Tuesday, July 28, 2015

If Spending Is Our Military Strategy, Our Strategy Is Bankrupt

By Mark Mateski

Even today, few deny the long arm of US military might. After all, the US military exhausted the Soviet Union, crushed Saddam Hussein, and drove Osama bin Laden’s al Qaeda into hiding.
To what should we attribute these triumphs? Some would say US planning and foresight. Others would mention the hard work and dedication of US soldiers, sailors, and airmen. Still others would point to the application of superior technology. All would be correct to some degree, but each of these explanations disregards the fact that for more than a lifetime, the United States has wildly outspent its military competitors.
For many years, the United States spent more on defense than the next ten big spenders combined. It turns out that’s no longer true, according to Jane’s and PPGF. But whether the current count is seven or nine, we must acknowledge that US dominance was purchased at a high cost.

The Real Impact of the Minimum Wage Hike in San Francisco

Aubrey Freedman, writes in the July issue of the Libertarian Party of San Francisco newsletter:
Government Magic Wand?

After our monthly LPSF meeting earlier this month, those of us who went out for dinner at a nearby restaurant (Ananda Fuara) got to witness the real-life consequences of what voters decide at the ballot box.  As we were preparing to pay the bill, one of our members noticed that one of the prices on the bill didn’t look quite right and questioned the waiter about it.  Our waiter told us that in fact the restaurant had recently raised all of its prices by $1 and laid off one of its employees in order to make ends meet after the minimum wage increase approved by the voters last November went into effect on May 1.  

A Free Counseling Session Courtesy of Obamacare

Cool, eEconomics landed a gig on Comedy Central.

(ht Nick Badalamenti)

Today's Anti-Capitalists Ignore the Fundamental Problems of Socialism

By Jonathan Newman

Anti-market and pro-socialist rhetoric is surging in headlines (see also herehere, and here) and popping up more and more on social media feeds. Much of the time, these opponents of markets can’t tell the difference between state-sponsored organizations like the International Monetary Fund and actual markets. But, that doesn’t matter because the articles and memes are often populist and vaguely worded — intentionally framed in such a way to easily deflect uninformed attacks and honest descriptions of what they are actually saying. In the end, they can all be boiled down to one message: socialism works and is better than capitalism.
While most of it comes from the Left, the Right is not innocent, since the Right appears to be primarily concerned with promoting its own version of populism, which apparently does not involve a defense of markets. “Build bigger walls at the border,” for example, is not a sufficient response to “All profits are evil!”

Monday, July 27, 2015

Donald Trump Sells Park Avenue Penthouse for $21 Million

Located on the 24th floor of the 32-story 502 Park Ave in New York City., this floor-through unit — which Trump never lived in — has five bedrooms and 7½ bathrooms.

WSJ  reports the sale, but the buyer is not immediately known.


Spending a Night in the Robot-Staffed Hotel

Watch out minimum wage workers.

(ht MarginalRevolution)

New "Male Privilege Tax"

The country is collapsing. The masses are totally brainwashed and have a totally absurd view of how the economy works.


(ht Zebram Zee)

The World Economy in One Visualization

The GDP of countries in relation to one another based on size.

What Would Paul Krugman Have Said Just Before the Wiemar Republic Hyper-Inflation Sent the Price of Gold Soaring in Terms of the German Mark?

Discussed today at the EPJ Daily Alert.

Greece Was Very Close to a "Currency Coup"

It should have been executed!

Here's Ambrose Evans-Pritchard with the details:

Varoufakis reveals cloak and dagger 'Plan B' for Greece, awaits treason charges
A secret cell at the Greek finance ministry hacked into government computers and drew up elaborate plans for a system of parallel payments that could be switched from euros to the drachma at the "flick of a button".
The revelations have caused a political storm in Greece and confirm just how close the country came to drastic measures before premier Alexis Tsipras gave in to demands from Europe's creditor powers, acknowledging that his own cabinet would not support such a dangerous confrontation.
Yanis Varoufakis, the former finance minister, told a group of investors in London that a five-man team under his control had been working for months on a contingency plan to create euro liquidity if the European Central Bank cut off emergency funding to the Greek financial system, as it in fact did after talks broke down and Syriza called a referendum.
The transcripts were leaked to the Greek newspaper Kathimerini. The telephone call took place a week after he stepped down as finance minister.
"The prime minister, before we won the election in January, had given me the green light to come up with a Plan B. And I assembled a very able team, a small team as it had to be because that had to be kept completely under wraps for obvious reasons," he said.
Mr Varoufakis recruited a technology specialist from Columbia University to help handle the logistics. Faced with a wall of obstacles, the expert broke into the software systems of the tax office - then under the control of the EU-IMF 'Troika' - in order to obtain the reserve accounts and file numbers of every taxpayer. "We decided to hack into my ministry’s own software programme," he said.
The revelations were made to a group of sovereign wealth funds, pension funds, and life insurers - many from Asia - hosted as part of a "Greek day" on July 16 by the Official Monetary and Financial Institutions Forum (OMFIF).
Mr Varoufakis told the Telegraph that the quotes were accurate but some reports in the Greek press had been twisted, making it look as if he had been plotting a return to the drachma from the start.
"The context of all this is that they want to present me as a rogue finance minister, and have me indicted for treason. It is all part of an attempt to annul the first five months of this government and put it in the dustbin of history," he said.
This is a stunning revelation. Though it was only prudent for Greek officials to consider an alternative to the euro, there was no indication this was going on. Why did Varoufakis have to be  secretive about this?  Greek officials should have been in the euro banksters' faces and announcing that they were considering an alternative to the bankster squeeze.

Further, Greek officials should have launched the plan and returned to the drachma and told the euro banksters to go to hell. That said, it is a radical left government that is in charge in Greece and they would have likely printed drachma at a rate that would have made Robert Mugabe wince.

Until there is sane economic guidance in Greece, the Greek economic tragedy will continue.


The Nuclear Deal is Mostly About Oil

By John Browne

The recent nuclear non-proliferation agreement between Iran and the U.S. has created a firestorm debate in the Middle East and both sides of the Atlantic. While the deal is supposedly all about nuclear power and nuclear bombs, its practical implications are all about oil. But the conclusions we should make about its impact on the energy sector are far from clear. A ratification of the deal would allow Iran to make lucrative long term production and distribution contracts with foreign energy firms. However, freely flowing oil from Iran would add significant new oil supply into the world markets, disrupt U.S. plans to become an energy exporter, and could potentially put further downward pressure on prices.

When a Goldman Sachs Flack Did PR for Geithner

By Timothy Carney

Maybe it's just a story of a crisis-era Treasury Department alumnus being loyal to his old boss. But it also looks like a Goldman Sachs honcho doing PR for an Obama appointee as a way of ingratiating himself to powerful government employees.

An open-records inquiry turned up this entertaining email exchange:

By January 2013, veteran Democratic operative Jake Siewert had aready passed through the revolving door, leaving Treasury to become Goldman's head of corporate communications. But as his old boss, Treasury Secretary Tim Geithner, was leaving, Siewert wrote in an email, "Still doing my old job."

He pitched Business Insider editor Henry Blodgett a clever idea for a little story:

"How about a Geithner chart of the day?" Siewert suggested.

"Dow Jones at 8000 when confirmed as Treasury Secretary[.] Dow Jones at 13825 as he begins his last day on the job."

Blodgett liked the idea, forwarded it to his deputy Joe Weisenthal, and by 9:33 am, BI's Lucas Kawa had the story online, currently headlined "Tim Geithner's Amazing Rally"

When Geithner took office, the markets were in free-fall and the Dow Jones briefly dipped below 7000. Under his steady leadership, the DJIA has more than doubled from its 2009 trough.
His vigorous defense of the banking system played a big role in ensuring a turnaround.

When the story was up, Blodget replied to Siewert with the URL...

Read the rest here.

CRASH CONTINUES Chinese Stocks Fall 8.5% in Biggest One-Day Drop Since 2007

Overnight, Chinese stocks have plunged more than 8 percent.

The CSI300 index the largest listed companies in Shanghai and Shenzhen fell 8.6 percent to 3,818.73 points, while the Shanghai Composite Index lost 8.5 percent to 3,725.56 points.

More than 1,500 shares listed in Shanghai and Shenzhen fell by more than the 10 percent daily limit, including China Unicom, Bank of Communications and PetroChina.

I have long held the view that China may be vulnerable to perhaps the greatest economic crash in history.

Although, there has been much genuine economic growth, since the abandonment of Mao's central planning economics, in China. China's central bank has manipulated and distorted the economy via massive money printing. It has resulted in ghost apartments, ghost stocks and ghost growth.

The Shanghai stock market over the last three months.