Tuesday, September 27, 2011

Homeland Security Failed?

Are we sitting ducks? Should USA cut budgets of the DHS Department of Homeland Security? Seems they are more into oral intercourse than protecting the USA. USA needs more computer scientists. Jobs now cannot be filled without importing more Chinamen and Indians. Affirmative action has failed but may account for many hires at the DHS. Merit should be used to select the best students and employees who will be loyal to the USA. How can we get more Americans to study Math and Computer Science and to eliminate preferential hiring and admissions to those less qualified?


Stuxnet, the cyberweapon that attacked and damaged an Iranian nuclear facility, has opened a Pandora’s box of cyberwar, says the man who uncovered it. A Q&A about the potential threats. One year ago a malicious software program called Stuxnet exploded onto the world stage as the first publicly confirmed cyber superweapon – a digital guided missile that could emerge from cyber space to destroy a physical target in the real world.

Iraq war a waste? Really?

Some contractors got a guilty conscience and are revealing what they saw and did. Links to a free chapter and a podcast interview below.

Muslims still don’t like gays, drugs, debts, jews. Why no Age of Aquarius in the Garden of Eden? Was it all a waste? Another big government spending project gone bad? Can Obama fix this mess or is he doomed too? Time to cut some budgets?

The Greedy Battle For Iraq’s ‘Hearts And Minds’ In 2009, Peter Van Buren joined a team working to rebuild Iraq’s infrastructure and economy. For the next year, he encountered comically misguided projects, greedy contractors and oblivious bureaucrats. In his new book, We Meant Well, he recounts the ground-level waste and corruption he saw.


We Meant Well: How I Helped Lose the Battle for the Hearts and Minds of the Iraqi People American Empire Project
Peter Van Buren

Thursday, September 22, 2011

Gold does not glitter

Good article. I agree and add that the USA government is more likely to sell gold than to buy more of it. If they sold all of it they could pay off 3% of the USA national debt! Wow! China is doing fine with 1.6% of its foreign reserves in gold. India has 8.7% of its foreign reserves in gold. They did not want gold when gold was cheaper, why would they want more gold now?

One reason for confiscating gold would be to spur investment. If the USA gave investors $1800 per ounce of gold then those investors would put some of that money in the bank or some other profitable investment activity that would help the economy grow, help banks and people to pay off debts, etc. Confiscating gold would also stop gold salesmen and hedge funds from ripping off investors by promising pie in the sky that will never happen. Gold has limited value. High prices are only sustained by intense efforts by hedge funds and salesmen. If all the gold disappeared, the real economy would not blip. There are better metals for jewelry nowadays that were too difficult to work with in the past.

I would not be surprised to see gold price drop to $500. Especially if some funds get into trouble and need to unload some of their positions. They are so tied up with derivatives that whenever big trends reverse they have to trade big to prevent collapse. For most assets, prices rise slowly along an exponential growth curve until they hit a cusp and then crash. Nobody is good at forecasting the exact timing of crashes even though they know a crash is coming. Thus they hedge themselves using derivatives that often make their position even more risky if they do not know what they are doing. Investment is hard even for experts.


Wednesday, September 21, 2011

Split Banking

“Split Banking” discussed in the British article below is what I have recommended for a long time. Back in the old days Glass-Steagall split off investment banking from retail banking and set up firewalls that worked fine for a long time. Deregulation allowed mergers to form super banks “too big to fail” —- they could gamble with savers’ money and threaten taxpayers with losing all their money without government bailouts. In split banking the investment banks could be allowed to fail without damaging the retail banks that hold most savers money and handle most transactions. If the rich fat cats lose money in the investment banks who cares? That is the free market system.

Also back in the old days banks were restricted to one state. That is also a useful firewall to contain damage from a bank failure. Nowadays with electronic movement of funds we do not need the pony express to move money from state to state —- indeed technology should allow more choice and specialization, not less. There would be no loss of efficiency in forcing banks to operate in one state. Abandonment of traditional rules and regulations is a recipe for disaster.


Friday, September 16, 2011



Poverty, Obesity, Hunger

Amazing paradox. The poor are Obese and Hungry at the same time. Might government programs, welfare, food stamps be to blame? What if they were shipped out of New York City and given 40 acres and a mule? New York City has a shortage of engineers. Will they ever become engineers? Instead of shipping food to their farmer’s markets why not ship them to their food? Why don’t they eat vegetarian and run marathons and study calculus? I find liberals to be a puzzle. Further this is a major national economic problem. I think it can be solved by elimination of some government spending and more taxes, rules and regulations. Tax junk food and drugs and fat people. Limit the sugar, flour that fat people can buy. Outlaw GMO. Require school lunches to include broccoli, cauliflower, turnips, carrots, brussels sprouts, kale, chard, etc. etc. Require all politicians to exercise daily, keep their weight/height low, IQ’s high, and eat only healthy food.

Excellent article in the Times:


the most severe hunger-related problems in the nation are in the South Bronx, long one of the country’s capitals of obesity: the hungriest people in America today, statistically speaking, may well be not sickly skinny, but excessively fat.

Tuesday, September 13, 2011

Alternative Investments: Guns vs Paintings

You might be able to make a profit by investing in guns, but you will get more capital gains by moving to New York or Santa Fe New Mexico, studying art and investing in paintings. With the rich getting richer, all sorts of collectibles will grow in value if they become popular with the rich. Paintings and rugs are needed for large houses. Some kinds of stamps, jewelry and furniture will also do well but Paintings are the best investment over the long haul if you study the market carefully. See the Moses Mei price index:
2000 year old Chinese painting attached. The singing bird pistol
auction was in Hong Kong

If you don’t want to study or farm, the USA S&P500 stock market is paying 2% dividends and in addition to dividends the value has grown from 5 to 1172 since 1871
Is not rocket science, just throw a dart at a newspaper to pick your stocks. The easiest investment.

Even in a deflationary environment you can find some inflating assets. What is relevant for the overall price level is how many dollars people have to pay for what they buy relative to what they get paid. Nowadays they buy a lot but don’t work much. Hence, they get fat, lazy, and stupid.

Best Jobs vs Student Loan Default Rates

The student loan default rate is over 10% and climbing. There are a trillion dollars of such loans, federally insured, so the taxpayer is on the hook. Subprime student loans may cause another crash as did subprime home loans so I hope they cancel eligibility for all institutions with more than a 5% default rate. Link to article below with the statistics

CollegeResults.org is a useful web site that gives all sorts of info on most colleges, including tuition, test scores, race, gender, loan default rates, dropout rates, etc. Regions vary widely in their support of education and quality of student.

Millions of high-paying U.S. jobs have no workers to fill them because applicants lack the education. New York City is trying to import Californians start an engineering college. Jobs in science and engineering make up 3.8 percent of New York’s workforce compared with 6.9 percent in the San Francisco Bay Area and 7.4 percent in Boston.

Los Alamos Santa Fe New Mexico is even better than Boston: better people and better weather. More Phds per capita.

Monday, September 12, 2011

No hyper-inflation

Rich people do not want inflation, they want all the money and low prices. Bankers are rich. Bankers own the Federal Reserve. The rich also own the president, house and senate of the US and all the states, and the military, and the oil companies,….

The rich are winning. They are getting what they want and nothing can stop them unless the people unite 51% to elect different politicians. But the people have diabetes, addictions, aids, obesity, stupidity, and a host of problems. They get their info from the liberal news media that divides them into warring camps that will never get 51% of them to agree on anything. Just as the rich plan in their disinformation campaigns on the media.

USA can’t get inflation when most are in debt and can barely pay their mortgage, car, and credit cards. They don’t have enough money to splurge on high priced items. They cut corners wherever they can. The rich know that so they let prices stay low and they keep coming up with cheaper items such as ipods, laptops, tablets, GMO grains, artificial flavors to placate the sheeple and stave off revolution. Overall prices have been falling relative to incomes and what people “like.” Bernanke gave up on QEIII. Rich do not care about unemployment because they do not have to work. There is no reasonable scenario for inflation unless something changes such as a Rick Perry war on Iran $10 per gallon gasoline.

Food stamps, liquidity, money supply

Cash back is allowable, with different policies for different states, stores, banks, etc. Some links below. Regardless of the attempt at social engineering, the recipient can use their food stamps for food thus freeing up cash for alcohol, tobacco or whatever. When they get something for nothing they will develop attitudes of parasitism i.e. milking the system instead of contributing to it. TV, radio, movies valorizes consumption over production, hence many social problems.

Food stamps are dangerous in a nation suffering from an obesity epidemic and should be opposed on ethical grounds. Poor, uneducated, and minorities tend to be fatter.

The balances on all electronic cards: EBT, Social Security, Debit, etc are part of the money supply and handled by the banking system in routine fashion. These balances are often small because people often spend them quickly.

Money and liquidity is increasingly hard to define and travels at the speed of electricity. Home equity can be tapped, converted to Italian currency, and Lamborghini bought within a few minutes, not showing up in the end-of-day money supply tally at all. Other assets are even more liquid.

Illegal drugs are a liquid asset that is not tracked. Food stamps can be swapped for illegal drugs, although not as easy as cash. USA has too much of an underground economy that is diverting attention to what is really needed: broccoli, carrot, tomato, etc.

Cash benefits may be used to purchase any item at a participating retailer, as well as to obtain cash-back or make a cash withdrawal from a participating ATM. Most states’ online EBT systems are interoperable through the Quest network

Can you get cash back at the grocery store from SNAP/food stamp benefits?
You can only receive cash back if you have both cash welfare(TAFDC) benefits and SNAP/food stamp benefits on your card. If you want to use your cash welfare benefits to buy food or get cash back, you have to swipe your EBT card in the machine a second time

Replaces paper food stamps and checks
Safer and more secure than carrying cash or checks
Faster payment
Convenient and easy to use
Replaces paper coupons
You don’t have to purchase all of your WIC food benefits at one time
The receipt given at the end of shopping shows your remaining WIC food benefit balance

Welcome to the Maryland EBT card website! EBT stands for Electronic Benefits Transfer. You can use your card at the grocery store to spend your benefits and some grocery stores will give you cash back with your purchase.

MAINE: If you want cash back with your purchase, you will need to either tell the clerk how much you want back or you will be able to enter the amount of cash back on the machine.

Friday, September 9, 2011

Horses vs San Diego Blackout

This is suspicious. Is the USA power grid so fragile? Are they covering something up? I lived in San Diego many years without air conditioning. It is not really needed. People are getting too soft. San Diego has the best weather in the USA. Properly constructed
houses do not need much air conditioning or heating, even in Missouri.

A power outage would not be such a big deal if people had more solar panels, windmills, stationary bike generators, horses, bicycles, etc. People should live where they can walk to most essentials. Bikes can go longer distances. Horses can pull heavy weights over long distances without paved roads or any imported oil. Horses are natural parts of the ecosystem and friendly vegetarian pets. Trains are the most energy efficient heavy haulers. Many modern problems are self-inflicted.


Authorities were focused Friday on trying to figure out how a mistake by a single Arizona Public Service Co. worker making a routine repair in Yuma, Ariz., could cascade across the Southwest.

Wednesday, September 7, 2011

Banking Panics and the Death of Capitalism

Interesting series of book excerpts on Bloomberg. Marx and others thought banking panics were signs of a dying free market. Instead the economy recovered. 150 years later the problem is obesity, excess, sitting, too many wasting time with TV, Radio, iPods, games instead of working. Economy is over-productive, giving people too much of what they want and not what they really need, including forcing them to work and work out. Has Obama finally killed the economy for good, or will it recover and prosper again?


Tuesday, September 6, 2011

Deregulation cause of Meltdown

The attached two charts show: (1) housing starts during the 2000s were below previous peaks and (2) total consumer credit actually grow slower during the 2000s Bush 2 era than 1990s Clinton era which in turn was grew slower than the 1980s which in turn grew slower than previous decades. Back in the old days credit grew exponentially but slowed to linear in the 1990s and did not even double during the 2000s. Now credit is falling! During Clinton, credit doubled from 800 to 1600 but during the 2000s never made it to 3200. Bush 1 was stagnant but Reagan doubled credit from 400 to 800.

FNMA and GNMA and mortgages have been around for a long time so their existence was not the cause of the crash. The crash was caused by deregulation that allowed the different kinds of mortgages to be issued differently and to be repackaged into derivatives without sufficient government oversight. Particularly bad was credit default swaps such as issued by AIG that would bankrupt AIG if too many mortgages went bad (as they did).

Back in the old days the smaller economy could handle more mortgages without serious problems. The problem was excessive pay for designing obfuscating derivatives. Deregulation allowed bankers to do what they were not smart enough to figure out the consequences of and really did not care. They traded short term gains for long term costs, realizing they could retire with those short term gains and let the taxpayers and investors pay the long term costs.

Much of the deregulation can be traced back to DIDMCA, a huge act that eliminated prohibitions on usury among many other provisions. I attach a paper discussing DIDMCA signed by Jimmy Carter in 1990 March. Reagan also rode the deregulation wave. Clinton finally repealed Glass Steagall and I was appalled, then not surprised at the debacle that followed