Guest Commentary: James Adams on the Economy

Today I am excited to offer another new guest commentary provider here at Stand Up For America. Mike, a good friend of mine, a year or so ago recommended to me that I pick up a book written by a friend of his, “Jimmy.” Knowing my passion for politics and my lambasting of federal economic policy over the years, he posited that I would enjoy the book, and insisted that he wasn’t just saying so because he was friends with the author. Those who know me are aware that I am an avid reader. But I have been burned on book recommendations from friends in the past. So I was skeptical, to say the least. But Mike wouldn’t relent…

“I’m telling you, the book is good, and you will enjoy it,” Mike promised me. I went home that night and ordered the book on Amazon and awaited its arrival. The book was titled Waffle Street, and was written by James Adams. It chronicled James’ true life story of a transition from Wall Street to serving hash browns on the night shift at Waffle House. Once it arrived, it sat on the kitchen counter for a week as I finished the book I was currently reading. I went ahead and ordered a second book in case I found that Waffle Street really sucked…

It didn’t. It is a great book. James told the story with a self-deprecating humor that both made some really good points and simultaneously turned “Wall Street” into a real life person. The stories of the relationships he built, and the lessons he learned, had me captivated and I finished the book in short order. As an added bonus, throughout the book James provided easy to understand lessons on basic economic principles that didn’t make me feel like I was back in a college accounting class. And the Waffle House in question was around the corner from my job, one that I had frequented at times (although Jimmy was not my waiter 😦 )To make a long story short, I loved the book, and I highly recommend it to all of you here at SUFA. Go order it now!

I decided the day I finished the book that I was interested in somehow getting James here on SUFA so that others could enjoy his insight and his no nonsense way of looking at the world of economics. Admittedly, James was immediately willing to participate. It was me that was the delay. My plans kept getting pushed off until James finally made it easy enough that even I couldn’t drop the ball too badly. As a result, SUFA finally gets to meet James.

For the record, there is a link in Jimmy’s bio at the end of the article that you should definitely visit. I have also added it to the Interesting Reading links on the SUFA main page. There is a great trailer for the book there that makes me laugh every time I watch it…

So without dragging this on any further, I am pleased to present a guest commentary article from the author of Waffle Street, James Adams…

On Friday, the Commerce Department reported second quarter GDP growth of 1.0%, down from a previously-announced estimate of 1.3%.  In a seeming vindication of the stock market’s recent volatility, the lackluster number confirmed what most Americans have been feeling in their bones– or at least in their wallets– for some time: that the most tepid of economic recoveries in half a century is faltering.

In a speech later that day, Ben Bernanke said the Federal Reserve still has tools to stimulate the economy, although he didn’t commit to using them.  Not that it would have comforted anyone if had done so.  The anemic pace of economic “growth”, stubbornly high unemployment levels, and a sovereign credit rating downgrade are causing an increasing realization that our national leadership– Presidential, Congressional, and Monetary alike– lack the ability to extricate the U.S. from its financial conundrum.

With the release of each depressing round of economic data, both the Left and the Right trot out the same tired commentary.  The former camp espouses the policy prescriptions that John Maynard Keynes advocated in his General Theory of Employment, Interest, and Money, namely:

  1. Redistribute wealth to lower income citizens who have a higher “marginal propensity to consume” and
  2. Socialize investment spending as needed to bridge the gap between current and full employment levels.

Generally speaking, the muted effects of the American Recovery and Reinvestment Act of 2009 on unemployment levels have lessened the many Left-wingers’ enthusiasm for the “socialization of investment” that Keynes espoused.  Vice President Joe Biden remains a noteworthy exception.  “I think the economy does need more stimulus,” Biden opined this week. “Everybody says we should’ve (had)…a bigger stimulus package. Yeah, we should’ve.  I was pushing (for) it,” he said. 

Biden’s remarks pale in comparison to a Keynesian assertion made by Paul Krugman two weeks ago on Fareed Zakaria GPS.  The Nobel laureate claimed that if the U.S. were forced to spend massive amounts of money to repulse an alien invasion, “this slump would be over in eighteen months.”  No, really.  He actually said that.

Such comments give credence to right-leaning economists who point out a major problem with the contemporary economics profession: it awards Nobel prizes to men who genuinely believe that putting the government in hock to repulse extraterrestrials constitutes a financial windfall.

Not that today’s Right has perfect lucidity in economic matters, either.  GOP commentators remain mired in an economic paradigm that hasn’t evolved in the past three decades.  The primary tenet of their dogma: if growth is slow, it’s surely because

  1. Business regulations are too onerous or
  2. Taxes are too high

To the first point, healthcare regulations like Obamacare undoubtedly constitute at least a minor impediment to resolving our unemployment problem.  Can anyone deny that forcing employers into the business of healthcare provision once their payrolls crest fifty individuals places an unnecessary constriction on hiring?

With regards to tax cuts: while laudable, they are not an effective salve for all forms of economic woe.  The Republican argument runs something like this: “Economic growth comes from higher productivity, which is created by investment.  Because taxes channel savings away from private investment and into government largesse instead, they are a drag on real growth.”

While anyone who seriously believes that government can allocate capital more productively than the private sector should have their head examined, there’s more to today’s story.  In the first place, by many measures, tax rates are the lowest that they’ve been in decades.  Rather than citing all of the individual metrics, please visit this link: http://www.americanprogress.org/issues/2011/06/low_tax.html
(Yes, I realize that the Center for American Progress is hardly an unbiased information source, but I think the data is correct just the same.)

Pundits on the Right correctly identify productivity increases as the appropriate remedy to unemployment.  However, their tax-factor growth model originally championed by Arthur Laffer and Jude Wanniski three decades ago obviously fails to explain contemporary economic malaise.  If there is any disincentive to investing today, it is surely not a 15% rate on capital gains or a 35% marginal rate on income.

An "Economic Cartographer" we need to revisit

Although credit conditions are generally tighter than they were in 2007, the Wall Street Journal has recently reported that more than 90% of small businesses who require access to capital have been able to obtain it from commercial banks or other lenders.  Furthermore, the prime borrowing rate has been 3.25%– the lowest level since 1955!– for nearly three years.  (Historical data available at this link: http://www.wsjprimerate.us/wall_street_journal_prime_rate_history.htm)It hardly needs mentioning that the bond market is also willing to furnish capital to large corporations at the smallest yields in decades.

But if tax rates are low, capital is accessible (and quite cheap) for the vast majority of creditworthy business borrowers, then why does the economy remain moribund?  Is monetary policy at fault?  Notwithstanding gold’s massive run of late, the Consumer Price Index (CPI) only rose 1.5% in 2010, and is running 3.6% for the twelve months ended July 2011.  Tighter monetary policy could increase the dollar’s exchange value, thereby lowering the price of petroleum and other commodities.  Cheaper gasoline might provide sufficient relief for ailing consumers and businesses to solidify a recovery.  On the other hand, the benefits of a strong dollar could be largely offset by a flagging export sector.

Here’s the bad news: policymakers– on both sides of the partisan aisle– have finally run out of viable fiscal, regulatory, and monetary bullets.  Neither increasing stimulus spending, nor cutting taxes, nor adjusting monetary policy will spur the sustainable growth our economy so desperately needs. 

The good news: there is still a way to get ourselves back on the growth track.  In fact, the roadmap for getting us there was originally drawn two hundred years ago.  And I’m happy to show it to you…next week.

James Adams spent eight years in debt capital markets. He is the author of a new book entitled “Waffle Street: The Confession and Rehabilitation of a Financier,” a true life account of his transition from working at hedge funds to serving hashbrowns at Waffle House. www.wafflestreetbook.com

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Comments

  1. Do we really have to wait a week? Right now I like anyone who bucks both sides of the financial argument.

  2. Can’t wait for next week! 🙂

  3. Ray Hawkins says:

    I’ll stick my neck out here – “consumer confidence” – kind of a squishy term I think, but hey, I’m not feeling real confident that the current administration (not any potential 2012 replacements) is going to make the right economic decisions therefore I tend to spend less (and to be fair – I have less money to start with anyway).

  4. Welcome, James!

    for some time: that the most tepid of economic recoveries in half a century is faltering.

    One of the most misunderstood issues of Economics (at least from the Austrian point of view) is that “economic recoveries” in a Keynesian economy is NOT a recovery at all.

    It is a new coat of paint trying to cover a degrading, decrepit, and collapsing structure … believing a new coat of paint will fix it. But as the system crumbles, it takes more paint to cover it, and without understanding what is undermining the system, the rusting of the system accelerates, until one day, no matter how much paint one applies, it cannot cover the rot.

    So there has been no economic recovery of any merit since the end of the Vietnam war – and even then, it was muted.. The illusion of such economic recovery has created by fiat monetary expansion and cheap credit – and more monetary expansion and cheap credit cannot sustain economic growth.

    Economic growth comes from only one source – improved productivity and savings – neither of which has grown much at all – and the latter, well, Americans are net-debt holders, not savers.

    The lack of any economic recovery after the latest round of pushes and shoves is no surprise … to Austrians Economists … but shocking to nearly every other economist.

    In a speech later that day, Ben Bernanke said the Federal Reserve still has tools to stimulate the economy, although he didn’t commit to using them.

    What is more telling: he did not say what these tools are, let alone whether he would use them.

    Bluntly, he is out of ammunition. Keynesian answer to economic woes is always more government spending and debt. But record amounts of both have no effect. Ben has no idea why, nor any idea what to do next, other than more government spending and debt.

    realization that our national leadership– Presidential, Congressional, and Monetary alike– lack the ability to extricate the U.S. from its financial conundrum.

    They never had the ability – government does not create or produce anything; but most certainly can impede the production of things.

    Thus any of its efforts are at best illusionary, and eventually, all of the efforts of government are destructive. As Hayek posited, the degrading efforts of government does not cause government to stop, but causes government to intervene and do more, which only hastens the destruction – up to the point either the government or the economy utterly collapses.

    Redistribute wealth to lower income citizens who have a higher “marginal propensity to consume” and
    Socialize investment spending as needed to bridge the gap between current and full employment levels.

    Yep, they have only one tool in the Keynesian toolbox and when it is a hammer, the world is full of nails.

    Consumption -the cornerstone to Keynesian crackpot theories – does not create economic growth. Productivity does.

    Keynes tried to refute Say’s law and produced an entirely incomprehensible theory to do so. Say’s Law was not refuted – but Keynesian never cared.

    Say’s Law:
    “Products buy products; Producers sell their products to other producers”

    Consumers in a prosperous economy are productive in the economy. Consumers without production are parasites and drain the economy.

    Redistribution of the production of the productive into the hands of the less productive degrades the economy, not “improve it”.

    Further, Keynesians view labor as a different economic good then anything else – thus treat it with different theories – all of them extentions of the same crackpottery vs. Say’s law.

    High unemployment is a statement saying that the previous and systemic mis-allocation of resources due government intervention was “really bad”. Trying to solve this high unemployment by promoting even more and deeper mis-allocations of resources may appear to solve the issue in a very short term, but the longer term, makes the situation even more broad, deeper, and dangerous.

    Government can solve unemployment overnight.
    Draft everyone into the Army.

    But then, who would actually produce the necessary goods for society?
    We would have 100% employment, but nothing to eat.
    This is government action in a nutshell.

    Business regulations are too onerous or
    Taxes are too high

    Both which are true.
    But Rep. are not interested in doing much about either.

    Regulations work to eliminate competition and promote large mercantilist corporations. Rep’s depend on the funding from such corporations, so the best they will do is mouth regulations “changes”, but will do so in a manner that expands corporate interests and cabals (see Banking Industry re-regulation)

    Rep tax matters only moves it around – yes, the lowered income tax, but they increase SS taxes – so no matter how you cut the cake, Americans fork over about 40% of their income to the government and this percentage hasn’t changed for decades regardless of political party in power.

    Economic growth comes from higher productivity, which is created by investment. Because taxes channel savings away from private investment and into government largesse instead, they are a drag on real growth.”

    This is an economic truth.
    Redirecting productive income away from the producer and into the hands of the non-productive MUST drain the economy.

    Otherwise, one would be suggesting that destroying wealth increases it.

    In the first place, by many measures, tax rates are the lowest that they’ve been in decades. Rather than citing all of the individual metrics, please visit this link: http://www.americanprogress.org/issues/2011/06/low_tax.html

    Actually, they haven’t changed in decades – only what name the tax is paid has changed.

    As this shows, the total tax taken by government has been essentially flat for decades – and this does not include State taxes – bringing the amount up to about 40% of the American wallet.

    It is this chart that defines taxation and the complete lack of any “tax breaks” actually supporting economic growth. Without real tax cuts (which means real spending cuts), the facade is created and the fallacy of excuses.

    So when people say “See, THIS tax break did nothing” – they are correct, but they create a crackpot theory saying “tax breaks don’t work” – they do not understand that there has been no tax break at all, but merely a redistribution of the tax to somewhere else – hence, the economy continues to be drained.

    Although credit conditions are generally tighter than they were in 2007, the Wall Street Journal has recently reported that more than 90% of small businesses who require access to capital have been able to obtain it from commercial banks or other lenders.

    Correct.
    But business is wary of committing to long term borrowing for capital projects when interest rate threaten to skyrocket in the near-future. So they are only borrowing on short-term notes, and long term investment borrowing is being avoided like the plague.

    Notwithstanding gold’s massive run of late, the Consumer Price Index (CPI) only rose 1.5% in 2010, and is running 3.6% for the twelve months ended July 2011.

    Gold price rarely has anything to do with inflation rates, up or down.
    It has much to do with the faith in government and currency – and both are heading for modern time disasters

    Tighter monetary policy could increase the dollar’s exchange value, thereby lowering the price of petroleum and other commodities.

    Commodities are cheap already – and again this has nothing to do with monetary policy or inflation … but lots to do with a glut filled stagnant economy.

    When things are not bought, the price falls … Supply and Demand, and this economy, there is very little demand, thus a glut of supply, thus prices fall.

    Cheaper gasoline might provide sufficient relief for ailing consumers and businesses to solidify a recovery.

    Fuel prices have little to do with demand – the world is awash with oil – piled up on ships and storage facilities.

    Oil prices are subject to uncertainty in the Middle East and the drop in purchasing power of the dollar.

    Gasoline prices only weakly correlate with oil prices, but strongly correlate with refinery capacity. It has been decades since refinery capacity has been expanded in the US, but energy growth has not abated.

    Further, the government has mandated changes in the fuel additives – further shortening supplies as few refineries have been able to upgrade their facilities to support this change … almost all of them being blocked for these upgrades by environmental activism.

    Manipulating oil production does nothing to relieve fuel prices.

    Here’s the bad news: policymakers– on both sides of the partisan aisle– have finally run out of viable fiscal, regulatory, and monetary bullets.

    They are Keynesian and know nothing else.

    Neither increasing stimulus spending

    Counter-productive

    cutting taxes

    If real tax cuts occurred, then yes it would help.

    But that is a fantasy – government cannot cut taxes without cutting spending -which will not happen- or without massively increasing debt, and already the debt is far too high.

    Thus, the only thing they will do is shuffle the taxes between columns and call it a tax cut.

    , nor adjusting monetary policy will spur the sustainable growth our economy so desperately needs.

    End the FED would go a very long way to creating real growth.

    • BF states ” when it is a hammer, the world is full of nails.”

      D13, in an attempt to control hysterical laughter with out rolling on the floor….no truer words could be said…..you “hit the nail on the head” with this one. Nice analogy. I must use that sometime. I thought that I have heard most metaphors but………you are never to old to learn.

      Good morning, sir….hope that you and yours are well….we are fighting another fire here because all the friggin rain hit the east coast..

    • Excellent as always BF! Hope all is well with you and yours…

      🙂

    • @BF

      Some interesting thoughts from you. I am hoping you will take some time to expand on them so that I can understand your position a little better…

      Say’s Law:
      “Products buy products; Producers sell their products to other producers”

      Consumers in a prosperous economy are productive in the economy. Consumers without production are parasites and drain the economy.

      I am interested in hearing your thoughts on the “service economy”. I understand your thoughts on producers. However, no matter the producer, there are usually folks aligned that work instead as a service part of the system. In your economic beliefs, are all service people also parasites on the system? Take for example the pharmaceutical industry. A CRO company runs the trials on potential drugs to determine efficacy and safety prior to FDA approval. In my eyes, these folks all provide a service, but don’t produce a “Good.” Does that mean that all the people who work in that industry are parasites on the productive economy? I am really just trying to understand…

      Rep tax matters only moves it around – yes, the lowered income tax, but they increase SS taxes – so no matter how you cut the cake, Americans fork over about 40% of their income to the government and this percentage hasn’t changed for decades regardless of political party in power.

      I saw that you later presented a chart and some stuff showing that the overall taxes paid hasn’t changed in decades. That is an interesting premise. I would like you to expand more on that if you will. It would seem, if true, that this completely eliminates the claims on both sides of the aisle that their policies stimulate or impede economic growth. I am not saying you are wrong, but I really want you to expand on it so I understand it better. I have long held that the republicans are right, at least in theory, that tax breaks stimulate the economy. And I felt I was justified in that belief because, despite the claims from the left, the numbers appear to prove so.

      Your claim here would be that I am wrong, that the tax rate in reality hasn’t changed at all, so tax cuts were not responsible for any increases in economic prosperity. I may have to reevaluate my position! If this is true, to what do you attribute the ups and downs of the economy over the last several decades? If tax rates really haven’t changed for anyone, what is it that changed to cause economic cycling?

      More later from me as I have more questions…

      • USW, BF can correct me if I am wrong here, but production and products are not the same thing. A service is a commodity in the market, just like labor. A person providing a service is providing a “good” in the sense that they are creating something that is tradeable. What they produce is temporary, in the sense that it cannot be resold, once provided, the service does not continue to exist. It’s effect, however, may indeed continue. For instance, if I provide mechanical services, and I fix your car, you cannot resell fixing your car, that item has come and gone. It does, however, carry intrinsic value in the sense that you have a functional car. If you sell that car, it will be more valueable as a repaired and functional car than as a broken car.

        The bottom line is that someone providing a service is creating a tradable commodity, just like someone making chainsaws. Someone who has services provided for them or purchases products but is not creating anything that can be traded is a drain on the economy. They are consuming. They are able to do this by spending wealth, thus destroying savings and “using up” wealth by consumption rather than creating it or using that wealth as a tool for production (investment), or they are are spending monies given to them via charity or government handouts. Either way, they are removing money, or economic value/wealth from the system.

        If, however, you trade your services OR your goods for that which you need, whether directly or indirectly through monetary exchange, you are at a minimum maintaining a balance of wealth. In the case of services, it could be viewed that since they hold no direct intrinsic value once performed, they maintain wealth rather than expand it. Even in my mechanic example, wealth was preserved rather than created. In some cases, however, services provided might be tools used to create wealth or increase productivity such as analysis of methods or education or a variety of other things. Overall, you are still being productive, even if you are not producing physical items. No one can consume without also producing unless they are draining wealth, either their own or that of someone else. So a “consumer economy” is a declining economy living on existing wealth, credit, or perception thereof. A “service economy” will not have the growth of a “production economy”, but at least there is productivity.

  5. Very interesting article and a great teaser……..I am with Bama Dad….however……………..

    Stated – “Presidential, Congressional, and Monetary alike– lack the ability to extricate the U.S. from its financial conundrum.”

    D13 says: Ya think? This current administration as well as the last one….had no experience in anything except mucking it all up. I cannot fathom why it is not apparent that the larger the government, the larger the problem.

    Stated – “Such comments give credence to right-leaning economists who point out a major problem with the contemporary economics profession: it awards Nobel prizes to men who genuinely believe that putting the government in hock to repulse extraterrestrials constitutes a financial windfall.”

    D13 does the one eyebrow up and the other down thing: Right or left, it does not matter, in my opinion. Academia does not know the answer at all and I think that academia is the tap root of the problems. There is nothing like experience. Nobel Peace Prize winners are second rate…take a look at the last few that have received them…Theories, what ifs, paper models…..they do not work. While this can be an aide to programs, it is not reality. Like flying a plane or driving a tank……we have all the books, the tech manuals, the procedure manuals etc…..nothing works until you flip the mag switch or start the engine. It still takes a competent pilot or driver to make it work…no matter what us written.

    Stated – “Business regulations are too onerous and taxes are too high”

    D13 muses: I will be the first to admit that simply cutting taxes is not the fix all. Raising taxes certainly is not. A first grader knows and understands that we are in a global economy. Our standard of living or our thought of standard of living is going to change in a global environment. The key to everything is productivity. How hard is this to understand? It apparently is hard to understand because most people do not have a clue. They worry about making the rent and their car payment and putting food on the table. In a global environment, how can we compete in business when we are stifled with “onerous regulations” that our competitors (globally) do not subscribe to? How simple can it be? Our competitors engage in forced low wages, child labor, no handicap regulations, no environmental regulations, no EPA mandates, little or no corporate taxes, lower individual tax rates, and the list goes on. How simple can it be to understand that China can make a widget and export it over here CHEAPER than we can make it on our own shores? It is a noble thought to have price controls, EPA regulations, clean air and water, minimum wage controls, high pensions, and an even more noble thought to be a leader in such……but then we compete globally with entities and companies that have none of these. Can anyone say DUH?

    Stated – “Although credit conditions are generally tighter than they were in 2007, the Wall Street Journal has recently reported that more than 90% of small businesses who require access to capital have been able to obtain it from commercial banks or other lenders. Furthermore, the prime borrowing rate has been 3.25%– the lowest level since 1955!– for nearly three years.”

    D13 agrees: The money is out there for business to borrow and at great rates. Credit is tight and should be…..why would you lend money to someone who cannot pay it back? I do not have all the answers but I can answer one thing with certainty. Our family business is and has been quite lucrative and we have cash and we are keeping it handy. We do not find it wise to invest today in long term issues because we do not know what is going to come out of Washington. We have reduced our employee count and have instead gone to independent contractor arrangements as much as possible to avoid the regulations that Washington has put forth. We will avoid higher payroll taxes, minimum wage regulations, mandated health requirements,etc. We are saving our cash because we know there will be regulations that will require greater spending and we wish to be in a cash position to sustain whatever Washington throws our way……in other words…it is not worth the risk of capital investment right now. There is absolutely no way to plan five or even ten years down the road. We have established a myriad of subsidiary corporations to fall under the “caps” that regulations have put on us. Why? Because we are the small guy….we do not get health exemptions like McDonalds and GE and GM and labor unions, etal. So, why borrow money to expand business in an uncertain environment. Smart managers are going to sit on their money and wait and see. No hiring…..no expansion…more unemployment.

    Nice article….will read the book.

  6. Welcome James and thanks for a great article.

    “But if tax rates are low, capital is accessible (and quite cheap) for the vast majority of creditworthy business borrowers, then why does the economy remain moribund?”

    I think uncertainty is the issue. Small Business is the largest employer in the US and they are scared of what will happen if they hire or expand.
    With the way the Obama administration has dealt with our oil companies, bringing new gulf to a near standstill and jumping into the Libya conflict, will gas prices stabilize at $4-5 a gallon? Nearly every business has to ship things in or out, a fuel price spike can erase all profits and cause you to fail. They are also worried about ObamaCare, that is still unclear what they will have to do to meet the law’s requirements.
    Obama wants to raise taxes, spending cuts are not enough, revenue must be part of the solution. Does that make anyone want to start a business or add employee’s?

    Consider some broken promises on ObamaCare.

    President Obama promised small businesses that they would receive tax credits to help alleviate the large premium costs in the bill. The Small Business Tax Credit is supposed to be the primary tool for doing this. But not only is the tax credit uselessly small — the Congressional Budget Office (CBO) estimates that it will only affect 12 percent of people in the small-group market — but it ends in 2017.

    President Obama promised seniors that their Medicare plans would be protected. But Medicare’s chief actuary, Richard Foster, has revealed that Medicare is anything but safe. Between 2014 and 2023 — the first 10 years of Obamacare’s full implementation — Medicare Part A and B will be cut by a combined $1.05 trillion under the law. Foster has also revealed that reductions to Medicare Advantage, the popular private supplemental insurance that almost one-quarter of Medicare beneficiaries enroll in, will cause almost half of current Advantage enrollees to lose their plans.

    In order to ease voters’ debt concerns, President Obama assured Americans that Obamacare would reduce the deficit and cost under $1 trillion over 10 years. The CBO produced a report suggesting that the president was right. But that report is flawed: It uses a 10-year window that includes four years of preparation for the law and only six years of its actual implementation. Shift the 10-year window back one year — three years of preparation, seven years of benefits — and Obamacare’s cost jumps to $1.4 trillion. In fact, the CBO says a full repeal of Obamacare would reduce the budget deficit by $540 billion over the next 10 years.

    President Obama emphatically promised, “If you like your coverage, you can keep it, no matter what.” But that’s not true either. The restrictions on cost-sharing adjustments leave companies and individuals with little flexibility to change plan details without losing their grandfathered statuses. The administration estimates that between 49 percent and 80 percent of small-employer plans, between 34 percent and 67 percent of large-employer plans and between 40 percent and 67 percent of individual plans will not be grandfathered by 2014.

    President Obama also promised that premiums wouldn’t rise under Obamacare. The law, we were told, was going to lower premiums for families by as much as $2,500. The Agency for Healthcare Research and Quality analyzed the ten largest states’ average premiums in 2010. On average, the premiums for a family plan rose 6.5 percent. Here in Texas, the average premium for a family plan jumped by more than $1,000.

    Read more: http://dailycaller.com/2011/08/29/obamacares-broken-promises/#ixzz1Wc3NCP5R

      • LOI,

        I disagree.

        NO pilot is needed

        An economy is not a plane, nor a machine, nor a ‘something’.

        It is the aggregation of billions of individual decisions.

        It is complete conceit to believe a bunch of men -whose interests are solely to enrich and empower themselves- can improve on the decisions that millions of people have made for themselves.

        Such conceit interferes with the people – making them make worse decisions so to avoid the perversions of the political minority – and as such the end always leads to economic problems.

        • Take this analogy a little further. As a pilot, I fly a Bonanza G36 and a Baron (twin engine)……both have been up graded with the latest in what is called the G 1000…..( all digital readout that does everything but cook breakfast). It is totally flight integrated and can couple all facets of the flight from takeoff to landing almost completely without piloting the plane. It will intercept radials, ascend and descend to preassigned altitudes,read weather patterns and measure air density, read winds aloft and compensate for drift. It will intercept and fly approach patterns in Instrument conditions……it does everything but actually land the plane. It is very easy to become dependent upon this one computer to make all your decisions. BUT…..it does not know what to do in an emergency situation…..like when you lose electrical power or the weather becomes to turbulent to hold the auto pilot. Hence, the once competent pilot is lulled into a false sense of security and forgets how to properly pilot his plane…it increases the likely hood of a fatal disaster.

          Our economy has been lulled into a false sense of security with the machinations of Presidents, Congress, and Fed Reserve (G1000). In good times, everything works fine….but when the emergency happens or the economic engine falters….the once competent forgot how to fly. They forget what got them there and they forget how to recover and use methods that increase the likely hood of fatal disaster……..interesting analogy but it fits.

          • Actually, I think it is more like a marathon with a massive number of participants. You cannot pilot this. The problem is that many of the runners have started following those in front instead of trying to win, and when those in front start running the wrong way, many runner follow. The ones being followed need to change course, or they need to admit they are stopping to go to the bathroom, and that they should not be followed. More importantly, those of us who see that some are running the wrong way just need to tell people to stop following them, but not break our stride or change direction to try and save them.

        • Morning Flagster,

          Well damn, I agree with you. But it’s a pretty good cartoon. I think the economy would do better if everyone in government would step back, shut up except to say they CANNOT control the economy, and quit meddling.

          August 31, 2011
          Welcome to the double dip recession
          Rick Moran, American Thinker

          Tyler Durden at Zero Hedge blog makes a pretty convincing case that we’re already in another recession:

          While the key market moving event from last Friday may have been Bernanke’s Jackson Hole speech which merely left the door open to future QE episodes, the most important event from an economic standpoint was the first GDP revision Q2, which dropped from preliminary 1.3% to a sub stall speed, in real terms, 1.0%. What is just as important is that as the following chart from Bloomberg demonstrates, the YoY change in real GDP, which is now at 1.5%, is a slam dunk indicator of recession: “Since 1948, every time the four-quarter change has fallen below 2 percent, the economy has entered a recession. It’s hard to argue against an indicator with such a long history of accuracy.” Bernanke agreed that “growth has for the most part been at rates insufficient to achieve sustained reductions in unemployment.” And while Bernanke is shifting dangerously into Greenspan territory with the open-ended interpretation of his statement, another thing that is more actionable is the observation that virtually every time real YoY GDP has dropped below 1.5%, this has led to a negative nonfarm payroll number. Granted, the result may not be as shocking as what the Philly Fed implied vis-a-vis this Friday’s NFP, but we believe a subzero print in the August labor report will convince the three Fed holdouts that the time for yet another monetary intervention is here (Arab Spring part deux consequences be damned).

          I’m not an economist but I’m a great believer in the past as an indicator of what will happen in the future.

          Of course, this is just a technical explanation for what we all see every day in our own lives. No jobs, little hope, and the queasy feeling many people live with on a day to day basis that their own jobs hang by a thread.

          We have no manuevering room as far as addressing this crisis. The Fed has QE’d too much. The federal government has spent too much money on dream world “stimulus.” Meanwhile, no one is addressing what really ails us; government intervention has made the problem worse and not better.

          The AP is reporting that 7 regulations proposed by the administration would cost the economy a billion dollars each. Obama and his crew of clueless gits wonder why there are no jobs being created?

    • Good morning, LOI. We have another fire to fight up here…..sigh,

      • Good Morning D,

        Wish I could come and do a rain dance for ya. We’ve been lucky lately. Started with spring flooding, then near drought, and then those million dollar rains started coming almost weekly. Is Obama still refusing disaster assistance?

        Did you view that video I posted late yesterday? Thought it would interest you.

  7. gmanfortruth says:

    Good article James, I look forward to the next one. The problem is the Government and that will not change until they are no longer. Far too many people are just muddling along as their own freedom is being slowing sucked from them. It will really suck to be them in the near future.

    • GMan

      Good to see you survived the big storm. Hope your piece of the woods stayed somewhat dry.

      • gmanfortruth says:

        Good Morning JAC,

        All we got was some wind and clouds, not a drop of rain. My sister got hammered, but they are OK and no damage. All is well with me, staying busy with hunting prep and canning.

  8. Yes I did,…..got a chuckle out of it because we have had drum fired shotguns for awhile. But you would be amazed at what we are finding here.

    And, the Obama Administration says that a 9 year drought is not a disaster.

  9. WTH! Next week? What, are you going on vacation to the Vineyard?

    Welcome to SUFA, by the way.

  10. The economy is doing just fine.

    Perhaps if the politicians and media stopped talking about it, it would do even better.

  11. re: Krugman and Aliens

    Keynesian do not understand the Broken Window fallacy, because they hold a flawed premise on the use of money.

    Krugman believes war is economically vitalizing – because money “that was merely lying around is now put back into the economy to rebuild things”.

    What Keynesians and leftist seriously misunderstand is that money is not lying around. It is invested – either in business directly or in loans (directly, or by depositing money into a bank, and the bank makes loans).

    So to repair the damage of aliens, war, or natural disasters is NOT economically vitalizing – the events are economically destructive.

    This is intuitive to normal people who would think it bizarre that burning down their homes improves their economic condition – but it does take years of academic study to convince one’se self of that belief of economic disaster=economic prosperity.

    Keynesian economists do not understand that the money does not sit around – and to repair damage it must be withdrawn from some investment that is actually improving prosperity, and used to replace the damages — the net, a lowering of prosperity.

    Keynesian economists are all nuts.

  12. Canine Weapon says:
  13. Home Equity declines almost 70% from 06 to 08.

    http://www.businessinsider.com/chart-of-the-day-our-vanishing-home-equity-2009-5

    Question for SUFA. Does this truly represent a decline in “wealth” as claimed by the report summary?

    • @ JAC…..here is how I view it. The minute substandard loans were put into effect, the real value of the home equity was devastated. It can only be wealth as much as you can put it on a financial statement. I think that in order to get to the real answer, you must back out the failed policies of Fannie Mae and Freddie Mac and you must back out the impact of the policies and the bundling of these same policies to get to true wealth. The people and funds that did the bundling are just as guilty. I hold the common broker and the hedge fund managers and anybody involved in the bundling of these loans just as guilty. They knew exactly what was happening.

      So, I think that real wealth in home equities can ONLY be measured on an individual basis through a personal financial statement and not as a class. So to answer your question, that article does NOT represent the real picture. It represents a picture of failed democratic policies and the failure of the Republicans and the private sector to call it.

    • JAC,

      For most consumers, one’s house is one’s biggest source of wealth. Economists have demonstrated that a loss of wealth leads to cuts in spending–from psychology and necessity. A 50%+ drop in home equity is one whopping-big loss of wealth. And it will have a lasting impact on consumer spending.

      And most consumers, when it comes to understanding home ownership, are economically ignorant.

      Home ownership is not, nor ever, an exercise in wealth building.

      People need a place to live – so you must buy it or borrow it (own/rent) or live in the street.

      If you sell your house, you have to buy another one – you are trading a house for a house – and if you review that in context, you see that there is no profit in it.

      Thus, your home is a cost, and not an investment. If you want to invest in homes, you buy a house and rent it to someone else.

      But people were lied to into believing to bet on a gamble – buy a small house when you get married, sell it for a larger one when you have kids, sell that for a bigger one as your career improves, then sell that one for a smaller one, reap the profit and spend that in retirement.

      All nice and clean.
      Just like “buy Blue Chip stocks, you can’t lose”

      However, the propaganda machine worked well convincing people that a cost to their lives was actually an investment – so people piled up and into home ownership thinking they were saving for their nest egg and as a consequence did not save for their nest egg

      Houses are no different an economic good and obey the laws of supply and demand.

      Today, the suffering public is learning that lesson harshly.

      For those that understand this, and own their own homes, nothing has changed.

      If you are not selling – it matters nothing what the market for homes does. So someone values your home to $1 billion … so what? if you aren’t selling, it completely is irrelevant the “valuation”.

  14. 😐

  15. Sneak preview of the upcoming Economic Plan…………….. Or Deja Vu all over again.

    “In an interview in 1960 with U.S. News World Report, Professor Samuelson talked about a new kind of inflation – what he called “cost-push.” As contrasted to the familiar kind of inflation – where too much spending power pulls up prices and wages – cost-push inflation is “a force that operates year-in and year-out, whenever we are at high employment, to push up prices. It’s a price creep, not a price gallop; but the bad thing about it is that, instead of setting in only after you have reached overfull employment, the suspicion is dawning that it may be a problem that plagues us even when we haven’t arrived at a satisfactory level of employment.”

    In his report to President-elect Kennedy in 1961 on the state of the American economy, he wrote: “Various experts, here and abroad, believe that the immediate postwar inflationary climate has now been converted into an epoch of price stability. One hopes this cheerful diagnosis is correct. However, a careful survey of the behavior of prices and costs shows that our recent stability in the wholesale price index has come in a period of admittedly high unemployment and slackness in our economy. For this reason it is premature to believe that the restoration of high employment will no longer involve problems concerning the stability of prices.

    “Economists are not yet agreed how serious this new malady of inflation really is. Many feel that new institutional programs, other than conventional fiscal and monetary policies, must be devised to meet this new challenge. But whatever the merits of the varying views on this subject, it should be made manifest that the goal of high employment and effective real growth cannot be abandoned because of the problematical fear that re-attaining prosperity in America may bring with it some difficulties; if recovery means a reopening of the cost-push problem, then we have no choice but to move closer to the day when that problem has to be successfully grappled with.”

    In this report to President-elect Kennedy, Professor Samuelson made certain minimal policy recommendations “that need to be pushed hard even if the current recession turns out to be one that can be reversed by next summer at the latest.” He urged strong support of pledged expenditure programs, including: increasing defense expenditures and foreign aid on a basis of merit and need, vigorously pushing educational programs, high priority for urban renewal and health and welfare programs, highest priority on improving unemployment compensation, acceleration of useful public works and highway construction programs, help for depressed areas programs, and natural resource development projects.

    To stimulate residential housing, he recommended reducing mortgage rates, mortgage discounts, insurance fees, and extension of maximum amortization periods, and a step-up in the Federal National Mortgage Association mortgage purchasing program. In monetary policy he specifically urged more reliance upon short term issues (to nudge a reduction in long term rates), and decisive actions to improve our international balance of payments position.

    On the question of unemployment levels, Professor Samuelson made these comments in an interview with U.S. News World Report in December, 1960: “I think, without question, that unemployment of more than 6 per cent is something to be concerned about. You don’t push the panic button, but you don’t relax and enjoy it either… I myself don’t believe in a numbers game in which you give a maximum tolerable percentage, because I think, truly, it does vary with the times… I would hesitate to specify the figure today, but I will say this: it would be, in my mind, less than a 4 per cent figure – that is, for the period ahead. I would not, realistically, think we could hope for a 2 per cent figure in the near future, as certain European countries have been able to do. But I do think that if we are pretty zealous in this matter and insist upon getting low figures – say, 3.5 per cent – then our very success in accomplishing that may lead to a new epoch just beyond when we could hope to go below 3 per cent… ”

    A further question in the interview asked what degree of responsibility the government has to insure high employment. Replied Professor Samuelson: “I think I would say simply that the American people have expressed the choice that it is their concern to see that large departures from high employment will not be tolerated… I never look upon the government as something in Washington that does something to us or for us. I think of public policy as a way in which we organize our affairs, and so I do think it is part of fiscal responsibility and monetary-policy responsibility to be discontented with the sort of unemployment we had in the prewar decade, and with the sort of exuberant booms leading to crises and panics that we have had throughout the history of our capitalistic system.””

    This article is filled with “Fatal Conceit”… 🙂

  16. PeterB in Indianapolis says:

    The government trying to control the economy is nothing but a bunch of men with forks in a world of soup.

  17. I know this might be an old story to some, but what the heck……….

    San Diego Woman Shot in Head
    Linda Burnett, 23, a resident of San Diego, was visiting her in-laws and while there she went to a nearby supermarket to pick up some groceries. Later, her husband noticed her sitting in her car in the driveway with the windows rolled up and with her eyes closed, with both hands behind the back of her head. He became concerned and walked over to the car.
    He noticed that Linda’s eyes were now open and she looked very strange. He asked her if she was okay, and Linda replied that she had been shot in the back of the head and had been holding her brains in for over an hour. The husband called the paramedics, who broke into the car because the doors were locked and Linda refused to remove her hands from her head.
    When they finally got in, they found that Linda had a wad of bread dough on the back of her head. A Pillsbury biscuit canister had exploded from the heat, making a loud noise that sounded like a gunshot, and the wad of dough hit her in the back of her head. When she reached back to find out what it was, she felt the dough and thought it was her brains. She initially passed out, but quickly recovered.
    Linda is blond, a Democrat and an Obama supporter, but that could all be a coincidence. The defective biscuit canister was analyzed and it was determined to be Bush’s fault.

  18. USWep,

    Say’s Law:
    “Products buy products; Producers sell their products to other producers”

    Consumers in a prosperous economy are productive in the economy. Consumers without production are parasites and drain the economy.

    I am interested in hearing your thoughts on the “service economy”. I understand your thoughts on producers. However, no matter the producer, there are usually folks aligned that work instead as a service part of the system. In your economic beliefs, are all service people also parasites on the system?

    No.

    Recall this statement:
    “Labor is an economic good, and obeys all the laws of economics like all other economic goods

    An “economic good” solves a human problem – ie: “wealth”.
    The nuance between “wealth” and “economic goods” is slight – the former the “potential” solution, the latter “the solution in action”.

    No less a machine relieves you of a particular task, so does the labor of others on your behalf (the “service”).

    You mowing your lawn with scissors….
    vs
    You mowing your lawn with a mower I built and you bought
    vs
    Me mowing your lawn with a mower.

    … from your point of view, each has increased its solution to your problem – mowing your lawn – but each advanced step relieves you of effort, allowing you to do something else or spend more time somewhere else.

    This is the essence of the division of labor.

    An economic parasite moves the opposite way – from merely impeding you, to causing you an increase in your effort, all the way to seizing the produce of your effort.

    This is the essence of government involvement.

    I saw that you later presented a chart and some stuff showing that the overall taxes paid hasn’t changed in decades. That is an interesting premise. I would like you to expand more on that if you will. It would seem, if true, that this completely eliminates the claims on both sides of the aisle that their policies stimulate or impede economic growth.

    It eliminates the claim that they stimulate economic growth. It all still impedes it terribly.

    The moving of taxation between “columns” and tax names will, absolutely, benefit a small segment of the economy.

    Obviously, if the government eliminated taxing YOU, you would see the removal of an impediment (hard to call it a benefit, since it was always yours to begin with) – and you would be “better off” than your neighbor still subject to that tax – better off being he still has more chains on his feet then you.

    However, the economy has not improved, for taxation is a zero-sum game. If you are relieved of it, someone has now been given an additional burden of it – the economy is still drained by it. The chains removed from you are placed on someone else.

    The ONLY way a tax cut begins to repair its damage is with an equal spending cut – for this is no longer a zero-sum game – reduction in expenditures with by a reduction in taxes – the taxes are actually removed OUT of the economy and one heavy chain link is removed.

    In general all western economies have all found ~40% taxation, no matter what country, is the maximum tax rate in total … any higher, tax revolts begin…

    I am not saying you are wrong, but I really want you to expand on it so I understand it better. I have long held that the republicans are right, at least in theory, that tax breaks stimulate the economy.

    Again “stimulate” by not impeding a segment of the economy, at the cost of another segment of the economy. But government will play magician and keep the audience eyes watching the small segment of “improvement” and avoid alerting anyone to the costs elsewhere.

    This explains why “Bush” tax cuts had limited effect over the whole economy; it still dragged – but some benefited enormously from it.

    Charlie can fill you in on who benefited.

    I may have to reevaluate my position! If this is true, to what do you attribute the ups and downs of the economy over the last several decades?

    Artificial low interests and monetary expansion policies.

    Mises and Hayek’s “Cost of Money” principle apply here – where the cost of money dampers high risk ventures in favor of low risk – while rewarding successful high risk ventures extravagantly. The cost of money is vital as the feedback loop between risk and reward.

    By artificially manipulating the cost of money (interest rates) downward, the (distorted) market is telling the entrepreneur that there is a lot of investment cash – ergo, lots of capacity to absorb risk – thus, lots of capacity to engage in higher risk investment for the potential of windfall, since if it fails, the loss of investment capital is not devastating.

    But this is a lie. There is not an abundance of investment capital – in fact, it is terribly scarce …. which is why government artificially lowered the interest rate because the lack of capacity to absorb risk had raised such interest rates higher!

    But the market believes the lie, because the market believes in its pricing mechanisms.

    So business which had no business starting get funding – buy materials and products, hire workers, etc.
    This gives the illusion of prosperity – but it is a mirage.

    There is no market for these products (or else the interest rate would not have needed the manipulation) – there are no ‘producers’ producing products to buy these products and the business fails.

    But this is a manipulation at the heart of the economy – its money – and the manipulation is not over one small sector, but the entire economy at once. The entire economy believes the lie, at the same time, and the entire economy suffers the reckoning of that lie at the same time … we call this a “Recession”, where mis-allocated resources are cleared, businesses closed, workers fired ….

    The cycle continues as government has found it politically unpleasant to face unemployed citizens, so they hold the to the lie …over and over again.

    Boom/Bust cycles are not a feature of the Free Market … small segments can certainly experience the cycle as their product moves from innovative to standard to insufficient as competition does its thing – but over the whole market, such a cycle is impossible.

    Boom/Bust cycles ONLY occur in the Keynesian manipulation of money supply and the cost of money. It exists because the entire economy is lied to at the same time, all segments make the same mistake in believing the manipulation and all segments suffer at the same time the collapse of the lie.

    This understanding is probably Mises’ greatest understanding.

    • “Boom/Bust cycles are not a feature of the Free Market … small segments can certainly experience the cycle as their product moves from innovative to standard to insufficient as competition does its thing – but over the whole market, such a cycle is impossible.”

      I’ve had this conversation with many an Austrian, but heck, why not start it again? How does one account for the Panics/Depressions of 1857, 1893, and 1907- an era devoid of central banking? I’ve heard some people cite national bank chartering requirements (although they weren’t in place for the first incident).

      • Hi Waffle Street,

        Do you agree that banks in the USA since 1781 has required a government license (charter) – in this case State charters?

        What do you thing of this particular comment:
        ….[T]he lending decisions of early banks were politically-motivated and skewed in favor of rich merchants.

        Overly stringent laws, ….forced bankers into lending patterns. Many early bank charters forbade banks to raise additional equity capital or to increase interest rates above a low ceiling or usury cap, usually 6 percent per year.

        Do you agree that the banks, to continue to seek a profit while unable to adjust their price of money due to law, engaged in a fractional reserve banking system (though there was no central bank)?

        Banking and Monetary Statistics three years previous to the Panic of 1857
        1854 (Jan.) 1857 (Jan.) Increase
        Number of Banks 1208 1416 17%
        Bank Loans $557m. $684m. 23%
        Bank Notes $205m. $215m. 4%
        Bank Deposits $188m. $230m. 22%
        Bank Specie $59m. $58m. -1%
        Reserve Ratio 15% 13% -13%
        Total Money Supply $575m. $647m. 12%
        Inflation $334m. $387 16%
        Population 27 29 7%

        20 Dewey, Financial History, 260; A. Barton Hepburn, A History of Currency in the United States (New York, 1903;
        repr. New York: Augustus M. Kelley, 1967), 159-160, 177-178.

        In 3 years, banks issued 23% more loans, while their fractional reserve dropped 13%

        The Panic of 1857 was caused by fractional reserve banking (although there was no central bank).

        State laws caused the credit to expand which caused a bubble to form in mining and some railroads among other things. The panic subsided fairly quickly.

        Wiki:
        James Buchanan, after announcing that the
        paper-money system seemed to be at the root cause of the Panic, decided to withdraw the usage of all bank notes under twenty dollars.

        He felt this would decrease the paper money supply to allow the species supply time to increase and reduce inflation rates.

        Banks, to earn profit, were not allowed to raise interest rates – thus, the choice left was to expand their credit provisioning via the fractional reserve banking.

        Combine artificially low interest rates with a boat-load of paper money, you get as I posted, funding for business operations that have no business to be in business. Bubble/Bust are inevitable.

        Under a fractional reserve system, you get a deadly scenario – banks lend highly leveraged monies to businesses who use such cheap credit to fund risky or over-aggressive expansion, which by definition, tends to fail often. Unable to repay loans, the fractional reserve lending system succumbs to the high leverage where only a few loan failures destroy the capital of the bank.

        If you would like me to specifically dialogue with you on the other dates, let me know.

        • Waffle,

          Oh, I see where your comment might derive.

          I should clarify that Keynes did not “invent” Boom/Bust cycles nor is Keynesian economics the sole and only historical cause of Boom/Bust.

          Keynesian economics specifically creates the conditions of Boom/Bust cycles … low interest rates by government decree and expansion of the money supply.

          And to repeat again, boom/bust within a small segment of an economy do happen often – and naturally – primarily caused by the natural cycle of competition. But this effect is not systemic throughout the economy.

          Even the 1857 Boom/Bust was localized compared to today — in this case mining and railroads which had been favored by grants, decrees, laws etc. by government to expand aggressively – their size impacted the economy writ large, however, it was not the whole economy under threat as today probably due to the more dispersed nature of State-run banking charters vs. today, the one and only FED.

          The point being – nation-wide boom/bust share the same roots – artificially low interest rates and monetary expansion

        • Oh, one more thing

          Mises did not attribute such a thing as to require Central Banking

          The requirement, he said, was credit expansion

          Our current era of Central banking merely has centralized the credit expansion – which makes such a thing far, far more dangerous as its failure provides a massively broad consequences as there are currently no alternatives to avoid it.

          Quote:
          The boom can last only as long as the credit expansion progresses at an ever-accelerated pace. The boom comes to an end as soon as additional quantities of fiduciary media are no longer thrown upon the loan market. But it could not last forever even if inflation and credit expansion were to go on endlessly. It would then encounter the barriers which prevent the boundless expansion of circulation credit. It would lead to the crack-up boom and the breakdown of the whole monetary system.

          The credit expansion boom is built on the sands of banknotes and deposits. It must collapse. If the credit expansion is not stopped in time, the boom turns into the crack-up boom; the flight into real values begins, and the whole monetary system founders. Continuous inflation (credit expansion) must finally end in the crack-up boom and the complete breakdown of the currency system.

          • Waffle House

            I would also like to welcome you to SUFA. I hope you stick around for more than the economic discussions. I am sure your new life experience will create other applicable jewels of wisdom.

            JAC

          • BF

            I generally agree, but………………….

            It seems to me that there is a speculative nature that goes along with major booms that goes beyond the mere expansion of credit. For lack of a better phrase lets call this the Gold Rush mentality. The housing bubble is a good example.

            I also don’t think you can attribute all the past “panics” or “boom/bust” events to Govt intervention. Even State intervention, that caused an increase in credit/money supply. And, I don’t think you can use Govt as the reason for the existence of fractional reserve banking. I think the human nature to increase wealth would allow fractional reserve banking to exist without Govt. I would expect, however, a greater degree of competition for services, such as “fee banks”, without Govt charter and financial protection. Even without Govt, when these banks fail due to overzealous lending they “could” impact other segments of the economy if they are large enough in size.

            You did well by identifying “easy money” as the culprit and not Central Banking itself. Obviously the latter contributes to the former as it is a “politically driven” entity. But I think it would be a mistake for folks to think that No Govt control over banks would eliminate boom/bust cycles or recessions in the broader economy.

            What I would expect under NO or VDLG intervention would be a much faster “correction” to any downturn caused by a boom/bust.

            • Specualitve booms and busts MIGHT still exist, but again they would be with a certain sector. The housing boom, for instance, was obviously fueled by cheap loans and specualtive loans made, in some cases, to be more “fair”. Even that, however, was only a single sector of the economy, and would not have had systemic effects without the central banking system being involved, or even, the culprit.

              Gold rush mentality will still exist, and it will still wipe out personal fortunes and entrap gullible people. So will vegas, but vegas is not a massive impact on our national economy, neither will speculative “gold rushes” or panics.

  19. Great explaination, BF. Your posts are some of the best. I might have to start spending time at SUFA again.

    🙂

  20. The Waffle House rocks … back in July 2009, when I met USW and his wife while attending/playing drums at a blues festival, I discovered Waffle Houses all over North Carolina … Tom Waits would love these joints. So, I’m looking forward to what James has to say … something tells me it’s not the workers in the Waffle House sharing the fruits of their collective labor (unless he’s managed to sway USW away from the dark side …:) …

    Go Waffle House.

    Go Bills!

    http://temporaryknucksline.blogspot.com/2009/07/blog-post.html

  21. September 1, 2011
    The Flip Side of the ‘It Would Have Been Much Worse’ Excuse For Failure.
    Lawrence Wolfe

    First, the current recession is not the worst economic downturn other than the Great Depression of the 1930s. The Great Depression of 1920 brought unemployment of 11.7% (from 1.4% in 1919) and a drop in the stock market of 47%. The top tax rate at that time was 73%.

    Arguing against the Progressives who called for stimulus, Secretary Mellon and President Coolidge instead choose to cut the top tax rate of 73% down to 25%, stimulating the economy along with job growth driving unemployment back down to 3.2%.

    The current argument by the Obama administration that “it would have been much worse if not for the stimulus” is little more than a lame excuse for failure. In fact, only two economic downturns in our history have extended well beyond the usual 18 months. The two that have been turned into long drawn out painful events exceeding all others are The Great Depression of the 1930s and the current recession. Both are unique in that the Liberal Progressives, with little or no political opposition, were able to enact and apply Keynesian Economics theories. In both cases, these theories worsened the severity and prolonged the downturns. Proof of these failures is the fact that Liberals continue to argue that “they needed larger stimulus.” If their stimulus plan had shown any sign of success, “larger stimulus” would not be needed nor called for. Progressives claim their failure is in some way proof that they were right.

    After three years of nearly $4 trillion of Obamanomic stimulus consisting of little more than, foolish pork, union payoffs and bailouts, the economy shows little sign of improvement. “If only we had spent more.” In fact, during the 1930s, we did spend more, much more. It too failed. Henry Morgenthau, Jr., FDR’s Treasury Secretary, said the following in 1939 to the House Ways and Means Committee: “We are spending more money than we have ever spent before and it does not work. I want to see this country prosperous. I want to see people get jobs. We have never made good on our promises. I say after eight years of this administration: We have just as much unemployment as when we started and an enormous debt to boot.”

    I can find no other time when abject failure has been used as an explanation for success. After six years of New Deal, WPA and a host of other big Government stimulus programs, unemployment effectively increased (when adding the WPA employed to the unemployed) up through 1939. “Doing more”, more government jobs, more government spending and more government stimulus in fact, increased the severity of the downturn. While we can easily argue that both the Great Depression of the 30s along with the current recession are huge failures of big Government stimulus programs while no one seems to be able to find a single event when Keynesian economics has ever succeeded. Part of the Keynesian theory may in fact be the complaining that routinely follows its failure. FDR, according to a letter from Mr. Keynes, apparently didn’t execute Keynesian theory properly while the current administration, according to Progressives like Paul Krugman, didn’t spend enough. Maybe it just doesn’t work.

  22. The next question will be;
    Where has there been an example of monetary stability?

    This is hard, as the State has historically seized control of money -money being the heart and soul of an economy- thus history is packed with economic catastrophes due to the State’s manipulations and debasements.

    But the Byzantine empire, who established a gold standard, and did not debase the currency, had stable money and economic system for nearly 1,000 years – prices were stable for over 800 years.

  23. USW, BF

    Re the question of stimulative effect of tax cuts.

    While BF is correct that the TOTAL tax burden has remained relatively constant, although generally increasing, this hides the effect of tax cuts at any given point in time and space.

    First of all, I am not sure that Total Tax $ as a percentage of GDP is the best measure of “tax policy impact” on economic activity. Partly because of the differences in which is the driver in the tax revenue side. For example, property taxes make up most of local tax. Generally these rates do not change as much as revenue increased due to increased home value. Thus the tax revenue as % of GDP can significantly increase as the GDP only includes house sales and not total home value.

    Second, the “transfer” of tax burden from say Income to Payroll or from Federal to State is not immediate. So you can get an increase in economic activity from a Federal Tax cut, such as the “Bush cuts”, which then turns into a greater take of State/Local or Payroll taxes in subsequent years. Thus creating the graph that shows a fairly flat “total” tax over time.

    BF’s more important point is that there is an inherent “saturation” point with respect to what “people” are willing to accept. This concept was in fact recognized by many of our Founders. The ability of the Govt to govern is controlled by the willingness of the people to contribute to it “financially”. When Govt pushes to far the people will revolt in some way. Under our system that comes in the form of political pressure to “cut taxes” or to “create deductions”.

    I think BF’s 40% is a little high. The total in the US seems to be more like 30 to 35%. Within this number is an even more interesting fact. The “saturation” point for Federal Income Tax seems to be around 18%, in recent decades. This is largely the basis for my proposal that the “Flat Tax” of 18 to 20% be established at the Federal level, with 8 to 10% earmarked for Debt Reduction. I expect the actual “saturation point” to be closer to 10% Federal Tax, if we look at our longer history and not just the period since 1960.

    • Keep in mind, however, that we do not yet have a tax revolt. More importantly, bear in mind that deficit spending, thus leading to devaluation of currency directly correlating to government expenditure, brings the percentage much higher. I would say that it actually surpasses the 40% mark and that we are not seeing tax revolts in the masses because it is a hidden tax. If taxes remained the same but spending was forced to match tax revenue, you would see a significant positive effect, just as you would if taxes and spending were equally cut. There might be more of a delay in the positive effect of spending cuts alone, but it would definitely be there.

      • Jon

        We have had many tax revolts. Not just the big one you are thinking about.

        When a group lobbies for a special deduction or reduction that is a revolt against the taxes they are paying. They are saying the amount they pay exceeds what they think they are getting in return.

        • We have tax resistance and individuals and groups trying to pay less taxes at every level of our tax history. I do not consider that the same thing. I do not think, with the exception of war time, that the majority of taxpayers have ever thought they were getting their money’s worth. A revolt I consider to be an open disobedience to the law.

  24. LOI,
    Labor service is like food – as you said, it is consumed once.

    But we do look at food as an economic good, even though its utility is singular.

    It is a good analogy you provided in associating labor in that manner.

    • LOI,
      “Labor service is like food – as you said, it is consumed once.” Don’t remember saying that but I’m happy to take credit.

      I think the auto bailout is useful to consider when talking about boom/bust. Ford went with GM & Chrysler asking the gov. to keep it’s competitors afloat because they feared loosing to many suppliers they had in common that GM failing might cause their wire, paint, steel or other suppliers to fail. I think letting them fail would have been better in the long run, auto makers would have risen from the ashes and would have been a leaner, more efficient organization, meaning lower prices and better products for all of us.

      Found an article you might like…

      http://www.brusselsjournal.com/node/4810

      • LOI,

        No, you didn’t say that – but what you said was precisely correct and accurate – and got me to think “what other economic goods has a single utility (one use) … and the most important of all economic goods – the one that probably started economies 100,000 years ago … FOOD!

        Ford went with GM & Chrysler asking the gov. to keep it’s competitors afloat because they feared loosing to many suppliers they had in common that GM failing might cause their wire, paint, steel or other suppliers to fail. I think letting them fail would have been better in the long run, auto makers would have risen from the ashes and would have been a leaner, more efficient organization, meaning lower prices and better products for all of

        Oops, a slip on the economic ice rink!

        Not one bit…..

        Supplying a economic parasite with goods destroys wealth.
        The argument that keeping the parasite means there will be suppliers to that parasite (and non-parasites) is a fallacy … for there are suppliers to non-parasites and these do not go away

        It is Supply AND Demand, not just supply and not just demand.

        If demand drops off, and supplies remain the same …. what happens? Prices fall … so the argument that the failure of GM would cause an increase in prices does not hold.

        The price may drop so far that SOME suppliers cannot maintain a profit … so what? They evaporate and leave those that could supply the goods at a profit at that lower price … the inventories would be consumed and the car industry would hum right along as it does now.

        Think about it – why is there “just the right” number of car manufacturers with “just the right” number of suppliers now?
        Is 10 the right number? 1,000?

        No, there is a right number of supplies to the industry because this is the number needed to supply to that industry. No fiddling required.

        If the industry retracts so does the suppliers, and that, too, will be “just the right number of suppliers”!

  25. JAC,

    I agree that fractional banking is not merely due to government intervention – I would say government intervention makes fractional banking very much more attractive.

    Fractional banking most certainly could occur in a “free market” banking system as well – but the problem with government intervention, is government protects fractional banking system from the many negative consequences, hence, more banks are attracted to that option. Even today, no bank is required to fractional bank, but they all do….

    If a real Free market banking, the consumer could chose between his risk and his profit – banks which use fractional banking will tend to be more profitable, but also fail more often, where those that do not use fractional banking will tend to have low profits, but be very secure.

  26. JAC,

    ot Central Banking itself. Obviously the latter contributes to the former as it is a “politically driven” entity. But I think it would be a mistake for folks to think that No Govt control over banks would eliminate boom/bust cycles or recessions in the broader economy.

    Here, I would absolutely disagree.

    Without a central bank, individual banking entities would come and go, like general businesses in the market place – because Mom/PoP grocer goes bankrupt, does not destroy the food distribution industry. No single company is big enough to devastate the marketplace due to its failure except….

    …if by government decree, it becomes a monopoly or a cabal, absorbs the entire market – then, it perversion DO devastate the entire market.

    Central banking is that monopoly, and that disaster.

    Boom/Bust due to the perversions of a single bank in the midst of thousands is a “shrug” – it simply does not exist.
    Boom/Bust due to the perversion of a single bank in the midst of 1 is a huge ouch – it is extreme.

    • BF

      That would depend on rationale behavior by all players. What history shows is that ALL people do not act this way when they perceive danger.

      Bank runs on one or two large banks could easily spread to others. Causing a constriction of money and increased bank defaults, assuming fractional reserve lending. And there would be no limit to the size of banks or the interconnected relationship between various large banks.

      So I think you are grossly over simplifying by using the mom and pop grocery store analogy.

      I think it is entirely plausible we would see events like the 1907 “Panic” or the 2007 meltdown. I can find no logical reason that a large economic constriction would not occur with such an event.

      But I also believe they would be short lived, for the reasons you state. The private investors would move to shore things up and money would move to more “lucrative” avenues. This could include the creation of new banks with adequate Capital. Furthermore, once everyone had their money out of the bank I think it likely they would also look for investment or consumption. Again causing a rapid correction to an economic slowdown caused by the bank problem.

      This does bring me to another thought. I think we (media & public) often confuse “financial or bank crisis” (PANICS) with general economic “corrections” (RECESSION/DEPRESSION). Our latest event is a good example. There were in fact TWO events and each has different impacts to the economy. Unfortunately the actions taken to fix one, financial crisis, may have prolonged the pain to the general economy caused by the other one, a housing shutdown,

      • JAC

        That would depend on rationale behavior by all players. What history shows is that ALL people do not act this way when they perceive danger.

        Actually, it doesn’t matter what the players do –

        Those banks that are not fractionalized will weather the bank run with no problems – that that are slightly fractionalized may be able to withstand the withdrawals long enough to weather the storm, but those highly leveraged will be destroyed.

        Those depositors who sought high returns learn about high risk/reward calculcations.
        Those that sought safety learn about low risk/return calculations.

        But the economy is just fine.

        Further, what are you arguing initiated the run?
        Bank runs do not “just happen” – they happen when depositors feel their deposits are threatened – but in a free market banking, where there is a wide rainbow of banking options, risk, and rewards, you would not get the herd action – no more than one stock market capitalized business going bankrupt, and the shareholders being wiped out wipes out companies that are not bankrupt.

        So I think you are grossly over simplifying by using the mom and pop grocery store analogy.

        I do not believe so, and this is why.

        Banking is no different a business than any other business in the economy and obeys all the same laws of economics.

        I can watch how window manufacturers operate within pricing/value/supply/demand/finance/loans/investment and see those same situations with shoe makers, candle makers, lawn care, laundry soap manufacturer, etc.

        Therefore, I can watch how other businesses operate within the Free market and be very confident the banking industry -given the same freedom- would operate in a similar manner.

        What we suffer today is we have seen no such freedom in banking – for reasons that government throughout history demands access to the heart of the economy so to fund its own misadventures.

        Other than being a target of the maximum government intervention into a single market, there is nothing about the banking industry that makes it unique -in a free market- from any other business.

        • BF

          I never claimed that bankers were not subject to the same economic laws.

          I am saying that without Govt controls several very large banks would emerge and that any financial failure of these banks would almost certainly ripple throughout the financial sector, eventually hitting the rest of the economy.

          I find any argument to the contrary as naive. Just look at the history of the large banks before Fed Regulations and the Fed started controlling them.

          I agree that Govt controls exacerbate the problems, and in some cases are the actual cause. But there is no logical reason to believe that banks or any other sector would not grow to a point that its failure would have a major impact.

  27. Good read.

    Obama and the Burden of Exceptionalism
    Post-’60s liberals, with the president as their standard bearer, seek to make a virtue of decline.
    http://online.wsj.com/article/SB10001424053111904787404576532623176115558.html

    • I find his conclusion to be profound:

      “Like me, he is black, and it was the government that in part saved us from the ignorance of the people. So the concept of the exceptionalism — the genius for freedom—of the American people may still be a stretch for him. But in fact he was elected to make that stretch. It should be held against him that he has failed to do so.”

      • Short version: Obama has a chip on his shoulder as a result of his liberalism and we’re taking the brunt of it.. He can’t claim racism on this article, that’s for sure.

        • Anita, my love … why are you picking on poor Obama? He couldn’t be more Republican if he wore one of those silly GOP buttons. The guy has killed the working man. He’s carved a path for corporations to hold power another 1000 years … the republicans couldn’t do as much damage as this guy. Yous should be proud of your president. Another 4 years of him may well bring about the workers revolution …:)

          • I am telling ya……D13 for President. And I will give Charlie the cabinet post of…….Court Jester. Wait…..there are already 535 of them in Congress and 100 in the Senate……what do you want Charlie? 635 Jesters is enough for anybody…..combine that with the clown in the POTUS position and we have greater but more dangerous entertainment than the three stooges.

  28. JAC,

    I am saying that without Govt controls several very [fill in the blank with any producer of economic goods] would emerge and that any ..failure of these .. would almost certainly ripple throughout the ..sector, eventually hitting the rest of the economy.

    Extraordinary claims of some economic theory I know nothing of….

    Just look at the history of the large banks before Fed Regulations and the Fed started controlling them.

    I do not think you have reviewed such history.

    Central banking first started in 1670 with the Bank of England – how far do you want to go back to try to make your case???

    • BF

      How about the Panic of 1907?

      • JAC,

        re: 1907

        So what conditions do you believe were relieved post 1857?

        Was fractional bank system in place? Yes.
        Was there a credit bubble in previous years? Yes.

        The Panic of 1907 was due to expansion of the money supply during the two previous years because at that time the US Treasury secretary Shaw tried to be the central banker. The loose money policy and inflation created a bank panic.

        Here is the testimony of the cause:

        “Now, let me state to the Senator, as he well knows, there is no requirement in the national banking act that the capital shall bear any fixed relation to the loans, nor is there, I believe, in the State banking acts, and the result is that we have such conditions as these: That the Knickerbocker Trust Company, of New York, with a capital of only $1,000,000, was able to make loans to the amount of $50,000,000. So the proportion of capital to loans was not that of 1 to 5, as the Senator from Rhode Island suggests, but was the relation of 1 to 50.” –Senator James P. Clarke, in Senate, March 11, 1908.

        • So, to carry on, do you think MORE government control on banks changed this condition?

          Did the creation of the FED solve this problem, or make it worse?

          Did the government act upon the fractional system or instead, embrace it?

          Does centralizing the control of a monopoly relieve a monopoly of its deficiencies?

          Answers:
          No, Embrace, No.

          • No, No, Embrace, No

            • BF

              None of which is relevant to my original point.

              With NO Govt there is nothing to prevent banks from consolidating, becoming large and becoming over extended with risk. When they suffer normal market corrections the impact will ripple through the broader economy.

              There is no evidence or logical argument yet to show that this could not occur.

              This is NOT an argument FOR Govt or a central bank. Simply an acknowledgment that NO Govt control of banking and money will NOT eliminate boom/bust or financial hardships at a large scale.

              But I also clearly stated that I thought NO Govt provides for more rapid correction and to some extent a more “moderate” bust because the GOVT seems to always exacerbate the problem in some way. Either in the short term or by pushing it into the future, where it gets much bigger.

              Your argument that Banks are just like any other segment of the economy, like bakers and candlestick makers, ignores a basic reality of any modern economy. That is that bankers are in the “Money” market. Money is EVERYWHERE in the market. Where as candlesticks and baked goods are limited to distinct segments, money affects everyone. It is the “foundation” of the economy. That is why “credit bubbles” are so disruptive.

  29. I’m confused-they bail them out because they were-to big to fail-now they are going to sue them. Whats up-political theater to impress and try to fool the people?

    U.S. Is Set to Sue a Dozen Big Banks Over Mortgages
    By NELSON D. SCHWARTZ
    Published: September 1, 2011

    The federal agency that oversees the mortgage giants Fannie Mae and Freddie Mac is set to file suits against more than a dozen big banks, accusing them of misrepresenting the quality of mortgage securities they assembled and sold at the height of the housing bubble, and seeking billions of dollars in compensation.

    The Federal Housing Finance Agency suits, which are expected to be filed in the coming days in federal court, are aimed at Bank of America, JPMorgan Chase, Goldman Sachs and Deutsche Bank, among others, according to three individuals briefed on the matter.

    The suits stem from subpoenas the finance agency issued to banks a year ago. If the case is not filed Friday, they said, it will come Tuesday, shortly before a deadline expires for the housing agency to file claims.

    The suits will argue the banks, which assembled the mortgages and marketed them as securities to investors, failed to perform the due diligence required under securities law and missed evidence that borrowers’ incomes were inflated or falsified. When many borrowers were unable to pay their mortgages, the securities backed by the mortgages quickly lost value.

    Fannie and Freddie lost more than $30 billion, in part as a result of the deals, losses that were borne mostly by taxpayers.

    In July, the agency filed suit against UBS, another major mortgage securitizer, seeking to recover at least $900 million, and the individuals with knowledge of the case said the new litigation would be similar in scope.

    Private holders of mortgage securities are already trying to force the big banks to buy back tens of billions in soured mortgage-backed bonds, but this federal effort is a new chapter in a huge legal fight that has alarmed investors in bank shares. In this case, rather than demanding that the banks buy back the original loans, the finance agency is seeking reimbursement for losses on the securities held by Fannie and Freddie.

    The impending litigation underscores how almost exactly three years after the collapse of Lehman Brothers and the beginning of a financial crisis caused in large part by subprime lending, the legal fallout is mounting.

    Besides the angry investors, 50 state attorneys general are in the final stages of negotiating a settlement to address abuses by the largest mortgage servicers, including Bank of America, JPMorgan and Citigroup. The attorneys general, as well as federal officials, are pressing the banks to pay at least $20 billion in that case, with much of the money earmarked to reduce mortgages of homeowners facing foreclosure.

    And last month, the insurance giant American International Group filed a $10 billion suit against Bank of America, accusing the bank and its Countrywide Financial and Merrill Lynch units of misrepresenting the quality of mortgages that backed the securities A.I.G. bought.

    Bank of America, Goldman Sachs and JPMorgan all declined to comment. Frank Kelly, a spokesman for Deutsche Bank, said, “We can’t comment on a suit that we haven’t seen and hasn’t been filed yet.”

    But privately, financial service industry executives argue that the losses on the mortgage-backed securities were caused by a broader downturn in the economy and the housing market, not by how the mortgages were originated or packaged into securities. In addition, they contend that investors like A.I.G. as well as Fannie and Freddie were sophisticated and knew the securities were not without risk.

    Investors fear that if banks are forced to pay out billions of dollars for mortgages that later defaulted, it could sap earnings for years and contribute to further losses across the financial services industry, which has only recently regained its footing.

    Bank officials also counter that further legal attacks on them will only delay the recovery in the housing market, which remains moribund, hurting the broader economy. Other experts warned that a series of adverse settlements costing the banks billions raises other risks, even if suits have legal merit.

    The housing finance agency was created in 2008 and assigned to oversee the hemorrhaging government-backed mortgage companies, a process known as conservatorship.

    “While I believe that F.H.F.A. is acting responsibly in its role as conservator, I am afraid that we risk pushing these guys off of a cliff and we’re going to have to bail out the banks again,” said Tim Rood, who worked at Fannie Mae until 2006 and is now a partner at the Collingwood Group, which advises banks and servicers on housing-related issues.

    The suits are being filed now because regulators are concerned that it will be much harder to make claims after a three-year statute of limitations expires on Wednesday, the third anniversary of the federal takeover of Fannie Mae and Freddie.

    While the banks put together tens of billions of dollars in mortgage securities backed by risky loans, the Federal Housing Finance Agency is not seeking the total amount in compensation because some of the mortgages are still good and the investments still carry some value. In the UBS suit, the agency said it owned $4.5 billion worth of mortgages, with losses totaling $900 million. Negotiations between the agency and UBS have yielded little progress.

    The two mortgage giants acquired the securities in the years before the housing market collapsed as they expanded rapidly and looked for new investments that were seemingly safe. At issue in this case are so-called private-label securities that were backed by subprime and other risky loans but were rated as safe AAA investments by the ratings agencies.

    In the years before 2007, “the market was so frothy then it was hard to find good quality loans to securitize and hold in your portfolio,” said David Felt, a lawyer who served as deputy general counsel of the finance agency until January 2010. “Fannie and Freddie thought they were taking AAA tranches, and like so many investors, they were surprised when they didn’t turn out to be such quality investments.”

    Fannie and Freddie had other reasons to buy the securities, Mr. Rood added. For starters, they carried higher yields at a time when the two mortgage giants could buy them using money borrowed at rock-bottom rates, thanks to the implicit federal guarantee they enjoyed.

    In addition, by law Fannie and Freddie were required to back loans to low-to-moderate income and minority borrowers, and the private-label securities were counted toward those goals.

    “Competitive pressures and onerous housing goals compelled them to operate more like hedge funds than government-sponsored guarantors, ” Mr. Rood said.

    In fact, Freddie was warned by regulators in 2006 that its purchases of subprime securities had outpaced its risk management abilities, but the company continued to load up on debt that ultimately soured.

    As of June 30, Freddie Mac holds more than $80 billion in mortgage securities backed by more shaky home loans like subprime mortgages, Option ARM and Alt-A loans. Freddie estimates its total gross losses stand at roughly $19 billion. Fannie Mae holds $38 billion of securities backed by Alt-A and subprime loans, with losses standing at nearly $14 billion.

    http://www.nytimes.com/2011/09/02/business/us-is-set-to-sue-dozen-big-banks-over-mortgages.html?pagewanted=2&_r=2&ei=5065&partner=MYWAY

  30. And the new topic on the news today,,,,,,the government, through one of Obama’s czars, is going try to regulate advertising during popular tv shows where a product may be high in sodium content………according the White House spokesman when asked about this……the following statement was made…….When parents do not control the eating habits of their children, it becomes a governmental responsibility.

    • Mathius™ says:

      As with so many other issues, I generally agree that this is no business of the government.

      That said, there is a serious problem in this country with the way people eat, the food that is available, the (many, many) deceptive ways that food manufacturers hide the bad things in their food, and especially in the escalating frequency of childhood obesity. This later, in particular, becomes a national issue when these children have life-long health issues and/or cannot become productive members of society (or become less productive than they otherwise would have).

      So, should the government get (more) involved? Depends on how they go about it.

      Remember that the cheapest way of making food taste better (particularly to children) is to add sugar or salt (depending on the meal) and fat. Certainly I should have the choice to eat Count Chocula and Ramen noodles and Big Macs. But at the same time, when does it cross the line into child abuse/neglect when this is the way I feed my young child? Why is it ok to feed him crap, but it would be child abuse to give him a pack of Marlboro’s? What, really, is the difference between the two?

      What is the cost to America of our lousy food choices?

      Disclaimer: I LOVE salt. I salt the hell out of my foods. I salt everything that can reasonably be salted and many things that cannot be reasonably be salted. If I had a salt-lick, I’d probably be licking it right now. If the government outlawed salt tomorrow, I would take up arms and storm the capital.

      • Childhood obesity is as much a result of video games, TV, and Wii than it is junk food. Yes parents should control the junk food content. That starts at the grocery store. If the food never enters the house it does not get consumed. We had limited junk food when I was growing up because it was expensive. But Mom baked one ot two cakes or pies a week. We almost always had desert with supper. We ate the fat and marrow from steaks, we had lots of mayo and potato salad, eggs and milk daily. During the summer when we were working we drank a quart of milk for lunch. I easily drank a half gallon of milk a day during the summer. Looking back, we spent very little time in the house. Prior to high school, we would be out playing ball, riding bicycles, or doing some other activity. We mowed lawns and raked leaves. Once in high school we worked all summer doing construction, 54 hrs/wk.

        CA your home state is becoming the Nanny state which is a part of the Super Nanny Nation. Long live Nannyhood.:)

        • New Yorkers (city, not state) are amongst the least fat of all Americans. Why? They walk almost everywhere.

          I agree with you t-ray. But the simple fact is that the parents, not the children, are the ones to blame. Ans the question is this: what, if anything, should be done in an extreme case where the parent is so abjectly failing their child to the point where it has become dangerous? (where exactly to draw that line is a different question). More to the point, if you can’t/won’t do what’s right for your child and you’re letting them get to the point where your twelve year old weighs 475 lbs and has to get around via power chair, should someone from the big bad nanny state be allowed to take that kid away from you, or should you just be allowed to continue to fail that child until they die from something almost completely avoidable?

          And, just some food for though, how is it different than allowing them to do drugs?

      • Food quality is an issue to some extent, but almost all of that food is snack food. Processed foods are indeed cheaper, they can be made en mass, they keep for longer with fewer regridgeration requirements, and they are packaged such that shipping is simpler, and more can be gotten out of lower grade food stuffs. In the process, nutrition is lost, and the food is overall less healthy. However, even the processed foods that are not snack oriented, such as ready to eat meals microwaveable meals are relatively healthy. If you will notice, they are not that much cheaper than the equivalent fresh food, they simply save time and, in the case of those not cooking for more than one, they may save a little since the portion is already divided up.

        So, in other words, it is still a matter of food choice. Certainly the processed foods have less nutrition and more fat, etc., but it is more a problem of available cheap snack food than a lack of available good food. When I was first training for competition in my college days I was broke. Very broke. I ate ramen noodles and tuna by the case. I could do 3k calories a day with high protein on unde $4 a day. I was in the best shape of my life, I was 5lbs heavier than I am now, but I am currently at 18% bodyfat, I was at 7% then. I could bench 1.5 times my weight, squat 2.5 times my weight,a nd deadlift 3 times my weight. It was a matter of discipline and excersize.

        I got busy and lazy and started getting out of shape. Left to my own devices, I eat pastries and fast food all the time. I find, however, when I am working out, that I crave more good stuff and less bad stuff, mostly less sugar. The key is, and always will be, excersize, not just diet. With diet, the key is what is in the food, not what is not in it. If it has a lot of nutrition, it does not matter if it has fat and salt as long as you excersize, those things can be burned off. When I started not being happy with how I felt, I started working out again, I realized how much I missed it, and I am back on the path and loving it. And I make time, even tho I am still working the 70-90 hours I have been for the last 4 years.

        I still eat fast food a lot. It saves time and the fat content is far better than no nutrition at all. I prefer better food, but the money isnt there for that, or else the time isnt there, more often the latter. The problems with child obesity is that they are eating empty calories and not excersizing. Period. Diet sodas have no sugar, but the alternatives chemicals make them worse than regular soda. Almost all of the “healthy snack food” is deemed healthy by what was taken out of it, so rather than fix the nutrition problem, junk science and hype exacerbate it by giving us calories that are emptier than before with chemicals added. Just cut the snack food altogether. You hungry? Make a sandwich. Your body does not just trigger hunger because your stomach is empty, it triggers it because it is seeking nutrition. Doritos ain’t gonna cut it.

        Even if one believed that this crap was any of the government’s business, they should see that it would be impossible for government to do a good job of it.
        1) Government is inflexible. One kid can eat anything and stay thin, another blows up even when eating healthy. One kid responds to athletic output, others dont. Some skinny kids need special diets because of other health concerns, some kids are just fat because they are getting ready to shoot up another 12 inches in height. People are far to different for legal action concerning diet.
        2) Any food regulation can be gotten around. I can get fat on carrots if I eat enough of them and don’t exercise.
        3) Government is incredibly gullible. The amount of junk science and old tech they fall for is mind-numbing. They would be handing out edicts blocking good food and promoting bad. Hell, they do that now. Look at the FDA’s track record and tell my why you would want the government having ANY authority over your kids diets. Why would anyone even listen to those fools?
        4) Unintended consequences. There will be reporcussions to food regulation that have not been thought of. Economic, physical, etc. Mark my words, it ALWAYS happens.
        5) You really think large food companies will go quietly? No, they will strike a deal that will be more profitable for them, make the government look good and expand power, and not do a damn thing for the health of consumers. Only when the consumers have the power of approval do companies care about the welfare of consumers.

        • 1) One kid can eat anything and stay thin, another blows up even when eating healthy. One kid responds to athletic output, others dont. Some skinny kids need special diets because of other health concerns I agree. I was one of these kids. I weighed 125 going into college. It just didn’t matter how much I age, and I wasn’t particularly active. I didn’t have to start watching what I was eating until I was 27 and noticed that I had put on 50 lbs.

          But that doesn’t mean that we should just throw our hands up in the air and say “there’s nothing we can do” – maybe the answer is a far more customized approach – I don’t know. And I’m not qualified to say.

          5) You really think large food companies will go quietly? No, they will strike a deal that will be more profitable for them, make the government look good and expand power, and not do a damn thing for the health of consumers. Only when the consumers have the power of approval do companies care about the welfare of consumers. General agreement. So how do you go about doing this when, it seems, such a high percentage of people just don’t care. Them I could live with, but their children are also suffering from this, and the kids are unable to do anything about it.

          How many parents give their kids candy bars just to shut them up? Oh, you want Count Chocula cereal? Ok. NO! NOT OK! But the parents are the ones failing, so how can we expect the situation to ever change if you rule out the (admittedly very imperfect) government?

          • I am not “throwing my hands in the air and saying there is nothing we can do”, I am throwing my hands up like a traffic cop and saying there is nothing the government can, or should be allowed, to do. The fact is Matt, you are not qualified to say, but based on your track record and brain power versus the collective brain power and track record of Washington, I would say you are the more qualified of the two. Something must be done, but it seems glaringly obvious to all but the most stubborn otrich-types that that something should not include government action or legislation/regulation.

            The only way the situation will ever change is if we do, in fact, rule out the government. Why do you think so many do not care? Have you ever looked at the psychology of responsibility? If you remove responsibility from someone, they stop caring about that subject. If you make someone’s decisions for them they stop caring about the quality of those decisions. My parent’s generation gave a crap about what their kids ate, and how active they were. The generation before that worked them so hard they didnt have to worry about activity level, and generally didnt even have the means to give them junk food and leisure time. The cause of the current situation is not processed foods and video games, that is a myopic perspective.

            The cause is a combination of removal of responsibility (even when that removal was not asked for, even those wanting to take responsibility find they are not allowed to be in charge) and a society so focussed on entertainment that they forgot about work. We have built up so much wealth and technology that there is actually time to sit around and eat bon-bons and stare thoughtlessly at a work of entertainment piped digitally into your home so that you do not even have to get up or interact with anyone. We are a fantasy driven culture, and we are a dependent culture. Everyone wants the fountain of youth, a return to the time when they got to play and someone made tough choices for them.

            The fix is to take back responsibility. It is to put it on people whether they want it or not. It is to take responsibility for those around us, both to help those in need and to punish those who are screwing up, not with violence, like the government would, but with social pressure and refusal to deal with them or accept them. Acceptance is not always a virtue. We should not accept all people no matter what. We should not make decisions based on race or religion or class, but treating a screw up or a lazy person like what they are is not just ok, it is essential. We are too afraid of lawsuits to step in when we see a child being mistreated. How pansy is that? You see a kid getting beaten or abused and you don’t come to their rescue? You see a kid being fed crap and looking unhealthy and you don’t say anything to the parents? Why? “None of your business”? If that’s the case, what business is it of government? Not your problem? Why do you care then? Afraid of conflict? Grow a pair if you really care about the kids.

            The consequences of those bold attitudes and actions can be bad because of lawsuits. Fault? Too much government.
            The parents don’t care. Fault? Dependency on government and self-absorbedness.
            The parents truly don’t know better. Fault? A horribly inept education system. Run by government.

            I can point out over and over how the government is, by and large, the cause of the issues, or at least a big part of that cause. Sure, human nature is part of it, but not all humans are like that or none of us would care. So if government ineptitude is the cause, how in teh crap can they be trusted as part of the solution? They have earned no such trust. Even you do not trust them anymore, not really. You look to them because of laziness and fear. You do not want to take on the effort of handling it yourself, and you are afraid that it will be inadequate. It may indeed be inadequate at first. Some kids will still suffer in the transition, but they suffer now, so what is the difference? When you are bleeding to death from a thousand cuts, you do not keep running to the man with the blade to fix the problem. That does not mean you will instantly stop bleeding, but you have a much better shot than if you continue to cut yourself. Even when the guy with the knife is waving an I.V. in your face, do you trust him to save you?

      • Mathius,

        If the government outlawed salt tomorrow, I would take up arms and storm the capital.

        You wouldn’t make to the capital.

        Without salt, you’d be dead in a day or two.

        • Buck the Wala says:

          Actually, that’d be plenty of time for him to make it to DC. And back home for a bland, saltless dinner.

          • oh getting there is not the time consuming part for Matthius, it would be the taking up arms. Its not like he already has them stockpiled…

            • What makes you think I can’t get my hands on a gun within the hour?

              Also, what makes you think that I don’t have enough salt stockpiled to last me the next few years? I have plenty of time to plot and plan.

              And, further, what makes you think I can’t distill my own salt the old fashioned way by evaporating seawater? There’s about 38grams (.08lb) of salt per gallon. I could go, fill up two 5-gal bottles and be set for a very long time.

              • Mathius,

                But you’d be an outlaw… 😉 a Black Flag…

              • Now your talking like a self-sufficient individualist. You’ve come a long way Matt, just a little bit to go! 🙂

              • You need an hour?

              • Mathius™ says:

                Let’s not forget, that I’m in Connecticut right now.. not exactly the same as looking for a gun in Colorado.

                Also, being Jewish, I would have to spend some time bargain hunting and finding the best deal, not just take the first offer I get.

              • lol.

                My point being, if you think at some point you’ll need a gun, then you should already have the gun (even if you keep it disassembled under lock and key in a gun safe).

                BTW- just go to COSTCO and get two 25lb bags of salt, then you’ll have no worries. 🙂

  31. While I may be somewhat understanding of child obesity…….it is a parental problem and I understand the long term health issues involved. Actually, I am for taking obesity off the disability list of things….it is very rare that obesity is a disease. According to the AMA, obesity, as a disease, affects less than 10% of the population. It is usually an issue of not pushing away from the table. As a parent, I was well aware of my children ate and I was well aware of what products were fattening WITHOUT labels and warnings.

    Is it child abuse to let children eat fattening foods….no it is not. Is it abuse to watch too much TV or play with computers or use cell phones….all of which have been labeled as unhealthy. The abuse is governmental regulations that infringe upon free choice.

    D13’s disclaimer: I eat the hell out of potato chips and drink gallons of Dr Pepper. I love Cheetos. Pizza and chocolate are basic food groups; I know good and well that Honey Nut Cheerios does not reduce cholesterol and has a high sodium content….but I pour my REAL MILK ( not white water) into a hefty bowl of Cheerios and use REAL BUTTER to cook with and not tasteless margarine. I manage my eating habits with caloric burn…..this is called exercise for those of you who have forgotten. But I do all of this without a government telling me to do so and blaming evil corporations for “deceptive” advertising.

    Ok….falling off of soap box for now.

    How are you, friend Mathius?

    • Ok, where to begin..

      1. It is child abuse / neglect to do things or allow your child to do things that are dangerous for the health and well being of your child. So, the only real question (as is so often the case) is where to draw the line. If you child is 10 pounds overweight, is that abuse? No. If your 6 year old child weighs 217lbs has acquired dangerously high blood pressure and has just acquired type 2 diabetes, then yes, that is abuse. Why? Because your job as parent is to keep your child safe. So, to me, the line is somewhere in the hazy middle.

      Put another way, if your teenager smokes a joint with his friends ever so often, is that a parental failure? Are you neglecting your child? No. Teenagers are teenagers. But if your teen is mainlining heroine two or three times a day, then yes, that would be neglect because it’s your job to stop that. Yours. And if you aren’t going to do the job, someone has to. So where’s the line? Somewhere in the hazy middle, of course.

      2. Is it abuse to watch too much TV or play with computers or use cell phones….all of which have been labeled as unhealthy. Yes and no. Mostly no. Kids want to play computer games and use cell phones and neither has been shown to be excessively dangerous. I might argue that you’re a bad parent if you let your kid do this all day (I’d boot mine out of the house and make him play in the yard for a while). But I wouldn’t say you’re abusing him. Then again, perhaps it could border on neglect in some extreme cases. Really the danger of being sedentary and playing computer games is childhood obesity and a (well documented) correlation between excess use of violent games and violent behavior.

      3. The abuse is governmental regulations that infringe upon free choice. Why do you have the free choice to do things that are PROVEN to be dangerous for your minor. Should you have the choice to shoot an apple off your child’s head with an arrow? He’s your kid, so the choice is your, right? No. I understand that there are certain boundaries (and I’ll be damned if I’m qualified to figure out where they are) between acceptable amount of leeway a parent should be given, and the point at which a parent is simply not doing their job. Did you spank your kid when it was well deserving? OK. Did you break your kid’s arm for a minor offense? Not OK. Should the government get involved? For the former, no. For the later, yes. So the answer has to be, yet again, somewhere between.

      4. Honey Nut Cheerios does not reduce cholesterol It does because it is less bad than other things and the theory is that you’ll eat Cheerios instead of that other stuff, thus lowering your cholesterol. This is like arguing that you’re making better choices since you switched from doing heroine to dropping acid. Yes, you may be better off, but it’s still not like you’re really doing the right thing for your body. That said, I love honey nut Cheerios too. I have slightly high cholesterol, so I cut down on the red meat, cut cheese out almost entirely, and switched from butter to margarine. Yes, I miss eating like a teenager, but I’m 28, and those days are gone. This is one of the things that allowed me to drop back to my college weight – it’s not easy, but it is simple.

      5. EAL MILK ( not white water) I’d like to make a suggestion here. My wife went out and bought lactaid milk. I think it’s some soy product thought up by hippies. At first I was pretty against it, but it doesn’t taste bad. But here’s the thing – it stays good for months, not days. I don’t go through a lot of milk in the Mathius household, and I always hated pouring out half a bottle of rancid milk. It’s also much healthier. Give it a shot and let me know what you think.

      6. I manage my eating habits with caloric burn You can manage calories in this fashion, but salt buildup doesn’t work the same way, and neither do some of these newfangled things they dream up to add to your food. But I agree – make your kid run laps and he can afford to eat a little worse. Still, generally not a good idea to give him junk food though. And remember, you are an adult – and a developing child is very different biologically.

      7. But I do all of this without a government telling me to do so and blaming evil corporations for “deceptive” advertising. Yes…. but you are not the people this kind of legislation is targeted toward. Frankly, I don’t care if a random woman wants to eat herself into a diabetic coma (except insofar as I wind up getting stuck paying for her). But her kid doesn’t have a choice. He doesn’t know what’s right and wrong in food choices. He can’t go out and buy good food. He will eat what Shamu gives him and then he, too, will end up like that – that’s a tragedy. And all the more so because it’s almost completely avoidable.

      8. Ok….falling off of soap box for now. I hope you didn’t hurt yourself in the fall. First thing they teach you in any good self-defense class is how to take a fall without cracking your head open. I assume you learned this in basic..

      9. How are you, friend Mathius? I’m good. I was without power for 5 days. This morning at 12:55 AM, the power came back on, so my whole house lit up like a Christmas tree. I hear they’re spending a billion dollars on fixing power from the hurricane, and it would cost around 8 billion to bury the power lines and never have this problem again. So, of course, they’re taking the easy way out – and when the next storm comes along, I’m going to be without power again. Going to buy a generator because I did not enjoy my experimentation with being Amish. Also, I haven’t shaved in a week.

      10. I sent USW something for you a while back, but I never heard anything about it reaching you. Not sure if it’s your style of humor or not, but I just couldn’t resist the urge to forward it on. Regardless, I dug it up online (Texas Longhorns. – warning, not particularly safe for work). Also, I’ve got another one I need to pass along to you, so I’ll dig that one up as well.

      11. How are things for you? Keeping busy, I expect..

      • Mathius

        “1. It is child abuse / neglect to do things or allow your child to do things that are dangerous for the health and well being of your child. ”

        FALSE

        The failure to act or to allow others to act is not abuse.

        This simple failure in logic and understanding leads to slavery. Well at least tyranny.

        • “The failure to act or to allow others to act” is neglect. Note that I said “abuse / neglect.”

          As a parent, you have an obligation to ACT. It’s not enough just to do no harm, you have to actively prevent harm.

          People may be dumb, but kids are even dumber. They’ll play in traffic if you don’t stop them, they’ll stick a paperclip in an electrical outlet if you don’t stop them. If you don’t stop them, you are being neglectful. Maybe you’re not abusing them, but you sure are being neglectful.

          I don’t know at what point the government should get involved – but there is a point at which too much is too much.

          Yes, maybe that way slavery lies, but there is a middle ground between abject slavery and a government which will step in to protect the interests of a child who is incapable of protecting their own interests in the absence of a parent who is willing/able to the job they signed up for when they had the child in the first place.

          Did you have the sex? Did you make the baby? Then you have created an obligation to act on behalf of the child until the child is able to act on his/her own behalf. Not able or willing to do that, there’s a list a half-mile long of people looking to adopt.

          • Mathius

            You have presented a coherent argument against abortion.

            “Did you have the sex? Did you make the baby? Then you have created an obligation to act on behalf of the child until the child is able to act on his/her own behalf. Not able or willing to do that, there’s a list a half-mile long of people looking to adopt.”

            I know you claim the unborn are not really people, but I think you can see how the concepts fits.

            The Govt should only get involved if the parents are “incapable” and there are no “relatives” who can step up. Then the involvement should be temporary quarters/care until placement can be found to a private facility or family.

            The horror stories about an over reaching Child Protective Services are a prime example of how it is impossible to keep this type of “general welfare” Govt intervention from having serious “mission creep”. In my opinion the only way to prevent that is to draw hard and fast and clearly identifiable boundaries.

            • He is also standing for said children to have an advocate in the government to look out for them-yet every law that anyone tries to pass -such as a sonogram and a doctor to discuss the details of the child’s development with the mother before she denies him or her the right to life-which is basically creating an advocate for the unborn child-is not denying the woman the “right” 😦 to dispose of said child) if she still wants too- is somehow unfair.

      • D, on Matt’s point 5, you should try it, just because trying stuff is healthy, but I will bet dollars to donuts you ain’t gonna like it. Matt, your milk choice makes sense, but not to someone who goes through a gallon under 3 days. 🙂

        On point 6, salt will flush perfectly fine on caloric burn so long as you actually break a sweat. A nice air conditioned gym will do the caloric side but not the salty one. But a good summer evening run with plenty of water will dump more than enough salt. In the winter, do the sauna thing after you work out, it helps flush both salt levels and lactic acids reducing soreness and shortening muscle recoup time. If you have joint issues that make the heat a negative, take shark cartiledge to counter inflamation. Problem solved.

        On point 7, there is one of the main core concepts that seperates you from us freedom lovers. “You are not the one this legislation is targetting” is a fallacy. Legislation, by its nature, targets everyone within the jurisdiction of the law. If legislation bans certain foods, but D’s kids are healthy in spite of that food because they run arounds outside, you think the law will be discriminating and flexible enough to understand that? Don’t be ridiculous, laws dont pick and choose, that is why so many of us that agree with an idea about morality or intelligent action do NOT agree that such ideas should be legal standards.

      • This is where you lose me-I see a need for children to be protected against abusive and dangerously incompetent parents-but to pass laws against advertising, or limit the amount of salt, sugar, butter-the list can go on forever-based on the fact that some parents are bad parents-is overstepping. If parents hurt their kids you deal with those parents and that situation-you do not deny everyone else the right to eat what they want or a company the right to advertise their products. This goes for cigarettes or anything else out there-that I can think of. If enough people are offended by the effect of the commercials -they will complain-they will stop buying the products and the advertisers will change because it is in their interest to do so.

        • Mathius™ says:

          General agreement – though I said above that my agreement/disagreement with any proposed laws would depend on what the actual laws are and how they are implemented. I don’t just give a blanket thumbs up because they’re trying to make food healthier for kids.

          But neither do I give it a blanket thumbs down because they’re interfering with the free market.

  32. Mathius, D13, T-Ray,

    This, I believe, is the cause of childhood obesity.

    http://www.uctv.tv/search-details.aspx?showID=16717

    (triple-w).huffingtonpost.com/2011/08/31/sugary-drink-consumption-center-for-disease-control_n_943445.html

    • BF,

      I’ll listen to that – hard to focus while doing work – and get back to you with my comments eventually. It seems interesting.

      That said, I’d like you to weigh in on the above.

      I know that you feel the government shouldn’t exist, and that by extension, it shouldn’t be involved in parenting in any way.

      That said, if you have a child and you feed your child unhealthy food to a dangerous extent (I’m not talking about a chubby kid, I’m talking about the 200lb 6 year old or some such), is this abuse/neglect? Do you not, by virtue of having made the child, have a moral obligation to feed your child in a manner which does not create a high statistical probability of morbid obesity and the attendant life-long health problems?

      I’m not asking if someone should intervene or be allowed to intervene. I’m asking if it is morally wrong to fail to act in the interests of your child with regard to their health by way of the things they are given to eat or which they attempt to attain for themselves for the purpose of eating.

      Your thoughts? Please use at least three nested block quotes and cite references. No fewer than 1,000 words will be accepted. 😉

    • DisposableCarbonUnit says:

      Sorry to chime in here but, I’m watching the video as you suggest, and, while his thesis is “technically” correct, he makes MAJOR errors with regard to what is going on biochemically. He also misses many of the confounding factors regarding obesity. I’ll finish watching the video now….please continue your discussion on rights and economics!

      • Carbon,

        I can’t wait to hear how someone can be correct but wrong.

        His biochemistry is right on since it is….correct. The metabolism of fructose is well known and nothing he said contradicts this.

        • DisposableCarbonUnit says:

          It’s the oversimplification of the biochemistry that bothers me (as a biochemist!). For instance, the activation of the AKT pathway, he doesn’t specify whether it is AKT1 or AKT2…they activate different pathways leading to the creation of different products. Does fructose impact 1 or both? Also his citrate to VLDL pathway can be interpreted a variety of ways. Ever had Coca-Cola or maybe some sour gummy bears? They contain a large amount (relative) of citric acid (conjugate base is citrate), perhaps the citrate is as big a contributor to the activation of the pathway. As I said it is the oversimplification where he is “technically” incorrect. There are too many alternate pathways that can be active depending upon a single individuals’ biochemistry.

          Just as one could say economics is just buying and selling, it’s “technically” what it is but a HUGE oversimplification.

          Fructose, in small amounts, is not poison. Even in larger amounts it is not a “poison”. Drink a bottle of water, it is good for you, drink a 5-gallon jug and you will likely die. Same principle applies.

          Now I haven’t done the calculations to provide you with hard numbers, but there are some contridictions (which you hate) in his presentation. He states that young males are consuming an extra ~300 kcal per day, but does not state the change in activity level for the same population of males. The change in total “sugar” consumption from ~50 to ~100g per day doesn’t seem to add up for me (calculations not done, just “ball-parking” in my brain), there are more calories in 50g of sugar than 300. He also does not account for other “sugars” in current use (mannitol, xylitol, glucitol, etc) which can have a significant impact on nutrient absorption as well as water and electrolyte imbalances. These “poly-ol” carbohydrates that are used in sugar-free products are actually laxatives!

          What else bothers me is that he COMPLETELY bypasses the pentose phosphate shunt when he discusses xylulose, this pathway can feedback into gluconeogenesis (which he also conveniently forgets to mention) via allosteric activation of the pathway by fructose. This would allow for the creation of glucose (glucose-6-phosphate) in the liver.

          There is too much he is simplifying the process to be completely accurate about the effects of fructose on the body. Fructose is NOT a poison.

          It comes down to the fact that we eat way too much and most of what we eat is crap anyway. It also offends me that he thinks the first law of thermodynamics doesn’t apply. Weight loss IS calories in < calories out….period. The rest is a function of an INDIVIDUAL's unique biochemistry.

          Want to lose weight? Eat less and get some activity. It also helps if you eat real food and not chemical stews.

          The presenter only shows what is convenient to his thesis but does not account for the pleiotropic effects of the different pathways. So while he may be "technically" correct that fructose may go through one pathway that leads to an increase in lipid formation, that may not be the pathway that is used by the majority of fructose consumers.

          His histograms on the increase in body mass index are also misleading, the histograms overlap to such a degree I would doubt that they would be statistically significant.

          Those are just the points I can make off the top of my head from viewing the video, I would actually have to investigate the pathways further to provide the actual physical biochemistry (which I sincerely doubt he did).

        • DisposableCarbonUnit says:

          At least you don’t call me Caribou! 😉

  33. JAC

    With NO Govt there is nothing to prevent banks from consolidating, becoming large and becoming over extended with risk. When they suffer normal market corrections the impact will ripple through the broader economy.

    Again, you make the same economic err.

    ONLY WITH GOVERNMENT do banks consolidate, become larger and over-extend with risk. This the nature of MONOPOLIES and CARTELS which is what the banking industry is… and these things can only occur by government grant.

    Evidence:
    The post-2008 banking crisis – the biggest banks got much bigger, and smaller banks disappeared.

    Banks by assets June 2011

    JPMORGAN CHASE BANK, NATIONAL ASSOCIATION
    1,689,889,500
    BANK OF AMERICA, NATIONAL ASSOCIATION
    1,480,394,157
    CITIBANK, N.A.
    1,186,706,500
    WELLS FARGO BANK, NATIONAL ASSOCIATION
    1,084,223,500
    U.S. BANK NATIONAL ASSOCIATION
    302,086,859
    PNC BANK, NATIONAL ASSOCIATION
    253,150,124

    Banks by assets June 2007

    BANK OF AMERICA, NATIONAL ASSOCIATION
    1,240,116,690
    PMORGAN CHASE BANK, NATIONAL ASSOCIATION
    1,218,038,000

    CITIBANK, N.A. LAS VEGAS NV
    1,080,370,000

    WACHOVIA BANK, NATIONAL ASSOCIATION
    520,923,000

    WELLS FARGO BANK, NATIONAL ASSOCIATION
    396,071,000

    U.S. BANK NATIONAL ASSOCIATION
    216,725,118

    What is absolutely apparent – if you continued to review the data from the FDIC – is that the largest banks got larger, and the smaller banks got eaten up by these larger banks.

    This is exactly opposite of your claim

    There is no evidence or logical argument yet to show that this could not occur.

    The fact is, I have evidence that proves me right and you have nothing that proves you right.

    With more government regulation, the banks are larger and consolidated more then ever in US history.

    Your claim, therefore, utterly fails reality.

    As far as the free market, Austrian economic theory says no such consequence is possible in a free market void of government regulation.
    The only way any economic entity grows is through profit.
    The larger the profit, the more attractive to competition.
    The more competition, the more price pressure on the competitors.

    Banking is no different an economic good as any other economic good and obeys ALL the laws of economics like all economic goods

    If you proclaim that “banking” requires government regulation to “keep it small” – then you are claiming each and every industry and economic good in the human experience requires government regulation to keep it small … and you’ve joined the Socialist/Statists as a full badge member!

    This is NOT an argument FOR Govt or a central bank. Simply an acknowledgment that NO Govt control of banking and money will NOT eliminate boom/bust or financial hardships at a large scale.

    Your claim is false.
    Every boom/bust has been a consequence OF government banking laws.

    Your argument that Banks are just like any other segment of the economy, like bakers and candlestick makers, ignores a basic reality of any modern economy.

    Absolutely NOT true – you are arguing here that economic law does not take hold because you have some reality that you cannot describe in your economic theory.

    This merely means your economic theory is flawed.

    Austrian economic theory precisely explains the consequences of government intrusion into the banking industry as Mises correctly foretold the consequences of central banking as is occurring today back in 1937!

    Banking industry absolutely, and completely obeys all the laws of economics like every other economic good.

    If in any industry, government grants a monopoly, you will see precisely the same perversions as is occurring in the banking industry – banking is not immune to monopoly perversions.

    But as Rothbard complained, libertarians are contradicted when it comes to banking.

    Libertarians are rabidly vocal against monopolies in the market place EXCEPT in banking, where -for some bizarre reasons- they believe a monopoly in banking is a good thing and it does not ascribe into the deficiencies that monopolies have in every single possible economic industry in the market place – that it is somehow “unique” and immune to perversion.

    Yet! It is the most perverted of them all because it has such broad grant and acceptance as if it should be the norm!

    That is that bankers are in the “Money” market. Money is EVERYWHERE in the market.

    Where as candlesticks and baked goods are limited to distinct segments, money affects everyone.

    This is not true.
    Money is merely desired the most of any economic good – and as such everyone desires it.

    But that does not change economic laws.

    Demanding that because money is valued it requires government is an argument that can be placed on any economic good – yet! We know such a consequence is disastrous.

    • JAC,

      Further,

      Your perceived risk of money “affecting” everyone comes from a point of view that exists within a boundary of government-controlled money.

      The only money you have had experience with comes from government – you have never experienced non-government money.

      You have reviewed your environment under the constraint “only government money can exist, and it that single monopoly cannot fall into the hands of a small set of self-centered men” (though, you’ve forgotten that it has fallen into the hands of a small set of self-centered men, called the FED)

      Thus, within your experience, you cannot conceive of what would happen if there was no monopoly on money.

      You have in past posts articulated your belief that it would be “currency chaos”, though I believe I countered every one of your complaints.

      But again, you argue for a monopoly in money because you believe such a monopoly will not exhibit the fierce deficiencies of a monopoly that every other economic good suffers with one.

      That, sir, means you have to come up with some wiz-bang economic theory that explains this.

      • BF

        Actually I did no such thing in making my claim. I considered it both under a national currency and a free market currency system.

        I don’t think I ever used “currency chaos” and if I did I am not sure the context. I have claimed and still do claim that a free market money system will create inefficiency in trading among the same group of people now contained within the USA.

        I do not see how free market money will prevent the human tendency to consolidate. I see my Bank of Montana seeking a merger with the Colonel’s Bank of Texas along with issuance of a “common currency” as a means of improving the efficiency and thus profitability of commerce between our states. It will also improve our ability to expand markets as Oklahoma, Kansas, Nebraska, Colorado, Utah and Wyoming see the advantage to also using OUR currency and banks.

    • BF

      The err here is your inability or unwillingness to accept my plain explanation and simple words at face value.

      How many times do I have to say that I am NOT talking about Govt’s effect on banking?

      So let me try this one last time: There is no evidence presented by you or the Austrians that market forces will prevent the consolidation of banks under a system that is free of regulation. That is my assertion. Nothing more.

      I have not, nor am I claiming that Govt will prevent such a consolidation and thus reduce the risk. I am in simple terms saying that eliminating Govt will NOT eliminate that risk.

      You claimed the risk to the general economy from bank failure was zero. I say Bull Shit. I have said it would be less than under Govt and Central Banking but it is NOT ZERO.

      My reason for this is simple. Rational business men will see that consolidation will improve their market share and their profitability. As banks they will compete for larger and larger shares of the money market. As humans they will eventually take more risk than they should and the cards will fall. The impact WILL be felt across the economy. The magnitude will depend on just how big and “interconnected” their activities are when the piper comes to play.

      I provided just one example, 1907, to show how the banks had taken risk and how the failure of a single large bank rippled through the economy. The size and multi dealings of the banks was during a period of little regulation in this regard. Thus it can provide some insight into what we could expect under a NO Regulation environment.

      You have yet to provide any evidence or rational argument to the contrary.

      Furthermore, Monopolies absolutely can occur under a NO govt scenario. The difference between the two systems is TIME. Under No Govt a monopoly will not last. Under a Yes Govt system it can become perpetual. But even this issue is irrelevant to my argument. Because Monopoly is not needed for a large bank failure to impact the broader economy. Not when fractional reserve lending is widespread and the dealings of the banks are linked via various deposit and debt transactions.

      • There is no evidence presented by you or the Austrians that market forces will prevent the consolidation of banks under a system that is free of regulation. That is my assertion. Nothing more.

        And that is my assertion regarding capitalism in general; there is nothing to prevent it from consolidated (as it always does) power in the hands of the few. We are fast becoming a third world state because of it and you can blame government all you want; it’s there to serve the wealthy, not the suckers who aren’t wealthy.

        It’s as simple as that.

        • Charlie-I would say that is a real good argument for limited government-but it certainly isn’t an argument for communism.

          • Screw communism … I’ll leave with anarchy … so long as capitalism plays in its own little field far away from where I play. The problem is, if it exists anywhere, it expands (some consider that progress; the misguided and, obviously, those who gain from it — the ones with the gelt). Once it expands, we have problems … what’s happened here. It’s obvious.

        • Charlie

          As usual you take my comment and place greater meaning to it than exists.

          My argument is limited to consolidation to some point of being BIG. I recognize and accept the theory that BIGNESS can not be maintained in a free market. So your claim is FALSE.

          What I am saying is that BIGNESS of banks will have an impact beyond that of some mom and pop store going out of business.

          The ONLY way for rich men to maintain monopolies in a subversive manner is to control and ARMY of other Govt armed force (POLICE). But without Govt they have no such capability because the millions of citizens can revolt against them with trial for treason.

          By the way, you do realize don’t you that those evil Monopolies you like to trot out, like Standard Oil, actually decreased the price of goods to the public, don’t you?

          • I recognize and accept the theory that BIGNESS can not be maintained in a free market. So your claim is FALSE.

            And who the hell sold you that bill of goods? Let me guess … BF? You won’t find free markets because they can’t exist. Once you opt for capitalism, the people with the money are going to seek to protect it. They will influence/corrupt governments to do so. Pretty much what’s happened to America. We’re on the fast track to becoming a third world nation; rich and poor/two classes … sooner or later the poor will get fed up with the bullshit and do something about it.

      • JAC, the main flaw I am seeing is that you keep referencing “modern economies”, all of which have had government involvement in banking and currency. Now, I certainly agree that currency itself will be consolidated to something uniform for imporved trade, that is certainly something the market will seek, with or without government. Bank consolidation, on the other hand, will happen no more or less than in other industries. There will be big banks and small banks, the big ones will never get everyone because they will lose customers, and without government barriers to market entry, smaller banks will have an easier time. Furthermore, in cases of large banking failures, absent government bailouts, remaining assets will be bought by remaining banks, and if the big guys fail because of fractional reserve banking, the remainder will be the midsize ones. It will certainly impact the economy, and the “panic effect” could make waves for the whole industry, but if they are less tied together and less likely to all be doing the same thing the same way, customers will not automatically assume that their bank is in as bad shape as the ones they see failing.

        Bottom line, standardization of currency and interbank transition of funds will be found by the market. Consolidation will not happen as much as you think. The only industries that tend towards that naturally are those with the highest barriers to entry. Banking has more than many, but not as much as massive infrastructure companies like utilities and communications. I can set up a bank in a local town with surprisingly little. Even in the current system this is still happening.

        • Jon,

          Now, I certainly agree that currency itself will be consolidated to something uniform for imporved trade, that is certainly something the market will seek, with or without government.

          Can you explain why this would happen in one economic good, but has never happened in any other economic good in the free market.

          Further, even a monopolist money culture, uniform money does not exist! There are hundreds of currencies concurrently in the world being traded all over the world – and more being developed as we speak (goldmoney.com et al). Indeed the number of alternate currencies are expanding not consolidating and it takes violent force (government) to stop the spread of independent money.

          So, to me, to claim that the free market would consilidate voluntarily when in reality, free from government, the market expands competition in money, seems rather bizarre.

          • Because currency’s value is that it is an agreed upon unit of exchange between more than just the two parties involved in an individual trade. In other words, the reason currency works is that I can plunk down my coins for coffee or next door for a pair of shoes. Each trade is individual, and there need not be anyone setting a fixed value on it, because some may value such a thing differently. However, for ease of trade, people will seek a currency that is accepted as widely as possible, and that is divisible into a variety of numbers, such that I can sell a large item and use teh currency to purchase many small items, or vice versa.

            It is an economic good, yes, but one of its valued traits is that it is accepted widely. Having something that is not accepted widely being used as a currency would be like having a car that did not drive straight. There are a variety of things valued in a car, but being able to drive in a straight line is a rather important one, and the market will seek a car that can do this, regardless of whatever other features may exist.

            Now, it is certainly true that there are hundreds of currencies, and no monopoly of currency would ever be required. The fact that currency and trade do not REQUIRE consolidation does not remove the fact that the market would seek a greater consolidation because it is a valued trait. Would one currency necessarily win out? No, but would the agreed upon currency be something that was very widely known and accepted? Yes. Would this likely mean that there would be less competition for the actual unit of currency than with other items on the market? Yes. Odds are that there would be more types and flavors of cola, for instance, available ont he free market than there would be currencies, even in your government free world. Why do you think gold and silver became currency metals? There would have been more than just those as potential currency, and those won out for a variety of reasons. Certainly their intrinsic value eliminated a lot of issues with various currency standards because gold, assuming similar purity, is gold, and its mass is more important than whose stamp happens to be on it. Perhaps that would be the same thing that would happen, but with modern technology, a currency that could be used in digital form would be beneficial, and I think the market would create one. Or more than one. But I doubt a totally free market with widespread trade would, as I said above, make the same variety that exists in carbonated drinks.

        • Jon

          My reference to modern economies is relative to highly industrialized, specialized, big and having the need for speed. I was trying to distinguish from the primarily agrarian economies that dominated before. The reason is that the “need for speed” contributes to risk itself with respect to the “Gold Rush” or “Herd Panic” behavior we exhibit from time to time.

          I actually see a greater chance of consolidation in banks than other industries. That is because you are dealing with one product and the services tied to that product are also uniform. The benefits of consolidation for some segments are constrained by variations in production and distribution costs geographically. Such as some natural resources. Given that money can be shipped via electrons this barrier is reduced.

          Please note that I never said how big banks would get or that a monopoly would result, or even how much consolidation would happen. I only said that some consolidations would happen and the nature of businessmen would be to increase size and market share if needed to increase profits. It is also human nature to eventually reach to far and fail and if they are large enough, in terms of their being intertwined in the economy, it will shock the entire system.

          The magnitude of the “shock” will depend on more than just fractional lending. The reason I used the 1907 example was because the impact of the failure of one bank was due to the extensive cross investment between that one bank and other institutions. Much like what happened with our last financial crisis. Fractional reserve obviously magnifies that even more.

    • BF, not all libertarians are of that opinion. It may still be on their official platform, but most that I know, and most I have heard speak about economics specifically with any saviness rail against the idea of central banking, referencing works like “The Creature From Jekyll Island”, etc.

      I see how JAC would think that some banks might still grow rather large, but it is not likely that they would be able to make the fractional reserve error more than once. In the absence of being insulated from market factors, banks that survive would explain why they did, negating propoganda by the failed banks that fractional reserve banking was not the cause of their failure. A large bank going down would have greater effect than a small one, but that still is nothing compared to the direct impact on currency itself of the central banking system, especially one that is so closely tied to the government that you cannot tell who is running who.

    • While I agree that onerous regulations increase overhead costs and expedite industry consolidation, most of the market share in any mature, capital-intensive industry is going to be dominated by a small number of players. Banking is no different than retail, energy, and other sectors in that regard. As returns on capital diminish in the financial intermediation business, the consolidation is only going to accelerate–with or absent gov’t impetus.
      http://en.wikipedia.org/wiki/Pareto_distribution

  34. Mathius,

    I know that you feel the government shouldn’t exist, and that by extension, it shouldn’t be involved in parenting in any way.

    Correct.
    The village is more then enough powerful to consul the actions of the parents to the best benefit of the child within the power and ability of the parents.

    That said, if you have a child and you feed your child unhealthy food to a dangerous extent (I’m not talking about a chubby kid, I’m talking about the 200lb 6 year old or some such), is this abuse/neglect?

    Whose opinion counts?

    Do you not, by virtue of having made the child, have a moral obligation to feed your child in a manner which does not create a high statistical probability of morbid obesity and the attendant life-long health problems?

    Obligation? No.
    I like the word “duty” instead per this definition “a task or action that a person is bound to perform for moral reasons”

    I’m not asking if someone should intervene or be allowed to intervene. I’m asking if it is morally wrong to fail to act in the interests of your child with regard to their health by way of the things they are given to eat or which they attempt to attain for themselves for the purpose of eating.

    It is wrong to me, but I am hardly a measure of society writ large.

    • Mathius™ says:

      How does one go about establishing a rational ethical standard of what does and does not constitute in in regards to what is morally wrong in this matter?

      And what, if anything, can be done on behalf of a child whose parent(s) seems unable or unwilling to abide by such a standard.

      In other words, what is wrong not just to you, but in absolute terms. And who can step in and when?

      If you neighbor is beating his child, do you not have a right or obligation duty to intervene?

      • Are you suggesting that we should have laws that force other people to do what you think is morally right? I thought you didn’t like other people forcing their morals on you?

        • Mathius™ says:

          I don’t.

          No one has any right to force their morals on me… except…

          Except where it impact non-consenting third parties (or third parties which are unable to give consent, such as a child).

          That is, I cannot morally shoot my friend. But if he agrees to a dueling match with me, I can morally do so – even if it kills him. However, I cannot do so in a way that risks shooting a random person who just happened to be walking by. Does this make sense? You may consider it immoral for me to shoot my friend, but you have no right to intervene if he is willing to allow me to shoot him. But if we want to do it in Times Square, the government can and should step in.

          To me, and this is just my opinion, the only place government should get involved in interactions between individuals and society-at-large, or individuals and non-consenting individuals. If I want to take drugs, that’s my business, not the government’s (affects only me). If I want to deal drugs, that’s my business and the business of the buyer, not the government’s (affects only consenting participants). If I want to deal drugs to children, that’s the government’s business because children cannot give consent.

          ——

          So, as this extrapolates to the case at hand, I suggest that there is a point at which “being a bad parent” turns into neglect or abuse. And at that point, the government should get involved for the safety and well-being of a person who cannot consent to being neglected or abused. (note, this would be no different in the case of a child vs a mentally disabled adult in someone’s care). (also note that if you, as an adult, are into that kind of thing, someone could perfectly morally abuse and/or neglect you – because you consent).

          Flag, of course, does not think the government should get involved because (a) there should be no government and (b) the point at which it becomes unacceptable in derived from personal opinion and not a logical proof. The former is moot since it’s a basic disagreement in our operating principles. The later is relevant because, perhaps, it applies to a scenario where government does exist. Right now, I don’t know when a kid is over-weight vs fat vs fat-to-the-point-of-being-unhealthy vs fat vs fat-to-the-point-of-being-dangerous vs neglected or abused, and I don’t know where the point is that the government should step in.

          I don’t have a logical framework for establishing this point any better than “in my opinion…” But that’s no good since if I can say “in my opinion” then the parents have a legitimate argument that “why is your opinion overriding of mine?” However, if I can build a perfectly sound proof, then it’s not a matter of opinion, but of facts: A, B, C, therefore X. That’s what I’m trying to get out of flag.

          • Except where it impact non-consenting third parties

            Like what Batista did to his people in Cuba by letting American companies exploit the shit out of them; labor and resources. Surely the Cuban people weren’t happy with it.

            Not to worry, it’s coming to a theatre near you soon. Maybe not your lifetime, but your kids? Probably. Certainly your grandkids (if your in your 20’s-30’s) … the gap between those with the power and the rest of American society is close to a breaking point as is. Now the capitalism can’t fix the problems it’s created (blame the government all you want, it doesn’t change the problem), global economics no longer requires 95% of the American population have work. So how are they going to dig themselves out of the holes most are in? (Blame them all you want, but you can be guaranteed they won’t be receiving any “bailouts”) … it’s a ship going down fast and most of you hear are applauding it. Oy vey …

      • Mathius,

        First, last

        If you neighbor is beating his child, do you not have a right or obligation duty to intervene?

        I have NO right to intervene – be very clear about that. It is not my rights being violated.
        I ONLY have a right to intervene when the child requests it – that is, delegates their right to self-defense TO ME.

        It maybe a duty I chose to be available to accept and act on that delegation.
        But others who do not chose likewise have done no evil.

        How does one go about establishing a rational ethical standard of what does and does not constitute in in regards to what is morally wrong in this matter?

        By measuring what works for you and what doesn’t.
        Morals are subjective, thus, measured individually. What you believe is moral might not be the same as mine.

        And what, if anything, can be done on behalf of a child whose parent(s) seems unable or unwilling to abide by such a standard.

        The most powerful tool society has – non-violent enforcement of its aggregate of moral code.

        In other words, what is wrong not just to you, but in absolute terms. And who can step in and when?

        Only initiation of violence can justify a response of violence.

  35. Undocumented workers collected $4.2 billion in a certain tax credit last year, up from less than $1 billion five years ago, according to a new audit.

    The report from the Treasury Inspector General for Tax Administration looked only at a tax benefit known as the Additional Child Tax Credit, a refundable credit meant for working families. The audit found that as a result of vague U.S. law — as well as an expansion of the tax credit in stimulus legislation and other measures — the number of illegal workers collecting the money has skyrocketed.

    The inspector general’s office expressed concern about the trend and urged the IRS and Treasury Department to determine once and for all whether that money should be paid out.

    “The payment of federal funds through this tax benefit appears to provide an additional incentive for aliens to enter, reside and work in the United States without authorization, which contradicts federal law and policy to remove such incentives,” the report said.

    The report highlighted a quirk in U.S. law. Even people who are not authorized to work are supposed to pay the IRS taxes on their income. Many of those people cannot obtain a Social Security number, so to facilitate this the IRS hands out what are known as Individual Taxpayer Identification Numbers — so illegal workers can file returns. However, in doing so many of those workers are claiming tax benefits like the Additional Child Tax Credit. For some, it’s a way of making even more money.

    “Refundable credits can result in refunds even if no income tax is withheld or paid,” the report noted.

    The Additional Child Tax Credit is an offshoot of another tax credit worth up to $1,000 per child. Restrictions for the tax credits were loosened in 2001, and eligibility was temporarily increased by the 2009 stimulus bill.

    “As such, more taxpayers could claim the ACTC or claim a greater amount,” the report said. The inspector general’s office said 2.3 million undocumented filers claimed the credit in 2010, adding up to $4.2 billion worth of refunds.

    Not all immigrants who are unauthorized to work are necessarily illegal immigrants. However, any legal immigrant who works without authorization would be in violation of his or her immigration status.

    The report said that if the administration determines the credits should not be paid in the future, then the IRS needs the authority to stop them.

    Read more: http://www.foxnews.com/politics/2011/09/02/undocumented-workers-pocketed-42-billion-in-tax-credits-audit-shows/#ixzz1WohHjKyr

  36. Volunteers?

  37. JAC,

    There is no evidence presented by you or the Austrians that market forces will prevent the consolidation of banks under a system that is free of regulation. That is my assertion. Nothing more.

    Yes, there is – the evidence that no other business or industry has ever exhibited the effects you are concerned about

    In other words, you want to demand a fantasy has a potential, but act as if such a potential is guaranteed … anything COULD happen but that does not mean IT WILL.

    No industry, ever, in economic history has ever exhibited the fault you claim exists.

    Does that mean it is absolutely impossible? That is not humanly possible to know

    But what I can say it has never happened anywhere else, and you have nothing at all to suggest there is something about one economic good over another that would make it be happen here and now

    I am in simple terms saying that eliminating Govt will NOT eliminate that risk.

    It most certainly WILL since the effects OF government -RIGHT NOW- have created the very condition you see threat from!

    Since it is government -RIGHT NOW- that has created your fear, eliminating government is the best course of action to reduce the risk

    You claimed the risk to the general economy from bank failure was zero. I say Bull Shit. I have said it would be less than under Govt and Central Banking but it is NOT ZERO.

    Because you hold a distorted view on banking – that is, you demand a monopoly on it – your concern of a failure is indeed, reasonable. There is but one entity, and if it goes bad, there is no alternative and disaster for everyone.

    What you do not seem to get is that if you undistort your view on banking – that is, eliminate the monopoly, your concern of failure is moot. There are a multitude of entities and if one goes bad, so what?

    Rational business men will see that consolidation will improve their market share and their profitability. As banks they will compete for larger and larger shares of the money market. As humans they will eventually take more risk than they should and the cards will fall. The impact WILL be felt across the economy. The magnitude will depend on just how big and “interconnected” their activities are when the piper comes to play.

    This argument is used against the free market and a claim that “capitalists” will work to consolidate the market successfully.

    But this is a fallacy.

    It maybe true that some men attempt such consolidation but what you fail to account for is competition – and where profit becomes attractive, competition appears in droves – and no attempt at consolidation is successful, as one cannot buy endless competitors forever – there simply is not enough capital to do so.

    This argument of yours has been used against every economic good in existence in the free market place at one time or another – from food to fuel to gold (which if you recall was once money) and that argument has never, ever, ever, ever seen reality.

    How, out of all this, you still proclaim this fallacy regarding banking …. (shrug) …. some coherent economic theory is missing.

    I provided just one example, 1907, to show how the banks had taken risk and how the failure of a single large bank rippled through the economy.

    But your example was a situation created by a cabal of government, the treasury and the monopolist bankers!

    But you use this example to say that free market banking will do the same thing!

    To solve a problem created by monopolists and government, you demand free market banking cannot exist, and must be controlled by monopolists and government!

    Bizarre!

    The size and multi dealings of the banks was during a period of little regulation in this regard.

    “Little”? What do you mean by little?

    The Political Economy of Banking Regulation, 1864-1933
    Eugene Nelson White

    The laws and regulations that shaped the structure of the banking industry from the Civil War to the Great Depression were strongly influenced by the banking community. In this period legal constraints on banks were weakened by competition between state and federal regulators trying to increase membership in their banking systems. The elimination of regulation was not completed, however, because the politically most powerful group in the industry, the unit banks, had an interest in preserving some regulations.

    http://www.jstor.org/pss/2120492

    Please answer these questions:
    What was the driving force?
    Who wrote the laws?
    Why were the laws written the way they were?

    Thus it can provide some insight into what we could expect under a NO Regulation environment.

    You have yet to provide any evidence or rational argument to the contrary.

    Furthermore, Monopolies absolutely can occur under a NO govt scenario.

    Absolutely false.

    The only way you can create a monopoly is to block competition in the market.
    The only way you can block competition is by force.

    Illegitimate force -criminal activity- is resisted vehemently by the citizens, leaving on legitimate force – government – and its ability to enforce monopolies.

    Under No Govt a monopoly will not last.

    It cannot establish itself at all.

    Because Monopoly is not needed for a large bank failure to impact the broader economy. Not when fractional reserve lending is widespread and the dealings of the banks are linked via various deposit and debt transactions.

    So, your scenario – for it to be true – has a set of fundamental REQUIREMENTS – that if it is missing but one of them, your scenario will not occur.

    1) This is a free market.
    2) Monopolies cannot exist without government force.
    3) To prevent competition in money, money must be monopolized FIRST, and no other alternative money can be allowed to exist
    4) To prevent competition requires force – legitimate force – which makes the market no longer a free market.

    Your scenario cannot exist in a free market.

    Your prescription to solve the problem caused by government action -boom/bust- you demand the monopolization of money by government – which is the fundamental first step in manufacturing the problem of boom/bust.

  38. Charlie,

    And that is my assertion regarding capitalism in general; there is nothing to prevent it from consolidated (as it always does) power in the hands of the few.

    No, Charlie – like JAC – you ignore competition, and no company, no matter how big, even the size of government can buy out all the competitors – there is not enough capital and further, there is nothing stopping them from re-entering the marketplace again as competition!

    The only way “consolidation” which is merely another world to describe “monopolization” is by government force preventing competition in a market place.

    • Competition is as vulnerable to corruption as any other operation that requires man be involved. Your fantasy assumptions about the free market are comical when set against history. Whether everyone starts with $10.00 or one starts with $100 and everybody else $1, at some point one guy (at least) with the $10 will have $50 … or the guy with the $100 will have $150 … and from that point on, competition will be bought and paid for the same way grocery chains ate up mom and pop shops, hardware stores, etc., etc.

      Forgetaboutit …

      • Charlie,

        Competition is as vulnerable to corruption as any other operation that requires man be involved.

        Yet, strangely, you do not apply this wisdom to politics.

        If men are corrupted, why do you believe men in government are not corrupted?

        If you do, why do you believe centralizing corrupted men is a better solution then widely dispersing them?

        Competition could be corrupt – but not all are – the decentralization of corruption, power and violence is always better then centralizing these things.

        You are afraid of a lone man with a gun.
        I fear a man who commands an army with tanks, aircraft and nuclear weapons.

        • I’m with you on the anarchy bit, BF. I just happen to believe it will require socialism to get there. But in eithe instance, anarchy via socialism or a trip to anarchy, capitalism won’t survive.

          • Charlie,

            Well, as long as men are free to chose their “ism” and don’t impose their choice on others, I matters not to me what ‘ism’ they choose.

          • Charlie

            So what economic system do you think will exist under Anarchy??

            • A more communal existence. People working together for each other rather than profit and power. It may be a bit idealistic, but certainly no more so than your fantasy of capitalism surviving in free market (with or without government). That gap that grows day by day is the guarantee it’ll die a nasty death, your capitalism. It has no chance, even with the government protecting it. The gap will sooner or later create revolution. My belief is socialism will have to occur before any form of anarchy because man will have to go that route (give it a chance) before it too dissolves from corruption. But capitalism, my brother, it’s seen it’s best days (and they were never very good) and the chickens will come home to roost soon enough.

              Go Bills!

      • 1) If everyone starts with the same stuff, it will certainly not stay that way. That does not necessarily mean that some people will have less. You always forget that economics is not based on a static number.

        2) If you base your issues with capitalism on the concept that it is subject to corruption, then you must logically know that your idealistic utopia is also subject to corruption. Socialism, as history has shown, is very vulnerable to corruption.

        3) Your argument that the free market will not remain free because big players will seek to insulate their wealth by seeking government protection, meaning that the market is no longer free, is not based on an issue with the free market, but with humanity. In other words, your argument is not that the free market is bad, but that people will not act within the principles of the free market. That being said, how could those same people be expected to operate within the principles of capitalism?

        4) If you are right about humanity and greed, then your utopia is indeed just as much a pipe dream as you claim the free market is. Why even bother with any ideals at all?

        5) Socialism cannot function without control, control means someone has power. This will eventually expand and lead to revolt. You claim that wealth will do this as well, but revolts do not happen because some have more than others, they happen when people are controlled and starved. If, in fact, the corruption of man means that the free market will lead to tyranny, then let the revolts happen to clear the tyranny and return the state of freedom. By contrast, the revolts ensuing because of socialist coruption will lead to freedom, not to renewed socialism. People revolt against control and lack of freedom, not against lack of stuff. As such, revolts will always seek more freedom, not more equal distribution of wealth.

  39. Waffle,

    While I agree that onerous regulations increase overhead costs and expedite industry consolidation, most of the market share in any mature, capital-intensive industry is going to be dominated by a small number of players. Banking is no different than retail, energy, and other sectors in that regard. As returns on capital diminish in the financial intermediation business, the consolidation is only going to accelerate–with or absent gov’t impetus.
    http://en.wikipedia.org/wiki/Pareto_distribution

    Where as I agree to the application of Pareto’s “law” (an incredibly interesting phenomena with no underlying explanation that pops up almost everywhere in the Universe) – I do not agree with your “consolidation will accelerate”

    As you point out, it is Pareto’s Law that you are pumping up against … on both sides.

    To breach the 20/80 (say, 10/90) requires powerful external force – it is not nature pushing. That is, violent force of government to distort the system.

    Further the phenomena of Pareto’s Law is recursive – that is, in the 20%, their is another 80/20 distribution in that, and in that 20%, another. But this stratification does not impact that of the 80% – it still remains at 80%, and in that 80%, there is the 20/80 recursion as well.

    As I pointed out to Jon, using the example of telephone companies pre/post Bell’s patents – is a powerful example of the opposite – once released from government imposition, the market expands aggressively, overwhelming the incumbent to such a degree Bell was nearly bankrupt.

    Indeed, actually being the dominate, mature, well capitalized player is no advantage and a huge disadvantage if it was earned by appealing the writs and grants of government.

  40. ..”appealing TO the writs and grants of government.”

  41. Charlie,

    You won’t find free markets because they can’t exist

    You don’t see the depth and breadth of the free market you live within, because you hide your eyes from it….

    …yet, you trade your coins for coffee….

    • Coins for coffee is way too simplistic (and you know it). Where did the coffee come from? Who was exploited to get it? Who sold it, distributed it? Why is the guy selling it only making a pittance of the profit?

      I trade coins for coffee when I need the caffeine.

      • Charlie,

        ..too simplistic…

        *blink*

        So, to you, to understand a concept, it must be so complex you can’t understand it. … yep, that’s Charlie! 🙂

        Coffee comes from a bean.
        No one is exploited to growing a bean, unless they had a gun to their head to do it.
        A man traded that bean -which he has a lot of- for something he did not have a lot of.
        Another man traded that bean -which he has a lot of- for something he did not have a lot of, and so on, all the way to you.

        • No one is exploited to growing a bean, unless they had a gun to their head to do it.

          Here I’m thinking a lot of those working the coffee beans fields might differ with your statement, sir.

          http://americanradioworks.publicradio.org/features/food_politics/coffee/index.html

          • Charlie,

            Yep, the author has zero understanding of economics – no surprise – but believes it is economics that is “holding the man down”.

            Nonsense.

            Coffee – in the field – is worth about what the people who grow are paid, because that is what they are paid. If they could demand more money for it, they would.

            If it was gold instead, they’d be paid more because they would demand more for it and others would pay it.

            You understand this, right? If it was gold in that field, they would be paid more because the demand for their goods would be higher.

            See… it has little to do with the man, but everything to do with the demand of the goods.

            • PS: If the “man” has a gun to his head, then it wouldn’t matter if it was gold or coffee – right?

            • If they could demand more money for it, they would.

              Says the one who benefits from their exploitation. You devalue the value of the human with that attitude but refuse to acknowledge it. That’s okay, it only furthers my point; the dehumanization of capitalism.

              The gun is to his head, BF. He needs to survive, work for whatever pay he can get to eat, etc. Callously overlooking that fact is what propaganda permits you (not me) to do. He can eat or die. If that’s not a gun to his head, I don’t know what would be.

              • Charlie

                Says the one who benefits from their exploitation. You devalue the value of the human with that attitude but refuse to acknowledge it. That’s okay, it only furthers my point; the dehumanization of capitalism.

                *scratch head*

                So you are arguing that you finding a gold bean vs a coffee bean would earn you the same?????

  42. Okay, wingies on the right … proof of how liberal democratic blogs attack me for being (now) a Karl Rove acolyte. This was from my Obama bashing in response to the blog continuing (as is their right) to denounce the unbelievably insane Republican presidential candidates (wingies, for sure) rather than hold their own incompetent to a standard somewhat higher than corporate lackey. What is interesting, of course, is how they can’t accuse me (as some of you here do) of being “red through and through”. So they go the other way and accuse me of being a Karl Rove disciple. I can’t tell you the joy I get from proving my point about both parties; how blindly loyal they are to people/parties who screw them over at every turn. Imagine criticizing their president (or you yours when it was Bush) to a standard higher than “We’re disappointed in him, but …”

    But … we’ll cut our noses to spite our faces and vote for the loser one more time.

    Once again, although some of the comments here are as batshit crazy (to me) as you think mine are, I’ll give Stand up for Socialism a one-up on most of the liberal democrat blogs I visit. You guys often get into substance (and some revisionist history to suit your points) but there it’s mostly just sarcasm and insults aimed at the other side. Usually zero substance and nothing but sycophants chirping in their approval.

    So it goes. Here now, the accusation of me being a disciple of Karl Rove:

    Hey, Charlie, I just found your user manual:

    Aug. 24, 2011

    From: KR

    To: All Internet Operatives and Interns

    Re: Internet Operations — For Immediate and Aggressive Implementation

    CONFIDENTIAL — EYES ONLY

    Hello Gang,

    You’ve all been working hard, and it’s paying off. Obama’s numbers are plummeting as I type this. Congratulations all around. But we can’t afford to be complacent now.

    I just want to briefly go over a few Mission Points with you.

    1. Main mission: Infiltrate all liberal web sites, posing as disaffected liberals with liberal-sounding user names, icons and signatures. (Reference Bernie Sanders, Dennis Kucinich, FDR, Smedley Butler, Bill Clinton, etc.)

    2. Express. Disappointment. With. Obama. (Whining pays double!) (jk!)

    3. Push primary challenge. Push third party. Push Green. Push Socialist. Push write-in voting. Push non-voting to “send a message.”

    4. Effective memes/talking points:

    “Obama is a DINO.”
    “Obama is no different than a Republican.”
    “Obama has sold us out.”
    “It feels good to vote your conscience.”
    “It feels good to stick to your principles.”
    “Don’t be trapped into voting for the lesser of two evils.”
    “We need to punish Obama and the Democrats by not voting.”

    Sound familiar? It’s a leaked memo from Karl Rove. I don’t think I’m going to give much credence to people who use those talking points any more.

    • Charlie, you old picked on devil you… 😉

      Here, you might enjoy this piece I wrote: http://gmanfortruth.wordpress.com/2011/09/02/what-we-have-here-is-a-failure-to-communicate/

      Of course all are welcome to check it out (shameless self-promotion 🙂 )

      • Very well said, sir. I tip my hat and applaud you with much enthusiasm.

        Now I’m sure should a certain someone from that other site visit here and see my comments, I’ll be accused of being part of that vast right wing conspiracy … but that’ll just prove your point … nobody hears, nobody listens and everybody accuses … so it goes.

      • Excellent Article Plainly. You know that you are welcome to become a writer at SUFA as well should the desire ever strike you. As is Charlie! A different side of things would be welcome in the discourse here.

    • Bravo Charlie, I must say, even tho I deplore your socialist views, I certainly applaud you for being awake to the corruption that exists, regardless of whether the current regime is closer to your thinking than, say the previous one.

      • Except for his (Obama’s) rhetoric about helping the greater good, I find very little difference between him and the republican party (practically nothing, in fact). They are equal parts of the same problem so long as they uphold capitalism (in my not so humble or not humble enough opinion). I do get a kick out of how much more blind liberal democrats tend to be, though. It’s defend (in this case) Obama at all costs rather than seek a better solution to their stated wants/desires/needs. And sometimes (like today) it’s downright comical. That particular person, I suspect, can’t get beyond the fact that I once tried the Republican Party for EXACTLY the reasons i stated at the start of this comment (I saw no difference and was thoroughly frustrated with being a Democratic loyalist; that coupled with my emotional reactions to 9-11, which the Bush administration did a masterful job of tapping into–Phil Donahue was soooo right about that; we wanted to punch somebody in the face and Iraq was offered up as the punching bag. By 2006, Bush embarrassed me no end (for voting for him), but I wasn’t about to go back the other way because of how quickly so many Dems went along with him (including Mrs. Clinton). That did it for me for either major party. Now I’d be more than happy with BF’s anarchy (except the capitalism bit), but I do believe socialism will have to be the choice before anarchy (because that too will be corrupted over time). Anyway, at least I was willing to admit my mistake voting for Bush. You’ll rarely hear a liberal Democrat admit it was a mistake voting for Obama (or whomever the Dems put in his place some day). The level of party loyalty there is as mind boggling as non-wealthy workers voting Republican (as if that’s in their interest).

        Plainly nailed it pretty well in his article on Gman’s site. The two parties are nothing but venting boards while corporations and those who own them clean up.

  43. And to be fair, here’s where the quote above came from:
    http://www.blogger.com/comment.g?blogID=13172818&postID=5831050829247686705

  44. Waffle, JAC

    Here is a great video (if you haven’t seen this before)

    The Private Supply of Money | George A. Selgin

    Its just over an hour long

  45. My favorite line in the article—– “Several labor unions decry the Environmental Protection Agency’s existing and prospective rules, mainly those designed to reduce coal emissions. These stalwarts of the liberal Left resemble capitalists who now call the EPA the Employment Prevention Agency.” Funny– To bad it’s so true–laughter is impossible

    Deroy Murdock

    September 2, 2011 4:00 A.M.
    Labor Leaders Tell Obama: Stop Killing Jobs
    Even Big Labor is complaining about Big Government.

    As 9.1 percent unemployment plagues America this Labor Day, major unions are clashing with a Democratic administration with which they normally would march in lock-step. Echoing the U.S. Chamber of Commerce, at least eight unions are begging Team Obama to abandon regulations, statements, and procedures that prevent jobs from being created or saved.

    ● Several labor unions decry the Environmental Protection Agency’s existing and prospective rules, mainly those designed to reduce coal emissions. These stalwarts of the liberal Left resemble capitalists who now call the EPA the Employment Prevention Agency.

    The International Brotherhood of Electrical Workers’ Texas unit wrote the EPA June 16 on behalf of its 23,000 members. IBEW executive Jonathan Gardner warned that EPA red tape “would directly jeopardize the jobs of approximately 1,500 IBEW members working at six different power plants across the state of Texas.” Gardner argued, “The shutdown of coal-fired units without any meaningful benefit to the environment is not justified.”

    This catastrophe unfolds well beyond the Lone Star State.

    The 76,000-member United Mine Workers estimates that EPA-fueled power-plant closures could directly kill 54,151 jobs and indirectly destroy 197,140 others in America’s coal, utility, and railroad industries.

    In an August 1 letter to Sen. Lisa Murkowski (R., Alaska), Federal Energy Regulatory Commission chairman Jon Wellinghoff and commissioners John Norris and Cheryl LaFleur wrote that FERC examined “how coal-fired generating units could be impacted by EPA rules.” FERC explained that this “informal, preliminary assessment showed 40 GW of coal-fired generating capacity ‘likely’ to retire, with another 41 GW ‘very likely’ to retire.”

    If the EPA unplugs 81 gigawatts, it would dim America’s electrical capacity 8.1 percent, from 995 GW to 914. American Electric Power, Duke Energy, and the Southern Company — among other utilities — have declared that these rules will force them to close coal-fired generating stations. Padlocked power plants and scarcer electricity would debilitate America’s feeble economy and further imperil workers — unionized and otherwise.

    “Overly aggressive action in the absence of effective, economical pollution control technology could result in unintended consequences that hinder employment growth necessary for a full economic recovery,” Mark Ayers, chief of the AFL-CIO’s Building and Construction Trades Department, wrote the White House last year. Ayers, who represents 1.5 million workers, added: “Our unions will be hard-pressed to support actions that lack the appropriate incentives to encourage both emissions reductions and job growth, while potentially having a chilling effect on the construction activities that put our members to work.”

    ● R. Thomas Buffenbarger, president of the 720,000-member International Association of Machinists, penned a June 29 letter with Peter J. Bunce, CEO of the General Aviation Manufacturers Association. This labor-management duo pleaded with President Obama to stop slamming corporate jets.

    “We are perplexed over recent comments and actions questioning the value of corporate aircraft use and proposing tax changes that would negatively impact the entire general aviation industry,” Buffenbarger and Bunce wrote. “During the severe economic downturn in 2008, ill-informed criticism of corporate jets and business aviation exacerbated the challenges facing our industry, which led to depressed new aircraft sales and jeopardized very good, high-paying jobs throughout the United States. More than 20,000 highly skilled IAM members were laid off in this industry.”

    The labor and management leaders continued: “We are very concerned that the rhetoric coming from some in your Administration will lead to similar economic difficulties. While such talk may appear to some as good politics, the reality is that it hurts one of the leading manufacturing and exporting industries in the United States.”

    The Obama administration has not opposed the Keystone XL oil pipeline, which would transport petroleum from Canada’s oil sands to Texas’s refineries. Instead, it has studied this project into paralysis. The State Department favors it, while the EPA frowns — “a process that has gone on for more than two years,” the presidents of the Plumbing and Pipefitters, Operating Engineers, Laborers International, and Teamsters unions (with 2.6 million members among all four) complained last October. Eleven months onward, Washington still contemplates Keystone. These labor leaders denounce this “lost ground for thousands of workers who are sitting on the sidelines of our ailing national economy.”

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    ADVERTISEMENT

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    “This project means jobs — and jobs for our members,” the Teamsters’ chief economist, James Kimball, told the Associated Press’s Matthew Daly. Keystone could launch some 118,000 new jobs, if President Obama would “just say yes.”

    Do these deregulatory rumblings foreshadow the AFL-CIO’s endorsement of Rick Perry for president? Unlikely. Union officials will stick overwhelmingly with the incumbent. Still, while 14 million Americans wish they were workers, some in Big Labor now cry “Uncle!” at Big Government — thanks to Barack Obama’s job-killing machine.

    http://www.nationalreview.com/articles/275974/labor-leaders-tell-obama-stop-killing-jobs-deroy-murdock?page=2

  46. A Big Boise State HOWDY to all those Georgia fans tonight.

    Heh, heh, heh.

    • You are cruel. I will have to speak to the Obama administration about you and how you are not politically correct. I am sure there will be an executive order that by passes Congress to come after you. You should be ashamed for you have discriminated and are racist.

      Heh heh heh…….

  47. This quote was translated into English from an article appearing in the
    Czech Republic as published in the Prager Zeitung of 28 April 2011.

    QUOTE OF THE DECADE,

    “The danger to America is not Barack Obama but a citizenry capable of entrusting an inexperienced man like him with the Presidency. It will be far easier to limit and undo the follies of an Obama presidency than to restore the necessary common sense and good judgment to a depraved electorate willing to have such a man for their president. The problem is much deeper and far more serious than Mr. Obama, who is a mere symptom of what ails America . Blaming the prince of the fools should not blind anyone to the vast confederacy of fools that made him their prince. The Republic can survive a Barack Obama. It is less likely to survive a multitude of Idiots such as those who made him their president.”

    • It took Obama to make this quote? Hell, we have been doing this for decades. I know…for I have voted foolishly myself.

    • D13,

      Though there is truth in the quote, the truth is not described in its conclusion.

      The truth: trusting this man with the belief that he -somehow- has the great knowledge and wisdom to act in the best interests of 300 million people is folly.

      The err: the belief that such a man actually exists.

      The quote blames the votes.

      I ask, “So what alternative did they have?”
      McCain the warmonger who may have actually started WW3 by attacking Iran?
      Or after McCain died in office from a heart attack, Palin? You want her fingers on the button of nuclear holocaust?

      Which one do you think is so brilliant that they know how to spend your money better than you?

      That is the problem with the thinking presented in the quote.

      The point to the problem – “This man is an idiot”
      But they do not understand the question – “Jesus, if he didn’t resign first, couldn’t have done the job – then who could?”

  48. “Union donations to federal candidates at the beginning of this year were down about 40 percent compared with the same period in 2009, according to the Center for Responsive Politics. Last month, a dozen trade unions said they would boycott next year’s Democratic National Convention in Charlotte, N.C., over frustration on the economy and to protest the event’s location in a right-to-work state.

    Read more: http://www.foxnews.com/politics/2011/09/04/union-leaders-adjust-to-new-reality-under-obama/#ixzz1WzK2KH6G

    Union donations and union dissatisfaction does not bother me and unions do not bother me except the one line in this statement and that line is the last one.

    WHY should anyone be against the “right to work”? Why would anyone want to live in an area where you are forced to pay union dues or join a union? Is not being against the “right to work” the same as saying…..ummm….Zieg Heil?

  49. @ Mathius…..yes sir…I did get your email. And you wonder WHY we like our Longhorns here?

  50. And over in Charlie world (yes, Pluto, Colonel) … check out the last story/video especially … ingenuity that doesn’t require a paycheck
    http://temporaryknucksline.blogspot.com/2011/09/interview-with-king-knucks-nfl.html

    • And the point of this is like my own son’s utopia of a Star Trek World?

      • 🙂

        People can think out of the box and not for profit … to help others; the fact that not everybody requires compensation for their ingenuity and most importantly, it should dispel the myth that if “all the guys who built the companies were to leave the U.S., we’d have nobody to run things anymore”. That’s just baloney.

        Leave the political party. Take the canolli …

        • Charlie,

          You merely define profit as exchange of money – you do not evaluate the profit of this fellow – advertisement of his skill, emotional benefit, etc.

          Further, someone bought the bike – somewhere. It did not “magically” appear from God. Someone paid, but you forgot that too.

          If the “guys” who built companies left the US, true, others would do the same … but they are doing that already (albeit under the strain of government writ and barriers) – but for whatever reason you think the guys who have not yet built the companies are “good”, but after they build the companies they – for some reason to you – become “bad”.

          • There you go again (now I’m quoting Regan, I must be a Rove shill!) … nobody called anybody bad, BF. it was a school project, first of all. So long as profit is removed from the formula, I’m sorry, boss, the world becomes a better place. It’s as simple as that.

            • Charlie,

              But that’s my point.
              There was profit in the formula — who do you think bought the bike in the first place?

              • I’m sure the out of work U.S. bike manufactuers (for example) are happy to know there was profit in it (for people overseas doing the work they used to do).

                You’re not going to win this argument, my friend …

  51. I was surprised by these statistics-it’s worse than I thought.

    Of family decline and the importance of traditions
    Share30
    posted at 5:30 pm on September 4, 2011 by Tina Korbe
    printer-friendly

    According to historian Paul Johnson, many analysts of American society consider the decline of the family and of family life — and the growth in illegitimacy — to be the decisive single development in America during the second half of the 20th century. It’s easy either to decry that

    decline in dramatic terms or to dismiss it as unimportant, a mere illusion in the minds of cultural conservatives. No need exists to overstate the case, to issue dire warnings of degeneracy and immorality or to primly utter hints at history repeating itself, to darkly allude to the collapse of the Roman empire or to the fall of any great civilization without regard to the aptness of the analogy. But neither does it serve a positive purpose to deny the reality. The family has been in decline and Johnson provides the evidence to prove it. From his A History of the American People:

    Up to 1920, the proportion of children born to single women in the United States was less than 3 percent, roughly where it had been throughout the history of the country. The trendline shifted upwards, though not dramatically, in the 1950s. A steep, sustained rise gathered pace in the mid-1960s and continued into the early 1990s, to reach 30 percent in 1991. In 1960, there were just 73,000 never-married mothers between the ages of eighteen and thirty-four. By 1980 there were 1 million. By 1990 there were 2.9 million. Thus, though the illegitimacy ratio rose six times in thirty years, the number of never-married mothers rose forty times. Illegitimacy was far more common among blacks than among whites. The difference in black-white marriage rates was small until the 1960s and then widened, so that by 1991 only 38 percent of black women aged 15-44 were married, compared to 58 percent of white women. A significant difference between the number of black illegitimate children and white ones went back to well before the 1960s, though it increased markedly after the 1960s watershed. In 1960, 24 percent of black children were illegitimate, compared with 2 percent of white children. By 1991, the figures of illegitimate births were 68 percent of all births for blacks, 39 percent for Latinos and 18 percent for non-Latino whites. At some point between 1960 and 1990, marriage, and having children within marriage, ceased to be the norm among blacks, while remaining the norm among whites (though a deteriorating one). The jump in the illegitimacy rate in 1991 was the largest so far recorded, but it was exceeded by subsequent years. By the end of 1994 it was 33 percent for the nation as a whole, 25 percent for whites, and 70 percent for blacks. In parts of Washington, capital of the richest nation in the world, it was as high as 90 percent.

    Updated statistics are scarcely more hopeful. For example, one in four children today lives with just one parent. Pretty grim.

    http://hotair.com/archives/2011/09/04/of-family-decline-and-the-importance-of-traditions/

    August 26, 2011 12:00 A.M.

    The Cohabitation Revolution
    It’s no substitute for marriage.

    The great divorce revolution of the 1960s and 1970s has faded. The great cohabitation revolution has begun.

    The divorce rate for married couples with children is almost back to the levels of the early 1960s, before the run-up that crested in the early 1980s. Considering the decades of social turbulence buffeting the institution of marriage between then and now, this is a notable restoration.

    But it only means that marriage is unraveling in a different way. According to a new study by the Institute for American Values and the National Marriage Project at the University of Virginia, cohabitation has increased 14-fold since 1970. About 24 percent of children are born to cohabiting couples, more than are born to single mothers, while another 20 percent experience a cohabiting household at some time in their childhood.

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    ADVERTISEMENT

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    On the face of it, this doesn’t seem alarming. At least there are two adults there for the kids. Except the research says it isn’t enough. Children in cohabiting households tend to lag children in intact married families on key social indicators and are not much better off than children in single-parent families.

    We want to believe that all relationships, so long as they are loving and well-intentioned, are equal. It feels like an offense against 21st-century mores to say otherwise. Who are we to make invidious distinctions among loving adults? But there is simply no substitute for marriage, for the relative stability and commitment it provides, and for the environment it creates for children.

    As a general matter, compared with married couples, people across the gamut of cohabiting relationships report “more conflict, more violence, and lower levels of satisfaction and commitment,” in the words of the National Marriage Project study. This basically holds true of unmarried biological parents who are living together. Cohabiting couples are more likely to be depressed and less likely to pool their income.

    They are in altogether more tenuous relationships. Cohabiting couples with a child are more than twice as likely to break up as married parents. Only 24 percent of children of married parents experience a change in the relationship status of their mothers by age 12. The figure for the children of cohabiting couples is 65 percent.

    This is especially consequential for the affected children. The study notes “an emerging scholarly consensus that family stability in and of itself is linked to positive child outcomes.” Children who experience a divorce or some other — to use the jargon — “maternal partnership transition” are more likely “to experience behavioral problems, drug use, problems in school, early sex, and loneliness.”

    Our pop culture tends to celebrate what one sociologist calls “the carousel of intimate relationships” that adults are constantly hopping on and off. Although Modern Family has replaced Leave It to Beaver as the TV-sitcom paradigm of American family life, children have more trouble in complex households formed by people unrelated by birth or marriage. “Children in stepfamilies,” according to the study, “are more likely to experience school failure, delinquency, teenage pregnancy, and incarceration than children growing up in intact, married families.”

    Children turn out to benefit from the structure, rituals, and identity that come with a lasting marriage between their parents. And the very act of committing to the norms of marriage makes adults better marital partners and parents. One of the more affecting pieces of data in this study is that fathers committed to marriage are more likely to hug their children than fathers who aren’t. One of the more disturbing is that children in cohabiting households are more likely to be abused than children in either intact, married families or single-parent families.

    The advantages of marriage run much deeper than merely having two adults in the house. It is an irreplaceable source of social capital. As we move away from it and social scientists study the consequences, we learn more about why it was such a timeless institution — once upon a time.

    http://www.nationalreview.com/articles/275612/cohabitation-revolution-rich-lowry

  52. Mathius™ says:

    Happy Labor Day, y’all!

  53. I put the blame for these deaths-right on Obama”s shoulders- for not declaring this an emergency. It is an emergency-no one can argue it is not. Texas has as much right to emergency funds as any other states-They are forced to pay in-just like the rest of us-the Federal government punishing States because they don’t walk in lock step with their commands-is and should be criminal. If he is going to deny them the money and the help(God forgive him)than they deserve to have any taxes they paid in, returned to them-so they can afford to pay for it themselves.

    US Texas Wildfire Engulfs Home Killing Young Mother and Baby Daughter

    * Posted on September 5, 2011 at 12:51am by Scott Baker Scott Baker

    DALLAS (AP) — A sheriff says a fast-moving wildfire has engulfed a home in East Texas, killing a 20-year-old woman and her 18-month-old daughter who were trapped inside.

    Gregg County Sheriff Maxey Cerliano says the fire destroyed the home Sunday between Lincoln City and Gladewater, more than 100 miles east of Dallas. None of the victims were immediately identified.

    Celiano tells the Tyler Morning Telegraph (http://bit.ly/njjkI9) that a male who was inside the house was burned but was able to escape.

    Authorities say high winds caused by Tropical Storm Lee are partly to blame for the wildfires that continued to ravage parts of East and Central Texas Sunday. Among the areas hardest hit was Bastrop County just southeast of Austin, where more than 6,000 acres were scorched.

    • Catastrophic fires burn thousands of acres, force evacuations across Central Texas
      Fires in Bastrop County, Spicewood, Steiner Ranch, Pflugerville, others driven by wind and dry conditions.

      n a summer where brush fires have become a near-daily occurrence, firefighting officials said the multiple wildfires that raged across Central Texas on Sunday were the worst the region has seen all year.

      Numerous wind-driven fires pushed fire departments to their limits and forced evacuations in Bastrop County, the Steiner Ranch subdivision, Pflugerville, Spicewood and other areas. Scores of residents were left wondering whether they had homes to return to as many of the fires continued to burn Sunday night.

      The largest and most destructive fire was in Bastrop County, where a blaze burned 14,000 acres and grew to an estimated 16 miles long by the end of the day, said Mark Stanford, fire chief of the Texas Forest Service.

      “It’s catastrophic,” Stanford said of the Bastrop County fire. “It’s a major natural disaster.”

      Forest Service spokeswoman Lexi Maxwell said that fire began about 2 p.m. in the Circle D subdivision off Texas 71. It merged with another fire north of there that pushed south and crossed over Texas 21 and Texas 71, Maxwell said. Aerial units estimated that at least 300 homes had been damaged or destroyed by the fire.

      Maxwell said another, unrelated fire was reported in the Colony subdivision in Bastrop County, which also forced evacuations.

      “This was far and away the most catastrophic day for Central Texas fires,” Maxwell said.

      Residents in Bastrop County were told to evacuate to Bastrop Middle School, the First Baptist Church in Smithville, Grace Lutheran Church in Smithville and the Smithville Recreation Center.

      As of late Sunday , Texas Parks and Wildlife Department personnel and firefighters were fighting to save the historic Depression-era Civilian Conservation Corps structures in Bastrop State Park. A regional office about four miles away on Texas 71 was destroyed, according to department spokesman Mike Cox.

      Steiner Ranch

      Firefighters battled a blaze in a part of the Steiner Ranch subdivision northwest of Austin that destroyed at least 25 homes and forced hundreds to evacuate. RM 620 was closed in both directions near the subdivision for hours.

      Lisa Rux said the sky over the subdivision changed color that afternoon, turning black as smoke filled the air.

      “It’s raining soot,” Rux said.

      She said she felt fortunate that most of her family was out of town that day, but she grabbed her dog and got out of the neighborhood as fast as she could. Rux said that the fire there reminded her of the hurricane evacuations she dealt with growing up in Corpus Christi, except this time she was flanked by 50-foot walls of smoke.

      One of her neighbors said a house caught fire and exploded when a propane tank went up.

      Resident John Zucker fled his home with his wife, two children, dogs and cats. The family packed full two vehicles of personal files, photo albums, laptops and clothes before arriving at Vandegrift High School off RM 2222, which has been set up as a shelter for evacuees.

      “It’s nerve-racking,” Zucker said. “When they first started to report it on the news, our power went out.”

      Zucker said he received conflicting information from police officials on whether the family should leave the area, and he decided to drive to the school after his wife’s mother called from California saying she had heard reports of the fires.

      Pflugerville

      As of late Sunday, more than 200 acres had burned in Pflugerville, where firefighters had been fighting multiple blazes since the late morning. No fire-related injuries had been reported.

      One fire started at Hodde Lane and Cele Road shortly after noon. Residents of the Reserves at Westcreek were evacuated to Hendrickson High School, and by late afternoon, firefighters were still trying to stay ahead of the blaze, which could be seen along Weiss Road. Dozens of people stood outside subdivisions and at Lake Pflugerville Park, staring at the fire off in the distance and taking pictures.

      Jennifer Parrish, who lives at the Reserves at Westcreek, evacuated her home about 1 p.m. with her husband and three dogs. She and friends parked at a nearby school for a while, watching the thick smoke in the distance.

      “People are just going to relatives’ houses and stuff,” she said. “I don’t know where we’re going yet.”

      Firefighters were able to save the 190-home subdivision, and by early evening, residents were allowed to go back home.

      Blazes also destroyed two houses on Pigeon Forge Road in Pflugerville.

      Cedar Park

      Earlier in the day, a fire in Cedar Park that ignited in a field behind houses on Bois D’Arc Lane destroyed two homes there and damaged at least one more. Fire Chief Chris Connealy said the fire was reported about 11:30 a.m. and contained by 1:45 p.m. About 10 acres burned.

      “With the wind conditions and the grass so dry, it ran so quick,” Connealy said. “It doesn’t take anything to have a catastrophic fire quickly.”

      The two families who lost their homes, in the 2600 block of Bois D’Arc Lane, were getting help from the Red Cross and a local church.

      Joe Pomerening, who lives behind the two Cedar Park homes, was at home with his mother and younger sister when the power went out. He smelled smoke and went outside to see flames from the field jumping across the road and into his yard. He and a neighbor fought the flames with their water hoses. Parts of his yard and the bottoms of his trees were charred.

      Spicewood

      Another fire broke out in the Pedernales area off Paleface Ranch Road, off Texas 71 in western Travis County. Texas 71 was closed in both directions for hours.

      Fire officials had hoped the road would help keep the fire from spreading, but by midafternoon, Westlake Fire Chief Gary Warren, who was helping coordinate resources for several fires burning in Travis County, said the fire already had “jumped across \u2026 and is headed toward the lake.”

      A Travis County STAR Flight helicopter was providing air reconnaissance, he said.

      It was unclear how large the fire was late Sunday, but fire officials were estimating the uncontained fire at about 1,000 acres, Warren said.

      Elsewhere in Hays County, two neighborhoods were being evacuated late Sunday, said Hays County spokeswoman Laureen Chernow. One was the Stagecoach Ranch subdivision south of Hamilton Pool Road. The other was an area encompassed by Bell Springs Road, Lost Creek Road and Grand Summit Boulevard in Hays County. Evacuees were told to go to Dripping Springs Middle School on Tiger Lane. The Bell Springs evacuation was ended later Sunday.

      Hays fire officials said they expected the fire, which was about 400 acres and spanned the Hays-Travis line near Hamilton Pool Road, to rekindle this morning.

      Less severe fires were reported in Liberty Hill, Georgetown and Cedar Park on Sunday.

      Warnings were there

      Local fire officials suspected this weekend would be a dangerous one. On Saturday, the National Weather Service issued a “red flag” warning, which alerts firefighting and land management agencies that conditions are ideal for wildfires.

      Central Texas is suffering under the worst drought in decades. And a local cold front was expected to combine with winds from Tropical Storm Lee, causing dry, gusty weather.

      And that’s exactly what happened. Winds as fast as 46 mph were recorded at Austin-Bergstrom International Airport, according to National Weather Service meteorologist Robert Blaha. In Georgetown, winds reached 38 mph; in San Marcos, 43 mph.

      So when the fires started early Sunday afternoon, they just kept coming.

      The fires took a tremendous toll on people whose homes were in the path of the blazes. As of late Sunday, Barbara Pereira didn’t know whether her home was still standing.

      Pereira, who lives on Kelley Road in Circle D in Bastrop County, said the wind had been blowing hard all day at her home. She and her husband, Daniel, had heard sirens throughout the day, she said, but that wasn’t unusual. Then they noticed a muffled booming sound.

      “Then we heard a huge explosion that shook our house,” she said.

      There was a huge plume of black smoke coming from the east.

      “You could just hear it was a fire,” she said.

      The Pereiras grabbed their cat, got in separate cars and tried to leave their subdivision. One route was blocked by smoke, another by fire. Finally, they found a way out of their neighborhood and automatically drove to Calvary Baptist Church of Bastrop, where they attend. By 8 p.m., the couple were still at the church with about 20 other residents waiting out the blaze. Pereira wasn’t sure where she and her husband would spend the night. But she was relieved to have escaped.

      “You get out when you have to get out,” she said. “You do what you have to do.”

      http://www.statesman.com/news/catastrophic-fires-burn-thousands-of-acres-force-evacuations-1820174.html?page=2&viewAsSinglePage=true

      No emergency here! But damn that Irene was a major problem

      • After further reading-I am going to withdraw my claim that Obama is responsible for the deaths-it was an emotional response made without enough facts-there has been help to fight the actual fires by the government-per this article that help was late in coming(so I am still not convinced that the government treated Texas the same as other States or even other countries in supplying that help) -while Mexico got immediate help. The article said that they denied the help to Texas that they gave to Mexico.

        Obama wildfire response in Texas – compared to Mexico and other disasters

        Posted by Steve M on May 13, 2011 at 9:30 am | Share via e-mail

        How did the Obama administration’s response compare when reviewing the wildfire response in Texas that burned 2.5 million acres (3,900 square miles) of land as compared to a recent Mexico fire that burned about 390 square miles? How about other disasters?

        Many feel that during the emergency in Texas, the federal government has been absent in their response. FEMA has not send teams of workers to help support, coordinate or fight the fires. That said, after the emergency local municipalities do have the ability to apply for grants to recover up to 75 percent of the funds used to fight the fires, but since a Major Disaster has not been declared, no funds from the President’s Disaster Relief Funds are made available.

        Since early March, there have been 23 Fire Management Assistance Declarations in Texas associated with wildfires. Those declarations are generally issued within hours or days of the event when there is a threat of a major disaster. Short term programs are put in place allowing municipalities to recover up to 75 percent of the funds used as mentioned above.

        None of the 23 wildfires have yet to meet the Obama administration’s threshold as a Major Disaster Declaration that would have put long-term federal recovery programs in place and provide direct funds from the President’s Disaster Relief Funds. Those relief funds would be extend beyond the 75 percent support.

        Now on to Mexico, where a wildfire consuming less than 10 percent of the Texas wildfires garnered an immediate response from the United States federal government including Air Force cargo planes.

        Just last month the U.S. sent two Air force cargo planes to help Mexico battle back wildfires in the northern part of it’s country, fires that burned 386 square miles. It’s a move that West Texas Congressman Francisco Canseco (R-Fort Stockton) thinks is a hypocritical one by the Obama administration as Texas has requested the same sort of federal aid but has been denied it.

        We can definitely question the level of response here, but I figure the local communities in Mexico will not be able to apply for US grants to recover a significant portion of their costs to fight the fires. They just received a bit of US aid just like many other countries.

        The real question … Have the Texas wildfires meet the threshold for a Major Disaster Declaration? If they did and the declaration was refused, was politics part of the equation?

        Take a look at the 32 Major Disaster Declarations from 2011 on the FEMA website and then consider the following…

        * On April 10, Reuters reported one Texas fire scorched 2,300 acres in one day as it moved through the small town of Fort Davis. An estimated 80 homes and buildings were destroyed.
        * On April 14, a report indicated 23 homes were destroyed. (I think that may have been from the same area.)
        * By April 19, CNN was reporting more than 170 homes were destroyed.

        The Jan. 11 -12 snowstorm in Connecticut that dumped a lot of snow was declared a Major Disaster on March 3. The tsunami wave in California on March 11 was declared a Major Disaster on April 18.

        Instead of jumping to conclusions here, maybe we should all take a few minutes to try to figure out how the complex FEMA system works and how it can be improved. Maybe FEMA should take steps to better define Major Disaster Declarations, Emergency Declarations, and Fire Management Assistance Declarations? What is the threshold for each? What support is available for each? Can they some how put that into a one-page summary document?

        Then again, eliminating FEMA as an option is not off the table. Simply because federal support seems to be very subjective – especially to those who receive or do not receive aid – this could possibly be described as another symptom of the disease.

        http://radioviceonline.com/obama-wildfire-response-in-texas-compared-to-mexico-and-other-disasters/

        • The POTUS has publicly stated that it does not matter that there have been over 1,000 homes destroyed in 6 months, Texas will not qualify for major disaster aid. When asked why…..his response was that Texas refuses to accept the conditions. In other words, it is blackmail. But that is ok. We do not want it anyway. He can go to hell.

        • VH……..FEMA is a joke and a political play thing and is totally controlled by the POTUS.

        • V.H.

          From the article: “FEMA has not send teams of workers to help support, coordinate or fight the fires. ”

          This is NOT FEMA’s responsibility, except perhaps to help coordinate post fire response if large numbers are homeless. The coordination of fire suppression and associated activities falls to agencies who traditionally do this work. These same agencies are subject to FEMA oversight on certain types of disasters, like hurricane response or scraping up remains of astronauts, but they are not FEMA per se’.

          FEMA is trying to act like it is bigger than it really is, or people are creating misplaced expectations on the agency. Just like happened during Katrina.

          • Okay, so you are saying that FEMA not being involved-doesn’t limit the physical resources to fight the actual fires. But it does limit the help that is given to recover and rebuild? I have been trying to figure out exactly what the 75% covered under the grants means. Have read that there are limits of “upto $7500” but just can’t figure out how this is applied. Read another article that said the 75% really only covered about 15%. So I am confused.

  54. http://lewrockwell.com/french/french142.html

    Doug French applauds the Waffle House – a bastion of free market social good!

    ….Black Flag standing ovation to Waffle House….

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