Sunday, July 3, 2011
Too Long for Twitter, Too Short for Separate Posts, 2nd Edition
"The Recovery", regardless of various statistics, has been a disappointment. One part of the issue is the anemic economic and employment growth (GDP at 2%ish). The big problem that I see is that we no longer have a normal market economy across many sectors, therefore we should not be expecting recovery patterns that are consistent with market economies. As we move closer to North Korea and Cuba via central planners/bailout managers in DC, we are going to be seeing slower and slower growth across the cycle. Until the powergrab reverses (both sides are guilty, as are their fossilized corporate and union patrons), we will have to learn that we are in a recovery because the Treasury Secretary said so in an op-ed called "Welcome to the Recovery". Turbotax Tim misses the subtlety of the principle "if you have to say it..."
Soon we'll reach the 4th anniversary of the first shot in the credit crisis: on August 9th, 2007, BNP Paribas halted withdrawals from three subprime funds. This begs question: was the crisis wasted? Absolutely: the too-big-to-fail banks have gotten bigger and none of the top-level perpetrators are in jail. I am not a lawyer but sure seems plausible to me that the DOJ can and should use RICO to go after the control fraud leaders. There is ample evidence, in my view, of organizations engaged in various types of frauds going back a fair number of years. If this means the closure of the TBTFs then so be it: ring-fence the essential operations and manage the rest. Instead we get a few showtrials of insider traders: not that these are not needed but the failure of Obama's DOJ and its leader, AG Eric Holder, has been stunning.
"The way to crush the bourgeoisie is on the grindstone of taxation and inflation"- Lenin. The Comrade had been targeting the capital owner class but these might also be two possible reasons for the decline in the middle class in the US. There are many others, of course, and the debate is still very much ongoing. However, the middle class has proportionately borne the brunt of taxation (holistic view of taxation here: % of income going to income, SS, medical, sales, property, tolls, excise taxes) and inflation (think of inflation in non-discretionary spending: energy, food, medical care and education). What do we have in DC now? Continuation of taxation (via deficit spending=future taxation) and inflation (explicit inflationary policies). So our reps should really look in the mirror while searching for the culprits.
"Taxing the rich" is a grossly misleading marketing soundbite. Obama makes no difference between stock and flow. Steve Jobs is "rich": billions (stock) in Apple equity (that pays no dividend) and $1 in salary (flow). XYZ MD just finished her residency, started working at $150k (flow) and has a negative net worth of $250k (stock) due to med school loans. Who's rich here? Who's paying higher taxes? Does it confirm that taxing income = taxing the "rich"?
The majority of babies in the US are now non-white. While this is bad news for some people, I think that it will add another angle to the debate regarding the inter-generational wealth confiscation going on from the non-voting minors to the voting seniors. This, of course, presumes that the system has not blown up by then.
Eggs. Yes, eggs. Eggs have been unfairly maligned for a long time. Here are a couple of things. One, the USDA recently reduced the cholesterol estimates by 14% (215 mg to 185 mg per egg), and increased the Vitamin D estimates by 64%. Second, and more interesting, there is a phospholipid in the yolks that prevents cholesterol absorption: some scientists were actually granted a patent on that, so I'd think the evidence is strong.
Posted by Barbarian Capital at 13:29