Wednesday, March 16, 2011

Watching Japan

Japan puts us all in an interesting situation, even if you don't live in Japan. While everyone is focused on the nuclear accident, the true global forces at work here are economic. Once the nuclear situation is stabilized, and it will be eventually though the damage in the interim may be horrific, Japan is going to have to rebuild. And depending on the extent of that rebuilding, the entire world may undergo a seismic shift in trade patterns.

Saturday, February 19, 2011

The Poison that is Public Sector Unions

"The process of collective bargaining, as usually understood, cannot be transplanted into the public service," President Franklin D. Roosevelt wrote in 1937 to the head of the National Federation of Federal Employees. In the private sector, organized employees and the employer meet across the bargaining table as (theoretical) equals. But in the public sector, said FDR, "the employer is the whole people, who speak by means of laws enacted by their representatives in Congress." Allowing public-employee unions to engage in collective bargaining would mean opening the door to the manipulation of government policy by a privileged private interest.

FDR was right. Collective bargaining has no place in the public sector. It inevitably leads to abuse. Favoritism, undue influence, lack of transparency, manipulation of government policy, the relentless mulcting of the taxpayer—this is the poisoned fruit of turning government agencies into union shops. It goes without saying that public employees ought to be as free as anyone else to join professional associations and affinity organizations. They are certainly entitled to all the protections of the civil rights laws and of a reasonable civil service system. But labor unions should have no right of exclusive representation in any government workplace and no right to negotiate wages and benefits with public officials who crave their votes and political support.

Wednesday, January 05, 2011

It's called Catabolic Collapse

In a recent discussion at zero hedge over a post titled Is The Collapse In FX Reserves Even More Dangerous Than The Plunge In Money Supply?, I saw someone saying he expected our society to fall in a staircase fashion. That led to the following post.

The Financial Crisis was NOT caused by Peak Oil

Personally, I mark the "public" moment of this financial crisis to July 2007, when two Bear Stearns hedge funds were both completely wiped out. Neither had anything to do with oil or oil trades. Both were highly leveraged funds that were simply in way over their heads. And those funds were symptomatic of the entire financial industry at that time.

Belief Systems

One commenter over at The Automatic Earth was recently disparaging comments he read over at Zero Hedge. I began a reply but it became long enough that I felt it better placed here instead.

A Flaw in the Hyperinflationary Argument

People assuming hyperinflation are assuming that the cash injected into the system will be spread equally or nearly equally, resulting in competitive bidding with more dollars for the current pool of goods and services. I believe this assumption to be in error.

How do we fix it?

How do we fix it? This is a question I hear over and over again. People want to know what regulatory reform to take, what laws to pass, what criminals to prosecute, all in order to "fix" the system. Another variant to this question is "How do we undo the damage done so far?" Each of these questions assumes that the system continues as-is, that is to say, broken, or that the system gets fixed. In posing the question, the biases of the questioner are exposed. I'm not suggesting malicious intent on the part of those asking these questions, but rather culturally imparted ignorance of the alternatives.

Inflation - Making You Poorer, Day by Day

Below is a chart that I lifted (with slight formatting changes) from Bill Downey's article The Day the Dollar Died - And the Day Gold was Reborn. The chart demonstrates the massive ongoing impoverishment of US taxpayers via the deliberate actions of the Federal Reserve, since it is the Federal Reserve itself that is the root of all inflation.

Famous Economic Quotes From The First Great Depression

There are a body of quotes from the Great Depression that should be required reading for anyone before they trust the words of Ben Bernanke, Timothy Geithner, Larry Summers, or any of the talking heads at CNBC. Hopefully these quotes will both amuse you and remind you that economic "authorities" have a horrible track record. It was horrible then and it's been horrible now. I strongly suggest you read these then compare them to the comments from our economic "experts" over the last two years. If you still want to believe the Bernankes, the Geithners, the Summers, and the CNBC talking heads, go right ahead but don't you dare say you were not warned.