Memo to Barack: learn your basic history, boy

I'll write more on his "Socialism be comin' and y'all ain't gonna stop me" speech tonight, but for now I'll debunk his historical ignorance. It's along the same line as Al Gore claiming he sponsored legislation that led to the creation of the Internet.

Sayeth Barack:

As for our auto industry, everyone recognizes that years of bad decision-making and a global recession have pushed our automakers to the brink. We should not, and will not, protect them from their own bad practices. But we are committed to the goal of a re-tooled, re-imagined auto industry that can compete and win. Millions of jobs depend on it. Scores of communities depend on it. And I believe the nation that invented the automobile cannot walk away from it.

His major lie there is denying that "giving" (meaning taking money from you and me to give to others) tens of billions of dollars to each of the Big Three is protecting them from their stupidity. Why should they bother to perform better when the American taxpayer will be forced

But the sheer ignorance is the last line of the paragraph: "And I believe the nation that invented the automobile cannot walk away from it." Uh, look again, Barack, but an American did not invent the automobile. Look it up: if you want to talk about steam engines, the Scots did it. If you want to talk strictly about internal combustion engines, it was various Europeans until the German Carl Benz invented the first practical one.

It doesn't matter that he had paid speechwriters. He should have seen that gross historical error right away. I did, and I'm hardly an expert. Yet in the early 1990s, before college (let alone home) Internet access took off, I still had read enough to lay out the basic auto history for some Canadian idiot (Neil of Ontario, are you still around?). What sparked things was his Barackian claim was that we should move toward electric cars, since after all the first cars were electric.

From the Free Eidelbus Dictionary of Political Terms:

Main Entry: Barackian

Pronunciation: \bah-rack'-ee-yuhn\
Function: adjective
Etymology: derived from the name of politician Barack Obama
Date: early 21st century

On the surface seemingly true to most people but is in fact materially false. The noun being described is typically a false claim about a historical fact, made to sway the ignorant and/or uneducated.

— \Ba-rack-is-m\ noun

Never mind George Santayana's particular phrasing: when people are utterly ignorant of the past, how much worse will we all be when they wield power (either by majority vote or as elected officials)?

My preemptive rebuttal for those who think I meant "boy" as a racial insult: read this, shove your race-baiting up your asses, then come back when you learn that behind every blade of grass does not hide a racist.

Obama again demonstrated his childish ignorance. Maybe if he had paid attention in school, instead of dreaming about being president, if he had read a book or two instead of "community organizing," he could have immediately corrected his speechwriters. But keep vigilant, people: this will be among the least of his rewrites of history.

What the Federal Reserve really said

Pay attention: when Bernanke & Co. say "the economy will actually shrink and unemployment will rise higher," it's not so much a prediction as it is the Fed and feds revealing their designs on the economy -- how they will so "graciously" permit the economy to perform. Does anyone still wonder why I call this the Reichstag fire of the financial world?

And now Alan Greenspan is publicly supporting bank nationalization. Like all government programs, it'll start small. The bureaucrats will claim specific targets, but the language of the legislation will in no way confine them to a limited scope. Just a few of the "most troubled" banks, then a few more, and suddenly "mission creep" becomes an understatement. A formal takeover of all banks won't be necessary, anyway. De facto nationalization will come with sufficient control of the web, something like nationalizing a super-majority so that all other banks are effectively isolated from each other. At that point, the non-nationalized banks can do no business (no transfers, no borrowing, i.e. no financial conduits whatsoever) except with nationalized banks.

In the Book of Revelation it is written about the second beast, who "exerciseth all the power of the first beast before him,"

And he causeth all, both small and great, rich and poor, free and bond, to receive a mark in their right hand, or in their foreheads:

And that no man might buy or sell, save he that had the mark, or the name of the beast, or the number of his name.

This isn't just trusting an arsonist to putting out the fire he caused. This is an arsonist setting your house on fire, forcing you to trust him to put it out, forcing you to hire him to rebuild it according to his specifications, and all payable via a loan he'll so generously give you! The government created the crisis, fueled it, and now insists it alone can "fix things" (as it always does). This will involve a complete uprooting of every profit-engendering quality of the financial system, such as banks no longer lending to creditworthy people, but rather anyone "underprivileged" or "never got a fair shake in life." And the cherry on top is all the massive new federal debt that future generations will be paying.

Mark my words here: as bad as it is now, we haven't yet seen how finance will become politicians' ultimate weapon to stifle dissent and ensure obedience. Under such a system, much like in African dictatorships, any suspicion that you're not loyal, have mocked or derided a politician, etc., means blacklisting. Financial blacklisting. That means an inability to deposit savings, get a loan, or transmit money electronically. It's not impossible to live that way, but most people don't have the stomach and would rather lick the hands that feed them. Be watchful, for I believe in the coming years we'll see (and most won't realize until too late) what "the mark of the beast" is. Without control of the financial infrastructure, how else could the tyranny of the last days prevent (most) people from engaging in commerce sans the mark?

Greenspan is such a liar. There was never anything "free market" about what he did, like tightening monetary policy too much and causing the 2000-2001 downturn, and keeping interest rates too low for too long after that downturn to fuel today's housing bubble. He wants to scapegoat "the free market" when the free market wasn't even there. By definition, anything he did as a central banker was contrary to the free market, and he knows it, which is why he's flat-out lying. It's one thing for banks to pool resources voluntarily into a fund from which a troubled member can borrow, but quite another for the government to set up a central bank that devalues everyone's money in order to "save" a favored institution.

That word "favored" reminds me. I've always forgotten to mention something here that most of you didn't know. JP Morgan given a sweetheart $29 billion loan from the New York Federal Reserve Bank, but Lehman Brothers was allowed to fail. Like many, I naturally figured that it was because JPM had friends/allies at the New York Fed, and Lehman didn't.

Of course, it had nothing to do with the fact that Jamie Dimon, JPM's CEO, was sitting and still sits on the New York Fed board of directors. Nothing at all...right? Good lord, we shouldn't be surprised. Who needs a friend on the inside when your own chief is on the inside!

And where is the outcry about this blatant conflict of interest, other than a few relatively unknown bloggers? I never saw anything in the Wall Street Journal, which should have been on top of this. Geraldo Rivera didn't have a special investigation. I haven't seen a single major political columnist or blogger talk about this, even Walter Williams, Thomas Sowell, Instapundit or Michelle Malkin.

Where has JPM's General Counsel been, considering that Dimon participating in NY Fed decisions is a crime if JPM benefits? Even recusing himself can still taint any decisions. Sitting on the board of a Federal Reserve bank is something so extreme that even I, being on the compliance end and thus far from business strategy, could (and never should) get approval from my firm's Chief Compliance Officer and General Counsel. There would always be an inherent conflict of interest, and any reasonable person would have an insuperable suspicion that I was not impartial.

Dick Fuld, former CEO of Lehman, used to sit on the New York Fed board, so we can only guess that he wasn't as popular with the boys. Keeping Lehman Brothers alive just wasn't part of The Plan. On the other side of the pond, though, keeping Lloyds and Barclays was, and the latter snapped up Lehman's remains after a mere seven-hour hearing in front of an American judge. Democrats have accused Bush, Cheney and Halliburton of corruption because Halliburton got no-bid contracts. Where is their outcry about banks buying "failed" ones via government-arranged-and-approved deals, with no competitive bidding, like JPM did with Bear Stearns and Washington Mutual?

Geithner will really bring in private investment as part of the rescue plan?

Geithner Seeks Private Investment for Toxic Assets (Update3)

Feb. 9 (Bloomberg) -- Treasury Secretary Timothy Geithner is seeking to draw investors into the U.S. financial-rescue program, aiming to add private funding as a new component of proposals to address the toxic debt clogging banks’ balance sheets.

Aides worked through the weekend to complete the package that Geithner will announce tomorrow in Washington, which was delayed by a day. Aspects of the plan that have been settled include a new round of injections of taxpayer funds into banks, targeted at those identified by regulators as most in need of new capital, people briefed on the matter said.

The rest of the article doesn't mention how he plans to pull off this miracle. It's presumably the same way that Obama will make Russia, Iran and North Korea play nice: hope!

However, apply a little reasoning, and the lie becomes evident.

If there were any possibility of a decent profit for the risk, private investors would have jumped into things long before Geithner had been dreamt of as a nominee for Treasury Secretary. The fact that government must "lure" private investment means that private individuals are reluctant to jump in. Government can swear up and down the water's fine, but people are afraid the pool might really be filled with piranha or just empty.

Using simple reasoning to debunk economic lies

It is a primary purpose of this blog to debunk economic fallacies, and to expose lies wherever they may be. My friend JK fell for one, specifically the claim that on September 18, 2008, the Federal Reserve stepped in to save the collapse of the U.S. economy because they feared $5.5 trillion would eventually be pulled out of money markets.

My reply:

That's a load of horse manure. Don't believe it.

Think about it for a minute. Do you realize how much $5.5 trillion is, and how much $105 billion will not stem such a tide anyway?

Do you realize that money merely doesn't disappear when it's withdrawn? It was hardly evaporating into thin air. People had started dumping money markets on September 17, ever since the Reserve Primary Fund "broke the buck" the day before, and putting into safe paper: bank CDs if the amounts were low enough for FDIC insurance, and Treasury securities otherwise. The money was simply being transferred from one form of savings to another.

"By their estimation" is no more than doom-mongering. They were merely extrapolating what was happening throughout the entire day, when it probably wouldn't have happened at all. Worse, their extrapolation was an outright lie. By 11 a.m., they had "noticed" $550 billion. Even if it had happened in one hour, how could another $5 trillion have been withdrawn in only three more hours?

How could $5.5 trillion have disappeared when the Money Fund Report reported last August that money market assets exceeded $3.5 trillion for the first time? Do you really believe that money markets surged by $2 trillion in just the following month?

Look, my friend, don't take this the wrong way, but god damn, think about things before swallowing this kind of guff. Whatever any politician tells you, even Ron Paul, be skeptical: "believe not every spirit, but try the spirits whether they are of God: because many false prophets are gone out into the world."

"The whole aim of practical politics is to keep the populace alarmed -- and hence clamorous to be led to safety -- by menacing it with an endless series of hobgoblins, all of them imaginary." - H.L. Mencken

When a non-professional economist like me can catch these lies with barely a thought, every economist who promotes these lies should burn in hellfire. And woe to those who believe the false prophets.

Let me add one last thing: motive. Why would politicians and central bankers lie about any of this? Why, indeed? The Great Depression was the first big opportunity for the dark powers to soften Americans up to the idea of government intervention to "save" the economy, notwithstanding the New Deal only made things worse. This manufactured crisis is being used to destroy all confidence in the free market, a return to which is the only thing that can save us, and to instill in people the belief that only government can save them, when in fact it only leads to economic damnation.

Lessons from Japan

As I wrote two months ago:

Real estate collapse, a stagnant economy despite the central bank lowering rates nearer and nearer to zero...God help us if we're going to spend the next two decades like Japan's spent the last two. We're already in a "liquidity trap": interest rates are so low that monetary policy just can't provide any more economic stimulus, as artificial as it would be.

On the fiscal side, Russ Roberts links to a New York Times article that admits Japan's efforts at fiscal stimulus were a failure.

Dr. Roberts was spot-on to call it "schizophrenic." What he didn't cite as a highlight is something I'd deem perfectly indicative of liberals' agenda:

"Japan spent too much on increasingly wasteful roads and bridges, and not enough in areas like education and social services, which studies show deliver more bang for the buck than infrastructure spending."

There you have it: collectivism isn't accomplished merely by directing people to build more "infrastructure" for themselves, but by converting current generations and breeding future generations to be dependent on a central authority's direction. Sprinkle some Keynesian junk science about "multipliers" so people will swallow the guff without question.

Remember that my patron saint debunked the idea 160 years ago, nearly nine full decades before Keynes, that government spending can create economic growth. It also brings us a point of simple logic: Keynesians shouldn't be in favor of any private spending at all, proceeding straight from their absurd posit that government spending has a greater multiplier than private individuals' choices. But you won't hear this at the present time. Even Western Europeans haven't been quite that softened -- yet.

A tax cut is government "giving" money?

Here's a snapshot of Yahoo's headlines from two nights ago, which I didn't have a chance to write about at the time:



But if you clicked on the stimulus story, here's the headline (McClatchy, not the AP, but just as liberally biased). The story is still up, for now.

"Unclear if stimulus tax breaks will save jobs, spark spending"

God knows the mainstream media can't allow the least positive headline about letting people keep their own property. The article is balanced enough, I suppose, in presenting the two arguments for and against tax cuts as an economic stimulus. But that's not the point: the point is that the taxes are simply theft of people's property. That quoted asshat Roberton Williams, of the ultra-liberal Tax Policy Center, opposes tax cuts because "If people want to save, giving them money will not force them to spend it."

Giving them money? Considering it was their property to begin with, taken by force with the ultimate threat of death if they resisted the robbery, it's as much "giving" money to taxpayers as a mugger robbing someone blind but "giving" him $20 for cab fare home. I wrote about this nearly four years ago, in the early days of this blog, talking about idiots who think "rich" people should pay higher taxes because "they can afford to give more back to the government."

Similar is the attitude of another asshat, Congressman George Miller of California, who thinks a tax break for 401Ks is a subsidy. A subsidy is money that the government takes from someone else and gives to you. The government "graciously allowing" a worker to save money without paying income taxes on it is not a subsidy because it's the worker's own property.

Explaining prices, part I

A reader e-mailed me,

Not long ago when gas pump prices were below $2/g there was a differential of $.10/g for each higher octane. I know not why, but, can assume it is a fee for refining. Currently in the Va. area the differentials have been more like $.20-.25/g. No way did refining costs double. Please help me understand this.

My reply:

Hi Mike,

Apart from government mandates (which Austrian economists like me consider "interference" with prices), it's a matter of supply and demand. The cost of producing something is a baseline, because in general, sellers must charge more than the marginal cost of production, else it's simply not profitable to stay in business. After that, though, sellers will charge what the markets will bear, i.e. what price people are willing and able to pay. A major-brand station may charge 1 or even 5 cents per gallon more for the same octane level than a major-brand station across the street, when both likely get their gasoline from the same wholesale supplier. The two stations down the road from me will charge the same price, except one is pure self-serve and the other is pure full-serve. They're not even a quarter-mile apart, but the full-serve just happens to be beyond an intersection few people travel on. BTW, the difference between adjacent octane grades at both of those stations is 10 cents.

I presume you found my old post on oil prices versus gas prices. I've been meaning to revisit it but haven't had the opportunity to do analytical blogging. But in the meantime, if you follow the two links I had supplied and look at the data since, you'll see nearly the same relationship as when oil and gas prices were at these levels. Right now we're back to pre-Hurricane Katrina days, where prices depended more on the limits of U.S. refineries (refineries get expanded, but because of environmentalist lobbying, there hasn't been a new one built in 33 years).

When crude prices got so high, that influenced the price baseline far more than refinery capacity limits. The reason we saw crude near $150 per barrel was because we hit the very limit of global crude production. Everybody was pumping what they could, what rigs were physically capable of pumping and/or limits that governments set. Prices are set at the margin, so the price doesn't depend on the average price of every barrel of oil: the price for all units is the price paid for the very next unit. And remember it isn't only what you're willing to pay, but also what the next guy is willing to pay. Demand so far outstripped supply like never seen before, so though one oil trader's clients were willing to pay $70, another trader's clients might be willing to pay $75. And up and up. The same goes for wholesale gasoline.

I don't have any data on this, but I wonder how much of the demand for higher octane is because people are holding onto their cars longer, and using slightly higher octane is a way to prevent knocks and pinging. There certainly is no disincentive now that prices have come down.

More on Fuhrer Bloomberg's crusade against salt

My additional comments at Karol's blog:

Casca, call me an idealist, but I'm pointing the way that works. Like Abraham, the high improbability of people listening to me doesn't mean I won't give up seeking the righteous.

Guess what, Tanya: it's the fact of government regulations that allows "low fat" and similar claims to mean zilch. If a law doesn't protect a particular claim, then you have no reason to trust anyone implicitly. I don't expect you to understand this, but here we go. Because there's a law defining "low fat," you have an illogically implicit trust that such a food genuinely is. Without such assurance, you would certainly read the label to see how bad something is. There already is truth in advertising, because if manufacturers don't accurately list the ingredients, that's fraudulent misrepresentation.

If government defined "low fat" to mean 10 grams of fat per serving, would that make it so?

By the way, Tanya, I didn't reply before about something you said: "These are foods that (a) don't taste salty and (b) are supposed to be good for you."

Who said these are supposed to be good for you? Do they have "THIS IS HEALTHY STUFF, YOU MUST EAT IT!" on the label? Or are you merely like most people and tend to assume things without justification? I never once thought of salsa as healthy, principally because of what you tend to eat it with (i.e. do you really eat salsa on its own?). Anyone with more than a few working neural synapses should know that "veggie" does not automatically mean something is healthy. "Light" refers to caloric content, nothing more.

I personally eat very little salt. About ten years ago, when my father was still alive, he had a stroke and lost much of his sense of taste after a stroke. He added far too much salt when he did the cooking at home. But that's my own situation. I don't believe in infringing upon others' freedom to do with their bodies as they will, when they harm no one else.

Charlie Kratzer's amazing basement decoration

Check it out.

Barack Obama doesn't like white people! Or, "Obama dozed, people froze"

As someone so well put it, "Obama Dozed, People Froze?"

I noticed this yesterday when looking at the Kentuckians on the news, pleading for help after this awful storm. Clearly Obama's inaction is because they're predominantly white, and Obama just doesn't like white people. Right? Perhaps it's not a matter of race, but this is apparently Obama's first lesson for red states, i.e. those whose electoral votes didn't go to The One.

So far, all Obama has done is declare Kentucky a federal disaster area. Where are all the federal workers like there were with Katrina? If there are any, they're not exactly trucking in supplies, or restoring power, to any extent that the news would mention them. The truth is that "FEMA has been a no-show so far" in many places, yet you have moonbats praising Obama for this inaction while blaming this on Bush!

Note that I'm not calling for big government intervention. I'm merely applying the same standard to Obama that liberals applied to Bush after Katrina.

Yet another way Obama doesn't understand that things have costs

Obama thinks that D.C. residents should emulate "flinty Chicago toughness" during the recent severe winter weather. Like a true politician, he either doesn't know or willfully acts like he doesn't know that things have costs (remember that a cost is not necessarily monetary). The D.C. metro area doesn't frequently experience such conditions, so it overall costs less for schools to shut down or open late after bad winter storms, rather than the difficulty of shuttling students in such weather, not to mention the expense of maintaining and operating sufficient equipment to clear the roads soon after a storm.

Now, residents of Chicago, New York and Salt Lake City are accustomed to winter weather, so those areas have lots of trucks to plow and spread salt after an expected storm. After an overnight snowstorm, I commonly hear snowplows at 4 a.m., clearing the way for the morning commute. This costs money, naturally, but it's worth it when a place often experiences severe winter storms. So would Obama say that D.C. should have fleets of snowplows on hand, "just in case"? He probably would, because as a politician he hardly needs to worry about what something costs.

Another cost to consider is that snow and freezing rain are a bad combination anywhere, and for safety's sake it's sometimes better to stay at home instead of risking your neck. It isn't a matter of your own driving competence, but the stupidity of other drivers. What would Obama have said if his daughters had been involved in a car wreck? Well, you can bet he'd probably have proposed some sort of big government program.

A few days ago, the worshipful Huffington Post tried to portray him as Chicago-tough-enough to forsake his winter coat. Big deal. I'll take out the garbage without putting on a coat or sweater if it's 30 outside. It also shows another facet of Obama's hypocrisy. The next day, the New York Times admitted a wee bit more than it should have: who could use some "toughening up" in winter? Hmm?