Monday, December 31, 2012

Incredible: DeLong-Krugman Go Out of 2012 with a Tag Team Bash of Austrian Economist Bob Murphy

In 2009 [corrected from earlier version, which said 2011], Bob Murphy and David Henderson made a bet that if at any point between October 2011 and January 2013, prices increased on a year/year basis, on seasonally adjusted CPI, by at least 10%, then Henderson would have to pay Murphy $500 or if by January 2013 no such increase occurred, Murphy would have to pay Henderson $500. Murphy has lost the bet.

Paul Krugman and Brad DeLong are going Gulf sturgeon crazy into the New Year over Murphy losing the bet.

DeLong calls out Murphy on losing the bet and continues:
The most terrifying thing of all is that being completely, comprehensively, unmistakably, fundamentally, fatally, totally wrong has not led Robert Murphy to rethink or modify any of his analytical positions or ideological beliefs by even one iota. 
I mean, one would expect an announcement on his weblog like: "I have been totally wrong, about everything. I am closing down this weblog for five years to avoid misleading readers while I intellectually retool. You will find me sitting at the feet of Paul Krguman, chanting 'om mani padme hum' until I achieve enlightenment."
Let me get this straight, DeLong expects an economist to shutdown his web site for an incorrect forecast. Maybe DeLong should show us how this is done, at Project Syndicate, in June, he wrote:
 I – have gotten significant components of the last four years wrong. Three things surprised me (and still do). The first is the failure of central banks to adopt a rule like nominal GDP targeting or its equivalent. Second, I expected wage inflation in the North Atlantic to fall even farther than it has – toward, even if not to, zero. Finally, the yield curve did not steepen sharply for the United States: federal funds rates at zero I expected, but 30-Year US Treasury bonds at a nominal rate of 2.7% I did not.
Compared to DeLong, Murphy looks like the haruspex Spurinna.

But, let's move on to Krugman, he goes beyond DeLong's cheapshot and acts just plain stupid. He writes:
Has there been anything comparable on the Austrian/Austerian side?
Why would any economist who knows anything about Austrian economics and bankster austerity programs link the two? Austrian economists have never supported any plan to suck dry the masses via taxation to payoff banksters holding government debt, which is what austerity programs are all about. As the leading Austrian economist, Murray Rothbard, put it:
I propose, then, a seemingly drastic but actually far less destructive way of paying off the public debt at a single blow: outright debt repudiation.
This is the exact opposite of austerity programs, which are designed to prop up sovereign debt and insure the banksters are paid. In other words, Krugman isn't getting a forecast wrong here, he is getting FACTS totally wrong.

As for Murphy's forecast, I have discussed before, in an important post, why exact timing in economics is very difficult.

That Krugman and DeLong jump on Murphy over a forecast suggests they have problems attacking Austrian theory. But they are lurking around Austrian blog sites, anyway, to jump high when they can spot something to blabber about. Indeed, it looks like Krugman and Delong are trying to mimic the high jumps of the sucker-mouthed, plate-covered Gulf sturgeon of the Suwannee River--a species headed for extinction.

Doug Wead's Magic Milkshake


8 weeks?

Doctors: Hillary Clot Between Brain and Skull

CBS News White House  correspondent Mark Knoller reports:
Doctors say the blood clot was in a vein running between the brain and the skull behind the right ear.

HOT: Congress Will Miss Fiscal Cliff Deadline After House Punts On Vote

Developing...

UPDATE 1:

HuffPo reports:

The United States government will miss the end of the year deadline to resolve the so-called fiscal cliff, House Republicans conceded on Monday afternoon.

The House of Representatives will adjourn December 31 without voting on a bill to delay the impending tax hikes and spending cuts that will take start to take place tomorrow. Majority Whip Kevin McCarthy (R-California), the party's whip, sent the following update to members on Monday afternoon.

Good afternoon. Thanks for your patience. Here's the latest on the Floor schedule:
There will be a Special GOP Conference Meeting at 5:00 p.m. in HC-5. Immediately following Conference tonight, roughly 5:30-6:00 p.m. we will have our first and only vote series of the day on suspensions.

Walk off the Floor: 6:00-6:30 p.m.

UPDATE 2:

The December 31 deadline is a soft deadline and will mean very little as far as a final outcome. A deal will be struck in Q1 2013 that will reverse most of the cliff kick-ins.

Bottom line: More useless drama. Your taxes will ultimately be higher, whatever the deal.

UPDATE 3:

House Members also advised by Whip's office to "stay close to the Capitol tonight should any additional votes arise."

UPDATE 4:

A Boehner aide says no legislative difference between voting on Cliff measure at 3AM tonight or midday tomorrow.

Rhamaland Bank Robberies Nearly Double in 2012


In Chicago, the city with very tough gun laws, the FBI said robbers have hit 218 banks in the Chicago area as of Dec. 31, compared to 115 in 2011.

“Close to double what we had in the prior year,” said FBI Special Agent Joan Hyde.

(ht Travis Holte)

Obama Follows The Footsteps of Lincoln & Bismarck

By, Chris Rossini
Email | Twitter

If you've never heard of Otto von Bismarck, you can think of him as Germany's version of Abraham Lincoln. (You know about Lincoln right?).

Both Lincoln and Bismarck (in the late 1800's) converted their respective countries, which were both confederations of states, into consolidated nation-states.

Both did so by becoming virtual dictators during war.

And wouldn't you know...not long after the creation of these giant consolidated states, they would fight, not one, but two World Wars against one another.

Fascinating!

There was one significant difference between Bismarck's Germany and Lincoln's America. Bismarck was the first to create the modern welfare state. He was the first to introduce old age pensions, accident insurance, medical care and unemployment insurance.

America (much the follower of tyrannical gimmicks that are introduced overseas) would jump on the welfare state wagon slightly later.

And now, many years later, we're all trying to tread water in the U.S.'s welfare ocean. The mentality has sunk so low that if you're against government giving out free contraceptives, you must be some kind of barbarian.

Yes, when it comes to government handouts, Americans are now all-in.


So where does Obama stack up in the Bismarckian/Lincolnian paradigm?

Does he getting a passing grade?

You bet he does!

First, when it comes to the Total State, here's Obama:
“You know, we have to make sure that we don’t start turning on each other...And I will do everything I can, as long as I am president of the United States, to remind the American people that we are one nation, under God. And we may call that God different names, but we remain one nation.”
In other words, the crazy people in Texas, who are talking about secession, better wise up. We're one nation, whether you like it or not...so suck it up.

What about the Welfare State?

Here what the pioneer Bismarck had to say:
“Life-insurance, accident insurance, sickness insurance should not be the subjects of private speculation. They should be carried out by the state or at least insurance should be on the mutual principle and no dividends or profits should be derived by private persons.”
Sound familiar?


Both Bismarck and Lincoln would be extremely proud.

ABC News Report on Emergency Landing of a US Plane in Iran

For the record. Yesterday, ABC News via AP reported on an emergency landing of a U.S. plane in Iran more than two weeks ago:

A small American commercial plane left Iran Sunday after it was repaired following an emergency landing at an Iranian airport this month, state TV reported:

The plane was forced to land 16 days ago at the airport of the southern city of Ahvaz due to technical failure, Mahmoud Rasoulinejad, head of the state-owned Iran Airports Company, told the TV station.

Rasoulinejad said three passengers left Iran for Arab countries in the Gulf, but the plane remained under repair in the airport. He said the plane took off from Iran Sunday upon arrival of needed spare parts and completion of repairs.

It was not clear why the announcement of the plane's landing was not made earlier.

Iran is a member of the International Civil Aviation Organization, or ICAO, which requires members to come to the aid of civilian aircraft when requested.

The service was provided though Iran and U.S. are at odds over Tehran's suspect nuclear program. The West believes it might be aimed at weapons development, a charge Iran denies.

A separate report by state TV said the Falcon-900 plane had one passenger and two crew members and was flying to Rotterdam in the Netherlands from Abu Dhabi in United Arab Emirates when it encountered mechanical difficulties.

It said a French team from Abu Dhabi repaired the plane at Ahvaz airport.

Every day some 500 foreign airplanes pass through Iranian airspace, including 30 American aircraft.

Ron Paul’s New Year’s Message to Congress: Follow the Constitution

State Department Denies Hillary Clinton Injured in Plane Crash

An EPJ reader has contacted the State Department and received the following response regarding a report that Hillary Clinton was injured during a plane crash:


Mr. XXX:

Secretary of State Clinton was not injured or involved in a plane crash.

Office of Press Relations
U.S. Department of State

-----Original Message-----
From: XXXXXXX [mailto:XXXXXXXXXXXXXX]
Sent: Monday, December 31, 2012 1:07 PM
To: PA-Press Duty-DL
Subject: Re
Dear Office of Press Relations: 
The EU Times is reporting that Secretary of State Hillary Clinton was
injured in a plane crash in Iran:
http://www.eutimes.net/2012/12/clinton-injured-us-navy-seal-killed-in-secret-us-mission-to-iran/. 
Was Hillary Clinton injured in a plane crash three weeks ago in Iran or
Iraq?
Thank you kindly

UPDATE:

ABC News has reported on a U.S. plane making an emergency landing in Iran approximately 17 days ago.

The Cities with the Hottest Home-Sale Listing Searches

Marketwatch has put together a list of the most searched cities at Realtor.com

1. Las Vegas

2. Chicago

3. Miami

4. Orlando

5. San Antonio

6. Phoenix

7. Los Angeles

Another Reason to Hate the Washington Redskins During the Playoffs

Alan Greenspan was in the Redskins owner's box, last night.

Clinton Injured, US Navy Seal Killed In Secret US Mission To Iran?

The European Union Times is reporting a very different story about Hillary Clinton than what is coming out of U.S. mainstream media. I have no way to gauge the veracity of the EUT story, but merely publish it here for the record:

A new Foreign Military Intelligence (GRU) report circulating in the Kremlin today is saying that United States Secretary of State Hillary Clinton was injured, and a top US Navy Seal Commander killed when their C-12 Huron military passenger and transport aircraft crash landed nearly 3 weeks ago in the Iranian city of Ahvaz near the Iraqi border.
Iranian intelligence agents quoted in this GRU report confirm that the C-12 Huron aircraft is still in their possession in Ahvaz, but will only admit that the plane was “forced to land because of technical problems”.
The US Navy Seal member reported killed in this bizarre incident, this report says, was indentified as Commander Job W. Price who as a leader of this highly specialized American Special Forces unit protects high-ranking diplomats traveling in Middle Eastern and Asian combat zones.
Curiously, US media reports on Commander Price’s death say it being investigated as a possible suicide as he died from what the American Defense Department describes as “a non-combat related injury”.
Equally as curious, US media reports state that Secretary Clinton will return to work next week after her having suffered what they describe as a “nasty bout with stomach flu” and a “concussion” which have kept her missing from public view the past three weeks.
This GRU report, however, states that US military flight logs recorded by Russian air and space forces confirm that Commander Price, and other members of US Navy Seal Team 4, left their base in Urozgan Province, Afghanistan on a flight to US Naval Support Activity Bahrain where they met up with Secretary Clinton and all of them transferred to the C-12 Huron that began a flight path to Baghdad, Iraq.
Within minutes of leaving Bahrain airspace, this report says, the C-12 Huron carrying Secretary Clinton and her US Navy Seal protectors, “without notice,” deviated from their assigned flight path heading, instead, directly towards Iran’s Ahwaz International Airport where, coincidentally, Iranian President Mahmoud Ahmadinejad had previously landed on an “unscheduled” visit.
Important to note, GRU analysts say in this report, was that when the C-12 Huron entered into Iranian airspace neither American nor Iran air force units responded clearly indicating that this secret mission was sanctioned.
Upon the C-12 Huron landing at Ahwaz, however, this report says it encountered “extreme turbulence” causing it to leave the runway where its main landing gear then collapsed causing it to crash.
Within seconds of the C-12 Huron crashing, this report continues, Iranian emergency and security personal responded freeing the victims, including Secretary Clinton who was reportedly unconscious and “bleeding profusely.” 
After emergency aid was given, GRU agents stationed in Iran state that another US military flight was dispatched from Bahrain to Ahwaz which evacuated all of those wounded and killed in the crash including Secretary Clinton.

UPDATE: State Department denies Hillary was injured in a plane crash.

UPDATE 2: ABC News has reported on a U.S. plane making an emergency landing in Iran approximately 17 days ago.

A "Common Billionaire" May Run for Mayor in NYC

It is stuff like this that helps explains part of Murray Rothbard's desire to follow NYC politics. NYT reports:

John A. Catsimatidis
John A. Catsimatidis, the Greek-born billionaire owner of the Gristedes supermarket chain, settled into a shabby conference room at his 11th Avenue office the other day and happily explained, in his wheezy, genial way, why he could be the next mayor of New York City.


“Am I a Republican? Yes. Am I a Democrat? Yes. Am I a conservative? Yes. Am I a liberal? Yes,” he said, his ringed fingers rapping the table. “We’re right in the middle. What are we? We’re pro-people. But, we’re also pro-business.”

Some ideological flexibility may be necessary when a wealthy businessman with zero political experience seeks the Republican nomination for mayor, particularly in a city that is overwhelmingly Democratic.[...]


Mr. Catsimatidis, who pondered a run on the Republican Republican line in 2009 and has formed an exploratory committee for the 2013 race, might need to do more than play both sides of the aisle if he wants to end up in City Hall.

An ample-bodied, idiosyncratic man who styles himself as a “common billionaire” — his company’s headquarters sit above a Lexus dealership — Mr. Catsimatidis is viewed with some skepticism by the city’s civic leaders, some of whom consider his political aspirations a vanity project.

He is best known as the proprietor of a less-than-universally-loved grocery store. He can be candid to the point of carelessness, recently finding himself in hot water after comparing policies to tax the rich to Hitler’s persecution of the Jews. And he lacks the C.E.O. demeanor and social radar that has guided other wealthy entrepreneurs, like Mr. Bloomberg, into elected office.

Still, Mr. Catsimatidis, despite dropping his bid the last time around, insists that he is now fully serious about a run. His vast fortune, estimated at $3 billion, would instantly make him the best-financed candidate in the race, and he has secured support from two of the city’s five Republican county chairmen[...]


Even his size, he said, could be a plus.

“People tell me, you better lose weight if you want to run for mayor,” Mr. Catsimatidis joked, with a nod toward his protruding belly. “I said, I got the Chris Christie look.”[...]

Mr. Catsimatidis struck an odd note when discussing education policy, expressing unease about the makeup of his daughter’s graduating class from New York University’s Stern School of Business.

“I think close to 480 of the 580 were Asian — Asian including India,” Mr. Catsimatidis said, of the graduates. “And, it was scary. And then when you think about it, we’re going to deport most of these kids.” (He clarified that he was concerned about immigration policies that can result in the deportation of “smart kids that we have just trained.”)


HuffPo Blocks Taibbi Video at EPJ

It's not clear if EPJ has been singled out, but HuffPo is blocking this video from being shown at the EPJ post, where I call out Matt Taibbi for his claim that the LIBOR scandal is the scandal of the year.

Travis Holte emails:
Taibbi video blocked on "economicpolicyjournal.com"

Hoe funny is that.

Why House Prices Will Climb Despite Climbing Interest Rates

Judging from comments here. One of the most difficult concepts to grasp is the relationship between interest rates and housing. The regular question that pops up is, "How can housing prices go up, if interest rates are climbing?"

The short answer is that there is no direct correlation between interest rates and housing prices. Think about it. Since the financial crash in 2007, interest rates have collapsed---but so have housing prices. Here's a chart of 30 year mortgage rates collapsing.



Here's a chart of housing prices (the Case-Shiller Index) for the same period.




Here is complete irrefutable evidence that there is no direct correlation between interest rates and housing prices. What is key is the interest rate relative to price inflation. If the fixed 30 year mortgage rate climbs from its current level of 3.35% to, say, 7%, but the Fed is pumping money in that will cause housing prices to climb by 10%, then it remains profitable for house buyers to buy houses and show a profit. It is only when interest rates are pushed above the current housing price growth that the money flowing into the housing sector starts to slow and eventually push prices lower. But as long as the money is flowing and keeping the Fed keeps the interest rate below the climb in housing prices, the boom will continue.

Here's a chart of 30-year fixed mortgages during the boom period. There was a general uptrend.



Here's what happen to housing prices during that period. Housing prices climbed while interest rates climbed, and actually only slowed the climb, when interest rates started to decline.




Bottom line: There is no direct correlation between housing prices and interest rates. It is very dangerous to look at the absolute interest rate to determine if housing prices are going to go up or down. You need to look at the interest rate on relative terms. As long as the Fed is pumping money to the degree that housing prices will climb higher than a climb in interest rates, the climb in housing prices will continue. Only when rates are pushed higher than the climb in housing prices will housing prices start to slow. Given the amount of money Bernanke is printing, we are nowhere near a period where interest rates will exceed the climb in housing prices. In fact, we are going in the opposite direction, the spread between mortgage rates and the climb in housing prices is expanding.

-RW

Privileged Greenwich Village Couple Busted with Cache of Weapons, Bombmaking Explosives

NyPo has the details:
The privileged daughter of a prominent city doctor, and her boyfriend — a Harvard grad and Occupy Wall Street activist — have been busted for allegedly having a cache of weapons and a bombmaking explosive in their Greenwich Village apartment.

Morgan Gliedman — who is nine-months pregnant — and her baby daddy, Aaron Greene, 31, also had instructions on making bombs, including a stack of papers with a cover sheet titled, “The Terrorist Encyclopedia,’’ sources told The Post yesterday[...]

Cops found the stash in the couple’s West Ninth Street home Saturday when they went there to look for Gliedman, 27, who was wanted for alleged credit-card theft.

A detective discovered a plastic container with seven grams of a white chemical powder called HMTD, which is so powerful, cops evacuated several nearby buildings.

Police also found a flare launcher, which is a commercial replica of a grenade launcher; a modified 12 gauge Mossberg 500 shotgun; ammo; and nine high-capacity rifle magazines, the sources said.

More from NyPo here.

UPDATE More from NyPo:

The couple’s arrest Saturday was a sharp turn from their privileged backgrounds. 
Gliedman, who grew up on Park Avenue, graduated from Dalton in 2002. Her dad, Dr. Paul Gliedman, is director of radiation oncology at Beth Israel Hospital, Brooklyn Division. 
Paul Gliedman — who was included in New York magazine’s list of top doctors in 2011 — received his medical degree from Columbia University[...] Greene attended Harvard as an undergraduate and did his graduate work at the university’s Kennedy School of Government.
 UPDATE 2 From Gothamist:
We spoke with a neighbor who resides in the couple's walk-up apartment at 8 West 9th Street: "They're hippie types," he said. "She's always very friendly, very nice. She looks like she's eight months pregnant. He's kind of cold, not the type of person who encouraged politeness. He never said a word to me."
The neighbor, who requested that his name be withheld because the seven-unit building is "very small, and we all respect each other's anonymity," said that recently the couple had refused to let the building's management into their apartment to perform repairs. "The super had been trying to put a new counter-top in for them, but all of a sudden two weeks ago, they wouldn't let him in the apartment, so it's just sitting outside their door."
Residents were roused by the police at around 7:30 a.m. on Saturday and relocated while police executed a search warrant. Gliedman, who is pregnant, is also charged with four counts of felony grand larceny for credit card theft that police say occurred in February of this year, and a warrant squad was making the arrest when they noticed "a white powdery substance" in a plastic container in the living room.
Investigators say that substance is Hexamethylene Triperoxide Diamine (HMTD), which was one of the components in the explosives to be used by Ahmed Ressam, the "millennium bomber" who planned to bomb LAX on New Year's Eve in 1999. HMTD was also likely to be used in the foiled bombings of transatlantic flights in 2005. Sergeant Michael DiMarfio of the NYPD's bomb squad tested the powder, and the results yielded a positive for HMTD, according to the complaint .

Prescription for Higher Unemployment in 10 States

The CNN headline reads: Nearly 1 million minimum-wage workers in 10 states will get a pay boost come New Year's Day. This means nothing other than CNN doesn't understand supply and demand economics. Prices, including wages, are set where supply equals demand. Price controls, which is what minimum wages are, only result in distortions to the market. Specifically, when prices are legislated by government above the market price, which is what minimum wage laws do, supply of product, in this case labor, is not fully employed. More technically, if the minimum wage is increased above the marginal revenue product, it becomes unprofitable for businesses to hire the least productive workers and unemployment increases.

Rhode Island enacted a law in June raising its minimum wage 35 cents to $7.75 an hour.

According to CNN, in nine other states -- Arizona, Colorado, Florida, Missouri, Montana, Ohio, Oregon, Vermont and Washington -- the minimum wage will jump between 10 and 15 cents an hour.

The new hourly rates will range between $7.35 in Missouri and $9.19 in Washington state, which has the highest minimum wage in the nation.

The federal minimum wage is set at $7.25 an hour.

In 2013, 19 states and the District of Columbia will have rates above the federal level.

Minimum wage laws create the most unemployment among youth, who tend to have the least productive labor skills.

Why I Won't Watch This Video

Because it has to be idiotic.

When I saw this tweet from HuffPo, I said to myself, if the video is about LIBOR or High Frequency Trading, I am not going to watch it:

HuffPostBiz

So I click through and this is the headline:

Matt Taibbi: Libor Scandal Is 'The Biggest Financial Corruption Case In History' (VIDEO)

Those shouting from their laptops about LIBOR claim that the major banks manipulated world interest rates. Think about that for a minute: WORLD INTEREST RATES. It requires the printing of trillions of dollars by Ben Bernanke to just manipulate U.S. interest rates and somehow, without using a penny of real money, but by posting prices out of line with real market prices the banks, Taibbi and his types claim banksters manipulated world rates. Does Taibbi have any clue as to what supply and demand curves look like? Does he have any clue as to how difficult it would be to move the supply and demand curves for global interest rates by simply posting non-market prices. There's no doubt banksters try to con and screw each other, but this is done at the margins and has little or nothing to do with a person taking out a mortgage or buying a CD.

Bernanke manipulating the money supply is a scam.

Social Security is a Ponzi scheme.

And Obamacare is an up and coming scam.

All three of these scams will hurt millions of people for years and years--big time hurt. The LIBOR "Scandal" will do no such thing. It's the difference between a dog pissing on a hydrant and the storm surge from Hurricane Katrina and the resulting levee system that failed catastrophically. Taibbi is amazingly focused on the pissing dog.

Whatever he says in the below clip has to be garbage.




Murray Rothbard on the Freedom Train

Sunday, December 30, 2012

PIMCO's Bill Gross: The Year 2013 Will Be the Year of Gold

Here's the Bill Gross 2013 Fearless Forecast as tweeted by him:
Here's my response:

Bernanke is pumping new money into the system as near double digit rates. If he continues

1. Stocks will  have a spectacular year. perhaps gains of 10% plus.

2. Stocks and bonds shouldn't be linked. Bonds will crash as interest rates climb, because of a flight away from perceived safety and because of accelerating price inflation.

3. Unemployment will trend lower as a result of the Bernanke money printing induced manipulated boom.

4. Here I am in sync with Gross, gold will go up. However, I suspect Gross thinks it will climb because of a poor economy. I suspect gold will go up because of Bernanke money printing, which will also cause a manipulated boom.

5. Housing prices will soar, 10% plus.

NOTE WELL: My forecasts are based on Bernanke continuing his mad money printing. If he doesn't, the trends will be much different, There are no indications that Bernanke is going to shift policy, but he is the most erratic policy making Fed chairman in history, so anything is possible. This is part of the reason investing at present is so difficult. Fed policy sets the direction for the economy, and a mad scientist is in charge of setting that policy.

US Naval College Professor: The Enemy is Winning the Spywar

John R. Schindler is professor of national security affairs at the U.S. Naval War College, where he teaches courses on security, strategy, intelligence, terrorism, and military history. Before joining the NWC faculty, he spent nearly a decade with the National Security Agency as an intelligence analyst and counterintelligence officer.

I have in the past run clips from Schindler, not because he is anti-war or anti-Empire expansion, he is not, but because he appears very sound on some of the problems being caused by various military strategies and tactics.

Here he is on the problem with drones:
The New York Times has run an excellent report detailing the severe methods which our enemies in Pakistan are employing to blunt the power of our UAVs in the struggle against Al-Qa’ida and the Taliban. Although not enough Americans seem concerned about the Obama administration’s prodigious use of drones to kill our enemies – not to mention innocent people who happen to be in the wrong place at the wrong time – it’s a cause for deep concern around the world, especially among Muslims. As I’ve explained elsewhere, I find UAVs to be a necessary tool in counterterrorism but one which the current administration is overusing to a dangerous degree. We fail to understand how the weapon our enemy terms “the Hand of Allah” is viewed by those on the receiving end of the Hellfire missile from nowhere. Certainly the geniuses in DC seem to be giving too little thought to the long-term consequences of employing drones as the weapon of first resort in our aggressive, worldwide anti-AQ operations.

But that problem may be solving itself in Waziristan, Pakistan’s ungoverned wild frontier, since as the Gray Lady explains, AQ and their helpers are doing a bang-up job of killing off America’s eyes on the ground, both real and imagined. Mujahidin are tracking down locals whom they suspect are helping out the infidels, spotting targets for UAVs and whatnot, and they’re killing them off in horrible ways. Often their confessions, real or feigned, are filmed in close-up for effect, as is a customarily awful death. The message is indelible: this is what we do to spies.

Surely many of those caught in the AQ counterespionage dragnet are innocent, or nearly so, which perhaps is the point. Soviet efforts to root out enemy spies during World War Two brought in plenty of non-spies, who were subjected to the same tortures as actual Gestapo agents. Not for nothing did Stalin term his fearsome counterintelligence agency SMERSH – short for Smert’ shpionam (“death to spies”). They meant it, and often they cared little about whom they brought in for “questioning”; causing general panic, and building deep resistance to helping the enemy, was the idea. Soviet methods were blunt and brutal, including torture on an industrial scale, but despite what progressives today may wish to imagine, also devastatingly effective at winning the spywar against the Nazis. And that victory in the intelligence realm was critically important to Stalin’s unprecedented military triumph in 1945.

Much the same may be happening today. It’s difficult to imagine that many Pakistanis will yearn to help the Americans or their local allies, at any price, when the consequences are so obvious, so public, and so unspeakable. I’m not convinced that the mujahidin are top-shelf experts at counterintelligence – I’ve studied enough campaigns where their own CI performance was subpar, sometimes disastrously so – but I’m certain that we suck at it. By being at least somewhat competent in counterintelligence, AQ is winning the spywar.

American intelligence has never exactly excelled at CI, as it’s known in the trade, and the history of U.S. counterspy efforts includes ample tales of woe, but recent years have been especially painful, with devastating consequences. Lest anyone brush these failures off as “just spy-on-spy stuff,” I implore you, dear reader, to remember CURVEBALL, the Iraqi fabricator who sold German intelligence, the BND, a bill of goods about Saddam’s WMD, which DC bought too, with well-known results a decade ago; this was a rare case where a basic lack of counterintelligence vigilance helped cause a war.

It’s not like things have gotten better of late. The list of CI disasters in the struggle against the mujahidin is long, but none was so public as the tragedy which unfolded at Afghanistan’s FOB Chapman, three years ago today, when a Jordanian AQ operative who we thought was ours but was really being run by the enemy, blew up himself and nine others – five CIA officers (including the chief of base), two CIA contractors, a Jordanian intelligence officer, and an Afghan security guard. It was arguably the worst day in CIA’s history, not least because it revealed a complete and total failure of basic counterintelligence awareness. We thought we were playing AQ, but really they were playing us, and people died. In the desire to believe in the golden source, caution was thrown to the wind[...]

The U.S. Intelligence Community, as I like to explain, is deeply enamored with technology, for some very valid reasons: our excellence in things like SIGINT and IMINT really is number-one anywhere, and it’s enormously impressive (as well as expensive), not to mention a critical enabler of our war against the terrorists. That said, all the technology in the world cannot help us if our basic intelligence model continually ignores something as vital as CI. We may own the skies above Waziristan, but the enemy owns the ground, where people actually live, and they are willing to employ old-school, ruthless CI methods to defeat our 21st century toys and techniques. And that is why the enemy is winning.
The full column is here.

Corporate Frauds Watch on Doug Wead

A profile on Doug Wead, who is currently attempting to turn the liberty movement into a milkshake selling MLM, has been brought to my attention.

In the fascinating report, Corporate Frauds Watch recounts Wead's secret recording of George W. Bush and his leaking of some of those recordings to NYT. The report goes on to say:
It seems that, in 2005, the 'Amway' racketeer, Doug Wead, was trying to send a powerful message to George W. Bush and the Republican party leadership. No one (apart from George W. Bush) knows what else was lurking in Wead's collection of tapes[...] Indeed, George W. Bush appointed one of 'Amway's' own attorneys  Timothy Muris, to Chair the US Federal Trade Commission.
The report also includes background on Wead's attempt to hustle Amway in Eastern Europe, by promoting the idea that Amway was a great way to make money in the newly free Eastern Europe . It sounds not too different from Wead's current attempt to get those in the liberty movement to "earn a little money" via milkshake sales, before political activity picks up in a couple of years.

Read the full highly critical report here. (Note the report is obviously written by someone for whom English is a second language, but the facts are what is important in the report.)

Power Warps The Human Mind

By, Chris Rossini

EPJ is known for keeping a sharp eye on politicians who gradually take the road of compromise away from liberty. To others, it seems innocent, and is justified as necessary, but here, we preach that once that road is chosen, it quickly becomes a very slippery slope. The politician (who originally may have had good intentions) often ends up doing tremendous harm.

Power is unnatural and very seductive. It warps the mind.

A perfect example is the Presidency of Thomas Jefferson.

Here was a man, who when out of office, was a GIANT for the cause of liberty. Yet, in the political arena, and while President, made decisions that were as far from liberty as you can go.

One of Jefferson’s major blunders was the Embargo Act. In an effort to harm the warring powers of France and Britain, the this Act prohibited virtually all U.S. commerce with the rest of the world. It also banned all land traffic with Canada. The law required, among other things:
  1. American vessels were prohibited from landing in any foreign port unless specifically authorized by the president himself.
  2. Trading vessels were now required to post a bond of guarantee equal to the value of both the ship and its cargo, in order to insure compliance with the law.
This disaster hurt the U.S. tremendously. Exports fell from $108 million to $22 million, and imports declined from $138 million to $56 million. Black markets, smuggling, and loopholes were discovered.

In an effort to combat the loopholes, Jefferson doubled-down and passed another Embargo Act that:
  1. Prohibited, for the first time, the export of any goods, either by land or by sea.
  2. Subjected violators to a fine of $10,000, plus forfeiture of goods, for each offense.
  3. Granted the President broad discretionary authority to enforce, deny, or grant exceptions to the embargo.
  4. Port authorities were allowed to seize cargoes without a warrant, and/or to bring to trial any shipper or merchant who was thought to have merely contemplated violating the embargo.
Remember this is Thomas Jefferson, author of The Declaration of Independence!

Power is unnatural. Once you give in to it...you're sunk.

After his Presidency, Jefferson returned to his old self. A look at his tombstone gives a great indication that he knew of his errors. There is no mention of being President of The United States. The only accomplishments listed are those that are admirable:


Libertarians must realize that power is poison to the mind. Even Thomas Jefferson couldn't handle it. Let that be an instruction.

If a libertarian decides to enter the den of vipers, he/she must stick to libertarian principles, without compromise.

Ron Paul did it. He refused to step foot on the slippery slope.

His choice made him a hero.


Follow @ChrisRossini on Twitter

One Place You Won't Find a Ban on Guns

File under: Typical elitist hypocracy.



President Obama sends his kids to a school where armed guards are used.

Brietbart's Awr Hawkins reports:
The school, Sidwell Friends School in Washington, DC, has 11 security officers and is seeking to hire a new police officer as we speak
So what is this? Are Obama's kid more precious than those of other Americans? Why isn't Sidwell a no gun zone, if that is really the answer?

(ht Travis Holte)

What Can Be Learned From the Full Results of a Facebook Subpoena

A friend emails:


The following story is making the rounds on Twitter:

http://superchief.tv/theycanseeeverythingyoudo/

http://blog.thephoenix.com/BLOGS/phlog/archive/2012/04/06/when-police-subpoena-your-facebook-information-heres-what-facebook-sends-cops.aspx

It's not new (dated Apr 10, 2012 and Apr 06, 2012), but I found it interesting:

....something neither it’s reporters, or the general public, had never seen before: The full 
results of a Facebook subpoena.

This is some scary stuff; for the first time, we can now see EXACTLY what Facebook sends
when the Police, or a judge, ask them to hand over your information.

The interesting part is not that FB shares with the police all the information you deliberately disclosed, but also every page you visited on its website while logged in.

Now the blog post doesn't discuss this, but a lot of websites offer their visitors the ability to comment on their site using their FB credentials. So if you visit a website that uses this FB functionality while you're logged in to you FB account, FB could technically log (and later share with the authorities) that you visited that website. It doesn't stop there. Basically anytime a website includes something that's located on FB's servers (like those "Like" buttons) and you visit that website while you're logged into your FB account, FB could link your FB profile to that visit.

Like I said, nothing new, but I don't think most FB users realize that even if they don't click the "like" button an a website, FB will still be able to tell they visited that website (if they were logged in to their FB account at that time). Combine that with an overactive police apparatus, shirtless FBI agents, politicians who despise liberty and FB's willingness to hand information over to those in power and you've got something every liberty loving individual should take into account when surfing the web.

How Rich are You Compared to Other Americans?

WSJ has the stats on income categories and wealth categories for Americans:


Celebrity Hypocrites (Gun Ban Edition)

Someone has done a great job of splicing together clips from a recent Hollywood video of celebrities calling for stricter gun laws, with clips of what these same actors/show hosts are doing in the movies and on television.



(ht Travis Holte)

The EPJ Calendar: The Good, The Bad & The Interventionists

By, Chris Rossini
Email | Twitter

Each Sunday EPJ publishes a calendar of upcoming political & economic events. The appearance of an event does not necessarily equal an endorsement by EPJ; hence the name The EPJ Calendar: The Good, The Bad & The Interventionists.

If you believe that your event, speech, meetup, etc. should be on our weekly calendar, please email me at chris@economicpolicyjournal.com

Down the Road

The Robert Wenzel Show - 2012 Year In Review


2012 Year In Review

Saturday, December 29, 2012

The Truth about the Deal Being Worked Out in the Senate

From WSJ:
The last-minute tax and spending deal being discussed in the Senate would do little to reduce the deficit, and could actually expand it[...]This weekend, with talks moving closer to the deadline, the only item being discussed that would reduce the deficit is a White House proposal to let the Bush-era tax cuts expire for upper-income households. White House officials believe raising tax rates on income above $250,000, combined with changes in capital-gains, dividend, and estate-tax rules, would raise roughly $950 billion over 10 years.
The WSJ piece fails to note that it appears that any deal will also result in an increase in the payroll tax by 2%, which will hit almost everyone taking home regular paychecks. Happy New Year.

WSJ does subtly point out that Social Security recipients will also get whacked:
$200 billion in savings [will come] from changing the government's measure of inflation, among other things.
Among the items that would increase spending:
One would extend emergency unemployment benefits for one year, at a cost of roughly $30 billion. Another would prevent Medicare payments to doctors from being cut close to 27%. This change would cost another $10 billion, according to estimates.
And tax increases (aside from the increase in the payroll tax) would raise only between $50 billion and $60 billion in new revenue in its first year, less than 10% of the projected budget deficit.

The Non-Agression Principle: The Most Civilized Principle

The below video clip shows a Luke Rudkowski video confrontation with Lord Jacob Rothschild. I have watched it several times. What fascinates me is that Rothschild acts so civilized in the clip. At the end, he appears a bit confused and not quite sure how to respond, but still even at that point he remains in a civilized posture.

He doesn't run from the camera and not answer questions, the way we have seen others do. He doesn't block the camera as others have done. Most significantly, he doesn't violate the non-aggression principle and push the camera away. He even seems to give Rudkowski some respect and allows Rudkowski to ask questions. Rudkowski, for sure, caught him off guard so this isn't a pose that Rothschild is using just for Rudkowski. It is likely his way of dealing with others, at least in public.

Think about that. Here is one of the richest most powerful men in the world and he adopts a pose that appears downright in line with the libertarian non-aggression principle. Watch the clip, he is respecting others and not exhibiting any signs of being a man of aggression at all.

Of course, in reality, he plots with war criminals such as Henry Kissinger, and heads of state. He is the ultimate crony capitalist. Here is what Wikipedia says about him:
Today, Jacob is Chairman of RIT Capital Partners plc, one of the largest investment trusts quoted on the London Stock Exchange with a net asset value of about £2 billion. He is Chairman of J Rothschild Capital Management, a subsidiary of RIT Capital Partners plc. In 2006, Jacob became a Founding Partner and Advisory Board Member of Xander Real Estate (India). He is also a Member of the Council for the Duchy of Cornwall for HRH The Prince of Wales and a member of the International Advisory Board of The Blackstone Group. He also retains many other venture capital and property interests. 
From November 2003 until his retirement in 2008, he was Deputy Chairman of BSkyB Television  and until 2008 he was a Director of RHJ International. 
In 2003 Rothschild came under scrutiny when Russian oil industrialist Mikhail Khodorkovsky's shares in YUKOS passed to him under a deal they concluded prior to Khodorkovsky's arrest. 
In November 2010, an undisclosed entity affiliated with Rothschild purchased a 5.0% equity interest in Genie Energy, a subsidiary of IDT Corporation, for $10.0 million. Shortly thereafter, potential 2012 U.S. Presidential candidate Sarah Palin hired former IDT executive Michael Glassner as her chief of staff. 
From his headquarters in St James's Place in London, Jacob Rothschild has cultivated an influential set of clients, business associates and friends who have extended his interests far beyond the normal scope of a banker. He was a close personal friend of Diana, Princess of Wales and maintains strong personal and business links with Henry Kissinger.
His country estate has been a regular venue for visiting heads of state including Presidents Ronald Reagan and Bill Clinton. Margaret Thatcher received French President Fran├žois Mitterrand there at a summit in 1990. He hosted the European Economic Round Table conference in 2002, attended by such figures as James Wolfensohn, former president of the World Bank, Nicky Oppenheimer, Warren Buffett and Arnold Schwarzenegger.
Yet, instinctively, with all that power, Rothschild adopts a posture that seems to imply he respects the non-aggression principle. He wants to pose as the most civilized person in the world. In other words, he knows the best way to present himself is as a civilized man, that's what people respond to in positive fashion, and the libertarian non-aggression principlemis the most civilized principle in the world.

Are Libertarians A Bunch of "Do Nothing" Complainers?

By, Chris Rossini
Email | Twitter

Bob Wenzel's post yesterday on Justin Amash's gradual stroll away from liberty brought out the following from an Anonymous commenter:
...can't libertarians like Wenzel and other commenters come up with better strategies and tactics than sitting all day theorizing about ideal society. By the time we are done debating we'll all be dead. So instead of complaining, think about doing something positive and turn it into action. Do it. Do it now. Tired of complainers and haters and theorists.
This isn't an uncommon view. So I'd like to assist the above commenter (and anyone else that holds that view).

But first, a necessary look at what we're up against here.

The State, and its employed politicians, are parasites…plain and simple:


They're a special kind of parasite though, because the entire time that they drain the life out of us, they're constantly making sure that we believe in their necessity; that we cannot live without them latched on.

The State pulls this off with plenty of help.

First, for the highbrow, it has very dignified Nobel Prize winning experts, like Paul Krugman; as well as $40,000 per speech geniuses like Robert Reich. You're gonna need a nice suit and tie to be graced by their intelligence. Their entire careers rest upon keeping the belief alive....that without The State, you're toast. Any type of freedom can only get you into trouble.

But it doesn't stop with the black tie crowd. The State has a line of defense tailored for everyone.

For the more visual people, there's Ezra Klein, who will crunch any numbers necessary, and will show you any pie chart necessary, to once again keep you believing.

For those who don't have a mind for charts and statistics, you can turn on Bill O'Reilly and Rush Limbaugh to tickle your base instincts. Anyone who thinks that life without the parasites is desirable must be some kind of wacko or idiot.

The State's lines of defense go beyond the talking heads. The belief is creatively woven into all parts of our lives, even down to the children. In schools across the land, kids are taught to "pledge allegiance"; and every sporting event starts with a "national anthem". If it's a professional sporting event, there are flyovers by fighter jets, and a member of the military to sing during the 7th inning stretch.

The whole thing is to reassure your belief.

And it works.

Millions upon millions, all over the world, genuflect at the altar of The State. In democracies, the idea was sold that you even have the privilege of praying to it. You can "make your voice heard" by casting ballots with the hope that your prayers will be answered. If you're lucky enough, the false god will bless you, favor you (and punish your neighbor instead).


Now, let's get back to the commenter who accuses sites, like EPJ, of being a bunch of "do nothing" complainers.

Nothing can be further from the truth.

By reading EPJ, you'll find a whole different set of beliefs. The belief in freedom, private property, contracts, the non-aggression principle...To sum it up, that we'd be much better off in a society that lives by the simple statement "Live and Let Live," so long as you're not harming anyone else.

The commenter needs to realize that this is a battle of ideas.

When Krugman perpetuates the illusion that Obama has the power to levitate, EPJ will point out the wires hanging from the ceiling. When Robert Reich exclaims that government really does have 50 rabbits in the top hat, EPJ will point out the trap door.

Now, if someone is coming to EPJ to find out which politician needs to get elected, or whether or not a politician needs to vote for H.R. 12345, than yes, he/she is going to be disappointed. If that's the idea of "doing something" then there are plenty of Beltway libertarian sites and organizations that can keep you entertained.

Here you will find a steady stream of work defending the ideas of freedom, and that contrary to what Leviathan's pawns say, we'd be just fine without them.

Leviathan lives because the citizens that it leeches off of are operating on a confused set of beliefs that allows the leeches to operate. Only when the understanding of the importance and value of freedom advances will a free society be able to hold its ground---and EPJ is about advancing that understanding of freedom.

Tom Woods Responds to New Hampshire Anti-Free Stater Cynthia Chase

An Ex-DEA Agent on the Importance of Storing Nickels and How to Do It

by David Hathaway

Are you doing due diligence with nickels? As many LRC readers know, nickels are the only real "money" being distributed by the U.S. Government at this point in time. The value of the metal in a nickel equals the fiat value assigned to it by the state. This cannot be said about the currently produced pennies, dimes, quarters, or half dollars and certainly cannot be said about the paper money or the even more insidious and plentiful computer digit money that we are forced to use. Nickels are uniformly marked, impractical to counterfeit, and easily recognizable for their metallic content (75% copper, 25% nickel).

So, is it really that easy to get real money in exchange for the worthless stuff floating around? Yes, it still is. You walk into a bank, hand the teller a 20-dollar bill, and walk out with 10 rolls of nickels. There is no dealer markup. There is no sales tax. There are no shipping fees. There is no capital gains tax or value added tax. It almost seems impossible in this day and age. It soon will be impossible. We are temporarily in an era with nickels that is analogous to the pre-1965 silver coinage period. Coin composition is slated to change during the 2013 fiscal year. So, what are the issues that would preclude a person from taking advantage of the inevitable increase in the value of nickels when compared to the fiat dollar? Well, there is one small issue and one slightly bigger issue. The small issue is obtaining the nickels and the bigger issue is storage. Both issues can be resolved fairly easily for most people. First, let’s look at the smaller issue.


You don’t want to shoot yourself in the foot when obtaining nickels; not to mention your fellow hard-money brethren who are doing the same thing. Don’t go into a bank and make a grandiose gesture by asking to speak to the branch manager and discussing the bulk acquisition of $1000 or $10,000 worth of nickels. I have read articles where people proudly describe the incredulous looks they get from the bank employees and the follow-up questions administered by the bank staff from such an action. These articles usually include a description of how they schooled the bank employees about how the customer was hoarding nickels as a hedge against inflation. Don’t have this conversation with the bank. You don’t want to be the source of new bank policy restricting the acquisition of coinage. Some banks may charge a percentage for obtaining coins but, most still don’t. With nickels it is still so easy.

You need to have a systematic outlook. What you do is always lay down a 20 dollar bill and ask for 20 dollars in nickels. No more. That’s all. Make this fit into your lunch break at work, your commute, your exercise routine, or your shopping routine. You can go to one, two, or three banks fairly quickly. Don’t get the coins using your debit card or a check. Keep it to a simple hand-to-hand cash transaction. You don’t want multiple computer entries showing up on your bank account at different bank branches 10 minutes apart. It looks like you are doing something. Banks look for patterns and they will ask more questions. You aren’t doing anything wrong but, once again, you don’t want to make waves. You want to be able to continue getting your nickels. Giving out $20 in coins is no big deal to a major bank but, retailers that get coinage regularly usually do have to pay extra for the privilege. Small account holders and even non-account holders are usually given "small" amounts of pre-rolled coinage in exchange for paper currency as a courtesy at no charge. You want to be in the small customer "courtesy" realm on this issue. Being in a slightly bigger town is a plus but, not essential. If you happen to be on a lengthier shopping trip or road trip, you can get $20 worth of nickels ten times fairly quickly at ten different banks. Remember, you don’t want to be responsible for the issuance of new restrictive policies within your local banking world. Banks talk to each other. They go to conferences. If only a few guys in a town of a million people are trying to get large quantities of nickels on each transaction, the word will get out and policies will change.

You won’t believe how quickly you acquire nickels at this rate. You quickly get in and out of the bank since you are not doing account-related transactions. You get 400 nickels each time you hand over a 20-dollar bill. The transaction usually takes less than a minute. If you do this twice every day on your lunch break, you will have nickels coming out of your ears. Don’t try to do it at a quicker rate. You will end up causing problems.

The second issue, which is really the point of this article, is the storage of your nickels. One of the first rules for obtaining and storing metal as a hedge against inflation is to take possession of the metal yourself and to not trust someone else to store it for you. A warehouse receipt can be next to worthless in a hyperinflationary environment and is subject to the same type of mishandling that has been seen in metal futures, ETFs, and other paper forms of metal. Nickels do present a challenge for storage but, the challenge is not insurmountable.

Green military style ammo cans are a very tempting solution. They have one serious drawback. They look valuable. That wall of ammo cans in your basement really looks like a stash of something worth stealing. The larger size (generically called .50 caliber ammo cans) are too heavy when filled with nickels. The smaller size is easier to handle. They weigh about 35 pounds when filled. They hold about 88 rolls. Each roll contains $2 face value of nickels. So, you are preserving about $176 face value of nickels in one ammo can. To get up into multiple thousands of dollars, you will have quite a wall of ammo cans. They get harder and harder to conceal. They won’t fit in a floor safe or that hollow brick like your gold coins do.

So, what’s the answer? After years of experimenting, I have found the perfect solution. Home Depot sells pre-cut 24-inch sections of thick walled 4-inch black ABS pipe. They also sell the 4 inch ABS end caps and ABS cement. This combination makes a perfect long-term burial solution. The ABS cement causes a reaction to occur that is the chemical equivalent of welding the plastic end caps on by chemically softening, melting, and then permanently binding the adjoining surfaces of the two plastic pipe fittings together. PVC pipe also works. The nickels will last for decades in pristine condition underground when stored in these pipes.

I had an occasion to dig up 10 pipes recently containing a total of 560 pounds of nickels that had been buried for three years. The store bar-code stickers hadn’t even come off the pipes yet. The pipes with the caps glued on with the ABS cement still looked brand new. Each of these pipes holds 122 rolls of nickels on average. The pipes weigh about 56 pounds when finished. I have found that drilling a tiny hole with a small drill bit aids with pushing on the final cap since the glue makes the caps airtight and the air pressure makes it hard to push the second cap on. The air relief hole allows the cap to slide on easily before the cement binds the parts together permanently. The small hole can then be filled with ABS cement to make the pipe watertight. To get the nickels out, you will have to cut the pipe open with a saw.

After preparing multiple pipes, dig a trench. It will look like you are installing a water line or a sewage pipe. The 24" X 4" inch black pipes look like sections of sewer line. You can rent a trencher to make the process quicker and to reduce prying eyes. I have found that even sensitive metal detectors cannot detect the pipes when they are more than 12 inches deep. To be on the safe side, you can make your trench 18 to 24 inches deep. Even if they are buried less deep, they have the metal detector signature of a buried water pipe and won’t look like an attractive target to unearth.


I will address one more point since I hear this all the time. How do you cash in the nickels for the metal value? You don’t in the short run. This is not a buy and turn over proposition. You don’t have to worry about the legalities of melting coins. People don’t have to melt down pre-1965 silver coins to get the metal value. There will always be a market for the actual metal value in the coin. You don’t have to melt down gold coinage to get the metal value. Some day, when the effects of massive inflation are more evident, you will have your hedge against inflation and you will be able to sell your coins for their metallic value as you need to. In the case of nickels, they won’t have to be assayed. They are marked and it is obvious what they are. Their metallic content is common knowledge. There is no down side with nickels. If nothing else, you have gotten your money out of computer digits and you are holding it in tangible form for the coming banking crisis. It just so happens that you got full value for yours in incorruptible metal form with a picture of one of the less offensive presidents stamped on the side.
December 29, 2012
David Hathaway is a former supervisory DEA Agent who homeschools his nine children. He enjoys writing about the injustices of the state. 

The above originally appeared at LewRockwell.com.

The Problem with Rand Paul

It is likely Rand Paul is an apple that didn't fall far from the tree, but he is very likely to be an apple that after hitting ground, then rolled down the hill.

Consider his latest move. Yesterday, the U.S. Senate voted on a series of amendments to H.R.1, the Emergency Supplemental Appropriations Bill, to fund disaster relief for victims of Hurricane Sandy. Among these amendments was one introduced by Rand, which would waive the Davis-Bacon prevailing wage law from applying to government projects funded in the bill.

The amendment, No. 3376, failed passage, 42-52.

Prior to the vote, Sen. Paul spoke on the Senate floor, urging his colleagues to pass this measure.

Below is a transcript of his floor speech.
Mr. President, when Hurricane Sandy struck the Northeast, hundreds of thousands, if not millions of people were without power. We all saw the video footage, we saw the terrible trauma and people are still trying to dig out from underneath the debris of Hurricane Sandy.

During that period of time, hundreds of workers drove up from the South wanting to help. These workers were non-unionized and they were turned away. This was a sad day for our country that non-union workers were not allowed to participate in the cleanup and were asked to join a union before they would be accepted as workers. I think it’s a mistake to politicize things like this, particularly at a time of an emergency. So what I’ve asked for and what my amendment would do would be to allow an exemption to Davis-Bacon.

Davis-Bacon is a federal law that requires that we not have competitive bidding on federal projects. What happens is, on federal projects the wages are fixed at a union-scale wage, and there is not a competitive bidding for wages. So what I’ve asked is that we suspend that and say in order to get better use of the money, in order to advance the money by billions of dollars and do more with the money -- and this is an enormous amount of money, running into the billions of dollars, in order to get better money to suspend Davis-Bacon we would basically be allowing competitive bidding on wages. This has been done before.

President Nixon and both President Bushes did this during Katrina, we suspended Davis-Bacon because it was an emergency and we wanted to make the best use of our nation’s dollars. This amendment would suspend Davis-Bacon for this emergency. It’s estimated that it might save as much as 22 percent of the cost. Now, we’re talking about billions of dollars here, $60 billion is being requested for this cleanup. Where is the money going to come from? You’ve heard we van enormous debt, $16 trillion in our country, we have over a trillion dollars in debt this year. Now, we print up the money you the but that simply steals from your savings and steals from your current currency. We can tax you or borrow more but we owe $16 trillion already. So what I’m asking here is why don’t we try to make good use of the money that’s going towards this disaster, allow the money to go farther, and that is simply by allowing competitive bidding on wages.

Currently there is no competitive bidding on wages, and my amendment would allow for this. I urge my colleagues to stand with taxpayers, to stand with taxpayers against special interests, against political and partisan purposes, and for the sake of an emergency to say we’re going to be frugal with the dollars spent. We’re not going to be extravagant. We’re not going to reward certain special interests that are very involved in the political process. We’re going to say we’re going to use the money wisely. We’re going to allow competitive bidding on wages. So I urge my colleagues to support this temporary and specific suspension of Davis-Bacon for emergency funds.
What's the problem with this? Rand is calling for a restriction to be removed on government, relative to federal aid. The libertarian position is that there shouldn't be any federal aid for hurricane victims, any hurricane, in the first place. It is not impressive libertarian, or solid small government, advocacy to unshackle an arm of the government beast so that it is free to create more mayhem. What is Rand thinking?

He couches this in terms of "standing with taxpayers." But making it easier for an unneeded government agency to hire more easily is not standing with taxpayers, it is standing with government. The proper small government position is to point out the dangers of government involvement in rescue operations. Rand's father got it right. The Hill reports:
Rep. Ron Paul (R-Texas) said Monday that the billions of dollars in damage Hurricane Sandy caused in New York and New Jersey raises "uncomfortable questions" about whether taxpayers should continue to pay for the cleanup from natural disasters.

While many New York and New Jersey members are calling for billions in additional funds, Paul said on his website that the government will continue to lose money by insuring these sorts of events. 
The former GOP presidential candidate said most of the funding to help with Sandy will come from the Federal Emergency Management Agency (FEMA) and the National Flood Insurance Program (NFIP). But he said these agencies will only put taxpayers deeper in debt by writing checks.

"Many think there is a need for the government to provide flood insurance of this kind," Paul said. "After all, the market would never provide insurance in flood prone areas at an affordable price. But shouldn't that tell us something?

"Shouldn't that tell us that it is a losing proposition to insure homes in coastal areas and flood plains often threatened by severe and destructive weather patterns? And if it's a losing proposition, should taxpayers subsidize the inevitable losses arising from federal flood insurance?"

Paul said the NFIP in particular creates a moral hazard by making it more affordable for people to keep building and rebuilding in flood prone areas.

"The obvious and expected outcome is more danger to life and limb when disaster strikes," Paul wrote.

Regarding FEMA, Paul said that agency has a record of "mismanaged recovery and relief" efforts in the wake of Hurricanes Katrina and Ike. He said charities and private organizations are better equipped to help people that FEMA.

So there you have it, the father correctly calling for getting the government out of the rescue business, while the son attempts to micro-manage the government folly and pretend that he is making the monster more efficient. Instead of calling for the killing of the beast, he is calling for the feeding of a better grade of banana to the beast. And that is the problem with Rand Paul, unlike his father, he has been sucked in by the D.C. beast and wants to micro-manage it rather than kill it.

de Rugy and Cowen Launch a Tag Team Call for Tax Increases

Veronique de Rugy, who worked at Cato during part of the Ed Crane years, has a column out at National Review Online that just seems nuts to me. She writes:
I really like Tyler Cowen’s idea from the New York Times this past weekend, about a symbolic solution to the fiscal-cliff problem as a way to commit to addressing our long-term problems. Here is his suggestion to Republicans:
To see how this could work, consider this script: Let’s say the Republicans decide to largely give in to what the President Obama is proposing. There is, however, a catch: the president has to agree to raise marginal tax rates on all income classes, not just on the rich. The tax increase would be one-quarter of a percentage point, or some other arbitrary small amount, with larger increases possible for higher incomes, as has been discussed. The deal also stipulates that both the president and Congress must publicly acknowledge that current plans for government spending can’t be financed unless taxes on most or all income groups climb further yet, and by some hefty amount. 
Given the slow economy, it is undesirable to reverse all or even most of the Bush tax cuts. A small but publicly trumpeted clawback of some of the cuts would send the right message to voters, while minimizing the macroeconomic fallout. The nice thing about symbols — single shots across the bow — is that they often can suffice.
If people already rationally expect these tax increases, this signal would do neither good nor harm, but perhaps such an approach would nudge political expectations closer to reality without draining the economy.
With such a deal, President Obama would get much of what he wants, which many Republicans find objectionable. Still, the Republicans are in any case unlikely to win this round of budget negotiations. The positioning suggested here would highlight the major weakness and, indeed, an evasion in the Obama administration’s fiscal stance — namely, the president’s campaign pledge to protect the middle class from income tax increases. It is commonly agreed that raising taxes on the wealthy alone will close only a small part of our fiscal gap over the next 10 years; an estimate of 15 percent is optimistic. 
It could also be agreed that taxes could come back down in the future, but only if politicians found matching spending cuts.
Think of this stance as a first step toward the explicit pairing of spending and taxes, toward a goal of more responsible fiscal decisions. Although taxes would go up for now, this could lead to a smaller, more effective government than our current mismatch of taxes and spending would produce.
This might work. In particular, I like the part where both the president and Congress must come clean and acknowledge that a deal that just soaks the rich won’t work.
Obviously, the more revenue you give government, the more it spends, so an increase in tax revenue won’t make deficits disappear. Also under this regime, many high income and middle class taxpayers still won’t be paying for all the services and subsidies they receive. But at least the Cowen plan would send the right signal, reminding us that we can’t spend like Europeans and tax like Americans forever. I personally like my government small — very small, actually — and for that reason I would like to see the size and scope of government shrink significantly. But if that’s not what today’s Americans want, then they ought to pay for the services they demand with higher taxes. The price, of course, will go beyond the higher tax bills since we can reasonably expect slower growth and higher unemployment rates in the long-run as a result. That’s not what I want but that is definitely the price we will pay for staying on the current path. 
The big problem here is that de Rugy and Cowen are thinking as though there is one voting block that is making taxing and spending decisions. This is just dumb thinking. There are net tax payers and net spenders of tax revenues. All the government needs to do is spread the tax revenue payouts over more than 50% of the voting public and the votes will always be there for growing government and higher taxes on the producing sector. The rest of their nutty micro-management thinking then turns to dust.

Further, Cowen's comment:
If people already rationally expect these tax increases, this signal would do neither good nor harm, but perhaps such an approach would nudge political expectations closer to reality without draining the economy.
...is beyond nuts. Just because I anticipate correctly that someone is going to cut off my right hand, and adjust for it, it doesn't mean there is no harm done to me. The same with an increase in taxes. Just because I may anticipate such, doesn't mean it doesn't cause harm.