…of abject failure.
I resolve that I will blog consistently in the coming days/months/years. The Nazis had the French resistance, and if the French are willing to resist tyranny even in the slightest little bit, so must I be willing.
Posts may be smaller than normal, however. But read them.
Submitted without comment.
This is entirely inappropriate, but I can’t stop laughing.
That last post may or may not have been mine…
…and you wonder why I use a pseudonym.
In case you thought that www.libertarianism.org would be an overwrought disappointment, please note that a video of F.A. Hayek and a video of Murray Rothbard are currently up on the front page.
It looks like this might be for real.
A good article reprinted from Henry Hazlitt’s 1969 “Man vs. the Welfare State” over at the Mises Institute Blog.
In pertinent part:
The pervading assumption of the Kennedy and Johnson administrations was that any and all problems could be solved if only we piled up enough new laws and restrictions. Yet it may be doubted that consumers are going to be helped much by defaming and harassing producers.
The consumer has one great protection against incompetent producers or dishonest sellers. This is his own intelligence and his own decisions. His views are heard every day in his purchases and refusals to purchase. With every penny that he spends, the individual consumer is casting his vote for this product and against that. He does not need to sign petitions or march in picket lines. If he patronizes a product, the firm that makes it prospers and grows; if he stops buying a product, the firm that makes it goes out of business. The consumer is the boss. The producers must please him or die.
Unless, of course, the government props the producers up. I’m looking at you, American auto and banking industries…
…Not that it ever was, but when Slate magazine (yes, that Slate magazine) runs a story like this one by Bethany McLean, you know that the idea of eliminating the Fed is finally reaching the consciousness of masses. It’s about time.
In the article, called “Fed-Bashing Three Ways,” McLean notes some very prominent Fed skeptics including Jeremy Grantham, CIO of Boston money manager GMO, Jim Grant of Grant’s Interest Rate Observer, the ubiquitous-when-it-comes-to-Fed-bashing Ron Paul, and Kevin Duffy of the Bearing Fund. It also quotes some others who are skeptics of Fed action, if not its existence per se. But the top prize goes to Duffy, for this truly awesome quote:
Kevin Duffy, who co-manages a small hedge fund called the Bearing Fund, says that criticizing Fed policy, rather than the Fed itself, is “a bit like dismissing Stalin and Mao as well-intended but not the right men for the job.”
They also throw in a mention of the great Murray Rothbard and his book ”The Case Against the Fed,” as well as some very heartening poll numbers, including a tally of 45% of the general population favoring the elimination of the central bank. However, despite the good news, not all is well in the public discourse. Consider another article in Slate magazine today, entitled “Gold Rush – what would happen if we returned to the gold standard?” In this article, author Christopher Beam brings us back to the depressing reality of Slate by seriously misunderstanding the nature of money in the very first paragraph of his hypothetical!
First he posits, the question “Say the United States decided to peg the dollar to the price of gold. What would happen?” He answers with this:
First, the government would have to decide what the price of gold is. That’s a lot harder than it sounds. In theory, there’s an ideal rate at which to peg currency against gold. We just don’t know what it is. Gold is notoriously volatile—its price has doubled over the last two years. If the Federal Reserve were to simply fix the dollar to the price of gold on a given day, and demand for gold changed drastically, it would wreak havoc on the economy.
Gold is volatile? I’ve never known gold to get drunk and punch people in the face. Let’s define our terms. “Volatile” means that the price of gold in dollar terms fluctuates. Beam never stops to wonder why. Right now, paper and faith in government convene to form what we call the dollar and use as money. In a truly gold-standard nation, gold is the money, and the dollar is merely a proxy – an avatar.
By never removing the central bank from the equation, never considering the possibility of a country that does not manipulate its interest rates, and assuming a country that runs a constant, rolling national debt, Beam never gets to the heart of the matter. Maybe it is currently a political impossibility, but by never considering an alternative arrangement, Beam doesn’t really add anything to the discourse.
Wouldn’t it be nice if our newsmen could be honest with us? I know that a particular brand of objectivity is pounded into our journalism students from the get-go (which makes the constant ideological bent all the more ironic), but some topics are just so ripe for honesty that we really shouldn’t let the opportunity slip by.
For instance, the AP is reporting that “Winds push fires through dozens of Detroit homes.”
Imagine the possibilities:
“Winds push fires through dozens of Detroit homes. Both residents flee in panic.”
“Fires rage through Detroit. World says ‘meh.’”
“Winds whip flames through Detroit, temporarily halting production of crappy cars.”
“Detroit ravaged by flaming inferno. Property values rise.”
Imagine what the world would be like if we got a little honesty from a journalists once in a while. Any other suggestions from the peanut gallery?
By now I’m sure you’ve heard the story about the little girl selling lemonade who was told to cease and desist by Health Department officials. Apparently our government has solved all crimes and won the war on drugs. Given that they’ve also secured world peace, all that’s left is slapping $500 fines on little girls with lemonade stands.
What you may not have heard of is the Portland Anarchists’ Lemonade Revolt. For you facebook denizens out there, check it out. On August 26th, they’ll be jamming the streets of Portland with lemonade for sale, for donations, for free…whatever. An elegant piece of absurdist resistance.
Let’s hope it leaves a sour taste in the Health Department’s mouth.
I’m not in the business of giving investment advice, but I do feel more comfortable telling people what not to do given how many ridiculous money pits are out there. Besides, in my post regarding the topics of this blog, I gave you some reason to believe that the topics would be fairly fluid. In any case, I’d like to point out an article by William Baldwin of Forbes, called Yield Junkies and the Pimco High. Now, I’d like it said that I have no interest one way or the other in the Pimco High Income Fund, but I do believe that Baldwin is pointing out some fundamental truths about how the “dumb money” (yours) is invested.
First, to the provactive headline. Eye catching indeed, and it contains a kernel of truth. The systemic bias in favor of credit and debt, the artifically low interest rates set by a central bank, the inflationary tactics systematically removing value from the dollar, governmental policies encouraging wild spending over prudence, the institutionalized conflict of interest that is the ratings agencies, etc., all probably take more blame. But for the relatively small portion of the captial markets that involve retail investors, Wall Street’s excesses are at least encouraged by investors making it far too easy for financial institutions to pluck the low-hanging fruit (again, yours).
Now let’s move on to what is, to me, the most compelling argument in the article. Certainly the “greater fools” quote in the third paragraph is powerful, and the idea that you shouldn’t be paying a premium for access to leverage is an important one. But this is pure gold:
(People are paying a premium because of) last year’s results. In the fund’s Mar. 31, 2010 fiscal year it delivered a 215% return, as junk bonds recovered from their depression lows. So what? You can’t buy past performance.
This is an incredibly common investing trap. Yes, there are some investors who are good at what they do, and it is absolutely certain that some are better than others. But survivorship bias is almost never accounted for in the homespun narrative that investors create as a reason to invest with SuperAwesome Fund. So SuperAwesome has done better than the index for five years – maybe they’ve been lucky for five years. (Please remember that I don’t mean to impugn Pimco High Income; this is universal stuff.)
Think about this scenario. If I run a 1-900 number giving sports betting tips, I might send out mailers to my target audience giving them a freebie. But what if I’m wrong? If I pick the Vikings over the Saints and send that out to every person on my mailing list, I won’t get a single caller when the Saints win. Better still to send out 50% picking the Vikings and 50% picking the Saints. But even the half that gets the correct pick probably won’t be impressed enough to call. One game does not a fortune make; that takes being correct on a consistent basis, and compulsive gamblers want results, dammit! So I’d plan to send out mailers over a period of five weeks, with five different groups, all with different picks. Group A will get all incorrect picks, but Group E will get all correct picks. Chances are, I’ll get calls from Group E (and maybe a few from Group D because, hey, 80% ain’t bad), and nobody from Group A was going to call anyway if I had only sent out one mailer.
The ultimate truth is this: I can get everything right without actually getting anything right. When you spend more money calling my 1-900 number than you’ll ever earn with my stupid sports picks, or you buy at the top of my mutual fund right before the bottom falls out, I won’t be there to bail you out. But I will have taken my cut along the way.
For those of you unfamiliar with Vasily Vereshchagin, he was a Russian artist of the late 19th century who tended toward a gruesome realism, especially where depicting war. (He painted many scenes of the Russo-Turkish war as well as British colonial militarism in India.) Perhaps his best known is entitled “The Apotheosis of War,” housed in the State Tretyakov Gallery in Russia.
Now, an artist called Sergey Larenkov has emerged with a new technique called “rephotography,” which is the simple alignment and melding of a historical photograph with a modern one. Thanks to the work of this artist, we can see a juxtaposition of the effects of mere days of war with the effects of years of peace. It should remain a powerful reminder, much like the work of Vereshchagin, of the horrors of war and of how much we have to lose.
Perhaps it should also be a reminder of the fact that peace should be our default option. War is not always entered into by necessity (especially as concerns the agressor), and the fact that war generally creates costs far out of proportion with its original aims is certainly not a new revelation.
I’d like to encourage you to take a look at some of Larenkov’s photos at his personal website. Many of them depict the siege of Leningrad, but even if you don’t recognize the backdrop, you’ll certainly recognize the seeming incongruity of a tank rolling down main street. And remember that it has happened before, and it could happen again. Unless we decide to stop it.