Ludwig von Mises Tuesday

Libertarianism Today • By Jacob H. Huebert • Praeger, 2010 • Vii + 254 pages

Jacob Huebert's outstanding survey of libertarianism ranks as the best work of its kind since Murray Rothbard's For a New Liberty. Huebert navigates successfully difficult waters. Many people, when they first hear of libertarianism, dismiss it as extreme and irresponsible. How can libertarians seriously propose to end public and compulsory education, repeal all regulations on drugs, and consign medicine entirely to the market? Huebert brings to bear a wealth of argument and historical evidence to show that, in these and other instances, libertarians have a convincing case.

[A]nyone should be free to do anything he or she wants, as long as he or she does not commit acts of force or fraud against any other peaceful person. Libertarians call this the "non-aggression principle."…Taken all the way, the libertarian idea means that no government is justified — any government is a criminal enterprise because it is paid for by taxes and people are forced to submit to its authority. Many libertarians (including this author) do go this far. But many others … stop just short of this and are willing to accept a minimal "night watchman state," as philosopher Robert Nozick put it, to provide for common defense, police, and courts, because they believe that only government can successfully provide these services. (pp. 4–5)[1]

 

Historically, war did not necessarily involve killing innocents on a large scale. War was always terrible and undesirable, but by the eighteenth century, Europe had developed rules of "civilized warfare"… Modern warfare is another story. Modern governments, including but not limited to democracies, claim to represent "the people," so modern wars are seen as being fought, not just between rulers, but between whole peoples (p. 176, emphasis in original)

 

[O]ne can safely say that the pro-war position is in direct opposition to libertarianism as we have defined it in this book… In sum, support for the Iraq war is deviation from libertarianism (p. 194).

 

The independent schools would not be killed off by genuine market competition; they would be killed off by government privileges [i.e., approval by the government to receive voucher payments] to some schools — those willing to accept government control — and not others. A program that would do this cannot be called libertarian. (p. 126)

 

Libertarians would say that it is fine for them to think that, but it is hardly a justification for telling people what they can or cannot do with their own bodies, or for condemning 6,000 people each year to death. Why should one person's desire not to have his moral sensibilities offended outweigh someone else's right to life itself?… If you are offended by someone else exercising his or her rights, too bad. (p. 106)

 

 

That is, they are limited in quantity, and one person's use of a piece of property prevents someone else from using it. Two people cannot occupy the same space or eat the same orange. Without property rights, there would be irresolvable conflicts over who can use what land and objects, and how they may use them. … on the other hand, if certain things were not scarce — if we could reproduce them infinitely at no cost, or if they were somehow abundant — there would be no conflicts over those things, and no need for ethical rules, property rights, or laws to govern such conflicts. As it happens, ideas fall into this latter category." (p. 107)

 

So according to libertarian theory, IP rights are not "property rights" at all, but a government-issued license to attack property rights — and therefore should be abolished. (p. 208)

 

Rothbard thought that copyright could be justified if it were the product of a contract. For example, if when Smith sells Jones a book, Smith marks it '"copyright," then Jones only receives from Smith the right to make and use that physical book, but not the right to copy it … because a person cannot transfer any more rights than he or she owns, any third parties who later get the book after Jones would be subject to the same restrictions Jones faced… Rothbard justified patents of a sort on similar grounds. If Smith sells Jones a new kind of vacuum cleaner and marks it "patented" (or, as Rothbard would have it "copyrighted"), that tells Jones that he is only receiving the right to the physical object, not the right to make copies of it. (pp. 205–206)

 

Copyrights … have their basis in prosecution of implicit theft. The plaintiff must prove that the defendant stole the former's creation by reproducing it and selling it himself inviolation of his or someone else's contract with the original seller. (MES, p. 745, emphasis added)

Hussman...from 2001 - Why the Federal Reserve is Irrelevant

Alan Greenspan isn't the "Maestro". He's Oz - working behind the curtains, leaning into the microphone, pressing buttons that blow smoke and fire, but not really having much power at all. Scarecrow already has a brain. For the past several years, commercial and industrial loans and consumer credit exploded quite simply because rabidly eager borrowers were able to find rabidly eager lenders. And now, both forms of credit (as well as commercial paper issuance) are declining because borrowers are saturated with debt and lenders are increasingly skittish of credit risk.

The Fed certainly played an important psychological role in recent years, and certainly has a role to play during bank runs and other crises where the demand for monetary base soars. But the rest of the time, open market operations are almost completely sterile. In recent years, the irrelevance of open market operations has also been argued (for slightly different reasons) by academic economists renown for their work in the theory of “rational expectations”, including Thomas Sargent and John Muth.

Inflation follows unproductive government spending

One might respond that even if the Fed doesn't affect credit, surely changes in the monetary base affect inflation. But if you look at the statistical evidence, the relationship between monetary growth and inflation is very weak. Instead, our research indicates that inflation is primarily the result of growth in unproductive forms of government spending (basically defense spending, entitlements and other expenditures that fail to stimulate the supply of goods). The evidence both from the U.S. and other countries clearly demonstrates this relationship.

As Milton Friedman has noted, the burden of government is not measured by how much it taxes, but by how much it spends . The impact is particularly severe when growth in entitlements is high and growth in productivity is low. This is why inflation exploded after the late 60's, and why it came down after the early 1980's. This is why the Germans suffered hyperinflation after World War I when its government decided to keep paying workers who had gone on strike.

Always and everywhere, rapid inflation is produced by excessive creation of government liabilities without a corresponding increase in the amount of goods produced by the economy. The Fed doesn't control this. It doesn't even matter much what form the liabilities take. If the Germans had decided to issue bonds to striking workers instead of money, bond prices would have been driven to ridiculously low levels, driving interest rates to extremely high levels, creating an unwillingness to hold non-interest bearing money, resulting in a rapid deterioration in the value of money, and hyperinflation just the same.

Except for the Federal Funds rate, the Fed does not determine short-term interest rates. Most of the time, it simply follows them. Statistically, the Federal Funds rate consistently lags market interest rates such as Treasury bill yields. Indeed, changes in market rates have far more predictive power to forecast the Federal Funds rate than vice versa.

The main exception is the Prime Rate. Changes in the Prime Rate follow changes in the Federal Funds rate largely because 1) competition forces equality of lending rates; 2) the Fed Funds rate tracks other short term rates, and; 3) changing Prime in unison at any other time than a discrete Fed move would be considered evidence of collusion among banks.

So don't place too much faith in the Federal Reserve. Again, in a banking panic, where the demand for the monetary base soars, the Fed is essential . But here and now, the Fed is, and probably will be, hopelessly ineffective.

In his recent testimony to Congress, Alan Greenspan described his job as difficult. In our view, he might as well have quoted Prime Minister Giovanni Giolitti. When asked in the early 1900's whether it was difficult to govern Italy, Giolitti replied, “Not at all, but it's useless.”

"I don't want to be an American Idiot."

"American Idiot"

Don't want to be an American idiot.
Don't want a nation under the new media
And can you hear the sound of hysteria?
The subliminal mind fuck America.

Welcome to a new kind of tension.
All across the alien nation.
Where everything isn't meant to be okay.
Television dreams of tomorrow.
We're not the ones who're meant to follow.
For that's enough to argue.

Well maybe I'm the faggot America.
I'm not a part of a redneck agenda.
Now everybody do the propaganda.
And sing along to the age of paranoia.

Jonny Lang is growing up

Shawn and I had tickets for Jonny last night at the Atlanta botanical Garden and we got a call that the concert was cancelled, online review revealed that his wife had given birth the day before. The man turned his life around.

Theeeeere Baaack....not the scary ones, F1 and Cycling!

Recall my post the other day...The Racing Doldrums and The Cycles of Cycling...lamenting the lull in F1 racing and the post Tour de France blues leading into the end of the season...

This weekend's entertainment...F1 of Belgium, Spa Francochamps...Weber on the pole and Hamilton, p2

...and...la Vuelta a Espana...opening ceremonies in Sevilla...TTT at night!...cool...

..ahhhhhhhhhhhh, he's ALIVE...

The Terror Mosque and Faux News

The Daily Show With Jon Stewart	Mon - Thurs 11p / 10c
The Parent Company Trap
www.thedailyshow.com
Daily Show Full Episodes Political Humor Tea Party

Islamic Cultural Center Near Ground Zero - are we ...

Greetings from Idiot America

Creationism. Intelligent Design. Faith-based this. Trust-your-gut that. There's never been a better time to espouse, profit from, and believe in utter, unadulterated crap. And the crap is rising so high, it's getting dangerous.

By Charles P. Pierce

(click of the title of the post to link to the rest of the article)

Deflation first, Inflation second...

FU Baby

Cee-Lo's "breakup" song of the year - gone viral on youtube...to be released with the album Ladykiller on 4th October 2010...just funnin'



ceelogreen.com

Japan and the Ancient Art of Shrugging

...as prelude to the linked article - Japan and the Ancient Art of Shrugging from the Sunday NYT  ...Some background, paraphrased from Seeking Alpha...

The Nikkei recently closed under 9,000, 77% below its final price in December 1989 0f ~38,900 

The yen just hit a 15-year high against the dollar and 9-year high against the euro. A richly valued yen is a big negative for Japan's export-based economy.

Japan has been trying to grapple with its real estate and stock market bubbles from the 1980s for over twenty years now. Its approach has been a zero interest rate policy (ZIRP) and an unending serious of stimulus programs (it was recently announced yet another one is being considered). 

The United States is currently following these same failed policies, but Washington is expecting that somehow they will work here. 

15 Penn Plaza

...whooaaa...interrupt scheduled programming...

Empire State Building, which has regained the top spot as NYC tallest building - due to the 9/11 tragedy, is PO'd re. the 15 Penn Plaza proposed sky scrapper for a nearby location...although 34 ft shorter than the Empire State Building, the fireworks are flying...

This looks like a very respectful and complimentary contemporary design by Pelli...and his associates...

...does this point to another dimension underlying the Mosque - Ground Zero silliness?

ref. Islamic Cultural Center Near Ground Zero - are we ...

Inflation and the Fall of the Roman Empire

I put this up on The Big Picture blog last year...be sure to check the link, which is a lecture given at the Ludwig von Mises Institute and is very good (available as text or as mp3 audio)...regarding currency debasement amongst other niceties...the more things change, the more they stay the same...

Wes Schott Says:

September 14th, 2009 at 5:58 pm
Inflation and the Fall of the Roman Empire

‘To look at the mentality of the Roman emperors, we can look just at the advice that the Emperor Septimius Severus gave to his two sons, Caracalla and Geta. This is supposed to be his final words to his heirs. He said, “live in harmony; enrich the troops; ignore everyone else.” Now, there is a monetary policy to be marveled at!’

...the ruling elite staying in power at all cost…i think i hear something rhyming

http://mises.org/story/3663

Prof John Hussman's weekly commentary

The whole article is well worth a read (click on post title for a link)...QE expectations...

"...My impression is that Ben Bernanke has little sense of the damage he is about to provoke. A central banker who talks about throwing money from helicopters is not only arrogant but foolish. Nearly a century ago, the great economist Ludwig von Mises observed that massive central bank easing is invariably a form of cowardice that attempts to avoid the need to restructure debt or correct fiscal deficits, avoiding wiser but more difficult choices by instead destroying the value of the currency..."

Market Climate

As of last week, the Market Climate for stocks was characterized by unfavorable valuations, unfavorable market action, and unfavorable economic pressures. I've noted for weeks that the damage to market action was not quite to the level that would create urgent downside concerns. However, the deterioration we observed last week suggests a more urgent shift to defensive positioning. For our part, the Strategic Growth Fund remains fully hedged at present.

In bonds, the Market Climate was characterized last week by unfavorable yield levels but favorable yield pressures. Treasury securities have advanced sharply on the initial quantitative easing purchases by the Fed. Meanwhile, the jump in unemployment claims to 500,000 and the surprising drop in the Philadelphia Fed index are both consistent with the weakening economic conditions that are clearly implied by leading measures. If anything, those deteriorations appear to be early, not late-stage observations. As I've noted regularly in recent commentaries, normal lead-times would suggest a deterioration in the ISM Purchasing Managers Index in the August-September data, while new claims for unemployment typically have an even longer lag, which would normally make us expect strains closer to October. Suffice it to say that the much earlier deterioration in economic measures is not encouraging, but it also opens up the possibility that we may see some misleading "improvement" in the data in the next few weeks before we get into the more typical window of deterioration.

As one might infer from the content of this week's remarks, my view is that the quick initiation of quantitative easing by the Federal Reserve has significantly changed the prospects for foreign currencies and by extension, precious metals. For the past couple of months, I've observed that deflation risks in response to fresh economic weakness were likely to provoke weakness in the commodity area, even if long-term inflationary concerns were accurate. However, my impression is that the Fed's immediate initiation of quantitative easing may cause investors to take deflation concerns "off the table." This is important, because even as we observe economic deterioration, the potential for a "deflationary scare" is likely to be more muted than we might have expected without explicit quantitative easing actions.

This doesn't entirely remove those risks, of course, particularly if we begin to observe a spike in credit spreads (which would be associated with default concerns and a likely drop in monetary velocity), but it clearly changes the environment. Gold stocks and the XAU have essentially gone nowhere since May. Last week, in response to a favorable shift in the Market Climate for precious metals and currencies (largely resulting from the shift in Fed policy and interest rates), we increased our exposure to precious metals in the Strategic Total Return Fund toward 10% of assets, and raised our exposure to foreign currencies to about 5% of assets. This is still not an aggressive stance, and we would prefer the opportunity to accumulate a larger exposure on substantial price weakness, if it occurs. But as this week's comment makes clear, the Federal Reserve has begun to play with fire, the effects of which I doubt Bernanke fully appreciates.

Good policy is not rocket science. It begins with the refusal to make people pay for mistakes that are not their own. This economy continues to struggle with a fundamental problem, which is that debt obligations exceed the ability to service them. While policy makers have done everything to preserve the patterns of spending and consumption that created the problem in the first place, we have done nothing to restructure those obligations.

To the extent that we observe fresh credit problems, we should not pursue the same policies. Instead, we should focus on restructuring debt. Let the bank bondholders fail, and defend depositors and customers through the standard procedures that the FDIC has followed for decades. Deal with the debt of Fannie Mae and Freddie Mac by asserting that there is no explicit government guarantee, and let the holders of the mortgage pools receive precisely what they are entitled to receive without public funds. At the same time, expand the role of the FHA to provide explicit government guarantees for future mortgages in return for actuarily fair risk-based premiums, and require mortgage originators to retain a piece of the mortgage loan, along with appropriate capital requirements, and the stipulation that this retained portion bears the first loss if the mortgage goes bad. Finally, refuse to trot self-interested bank and Wall Street executives in front of the public to extort the nation through fear of the word "failure." Banks fail all the time and customers don't lose a cent. The only implication of failure is that stock and bondholders of reckless institutions aren't rewarded for their malinvestment at public expense.

Richard Russell on the Markets via Eric King's World News

The Godfather of newsletter writers, Richard Russell, summed up our situation as follows, “crumbling.” Again I will repeat what I have always liked about Russell is that he likes to focus on the big picture. What is the big picture? Here are a few snippets from his latest commentary...

August 21, 2010
KWN Blog

Richard Russell:

On to the markets. The stock market is crumbling -- actually crumbling before our very eyes.

...I'm saying that half the issues in the Dow, the NYSE, S&P and NASDAQ have now sunk below their important 200-day moving averages. And the same is true of the big stock averages.

And the incredible thing is that even as the stock market is falling apart, the experts and the media are taking in and believing the government reports, and they think everything is bright and sunny.. It's as if they can't see or take in what the market is doing -- the whole financial world seems to be brain-washed...I've never seen anything like it.

The Russell opinion. It's the markets that are telling the real story, not the analysts or the government..Believe me if the stock market continues the way its been going (particularly if it crashes) it's going to scare the living hell out of America's consumers. If consumers freeze up, you're going to see all the deflation you want. So who to believe, the analysts and economist or the stock and bond markets?

At this point, who's running the nation? It's not Obama, it's not Geithner or Bernanke, it's not even the Fed -- IT'S THE MARKETS. And we'll watch 'em as intently as a barn owl watches a mouse.

A final take -- It's simply uncanny to see the stock market (most stocks) falling apart while the media and the government tells us that "things are looking better." It's as if the nation is watching a horror movie and is reacting with a case of the giggles.

As for Richard Russell, he's resting easy. I've been urging my subscribers to "clean house" and be OUT of all stocks. I think (hope) I've got a lot of happy, solvent subscribers, which is exactly what I want as this market teeters on the edge of an historic collapse.

Question -- Russell, recently you wrote up certain utilities as a source of income. What are your latest thoughts now?

Answer -- My thoughts now is that I want subscribers OUT of all stocks and bonds except for gold and gold items. Before this bear market is over, it's going to take down everything. We're in cash and gold, and probably less cash as time goes along.

This is not a recession, but rather a depression. Recessions tend to break people, depressions on the other hand tend to consume them.

Truth Seeker or Truth Obscurer?

Great post by Barry Ritholtz, reproduced in whole here. Click the link on the title to go to The Big Picture website and check out the comments. A smart crowd there...

Seeking the Truth — Or Obscuring It?

By Barry Ritholtz - August 20th, 2010, 8:49AM

Over the past few weeks, I have posted on an eclectic assortment of items. That is keeping with the blog’s sub-title: Macro Perspectives on Capital Markets, Economy, Technology, and Digital Media. A few of you have made specific comments (and emails) about this recently.

I want to take a few moments to explain the thought process behind what appears to be a nearly random collection of posts, but actually is not. Instead, its part of a broader process. It ranges across a variety of disciplines, interests, methodologies.

The broader mission of what I try to do is seek the Truth.

I define “the Truth” as being in accord with objective reality. Philosophers have argued we can never achieve that degree of perfection, so to me it means getting as close as possible to the Truth as any slightly cleverer, pants-wearing monkey can.

I do this for three reasons: The first is that I am interested in it intellectually. I am aware that our individual universes are mere constructs of a sophisticated cognitive process, the evolutionary apex of this planet. I am also all too aware it is filled with flaws and biases and error. So few people seem to understand what objective reality is that it is a rarified space to even get near, much less inhabit.

This means venturing far and wide in search of “enlightenment.” No one discipline has a monopoly on the Truth, and very often a brilliant insight from one field can be applied in another. Hence, Behavioral economics, music, neurophysiology, methods of data-depiction (aka chart porn), market history, even automotive innovations all part of the multi-discipline process.

The second reason is professional: Fund managers whose universe deviate from reality eventually come to major losses, under-performance, and professional ruin. The most public version of this was likely Bill Miller: His failure to understand the derivative situation, creaky Housing edifice, and the artifice of the 2002-07 finance rally led his fund to load up on banks, GSEs, investment houses — and ruined an incredible record. There are many other examples, but this one is the most acute. Note there is a distinction between those who play probabilities that do not play out, and those whose world view is so flawed as to make losses all but inevitable.

I believe in Variant Perspective as an investment thesis: Identify where most of the investing public is objectively wrong; determine what the best approximation to reality is; factor in timing, and invest accordingly. Value investors do this when the buy undervalued stocks; they are saying the public is wrong about the lack of worth of an issue; short sellers do this as well, implicitly saying the opposite — that the public is overvaluing a stock, and making their bet.

One of the surprising things this blog has taught me about Reality is how long it takes to go viral. There are entrenched interests opposed to the truth, and they release their grip on their subjective fantasies very, very slowly.

When people said that Housing never falls in price, or that it is such a small part of the economy, and it could never have much impact, I push back against that error. Not a difference of opinion, mind you, but a cognitive failure on their part to hypothesize a probable or likely outcome. Years passed before the Truth became known. When the inverted Yield Curve as an omen of impending recession was dismissed as different this time, it invited my criticism. Erroneous discussions of cheap home builders, expensive tech stocks, low inflation, high employment were all subjects of discussions here.

There are 100s of such examples. Some people claim that nobody forecast a possible housing/derivative/market collapse. This is a lie to obscure their own failures. When the CRA or Fannie/Freddie are blamed for the economic crisis, I recognize this as false, a blatant attempt to obscure, rather than reveal the truth. Arguments talking up or down the economy usually have a specific agenda apart from the objective reality of the situation.

Which leads us to our headline: Seeking the Truth — Or Obscuring It?

I have explained my motivations as a truth seeker. It is intellectually stimulating, and it can be profitable. The major investment houses have for the most part abandoned it as part of their model, leaving that market niche open (to smaller, nimble firms like mine).

But what motivates people to pursue a narrative that is blatantly false, misleading or intellectually dishonest? Typically, it meets a powerful group’s specific agenda. There is a embedded interest amongst the powerful to preserve the status quo. The thought process seems to be “Hey, its working for us, let’s not mess up a good thing.”

We see this in a variety of areas: Politics are notorious for disregarding the Truth. Political objectives are to win votes, control public monies, amass power and influence. Truth is an obvious casualty in this process.

Amongst corporate interests, the Truth can get in the way of sales, earnings reports, and profitability, impacting careers, stocks prices and of course bonuses. Regulation reduced profits. Impacting the debate to achieve a desired outcome is worth billions, even if the consequences to society costs trillions.

Even academia is suffers from this error prone tendency to obscure the truth when it contradicts a long held theory or belief system. Look no further than the Efficient Market Hypothesis, and the way it was applied in real world discussions of policy, and self-regulation. Then consider the tortured route it took to go from the intellectual standard of academic capital market explanations to a partially discredited, somewhat outmoded belief system.

I initially mentioned three reasons. The third is simply that we live in a society where decision-making takes place with less and less reverence for the Truth, with terrible consequences. Those people who seek to obscure the Truth for personal gain do an enormous disservice to our nation. Public policy is made based on false pronouncements, monies are allocated based upon misleading arguments, laws are made, taxes levied, policy executed. The lives of 100s of millions of people is significantly impacted by our public policy.

When the entire edifice rests on falsehoods, mistruths, faulty assumptions, false premises, future outcomes, as we have seen over the past few years, can be horrific. History teaches us that eventually, the Truth will reveal itself. When that happens, there can be terrible consequences: Economies collapse, wars occur, empires crumble, millions die.

Whenever I read a major policy piece, newspaper article, or OpEd, I ask the following question: Is this person a truth seeker, or a truth obscurer? When you see nasty posts that dissect/shred/fisk these, it is because I was not happy with the answer to that question.

Are you a truth seeker, or a truth obscurer?
PERMALINK | COMMENTS (86)

Islamic Cultural Center Near Ground Zero - are we a secular country of laws?

Voice from afar, where evidence of no rule of law is easy to spot (look at Malaysia).

As I sit here in Singapore, I am quite embarrassed by the uproar being raised in my home country regarding the proposed building of an Islamic cultural center near ground zero in NYC. Embarrassed, but not surprised because there are elements of the right that have no respect for the tenets of the constitution unless they can parse a certain section that suits their particular cause. This is a simple issue: the US is either a secular country ruled by law, or it is a country ruled by religious zealots and emotional mobs. In a country ruled by law, a building permit would be issued if no local laws or restrictions were violated. What certain people "felt or believed" would not be a consideration. Come on America; you can be better than this..

Lush Life

v=QqubWDSoUrw&p=562FFCC8750BB7E6&playnext=1&index=37

Tonights posting is in celebration of my wife Shawn and I, 27th year of marriage, Wes steppin up as best man and introducing me to the enduring art of jazz and single malt scotch.

I am sitting here sipping some Balvenie DoubleWood aged 12years, First in a oak casks mellowing the spirits and second in european oak sherry casks increasing complexity (a gift from Shawn) while listening to Wynton Marsalis's 1984 recording of Hot House Flowers, I have never heard his trumpet sound sweeter.

The Keynesian Toxic Debt Death Spiral

The Fed is losing control over the economy and the futility of Keynesian theory band-aiding of a world caught in a toxic debt death spiral...

Kyle Bass, part 1




part 2, Kyle Bass

Mandelbox Zoom

...you gotta view this full screen mode...and in HD...

Mandelbox Zoom from hömpörgő on Vimeo.

The Racing Doldrums and The Cycles of Cycling

Having suffered through Tour de France withdrawals, and, now, three weeks sans F1....what is a poor boy to do, but think about what has been and what is in store...

The Giro d' Italia - what a beautiful setting for the first Grand Tour of the year in May.  Setup by the Sping Classics - the falling in love...the romance...the entree...by the time the Giro comes along, we are into foreplay, if you will...

Then, July - Le Tour de France - the courtship, the attention, the love, the climax...the most beautiful of experiences...for an observer, anyway...

Big gap, and then... September and La Vuelta de Espana - some great climbs possible - The Angrilu...the nastiest climb ever in a grand tour...tougher than Brasstown Bald, Ga...., but, still, it is like the middle of the night long after love making, early in the morning - just let me go back to sleep, already...

..then...The Fall Classics...Paris-Tours, Giro di Lombardia (The Autumn Double)...  I'm starting to get up again...ooooh yeah...cycles of cycling...

...ok, and F1's return...yeah, i am definitely feeling the blood flow.........oh yeah....


13 2010 FORMULA 1 BELGIAN GRAND PRIX (Spa-Francorchamps) 27 - 29 Aug


14 FORMULA 1 GRAN PREMIO SANTANDER D'ITALIA 2010 (Monza) 10 - 12 Sep


15 2010 FORMULA 1 SINGTEL SINGAPORE GRAND PRIX (Singapore) 24 - 26 Sep


16 2010 FORMULA 1 JAPANESE GRAND PRIX (Suzuka) 08 - 10 Oct


17 2010 FORMULA 1 KOREAN GRAND PRIX (Yeongam) * 22 - 24 Oct


18 FORMULA 1 GRANDE PREMIO DO BRASIL 2010 (Sao Paulo) 05 - 07 Nov


19 2010 FORMULA 1 ETIHAD AIRWAYS ABU DHABI GRAND PRIX (Yas Marina Circuit) 12 - 14 Nov


.........."He's alive!"

David Rosenberg Interview

Market Climate

...from John Hussman's weekly commentary -

Market Climate

As of last week, the Market Climate for stocks was characterized by rich valuations, unfavorable economic pressures, and elevated though not extreme bullish sentiment (the Investors Intelligence figures are 41.7% bulls vs. 27.5% bears). We also observed an abrupt and somewhat surprising amount of technical damage last week. That damage is not quite to the level that would create urgent downside concerns, but as I noted last week, the deterioration could be very abrupt if the economic data continue to come in weaker than expected. We are fully hedged in the Strategic Growth Fund. Given the repeated tendency for investors to "buy the dips" on the false perception that stocks are cheap (primarily on the "forward operating earnings" argument that we've analyzed in recent weeks), we may see a "fast, furious, prone-to-failure" advance to clear the short-term oversold conditions we developed last week. Still, caution is important here, since we're in a set of conditions where one or two hard down days can wipe out weeks of choppy upside progress.

In bonds, the Market Climate remained characterized last week by unfavorable yield levels and favorable yield pressures. Over the near term, perceptions of economic risk are clearly dominant, and given the tendency for the Treasury yield curve to flatten during periods of economic weakness, we may see long-term Treasury yields pressed even lower for a while. At the same time, however, increased risk perceptions could hit corporate bonds very hard even in a softening economic environment. While corporate cash levels may very well reduce liquidity risk for companies that would otherwise need to raise funds in a tight credit market, investors should not ignore that the overall debt burden of U.S. corporations is higher than it has ever been.

A Marxist View of the Financial Crisis... redux

Fannie and Feddie

Why haven't bond holder gotten a haircut during the financial meltdown?  All of the bailouts have resulted in the Too Big To Fails being saved from bankruptcy..  If you buy a bond from a company that goes effectively bankrupt, you should get a haircut through debt restructuring during the bankruptcy process.  But, the monumental USG bailouts have prevented many companies from failure.  This has created a tremendous future burden on the citizens, which can never be re-paid.

But why were the bondholders spared the pain?  Jim Rickards has recently penned a piece for the FT, which provides some additional insights.

A strange fog has enveloped the bond market. Once, the strength of a bond was based on the reputation of its issuer. But a change began in 2008, as Fannie Mae and Freddie Mac verged on bankruptcy, and legislation was rushed through the US Congress to restructure them. The political importance of these institutions created a new world, one in which a bond’s performance is determined by the reputation of its holders.

Further, Jim argues that the big holders of these bonds would not take lightly to a haircut.

One reason is that Russia and China were among the largest holders of Fannie and Freddie bonds. Recall in 2008 that Russian tanks were rolling into Georgia, while the US was utterly dependent on China to purchase its debt. In Moscow a haircut on Fannie or Freddie debt would have been seen as financial warfare. China’s dismay at losing money might have had even more daunting results, given its power to alter the structure of US interest rates at the touch of a keyboard. So, unusually, the identity of the holders, not the condition of the issuer, determined the bond’s fate.

 Just kicking the can down the road.

Here lies the crux. Policy, whether it be printing money, guarantees or deficit spending, can prop up asset values for a while. This may even be useful in a liquidity crisis. But a solvency crisis is another thing. The longer policy distorts markets by ignoring fundamentals, the longer those reliant on market signals will sit on their hands. The Fed’s recent decision to continue asset purchases shows there is no exit once this path is chosen. As we approach the second anniversary of the Fannie and Freddie bailouts, are we better off? Values cannot recover until they first hit bottom. In short, our economies would be growing more robustly today if we had taken our medicine in 2009.

Here is a link to the full article   http://www.ft.com/cms/s/0/3e726a68-a640-11df-8767-00144feabdc0.html
(you may need to register at the Finacial Times to view the article)

On a  related note...

Debts Rise, and Go Unpaid, as Bust Erodes Home Equity

PHOENIX — During the great housing boom, homeowners nationwide borrowed a trillion dollars from banks, using the soaring value of their houses as security. Now the money has been spent and struggling borrowers are unable or unwilling to pay it back.

The delinquency rate on home equity loans is higher than all other types of consumer loans, including auto loans, boat loans, personal loans and even bank cards like Visa and MasterCard, according to the American Bankers Association.

follow link here for the rest of the story...
http://www.nytimes.com/2010/08/12/business/12debt.html?_r=1

Friday Night Jazz - Coltrane, Dolphy, Monk, Braxton...Impressions

Oh yeah...



Dolphy comes in around 4:24...



T-Monk is my main man...



bonus, if I can find it...and, an Anthony tribute to boot...circa early 80's..with Chick Corea, and Miroslav Vitous (I think, on bass)...

and now, the Hindenburg Omen...

We have a "Cardinal Climax" coming, we've had a "Death Cross" of the 50 and 200 day moving averages, we've had a "Dow Theory Trend Change Confirmation" according to Richard Russell, and now, from Zero Hedge...the Hidenburg Omen...is it time to look out below?

The Hindenburg Omen Has Arrived

Submitted by Tyler Durden on 08/12/2010 21:35 -0500

• Dick Fuld
 
• Market Crash
 
• McClellan Oscillator
 
• New York Stock Exchange
 
• Technical Analysis
 

Easily the most feared technical pattern in all of chartism (for the bullishly inclined) is the dreaded Hindenburg Omen. Those who know what it is, tend to have an atavistic reaction to its mere mention. Those who do not, can catch up on its implications courtesy of Wikipedia, but in a nutshell: "The Hindenburg Omen is a technical analysis that attempts to predict a forthcoming stock market crash. It is named after the Hindenburg disaster of May 6th 1937, during which the German zeppelin was destroyed in a sudden conflagration." Granted, the Hindenburg Omen is not a guarantee of a crash, and the five criteria that must be met for a Hindenburg trigger typically need to reoccur within 36 days for reconfirmation. Yet the statistics are startling: "Looking back at historical data, the probability of a move greater than 5% to the downside after a confirmed Hindenburg Omen was 77%, and usually takes place within the next forty-days." The last Hindenburg Omen occurred during the lows of 2009. Today, we just had another (unconfirmed) Hindenburg Omen. It is time to batten down the hatches - something big is coming.

» 

• 169 comments
 
• Read more

DGDF (Dollar Goes Down Forever) - To resume its downward trajectory?

Barber- Adagio for Strings

Moving Music. Strings resonate with the heart.

resonate |ˈreznˌāt|verb [ intrans. ]produce or be filled with a deep, full, reverberating sound : the sound of the siren resonated across the harbor.• figurative evoke or suggest images, memories, and emotions : the words resonate with so many different meanings.

Admittedly moved me to tears.

It's emotional power was used in the slow motion death scene in Movie: Platoon.

from TBP

The Fed is worried and thus won’t stop

 

By Peter Boockvar - August 10th, 2010, 3:05PM

Following the trial balloon in last week’s WSJ, the FOMC confirmed that they will keep their balance sheet constant by reinvesting the proceeds of maturing MBS/Agency securities into Treasuries. On the economic outlook, the Fed said “the pace of recovery in output and employment has slowed in recent months” as we expected them to. Instead of saying the recovery will be moderate over time, they said the recovery will be “more modest in the near term than had been anticipated.” Notwithstanding the recent rise in commodity prices, they continue to rely on CPI/PCE and say inflation has trended lower in recent quarters and will be subdued for “some time.” Hoenig disagreed with keeping the balance sheet constant and didn’t think it was required. Bottom line, stocks love an easy Fed and the Fed delivered with what was expected BUT nothing more. The Fed is clearly still worried about the economy and B52 Ben won’t stop.
As the FOMC doesn’t believe the current level of interest rates are low enough to spur economic activity, they said they will focus their buying of Treasuries in the 2 yr and 10 yr maturities and will begin on Aug 17th. Their balance sheet will technically stay constant in $ value so there isn’t any new ‘money printing’ but the direction the Fed has chosen, the continued desire to suppress interest rates, is an asset price’s best friend as who in their right mind would own too many US dollars. With this said, what the Fed announced today is exactly what last week’s WSJ article hinted they would do so today is just affirmation and we’ve rallied in anticipation so from a risk reward standpoint in the very short term, stocks may be a sell on the news.

Look Out Below!

By Barry Ritholtz - August 11th, 2010, 6:05AM

Futures are off on QE1.5, slowing US economic growth, and a slowdown in China. The Nikkei Dow fell -2.70%, while most European Bourses are off 1.5-2.0%.
The US pattern over the past few weeks has been for a weak opening to be ground gradually higher, erasing most of the losses by days end on anemic volume. Let’s see if that holds true today . . .
>

Click for Updated Futures

Matt Simmons - dead at 67, RIP

I've enjoyed Matt Simmons take on things oil over the last 25 years or so.  Really enjoyed his book Twilight in the Desert - an oil industry classic alongside The Prize.  Funny, the two books are written by oil industry analysts who are polar opposite in their beliefs - Daniel Yergen (The Prize and Cambridge Energy Research Associates CERA) the perennial oil industry sell-side yes man, might has well been on the XOM payroll - "technology" will overcome depleting oil resources..v...Matt Simmons the main proponent of "Peak Oil", which "occurred" in 2005...

Recently, and I have stated this openly, Matt seemed to be loosing his grip on reality with respect to the Macondo well blowout.  He was a financier, researcher, numbers guy, not an engineer, technical guy and, in my mind, somewhat sullied his reputation making outrageous claims at to what happened and what was happening subsequent to the blowout.  It was reported that he was hugely "short" bp shares.  I guess you could say he put his money where his mouth was.  In any case, love him or hate him, he will be missed.

"DEBATE OVER PEAK OIL FAR FROM OVER

Matt Simmons was known for his research in support of peak oil, a theory of waning world oil supply that dates back decades.

The term was coined in the 1950s by M. King Hubbert, a Shell oil geophysicist who predicted U.S. oil production would peak in 1970 and decline at the same rate it rose. He was right about the peak date for U.S. supply. The oil embargoes of the early 1970s helped put an exclamation point on his prediction as Americans sat in long lines waiting for gasoline.

But Hubbert's prediction about the rate of decline was off, and his prediction that global oil production would peak around 2000 proved wrong.

The counterargument to imminent peak oil - supported by organizations including IHS-Cambridge Energy Research Associates - is that improving technologies will make it possible for companies to find more oil and get more out of existing fields.

The global recession has dampened energy demand, but the debate is far from over. Peak oil theorists note that oil prices still are elevated and that much of the data on global reserves is in the hands of national oil companies or governments that benefit from higher numbers.

TOM FOWLER"

http://www.chron.com/disp/story.mpl/business/7146548.html

LiveStrong Hitchens

I have always admired and enjoyed Christopher Hitchens for his intellectually challenging debate. I have seen him several times on Bill Maher.
I was surprised learn he is battling Cancer.

http://ac360.blogs.cnn.com/2010/08/07/video-extended-interview-hitchens-on-cancer-and-atheism/?iref=allsearch

From CyclingNews (see links)

From here until the end of the season there will be a flurry of transfer activity, so don't get left behind and bookmark this page. Check back regularly to get up-to-the-minute news from Cyclingnews about who's going where in this transfer period.
 

Ag2r-La Mondiale

In:
Mathieu Perget 
Romain Lemarchand 

Re-signed:
Nicolas Roche
Cyril Dessel 
Sebastien Hinault 
Yuriy Kritsov 
Guillaume Bonnafond 
Martin Elminger 
John Gadret 
Blel Kadri 
Rinaldo Nocentini 

Astana

In:
Robert Kiserlovski 

Out:
Alberto Contador 

Bbox-Bouygues Telecom

Out:
Yuri Trofimov

BMC

In:
Yannick Eijssen 
Amaël Moinard 

Ceramica Flaminia

Out:
Riccardo Riccò

Cofidis

Out:
Amaël Moinard

Euskaltel-Euskadi

Re-signed:
Samuel Sanchez

Française des Jeux

Out:
Jussi Veikkanen
Christophe Le Mével 

Re-signed:
Frédéric Guesdon 
Sandy Casar 
Mathieu Ladagnous 
Yoann Offredo
Jérémy Roy 

Garmin-Transitions

In:
Christophe Le Mével 

HTC-Columbia

Out:
André Greipel

Re-signed:
Bert Grabsch 
Bernard Eisel 
Mark Renshaw 

ISD-Neri

Re-signed:
Giovanni Visconti

Katusha

In:
Yuri Trofimov
Leif Hoste

Lampre – Farnese Vini

In:
Michele Scarponi 
Andrei Kashechkin

Liquigas-Doimo

Out:
Francesco Chicchi
Robert Kiserlovski 

Omega Pharma – Lotto

In:
André Greipel
Jurgen Van de Walle
Jussi Veikkanen

Out:
Leif Hoste

Quick Step

In: 
Marc de Maar
Francesco Chicchi

Out:
Jurgen Van de Walle

Re-signed:
Sylvain Chavanel 

Rabobank

In: 
Matti Breschel 

Out:
Koos Moerenhout

Re-signed:
Graeme Brown

Saxo Bank – Sungard

In:
Alberto Contador

Out:
Fränk Schleck
Andy Schleck
Matti Breschel 

Re-signed:
Michael Mørkøv 

Skil-Shimano

In:
Marcel Kittel

Re-signed:
Roy Curvers 
Mitchell Docker 
Koen de Kort 
Steve Houanard 

Vanansoleil

In:
Stijn Devolder 
Martijn Keizer 

Out:
Brice Feillu 
Bobbie Traksel 
Wouter Mol

Re-signed:
Romain Feillu 
Bjorn Leukemas

Follow Cyclingnews on Twitter for the very latest coverage of events taking place in the cycling world - twitter.com/cyclingnewsfeed

Wes