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Friday, June 28, 2013

Paul Krugman: A Broken Window Equals Economic Strength

Benjamin Zycher writes:

It truly is amazing. That a Nobel prize-winning economist can believe utter nonsense, write utter nonsense, and defend utter nonsense, all in the service of a “climate” policy agenda that is remarkably weak in terms of the underlying peer-reviewed science, and that would have virtually no effect on temperatures under any set of mainstream assumptions. I refer to the latest from Professor Paul Krugman, who actually argues, presumably with a straight face, that a forced closure of some coal-fired electric generating plants would force new investment in power plants and increase average power prices, thus yielding “an increase in spending” and a “positive effect” on the economy.

Wow. Remember the broken window fallacy? If a window is broken, the result is more employment and economic activity, because, obviously, someone has to pay someone else to replace the window. Sadly, this story leaves out the spending on something else that the first someone would have undertaken had the window not been broken in the first place. The broken window results in a reallocation of resources and not an increase in aggregate wealth; that is a reality that any student in Economics 101 should learn. The spending forgone on something else offsets the dollars spent replacing the window, but in Mr. Krugman’s world, the investments in new power plants and the higher spending on electricity represent new spending that otherwise would not have been made, because without the climate rules the dollars would have remained hidden in mattresses. Or something.[...]

One wonders why there is any “spending” at all in the absence of federal actions. What is clear, however, is that promises of a free lunch are as old as politics. And it is politics rather than economics that Mr. Krugman is practicing.

Fans Petition NFL: 'I Don't Watch the NFL to be Preached at by HHS Secretary'

The Obama administration is in talks with the National Football League to make commercials promoting the new Obamacare law.

Health & Human Services Secretary Kathleen Sebelius said this week that the NFL "has been very actively and enthusiastically engaged" in these discussions. Taxpayer dollars would be used to pay for these NFL Obamacare commercials.

Americans for Tax Reform has released a petition that allows taxpayers to voice their opposition to this HHS effort, reports Craig Bannister.

The petition reads:

As an NFL fan, I am opposed to my tax dollars being used by the NFL to promote Obamacare. I don't watch the NFL to be preached at by HHS Secretary Kathleen Sebelius and other politicians. Keep healthcare politics out of the NFL.

The Best Second Passport for Edward Snowden

By Simon Black

Ron Paul recently said on his Facebook page:

"My understanding is that espionage means giving secret or classified information to the enemy. Since Snowden shared information with the American people, his indictment for espionage could reveal (or confirm) that the US Government views you and me as the enemy."

He's right. If nothing else, the way this has played out tells you everything you really need to know about the Land of the Free right now.

Snowden has been demonized by just about every government official on record. US Secretary of State John Kerry called Snowden's actions "despicable and beyond description," while US Senator Lindsey Graham said, "I hope we'll chase him to the ends of the earth..."

Words like "hanging" and "treason" are floating around the mainstream media. It's incredible. The issue no longer has anything to do with the criminality of the government spying programs. But whether Snowden should be shot or hung.

Yet amazingly enough, many polls show that roughly half of Americans think that Snowden is a traitor and should be prosecuted. And among the Twittering classes, the discussion quickly turned to Snowden's 'hot or not' status as a potential sex symbol.

Such data is truly profound. Roughly half of Americans don't give a rat's eye about their own liberty. And it's obvious that the US government has every intention to continue these programs full speed ahead.

When it becomes this clear that you no longer share basic, core values with your government... or your neighbors... maybe it's time to consider other options.

The world is a big place, after all. And there's a tremendous amount of freedom and opportunity ripe for pioneering, talented people.

One last thing I'd like to point out on the matter is whether or not Mr. Snowden would have been aided if he had procured a second passport. The answer, quite simply, is a resounding YES.

Snowden is now marred in a number of banal legal technicalities.

The US government has cancelled his passport (another questionable legal move from Uncle Sam). So he appears stuck in the international transit area at Moscow's Sheremetyevo airport.

He's not legally able to fly back to Hong Kong. Nor is he legally able to board a flight to Havana for onward travel to Ecuador, in order to apply for asylum.

If Mr. Snowden had been able to procure a second passport prior to stepping into the limelight, he would likely not be in this predicament as he could have been traveling on his other passport.

This is one of the hidden virtues of having a second passport. You might never 'need' one. But should such a need ever arise, it can really be a life saver.

In Mr. Snowden's case, the best option on the table would have been Brazil.

Why? Because anyone can be Brazilian. It doesn't matter what your ethnicity is; Brazil is a melting pot of 200+ million people. White, black, brown, it doesn't matter. Even obviously anglo names like Edward Snowden are not terribly uncommon in Brazil.

Moreover, Brazil has a very clear policy of not giving up its citizens.

Yes, Brazil technically does have an extradition treaty with the US. But nations routinely set aside extradition treaties whenever it suits them.

So if Snowden had become a Brazilian (which anyone can do-- via 2-4 years of residency, or marriage, or even having a child), he could be happily living out his days on the beach in Fortaleza, rather than being stuck in a Russian transit zone.

I personally would like to wish Mr. Snowden safe and speedy travels to his next destination... which will hopefully be far from the United States of America and its faux justice system.

Simon Black writes and is Senor Editor at SovereignMan.com

Prosecutors Move To Seize Jesse Jackson, Jr.’s Homes

Federal prosecutors asked for permission Friday to seize the homes of former Rep. Jesse Jackson, Jr. (D-IL) and his wife, former Chicago Ald. Sandi Jackson, in addition to an IRA of Jackson's with an almost $80,000 balance, the Chicago Tribune reports.

According to the Tribune, prosecutors asked a judge in U.S. District Court for the District of Columbia to let them seize the Jacksons' homes in both Chicago and Washington, D.C.'s DuPont Circle.

Prosecutors also pointed out that Jackson had returned only 12 out of 24 items worth a total of $61,910, including furs and celebrity memorabilia, that he agreed to forfeit because they were purchased with campaign funds.

Jackson Jr. pleaded guilty in February to misuing hundreds of thousands of dollars from his campaign accounts, while his wife pleaded guilty to filing false tax returns. The couple is scheduled to face sentencing next Wednesday.

(Via TalkingPointsMemo)

Who Will Be The Next Emperor of Price Fixing?

By, Chris Rossini

The toady media seems to have had enough of the NSA spying scandal. It's very damning for The State, so they've decided it's best to just let it go. They won't let Snowden go, of course, but looking into the whole spying thing has seen its 15 minutes.

Paul Krugman himself has declared that all recent scandals hold no water, and its time to get back to that woozy and trusting stupor that Americans are so famous for.

Let's get back to the real issues, like choosing the next Fed Chairman!

And so the media flits from one central planner to another, analyzing their credentials like they're comparing baseball cards. All to see who will be crowned to do the impossible.

As libertarians, we can just lean back with our popcorn. For the whole charade is equivalent to sitting through a filming of the movie "Jackass".

As Ludwig Von Mises pointed out many years ago: "A government can no more determine prices than a goose can lay hen’s eggs."

And if Ron Paul didn't say it a million times, "It isn’t the individuals. It’s not Greenspan, it’s not Bernanke, it’s the system and it’s not viable. They cannot practice central economic planning through the Federal Reserve. They cannot have stable prices, whatever that means. They cannot prevent prices from going up when the time comes for prices to go up."

So the answer to "Who should be the next Fed Chairman?" is a resounding:

"No one!"

Sadly, the mentality of enough Americans has not reached that conclusion yet...Evidently, more (and stronger doses) of economic pain must be experienced first.

So if that's the case, why not have some fun with it? Why not add a nice silver lining to the pain?

Why not (for once) actually agree with Joe Weisenthal?

Obama should nominate @NYTimeskrugman. That'd straight up baller.
— Joseph Weisenthal (@TheStalwart) June 18, 2013

Someone does have to hold the Greenspan/Bernanke bag.

I can think of no one more deserving that Paul Krugman. That would be textbook poetic justice.

I actually agree with Joe. It would truly be "straight up baller".

Follow @ChrisRossini

Smearing Glenn Greenwald: The Gregorian Connection

By Justin Raimondo

The campaign to demonize Edward Snowden, whose revelations about the National Security Agency’s ubiquitous and ongoing spying on the American public has the Obama regimein furious disrray, has taken on a new dimension – now they’re going after Glenn Greenwald, the Guardian reporter and columnist Snowden chose to tell his story. Glenn has already preempted some of this in his Guardian column, but there is sure to be more. What’s interesting about this effort is that it tells us far more about the smear-merchants – and who they serve – than it does about Greenwald.

There were a few preliminary fusillades coming from liberal bloggers when the NSA spying story broke – lame attempts to debunk Greenwald’s reporting, and vague insinuations directed at his objectivity as a reporter. However, as the Obama administration and its apologists flailed about, while Snowden – and Greenwald’s reporting – ran rings around them, the nasty stuff started. David Gregory, echoing Rep. Peter King (R-IRA), wondered aloud on national television why Greenwaldshouldn’t be jailed forthwith – but that was just the beginning. A few days later, the dirt really started to fly with an article in the New York Daily News detailing Greenwald’s various personal, legal, and financial troubles, and I quote:

"The reporter who broke the story about the National Security Agency’s secret surveillance programs has a little secret of his own.

"Before he was a reporter and commentator for The Guardian newspaper, Glenn Greenwald was a lawyer — and had a part-time job in the porn business."

Glenn – a porn star? Well, uh, no, not exactly, or even remotely. But that’s the Daily News for you, a tabloid modeled on those British rags with screaming headlines over photos of scantily clad "celebrities." After that lascivious opening – like a whore beckoning at the reader from a dark corner with promises of unimaginable carnal delights – the letdown is dizzying.

It turns out the "part time job in the porn business" was a business relationship with a friend and a third party producer involving video distribution rights. Yawn. And it’s downhill from there: Greenwald owes back taxes, Greenwald has been involved in some lawsuits (he’s a lawyer!), and – last, and certainly least – one of those lawsuits involved a dispute with the Manhattan co-op he was living in involving the size of his dog, deemed "too large" for the co-op board. To Guantanamo with him!

None of this is too interesting, except for its value as an object of near-universal derision: last [Wednesday] night and well into Thursday, Twitter users were riffing on a new hashtag, #ggscandals, mercilessly mocking the smear-mongers’ sheer lameness.

Far more interesting than the content of this misfired dirtball is the dirtbag who wrote it, one Dareh Gregorian. Aside from being a low-level gossip-monger for the low-rentNYDN, he also happens to be the son of Vartan Gregorian, head of the Carnegie Corporation of New York, one of the major dispensers of corporate cash to various philanthropies and nonprofit outfits throughout the country.

The connection matters because it was Dareh’s dad who lobbed $49.2 million in Barack Obama’s direction when the community organizer and future President headed up the Chicago Annenberg Challenge (CAC). Gregorian, as the Annenberg Foundation’s representative in the matter, was instrumental in securing the funding for a group led by Bill Ayers and Mike Klonsky, two sixties-era former radicals turned education reformers. Gregorian chose the Ayers-Klonsky-Obama proposal over competing bids from Mayor Daley, the Chicago Public School system, and the teacher’s union. Obama, CAC’s founding president, resigned in 1999 to run for Senate. When Obama took office, Vartan Gregorian was appointed to the President’s Commission on White House Fellowships, which "mentors" up-and-comers deemed worthy by the Regime.

Read the rest here.

MSNBC Notices the Establishment Cuddling Up To Rand Paul

Steve Benen writes at the Maddow Blog:

It seems much of the media establishment has decided Sen. Rand Paul (R-Ken.) deserves to be taken seriously. He's made seven Sunday show appearances since February; the New York Times recently described Paul has one of his party's "rising stars"; and the Washington Post's Chris Cillizza last week referred to the Kentucky Republican as "the most interesting politician in the country" and "the most interesting man in the (political) world.

Benen is correct to highlight this coverage that Rand is getting. This doesn't happen by accident. Who in the establishment is running Rand Paul? And what kind of deal was cut?

LOOPHOLES: How to Avoid Paying for Obamacare Insurance AND Also Avoid the Penalty

Merrill Matthews at Forbes explains:

[T]he IRS has no authority to go after someone’s assets or wages in order to collect the penalty. It only has the authority to deduct the penalty from a person’s tax refund at year’s end. It won’t take long for people to figure out how to fix that problem by trying to ensure they have only enough withheld to meet their tax obligation. Those who are uninsured and successful at hitting the tax mark will face no effective penalty.

Here's another loophole (via Matthews)

But just because millions of Americans refuse to get ObamaCare-qualified coverage doesn’t mean they will be uninsured. There are policies available now that would work very well for the ObamaCare avoiders.

Some of these policies are built on a life insurance platform rather than health insurance — which, incidentally, means they are outside ObamaCare’s long arm of regulatory control.

The customer buys a life insurance policy that pays up to $250,000 upon death, which I believe is the current maximum available for this kind of policy.

Along with life insurance coverage the policy includes what’s called a “critical illness” component. If the policyholder needs, say, surgery, the insurer writes the policyholder a check based on a schedule. Let’s say, for example, it’s $10,000.

The policyholder has $10,000 in hand to pay for the medical care — or, frankly, anything else since the money belongs to the insured — but the value of his life insurance benefit is reduced by the same amount, to $240,000. Thus the critical illness component simply accelerates the benefit payout.

One existing policy pays 100 percent for heart attack, stroke, life-threatening cancer, major organ transplant, kidney failure, Alzheimer’s and paralysis, among other medical conditions.

The policyholder could also be part of a provider network that provides a discounted rate for the care — one of the most important current benefits of having health insurance.

How much would such a policy cost? For one company, a 30-year-old male would pay $1,438 a year, and for a 50-year-old male it’s $3,234.

And remember, this isn’t just health coverage. In the event of a tragic accident or illness, whatever is left of the benefit goes to the estate upon death.

If ObamaCare proves to be the train wreck that Democratic Senator Max Baucus fears — who, incidentally, is largely responsible for its current structure — then millions of Americans from all income categories may decide to opt out. Many will still want something, at least until they get a major medical condition whereupon they can then go back into ObamaCare coverage. And they can still keep their life insurance policy along with its critical illness benefits. Good times!

CIA and NSA Employess are Frontrunning Coups (for Profit)

Yves Smith writes:

A 2008 paper by Arindrajit Dube, Ethan Kaplan, and Suresh Naidu (hat tip MS) found evidence that the CIA and/or members of the Executive branch either disclosed or acted on information about top-secret authorizations of coups. Stocks in “highly exposed” firms rose more in the pre-coup authorization phase than they did when the coup was actually launched.

Here’s how the dataset was developed:

We selected our sample of coups on the following basis: (1.) a CIA timeline of events or a secondary timeline based upon an original CIA document existed, (2.) the coup contained secret planning events including at least one covert authorization of a coup attempt by a national intelligence agency and/or a head of state, and (3.) the coup authorization was against a government which nationalized property of at least one sufficiently exposed multinational firm with publicly traded shares.

Out of this, the authors found four coup attempts that met their criteria: the ouster of Muhammed Mossadegh in Iran in 1953, two programs in Guatemala in 1952 and 1954 that eventually removed Jacobo Arbenz Guzman; the unsuccessful effort to topple Castro in 1961, and an operation that began in Chile in 1970 and culminated in overthrow of Salvador Allende. Then they chose companies:

We apply 3 criteria to select our sample of companies. First, a company must be publicly traded, so that we can observe a stock price Secondly, the company must be “well-connected”, in terms of being linked to the CIA. Finally, the company should be highly exposed to political changes in the affected country, in the sense that a large fraction of a company’s assets are in that country.

They used these criteria to devise two samples (based on different definitions of “highly exposed”) and tested both.

Their conclusions:

Covert operations organized and abetted by foreign governments have played a sub- stantial role in the political and economic development of poorer countries around the world. We look at CIA-backed coups against governments which had nationalized a considerable amount of foreign investment. Using an event-study methodology, we find that private information regarding coup authorizations and planning by the U.S. government increased the stock prices of expropriated multinationals that stood to benefit from the regime change. The presence of these abnormal returns suggests that there were leaks from the CIA or others in the executive branch of government to asset traders or that government officials with access to this information themselves traded upon it. Consistent with theories of asset price determination under private information, this information took some time to be fully reflected in the stock price. Moreover, the evidence we find suggests that coup authorization information was only present in large, politically connected companies which were also highly exposed.

We find that coup authorizations, on net, contributed more to stock price rises of highly exposed and well connected companies than the coup events themselves. These pricechanges reflect sizeable shifts in beliefs about the probability of coup occurrence.

Our results are robust across countries, except Cuba, as well as to a variety of controls for alternate sources of information, including public events and newspaper articles. The anomalous results for Cuba are consistent with the information leaks and inad- equate organization that surrounded that particular coup attemp

Snowden’s Special Travel Document Is Real but Not Valid, Official in Ecuador Says

Apparently it is a Hotel California-type document, you can check out on it but you just can't leave.

An official in Ecuador told The Associated Press on Thursday that a special travel document provided to Edward Snowden to help him travel from Hong Kong after his American passport was revoked is genuine but not valid, since it was issued by someone without the authority to do so.

Thursday, June 27, 2013

Will Someone Please Email George Soros and Send Him a Link to the Mises Institute

In the below clip, George Soros correctly complains that there are serious problems with mainstream economics. Toward the end of the clip he correctly points out that mainstream economists are improperly attempting to mimic the science of physics. What he fails to seem to be aware of is that the Austrian economists, such as Ludwig von Mises, Murray Rothbard and Fredrich Hayek, recognized the problem of economists mimicking the physical sciences and built the entire science of economics using the deductive method. Will someone please send Soros a link to the Mises Institute

HOT Ex-Pentagon General Target of Leak Investigation

Legal sources tell NBC News that the former second-highest ranking officer in the U.S. military is now the target of a Justice Department investigation into an alleged leak of classified information about a covert U.S. cyber attack on Iran’s nuclear program.

According to legal sources, Retired Marine Gen. James “Hoss” Cartwright, the former vice chairman of the Joint Chiefs of Staff, has been notified that he’s under investigation for allegedly leaking information about a massive attack using a computer virus named Stuxnet on Iran’s nuclear facilities. Gen. Cartwright, 63, becomes the latest alleged leaker targeted by the Obama administration, which has already prosecuted or charged eight individuals under the Espionage Act.

Wow.

Two questions:

1. Why would Cartwright leak this information? According to NYT, Cartwright, a four-star general who was vice chairman of the Joint Chiefs from 2007 to 2011, conceived and ran the cyber operation.

2. Can this somehow be tied into an NSA-Pentagon-CIA internal battle?

Fed Chairman Bernanke Admits the Fed Has No Clue

More than a week ago, Fed chairman Ben Bernanke gave a press conference, where he answered questions from the controlled part of the press. Every once and awhile, truth seeps out at these affairs. It did at this conference. I have waited just over a week to see if anyone else would point this out. The conference occurred on June 19 and there has been not a word on the very important fact that Bernanke admitted he had did not understand why rates were climbing to that point.

I quote the exchange as transcribed by the Federal Reserve itself (my highlight)

ROBIN HARDING. Robin Harding from the Financial Times. Mr. Chairman, you’ve
always argued that it’s the stock of assets that the Federal Reserve holds which affects long-term interest rates. How do you reconcile that with a very sharp rise in real interest rates that we’ve seen in recent weeks? And do you think the market is correctly interpreting what you think is most likely to be the future path of the Federal Reserve’s stock of assets? Thank you.

CHAIRMAN BERNANKE. Well, we were a little puzzled by that. It was bigger than
can be explained I think by changes in the ultimate stock of asset purchases within reasonable ranges. So I think we have to conclude that there are other factors at work as well, including, again, some optimism about the economy, maybe some uncertainty arising.

Got that? Bernanke is pretty much admitting that he did not understand why rates were climbing at that point (Note: This was discussion before the spike in rates that occurred after this press conference). Further, this means he is pretty much admitting that his asset purchase plan is not working.

Notice, he makes no note of the fact that money growth has slowed dramatically, which could very well be a factor in pushing rates higher. (In the EPJ Daily Alert, I point out that money supply growth has dropped from 11.4% earlier this year to 3.6% in recent months). Is Bernanke not watching this data? Is he not aware that money supply growth plays an important factor on the capital structure, including the stock and bond markets?

This is serious. We have a Fed chairman who is in the pocket of Wall Street operators, but has no idea how this ship is steered. Is it any wonder we have such volatile times? As Bernanke gets backed more and more into a corner, with higher and higher rates, how much more crazed and volatile will things get? What crazy new "tool" will he introduce to attempt to steer the good ship Economy of the USA? What will happen to the economy next because of Fed manipulations. It is perhaps time, as Joe Salerno suggests, that the as a first step, the Fed be defanged.

The Sad Job Market for Recent College Grads

The unemployment rate for 22-year-olds jumped from 4.5% in 2000 to 10.3% in the 2009 — 2011 period, according to a presentation Thursday by researchers at the Federal Reserve Bank of New York.

Even worse are the number of recent graduates who have jobs that don’t require a degree, such as a salesperson in a retail store, a food server or even an electrician. In 2001 the underemployment rate fell to as low at 35%, but last year it rose to 44%.

(Via WSJ)

HiIlsenrath: White House Preparing Bernanke's Replacement

WSJ reporter Jon Hilsenrath reports:

The Obama administration has begun assembling a short list of candidates for the Federal Reserve chairmanship, in the expectation that Ben Bernanke won't seek reappointment when his second term ends in January, according to people familiar with the matter.

Treasury Secretary Jacob Lew is putting together the list, working closely with a small number of senior White House officials.

People familiar with the process wouldn't divulge any names on the short list, but said there was no front-runner. The White House is still in an early stage of the process and might not announce its selection until the early fall, they said.

Many reports suggest that Fed vice-chair Janet Yellen is the frontrunner to replace Bernanke, that may be the case, but Stanley Fischer, the current head of the Bank of Israel, and an American, is stepping down from his post as governor of Israel's central bank in a couple of day's, June 30, and may also be a candidate, along with Larry Summers.

Innocent as Long as You Are a Celebrity

There hasn't been a trial yet, and I tend to give people the benefit of the doubt, but it sure sounds like former New England Patriot Aaron Hernandez did just what the police allege he did. Which means people chanting "INNOCENT!" as he arrives at court really do baffle me.