Hayek, while a brilliant mind, was not right on everything. He saw the welfare state is legitimate, a need for regulation into private industries such as education and food, and the necessity of the state in providing for individual and national defense. Yet even he was able to distinguish how political power attracts those who will use in the worst manner. The Secret Service agents who procured prostitutes may be relieved of their duty but it will only serve as a cautionary tale for the rest to keep their off-duty exploits better concealed in the future. The waste and graft will go on despite a pledge from Obama for a “rigorous” probe and his potential successor’s promise to “clean house.” These promises are just political theater used to conceal the playground like mentality which possesses the attitudes of all those who wield the guns of the state.
In our daily scouring of the markets we run across a plethora of charts, many of them boring, some interesting, and a few select ones, exponential, and thus completely unsustainable. The US debt load is of course one of them, global central bank assets is another, as is pretty much everything associated with Europe these days. However, the following exponential chart is one we had never encountered before: it shows the number of major "disturbances", read power outages, in America's power grid in the last decade. The chart is, well, disturbing.
Before even taking into account the aftermath of the “unexpected” NFP result, it has been amazing to see over these past few months the number of experts, especially those that reside solely within the “science” of economics, proclaiming a successful engineering of the long sought-after recovery. That this has been the third such claim in as many years is lost in the noise of confusing “headwinds” that are somehow beyond the control of those that now control most everything within the financial arena. Stock speculators are beneficial components to the healthy financial transmission mechanism into the real economy (even when all they are supposed to do is provide liquidity 20,000 times per second), but anybody that dares speculate in the far more vital energy sector (or any real commodity) is the pure incarnation of evil. That these two apparently disconnected speculative classes are really one and the same shows just how obtuse (not always intentionally) economists and the pandering classes really are.
Paging Paul Krugman ... Paging Professor Krugman to the White Courtesy Telephone ...
In this very informative interview between The Browser and Peter Boettke, the professor of economics discusses the contributions made by the Austrian School, and explains the various nuances of the economic school by way of recent books by "Austrians." He also explains what we can learn from Mises and Hayek, and argues that economics is the sexiest subject.
The Real Dark Horse - S&P's Mass Downgrade FAQ May Have Just Hobbled The European Sovereign Debt MarketSubmitted by Tyler Durden on 01/13/2012 19:55 -0400
All your questions about the historic European downgrade should be answered after reading the following FAQ. Or so S&P believes. Ironically, it does an admirable job, because the following presentation successfully manages to negate years of endless lies and propaganda by Europe's incompetent and corrupt klepocrarts, and lays out the true terrifying perspective currently splayed out before the eurozone better than most analyses we have seen to date. Namely that the failed experiment is coming to an end. And since the Eurozone's idiotic foundation was laid out by the same breed of central planning academic wizards who thought that Keynesianism was a great idea (and continue to determine the fate of the world out of their small corner office in the Marriner Eccles building), the imminent downfall of Europe will only precipitate the final unraveling of the shaman "economic" religion that has taken the world to the brink of utter financial collapse and, gradually, world war.
We have now entered the fifth year of this Fourth Turning Crisis. George Washington and his troops were barely holding on at Valley Forge during the fifth year of the American Revolution Fourth Turning. By year five of the Civil War Fourth Turning 700,000 Americans were dead, the South left in ruins, a President assassinated and a military victory attained that felt like defeat. By the fifth year of the Great Depression/World War II Fourth Turning, FDR’s New Deal was in place and Adolf Hitler had been democratically elected and was formulating big plans for his Third Reich. The insight from prior Fourth Turnings that applies to 2012 is that things will not improve. They call it a Crisis because the risk of calamity is constant. There is zero percent chance that 2012 will result in a recovery and return to normalcy. Not one of the issues that caused our economic collapse has been solved. The “solutions” implemented since 2008 have exacerbated the problems of debt, civic decay and global disorder. The choices we make as a nation in 2012 will determine the future course of this Fourth Turning. If we fail in our duty, this Fourth Turning could go catastrophically wrong. I pray we choose wisely. Have a great 2012.
It just may turn out that Europe's strategic "plan" of kicking the can down the road indefinitely, or at least until aliens can come down and bail out the global central banking cabal - aka the Deus Ex Alpha Centauri plan - may have worked! In a rather curious announcement, the SETI website of UC Berkeley has announced that it has found signals that "look similar to what we think might be produced from an extraterrestrial technology. They are narrow in frequency, much narrower than would be produced by any known astrophysical phenomena, and they drift in frequency with time, as we would expect because of the doppler effect imposed by the relative motion of the transmitter and the receiving radio telescope." And in the off case that said aliens prove to have an atavism to rude European waiters, at least Paul Krugman will be delighted: after all there is nothing better for the economic voodoo shamans out there than intergallactic warfare. Then again, since Keynesianism appears to be a popular universal delusion, we wouldn't be surprised if it is us who ends up having to bailout them...
Sean Corrigan, of Diapason Commodities Management, outdoes himself this week. At one fell swoop, and in his usual eloquent manner, he dismantles Krugman's Keynesian war-mongering, Bernanke's bafflement at a lack of recovery, Trichet's stable instability, and Hildebrand's god-like control of markets. Along the way he destroys every six-year old girl's (and sell-side/academic economist's) dreams - quite a read for a Sunday afternoon.
In an excellent treatise on sovereign subtleties, Morgan Stanley's Arnaud Mares (the same analyst who nailed the Greek situation long before most others) once again lays out the increasingly bifurcated path that a broken European 'union' may and must take. Most interesting, and highly prescient in our view, is his consideration that the 'private sector involvement' in the restructuring of Greek debt was not only a major policy error but opens the door for the peasantry to finally comprehend that when sovereign debt is not 'risk-free' then fiscal (and monetary) policy can become pro-cyclical. With the entire Keynesian dogma resting on this very tenet, we think it well worth a read and as he writes: "Pandora’s Box has been opened. Only fiscal integration accompanied by centralized financing of governments can bring about full stabilization of the market in Europe, in our view. The alternative could eventually be a resumption of the run on governments and a wave of public and private defaults." Bottom line, in attempting to do things half-assed, Europe may have just destroyed the entire credibility of the one primary economic theory driving global "growth" (or stated better, borrowing from the future) since the beginning of the 20th century.
No, Mr. Krugman ... war is NOT good for the economy!
Watch the teleprompter advise the president on the correct choice of words at his address to workers at a Fiat, pardon Chrysler Group, Toledo supplier park, during which he will have to explain why both fiscal and monetary policy (read Keynesianism) is now a confirmed failure. But far from Austrian economics finally get the respect it so much deserves, this will merely retrench the current idiotic policies - just read any column by Krugman demand doubling down on stimulus post haste: that's what happens with junkies - it never ends, and in fact the "last" does must always be more and more and more...
Keynesianism Kapitulates To Kondoms? Bill Gross Suggests The Demographic Growth Crunch Will Put Keynesian Policies To RestSubmitted by Tyler Durden on 07/28/2010 10:48 -0400
After entertaining some potty humor for a page or two in his latest brief, Bill Gross conducts an interesting thought experiment in which he presents an anti-Malthusian economic hypothesis, which states that predicated by declining global population growth, the global economy will be unable to grow into its full potential, regardless of size (or usage) of any new trillions of stimulus. "This is not the Malthusian thesis, which maintained that at some point the world would run out of food to satisfy a growing population; it is an assertion that capitalism depends upon final demand and that if there ever comes a time when population growth slows, then the world’s most efficient economic system will be tested. If anything, my thesis is anti-Malthusian in its assertion that there will always be enough production to satisfy a growing population, but perhaps not enough new people to sustain growing production." Looks like all the Ph.D.'s from reputable universities just got a new challenge: look for many papers in peer reviewed publications (and we were wondering for a second why Gross used so much toilet humor initially) trying to refute this major kink supporting the new normal, and refuting a "special case" of Keynesianism, which of course was not relevant when the economist was alive, but is becoming the reality all too quickly. Could something as simple as a condom be the cog in the wheel that dethrones the religion of John Maynard Keynes?
With the topic of Keynesian stimulus now so prevalent, that for some reason everyone, even economic Ph.D.'s feel entitled to chime in with their useless opinions on whether or not it is appropriate for your overleveraged economy, we would like to present this very educational anecdote about the Obamanomic version of Keynesianism as it pertains to jobs, explained by Daniel Mitchell of the Cato Institute. The kicker - Victoria's Secret models. If after this one still doesn't understand the wonderbra approach to pushing up our economy, one is hopeless.
"Inflation Seen As Nation's Salvation" Redux; How Keynes Grew To Hate 'Keynesianism' And Love The Monetary BombSubmitted by Tyler Durden on 07/04/2010 13:56 -0400
There are few things as entertaining as watching US propaganda movies from the 1930s. Case in point, this documentary from the depths of the great recession (1933), when America was struggling with a deflationary wave nearly as bad as the one today, and when the only salvation was the spinning of Keynesian politics to the point where even Keynes himself had to send a letter to FDR to warn him that how the US was was interpreting his fledgling economic religion (it hadn't quite made cult status yet), was wrong. Of course, nobody cared then, and nobody will care now: after all there are cans to be kicked, mid-term elections to prepare for, and votes to be bought with ridiculous unemployment benefit extensions upon extensions. And while even back then Keynes disagreed with FDR's wholesale economic approach which compounded failure upon failure, only to be saved by the "fluke" that was WWII, one wonders just how quickly he is spinning in his grave today, when, as Rick Santelli pointed out, we no longer have deflation, but deleveraging to the tunes of tens of trillions of dollars, and no longer a cyclical recession, but a structural shift in the way credit is apportioned, and disappearing, in the economy. We expect to soon see a comparable shift in the Fed's and the ECB's subliminal cartoon messages, which just like the recent 180 from Barton Biggs, will soon begin highlighting all those "previously undiscovered silver linings" in the great satan of inflation.