, sir. But I still don't want to carry your flag.

Following the Charlottesville riots, progressives across the country are engaging in their latest bout of hysteria: seeking to remove or destroy all monuments that this group perceived as linked to the Confederacy and/or slavery. This can be seen as an extension of the left's Confederate flag fetish a couple of years back.

Of course, tearing down statues is the socialist way. Whether those socialists originate from communist or fascist sides of the spectrum, the idea is to erase symbols from the public mind that are inconsistent with the collective message. Also, being an intolerant lot, socialists seem to possess a strong urge to blot out words or symbols that cause them negative psychic income.

As many, including President Trump and Judge Nap, have argued, removing these monuments amounts to trying to erase history. And how far do you take it? The pyramids were built by slaves. The White House was built by slaves. Washington, Jefferson, Madison, et al were slave owners. Lincoln's racism. Slaves even worked in Lincoln's White House during the Civil War. Lots of infrastructure would have to come down to be logically consistent with this movement.

As Judge Nap questions, do we really want to pretend that none of this happened? He suggests that we're in a bad place when we erase and deny history. He argues that we should remember the awful so that the pain of those memories helps prevent those bad events from recurring. Quoting Orwell's 1984:

"Every record has been destroyed or falsified. Every book rewritten. Every picture has been repainted. Every statue and street building has been renamed. Every date has been altered. And the process is continuing day-by-day and minute-by-minute. History has stopped. Nothing exists, except an endless present in which The Party is always right."

The Judge fears we are getting there today. Me too.

Although I am sympathetic to this view, there is a good argument for removing these monuments from public places. We'll discuss it next time.

Thursday, August 17, 2017

Brandenburg Doctrine

William Roper: So, now you give the Devil the benefit of the law!
Sir Thomas More: Yes! What would you do? Cut a great road through the law to get after the Devil?
William Roper: Yes, I'd cut down every law in England to do that!
Sir Thomas More: Oh? And when the last law was down, and the Devil turned 'round on you, where would you hide, Roper, the laws all being flat? This country is planted thick with laws, from coast to coast. Man's laws, not God's. And if you cut them down, and you're just the man to do it, do you really think you could stand upright in the winds that would blow then? Yes, I'd give the Devil the benefit of the law, for my own sake.
--A Man for All Seasons

Judge Nap adds legal perspective to our discussion (here, here) about the Charlottesville riots and the First Amendment. The First Amendment protects speech from government infringement. Government does not grant free speech. Free speech is a natural right derived from our humanity. Rather, the proper role of government is to protect speech from invasion by others.

The ink was barely dry on the Bill of Rights before the federal government moved to abridge freedom of speech--particularly speech perceived as threatening to government itself. Alien and Sedition Acts. Lincoln's War. Wilson and FDR during the World Wars. When those infringements were brought before the Supreme Court, sometimes they were rejected and sometimes they were upheld.

At a Ohio rally in the 1960s, a KKK leader named Clarence Brandenburg verbally attacked Jews and Blacks in the federal government and urged followers to travel to Washington and produce violence against them. Brandenburg was subsequently arrested and convicted under Ohio law that prohibited public expression of hatred as a means to overthrow the government.

Brandenburg's conviction was subsequently overturned in a unanimous decision by the Supreme Court in 1969. The court ruled that the entire purpose of the First Amendment is to protect speech that we hate and fear--lest, of course, it would not require protection. The right to decide what speech to consume is left to each individual--not to a group or the government. The court ruled that all innocuous speech is protected absolutely. Speech is considered innocuous when there is time for more speech to challenge it. Brandenburg's speech was innocuous because, while he suggested violence against government officials in Washington, there was reasonable time for speech to suggest otherwise.

The Court's 1969 ruling became known as the Brandenburg doctrine and has been consistently upheld since then.

Applied to the Charlottesville case, the Brandenburg doctrine says that the government cannot take sides in a public dispute. If it does so, then the government becomes a censor, thus infringing upon the free speech rights of those against whom it has taken a position. On the contrary, as noted in a previous post, government is obligated to protect the speaker's right to speak and the audience's right to hear and respond to the speaker.

When the police declined to maintain order in Charlottesville, government abdicated its responsibility to protect the right to free speech. They permitted the 'heckler's veto' where the audience silences speech that it dislikes. When the heckler's veto comes about as a result of government failure to protect the right to speak, then it is unconstitutional. It is equivalent to the government taking sides and censoring speech it hates or fears a la the early Alien and Sedition Acts.

Yet, I am aware of few mainstream media outlets headlining, or even investigating, this story: Government fails to uphold the First Amendment in Charlottesville.

Wednesday, August 16, 2017

Soft News and Pseudo Events

"A journalist makes himself the hero of the story. A reporter is only a witness."
--Jim Cleary (Deadline U.S.A.)

Yesterday these pages observed that there has been a lack of reporting and analysis by the mainstream of the actual Charlottesville riots--particularly with respect to First Amendment issues and how that process broke down.

Ryan McMaken provides an interesting follow up piece here. "Already," he notes, "the media has lost interest in analyzing the details of the event itself, and are instead primarily reporting on what Donald Trump, his allies, and his enemies have to say about it."

A good example is this WSJ piece this morning that focuses on what Donald Trump said yesterday during a press conference. The tone implies that Trump is wrong for claiming that both sides--the original assembly and the protesters of that assembly--shared blame for the violence. No reasonable mind should dispute Trump's claim given what facts have been made widely known about the events in Charlottesville, and not one shred of evidence is offered in the article that suggests otherwise.

McMaken links this situation to a phenomenon seen in the national media for many years: a shift away from who/what/when/where factual reporting about an event to a focus on what people who were not directly involved in the event think or say about it. Old school newspaper types would term this as a movement from 'hard' to 'soft' new. Historian Daniel Boorstin calls it an evolution toward 'pseudo events.'

Boorstin suggests that the need to create more copy led reporters and editors to realize that they could 'create' news by focusing on how people respond to a particular narrative that often first requires creation by media types themselves. That response constitutes the pseudo event. It is particularly 'news' when individuals defy the narrative in some way. Trump, of course, is a media dream in this regard.

McMaken suggests that what passes for news coverage today actually involves pseudo event journalism that, when you break it down, involves far more opinion than fact.

Tuesday, August 15, 2017


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

The sad events last weekend at Charlottesville once again motivate review of issues related to political speech--particularly with respect to people who show up to protest that speech.  When political speech takes place in a public place, the speech rights of both the speakers to speak and any present protesters to peacefully protest must be upheld.

Protesters toe a fine line, however. They cannot lawfully interfere with political speech, however innocuous it might seem to them, in a manner that drowns out the message to the audience (a.k.a. the 'heckler's veto'). Physical force against the speaker or the assembly at large is also illegal, of course.

Moreover, it is the affirmative obligation of the police to protect the speaker's right to speak and the audience's right to hear as well as to protect the protester's rights to peacefully protest.

In all of the accounts that I have seen/read/heard about the Charlottesville incident I have yet to encounter one that clearly lays out the related facts related to both party's First Amendment rights. What is clear is that the process described above broke down badly.

The Charlottesville case also reinforces a previous observation. Demonstrating in the midst of someone else's political rally is like a spark in search of tinder. Whether intended or not, the likelihood of violence increases dramatically when opposing protesters show up at political rally.

Stated differently, if you intend to protest at someone else's assembly, then you are unnecessarily escalating a potentially violent situation.

Rather than protest, why not walk away? Graduate from the playground and let juvenile minds with small thoughts talk themselves into the ground?

Better yet, pray for them.

Monday, August 14, 2017

Poverty is the Natural State

"Ghettos are the same all over the world. They stink."
--Williams (Enter the Dragon)

Sage insight by Prof Bylund. People asking about the causes of poverty are asking the wrong question. Because scarcity is the default condition of the world, poverty is man's natural starting point.
Prosperity is the alleviation of poverty. The more salient question is what causes, and advances, prosperity?

Sunday, August 13, 2017

Tariffs Without Bounds

Everybody's kicking sand
Even politicians
We're living in a plastic land
Somebody give me a hand
--Steve Miller Band

Rothbard suggests a useful way to think about tariffs: forget about political boundaries. While country borders may be important for other reasons, they can be seen as arbitrary from an economic perspective and having little significance.

Imagine that each state in the US were a separate nation. Inevitably, there would be complaints from some states about unfair, cheap labor in other states undercutting inefficient producers on prices. Calls for tariffs would follow to protect essential local industries from that unfair competition.

Indeed, such trade wars between the original 13 states provided motivation for the Constitutional Convention of 1787. The idea was to have a central government to regulate--in the sense of making regular and free--trade between the states. And so it is today--an American free trade zone where it is illegal for states to levy tariffs on other states.

To push the tariff 'logic' to completion, why stop at country borders, asks Rothbard? Why not tariffs at state, city, or even the family level in order to shield producers from unfair external competition?

The answer, of course, is that such nonsense would cast the world back into the dark ages, where each producer would need to diversity in attempts of being self-sufficient. As trade dried up, division of labor and the productivity gains that it confers would disappear.

As history reminds us, tariffs protect squalor, not prosperity.

Saturday, August 12, 2017

War Drumming Markets

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

Markets took a hit on Thurs on back of North Korea situation--although not as much as one might have expected. Muted downside market response marks the time we live in--although that could change quickly, of course. Currently the SPX is not quite down to support defined by the multi-month uptrend line.

Volatility indexes did seem to take an outsized jump compared to the move in stocks. VIX was up nearly 60% in two days.

I happened to look at put schedules mid-week before the jump in vols. Despite historically low index vol levels, out of the money index puts did not look cheap to me--certainly nowhere near 'Simon' levels. This suggests significant option 'skew,' and is consistent with market participants scooping quantities of downside 'insurance.'

Sitting on my hands for now, and will see how things unfold.

no positions

Friday, August 11, 2017

Political Shortsightedness and War

"And the Lord said, 'Gentlemen, he who is without sin, let him cast the first stone.'"
--Professor Groeteschele (Fail Safe)

Saber rattling comments by Donald Trump aimed at North Korea earlier this week once again have his detractors wringing hands. Presidents don't talk like this, they complain.

They do now. Get used to it.

Trump's most recent round of behavior deemed unbecoming of a president presents another opportunity to warn those pointing fingers to take a good look in the mirror. How much of the current problem was created by political shortsightedness of a good many people?

Many didn't complain when the executive branch was assuming more power while their guy was sitting in The Big Chair. How nearsighted the granting of administrative power looks today now that someone less likable is in charge.

As a nation, we've been fine with the President of the United States carrying nuclear launch codes at his side for more than a half century--despite the fact that war-making power constitutionally rests with Congress. For many, that may seem pretty stupid right about now.

There has been also been a multi-decade, bipartisan effort to fund gargantuan war-making capacity. In the last year of the previous administration, military spending was targeted well north of a half trillion dollars.

Finally, let's not forget the role of sanctions. For years, politicians from both major parties have supported the imposition of trade sanctions against countries deemed to be enemies of the United States. Trade, not sanctions, foster interdependence and peace. Indeed, it has long been said that when goods don't cross borders, armies will.

Perhaps armies will cross borders this time as a result of our political shortsightedness.

Thursday, August 10, 2017

Sanctuary Cities

The traffic roars
And the sirens scream
You look at the faces
It's just like a dream
--Glenn Frey

Over the past couple of years, the term 'sanctuary cities' has been applied to cities whose political officials have refused to enforce federal immigration laws. Why have they done so? Sanctuary cities are almost exclusively under the control of Democrats. Because Democrats generally view voter blocks sympathetic to immigrant causes as valuable sources of political capital, their creation of sanctuaries for illegal immigrants can be seen as a thinly veiled strategy for winning votes.

Are sanctuary cities legal? As Judge Nap argues, yes. Local authorities are not obligated to help the feds with manpower or other resources to enforce federal law in local jurisdictions. The Supreme Court has ruled in previous cases that the federal government cannot force local officials to enforce federal law; the feds must enforce it themselves.

The Court's rationale is that such compulsion would violate the Guarantee Clause of the Constitution which guarantees a representative form of government in every state. If the feds interfered with the will of elected state officials on how to spend state resources (read: tax dollars), then representative government would be constitutionally impaired in those states.

To get around this legal inconvenience, the federal government has frequently provided funding to states that is contingent on state cooperation in particular matters. During the Reagan administration, for instance, the feds dangled dollars in front of states for interstate highway repairs under the condition that states reduce speed limits to 55 miles/hr. If states didn't want to lower their speed limits, then they were free to reject the funds. Subsequent ruling by the Supreme Court validated the legitimacy of what resembles a contract.

In other cases, however, the federal government has threatened to pull funding from states who refuse to comply with a federal demand that was not specified when the monies were first sent to the states. For example, in a move designed to force states to expand Medicaid under Obamacare, the federal government threatened to cut Medicaid funding to states who didn't do so. In one of the few Supreme Court rulings related to Obamacare that made sense, this initiative was ruled invalid by the Court.

Not only does such a practice by the federal government violate the principle of federalism, but it is not good contracting practice.

A similar situation has arisen in the context of the sanctuary cities. Under the Obama administration, funds were offered to sanctuary cities with no strings attached related to federal immigration law enforcement. Now, the Department of Justice under the Trump administration wants to impose such strings retroactively. As Judge Nap notes, that won't fly in the courts and any legal challenge on withholding Obama era funding should favor the sanctuary cities.

What the Trump administration can do is work with Congress on future funding packages that do require state cooperation in immigration law enforcement if states want those funds.

In the case of sanctuary cities we are witnessing principles of federalism and nullification in action--both of which are healthy and favorable for liberty. Democrats and Republicans, of course, tend to like these principles when they work in their political favor and detest them when they don't.

Wednesday, August 9, 2017

Civil Asset Forfeiture

"Nice house on government pay."
--Mace Ryan (Rapid Fire)

Civil asset forfeiture is government seizure of property believed to be involved in a government crime. For example, people thought to be transporting drugs can have their vehicles confiscated by the police.

The government can use civil asset forfeiture to take property from owners that was used in criminal activity unbeknownst the the owner. Real estate owners (e.g., homeowners, apartment building owners) can lose their property because guests or renters were dealing drugs behind the owners' backs.

The big thing is this: Government can keep the property that it confiscates even if it never convicts, or charges, the owners.

This opens the door for civil asset forfeiture to be a multi-billion dollar money maker for government at all levels. Studies, for instance, indicate that most states allow police and prosecutors to keep at least half the loot that they confiscate. The IRS can also use civil asset forfeiture to increase tax collections.

As Ron Paul observes, civil asset forfeiture is a euphemism for civil asset theft. Recently, Attorney General Jeff Sessions ordered the Department of Justice to increase use of civil asset forfeiture. In doing so, he, like his predecessors, is escalating use of a clearly unconstitutional policy.

Twenty four states have now passed legislation limiting its use. Let's hope that trend continues. More state-level push back might impair federal level looting as well.

Tuesday, August 8, 2017

Low Vol, No Vol

Fool, said I, you do not know
Silence like a cancer grows
--Simon & Garfunkel

While recent headlines have emphasized more all time highs in the major equity indexes, the extremely low volatility context that surrounds them have largely been ignored. As ZeroHedge notes, it has now been 13 days since the SPX has moved more than 0.3% in either direction.

Am reminded of observations that unstable systems often go quiet before breaking apart. Minsky's theory that 'stability breeds instability' also comes to mind.

Silence is not necessarily a harbinger of peace and solitude.

no positions

Monday, August 7, 2017

Socializing Kids

"America is a whorehouse...where the revolutionary ideals of your forefathers...are corrupted and sold in alleys by vendors of capitalism."
--Re-Education Film Narrator (Red Dawn)

Bernie Sanders will soon release a new book aimed at teens: Bernie Sanders Guide to Political Revolution.

It follows the recently released book from MIT Press, Communism for Kids.

Since the time of Marx and Engels, socialists have understood that they must try to indoctrinate minds before they fully develop. Once minds mature and are able to think critically, the drivel of socialism becomes much harder to swallow.

Sunday, August 6, 2017

Demand for Media Bias: The Microaggression Crowd

There are things we won't recall
And feelings we'll never find
It's taken so long to see it
'Cause we never seemed to have the time
--Phil Collins

Producers of slanted media could not persist unless there was a market for biased information. A large source of demand for media bias is likely to be people who protest opposing views or claim to be offended by so-called 'microaggressions.' Their intolerance for opposing views that by definition add to balanced perspective is so great that they refuse to admit those viewpoints for consideration.

Instead, the microaggression crowd will want to remain inside their comfort zone and consume media that reinforces their worldview and provides a source of positive psychic income.

Saturday, August 5, 2017

Eat Your Cooking

"You reap what you sow. You have heard of this, no?"
--Imad (Kingdom of Heaven)

President Trump recently tweeted that bailouts for insurance companies and members of Congress related to Obamacare should end.

The reference to Congress involves an exemption that allows congressional members to opt out of the ACA framework in pursuit of other healthcare alternatives.

Thomas Massie subsequently asked the president why he didn't end them right now?

Trump has the power to do so. Why shouldn't Congress be required to eat its own cooking?

Friday, August 4, 2017

Whiskey Rebellion

"How could it come to this? An army of rabble...peasants. Everything will change. Everything has changed."
--General Charles Cornwallis (The Patriot)

Rothbard discusses one of the many American events that has been distorted by historians: the Whiskey Rebellion. The official narrative is that people in four western Pennsylvania counties refused to pay an excise tax on whiskey that had been levied by the workings of Alexander Hamilton, then Secretary of State, in 1791. Subsequent uprisings drove President Washington to call a federal army of 13,000 into the area to put down the insurrection in 1794.

Consequently, according to the narrative, a local but dramatic challenge to federal taxing power had been defeated, and the forces of federal law and order were reinforced.

Rothbard points out the flaws with the official narrative. The deep seated hatred that Americans had for internal taxes of any kind found widespread resistance to the whiskey tax far beyond a mere four Pennsylvania counties. In frontier areas of several states, no one paid the tax on the whiskey.

Moreover, whiskey was widely produced by back-country farmers and often used as a medium of exchange in local transactions. Back-country people people correctly viewed the tax as a means for large distilleries to cripple their smaller and more numerous competitors.

Western Pennsylvania, Rothbard observed, "was only the tip of the iceberg." It became the focus in large part because it was one of the few back-country areas that made any attempt to collect the whiskey tax. Other areas did not rebel because the taxes were not being collected.

Widespread resistance to the tax ultimately helped motivate formation of the Democrat-Republican party and the forthcoming Jeffersonian movement. In fact, one of Jefferson's first acts as president was to repeal the entire federal excise tax program.

The true story of the Whiskey Rebellion is that it was a widespread, multi-year campaign of civil disobedience in which American citizens refused to pay a hated tax. Rather than being quickly put down, the Whiskey Rebellion was successful in that it eventually led to federal repeal of the tax.

It is easy to see why the story was subsequently distorted. Washington and his cabinet did not want to advertise the extent of their failure. And big government historians certainly did want it known that federal taxing power could be successfully challenged by the people.

When correctly viewed, the Whiskey Rebellion was a victory for liberty rather than for the state. It offers a source of inspiration and hope for American taxpayers who ponder being tax resisters.

Thursday, August 3, 2017

Compassion, Envy, and Redistribution

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

Interesting multi-disciplinary, multi-national study on what motivates individual support for economic distribution. The fundamental hypotheses propose that various motivational systems--compassion, envy, self-interest, and taste for fairness--nfluence a person's support for economic redistribution. Scales used in the study can be found here. Over 6000 respondents from four countries were obtained.

Among the less interesting findings was that self-interest was positively associated with support for forced redistribution. Stated differently, if you perceived that you would benefit from the redistribution program, then you were in favor of it. Not a surprise.

A more interesting finding was that there was no significant relationship between taste for fairness and support for redistribution. This is surprising to me. The researchers were careful to measure fairness using two separate underlying definitions consistent with common views--i.e., fairness under law and fairness in outcomes. Neither of the fairness scales were found related to support for distribution in 'all-in' regression models.

Perhaps this was due to high cross correlations with other constructs. Unfortunately, correlation matrices are not available and the researchers, while conducting some assessment of internal consistency of their scales (e.g., Cronbach's alpha), did not evaluate/report measures of discriminant validity. This is a limitation of this study that lends to the feel that this is a 'working paper' that has been published in a 'preliminary edition' of a proceeding as indicated on the pdf masthead.

The most interesting findings concerned the compassion and envy constructs (both measured with multi-item psychometric scales). Personal compassion was not associated with support for coerced economic redistribution. Instead, compassion was positively related to charitable giving and voluntary work with the needy. Individuals who did support forced redistribution were less prone to charitable giving.

Envy was found to be positively associated with forced redistribution. Moreover, based on several cases posed in the study, respondents who measured high on the envy scale were prone to tax the wealthy (i.e., redistribute economic resources) more even though poor people would receive less.

Results of this study suggest that compassionate people do not favor forced redistribution. Rather, they prefer voluntary charity. Envious people, on the other hand, support forced redistribution. However, envious support for the forced redistribution may not be due to desire to help the poor as much as it is due to desire to hurt the rich.

Wednesday, August 2, 2017

Hot Rentals

The heat is on, on the street
Inside your head, on every beat
And the beat's so loud, deep inside
The pressure's high, just to stay alive
'Cause the heat is on
--Glenn Frey

I haven't rented since the early 1990s. Back then I was paying low to mid $300/month for a single bedroom unit with detached garage. From the looks of the below chart, I was probably just about average after factoring in my apartment's size.

Fast forward 25 years and rents have more than doubled nationwide. A brief scan of rents for open units in my former stomping grounds is consistent with the trend.

For renters, the heat in on.

Tuesday, August 1, 2017

Promising Poverty

You made me promises, promises
You knew you'd never keep
Promises, promises
Why do I believe?
--Naked Eyes

As the new campaign cycle kicks in, we once again observe politicians trading promises for votes. Many of those promises are for free stuff. Free healthcare, free college, free food, etc.

Many of those same politicians also promise that there will be jobs for all.

As questioned above, what happens to incentive for work when economic resources are given for free? Another way to ask the question is who produces the free stuff?

Anyone who thinks this thru is bound to arrive at this truth: the greater the socialism, the lower the productivity. The lower the productivity, of course, the lower the standard of living.

They may not realize it, but these politicians promise not prosperity, but poverty.