All posts in Economy

Did you know the Fed is the largest hedge fund in the world?

It holds more than $3 trillion in debt.  Run by academics and bureaucrats who have never actually taken real risk with real dollars before.  Ever thought what would happen if they lose control of the long end of the yield curve?

Hint:  bad stuff


The fillet-ing of liberty

Much has been written on the Chick-fil-A controversy and I don’t think I have too much to add at this point.  For a couple must read pieces I offer this one by Steyn and this one by Morrissey.  For those of you who don’t care or don’t see the relevance of this issue to your life, please, stop reading this post immediately and click on one or both of the above referenced articles.  In my opinion, this episode has been one of the most offensive assaults on our understanding of liberty I’ve ever witnessed.  Worse still, it shows an ignorance of and utter disregard for basic freedoms on the part of men who hold positions of high authority in this land.  Remember Rahm was only a step away from the President until a year ago.  In short, the sneering contempt that the mayors of great cities like Boston and Chicago (San Francisco has become too farcical to even complain) and the senior government official in New York City can openly exhibit towards a man whose crime seems to be that he’s a hard working decent charitable man who dared to run his company as he saw fit–and always in accordance with applicable laws–and who answered a politically charged question honestly based on his own personal belief and moral conviction (an answer which happens to coincide with the President’s views on the topic up until a couple months ago).

Of course the issue is gay marriage, but I can only imagine the ridicule Mr. Cathy (Chick-fil-A’s owner) receives behind the closed doors of Chicago’s city hall for his gall in keeping his stores closed on Sunday.  How quaint.  What’s remarkable to me is that a mere 20 years ago not only would the term gay marriage have been oxymoronic but for most Americans (I’m thinking of my grandparents) it would have been an undefinable and nonsensical term.  For that matter, 20 years ago shopping centers were usually closed on Sunday and you couldn’t buy liquor either.

Now you have Sheriff Rahm and the town elders warning Mr. Cathy he’d better not even think of stepping foot in their town.  You see, they don’t like his kind ’round these parts.  The speaker of New York City’s city council took it one step farther and wrote to the President of private New York University and advised him that he should kick to the curb New York City’s lone Chick-fil-A, which happens to be a tenant of the university (and I imagine a very popular one among cash strapped and its hungry students).  Of course it’s simply coincidence I’m sure that the speaker is a recent beneficiary of the gay marriage wave herself.  And oh yeah, isn’t there probably some kind of contractual arrangement between the University and Chick-fil-A the terms of which a city official shouldn’t be encouraging one of the parties to break?

So many issues are raised by this lightly seasoned thought tyranny but I’d like to raise a couple: consider Steyn’s mention of the radical Muslims who openly advocate death to homosexuals yet have no problem getting city permits to do business in Boston and New York; or what about the baba ghanoush street vendors across the city–did you hear what they said at the dinner table last night?  And then there’s Rahm and his recent cozy relationship with Louis Farrakhan, who not only openly opposes gay marriage but also advocates (loudly) against Jews for…well, for being born Jews.

So in one fell swoop you have the mob-like trampling on basic first amendment rights, the malevolent sneering at by all accounts a good man and law-abiding citizen and a heavy dose of puke-inducing hypocrisy.  To call it outrageous is an understatement.

But it’s even worse than that.

We have a friend who is an institutional money manager for a large firm in a big city.  He has an undergraduate degree from an Ivy League school and an MBA from a top 5 business school (also Ivy League).  He is married (to a woman) and has a child.  As I understand it, he works hard evaluating companies and buying and selling shares in large blocks for his firm’s customers.  Knowing what I know about his business he is narrowly focused on companies’ prospects and earnings and the viability of the companies he covers going forward.  Somehow the Chick-fil-A topic came up in conversation and without hesitation he called Mr. Cathy a “bigot,” he liked and supported that Rahm & Co stuck it to him and he declared that he didn’t want his money to go to bigoted fools like that and he wouldn’t be eating at Chick-fil-A.  When confronted with the idea that Mr. Cathy had every right under the 1st Amendment to express his views on the subject of gay marriage and that mayors, while also entitled to their own 1st Amendment rights, should not be using the levers of the state to intimidate a private citizen and his or her right to conduct business as long as that person is doing so within the laws of the relevant jurisdiction.  Our friend conceded partially but then he bowed up again and blindly said these mayors were speaking purely as private individuals expressing their opinions (not true) and then he reiterated that Mr. Cathy is a “bigot” and that if he’s done one thing to violate any kind of equal opportunity law they should crush him.


And by the way, in the next breath he talked about how excited he was to go see a well known (and old) heavy metal band.  I’m not sure if he’s aware that the stars of this band include one who’s been in and out of trouble for illegal drug use and another who went to prison for assaulting a woman.  Guess he’s got no trouble giving his money to them.

This is America in 2012.

PS.  I received a text from a friend this morning encouraging me to go eat at Chick-fil-A today to show my support.  Here’s my deal on that.  I eat a lot of Chick-fil-A and I will continue to do so.  But I don’t want to go eat a chicken sandwich as a political statement.  I simply want to eat it because it’s good.  While I fully support those who want to eat Chick-fil-A today, I think in some ways supporters of Mr. Cathy are doing a disservice to him, and our country’s principles of liberty, by being drawn in to this battle on Rahm’s terms.  The tragedy is that the left has so politicized a chicken joint that it makes it hard to “eat mor chikin” without thinking of the shrill voices denouncing it.  It is insanity pure and simple.

By the same token, I still love The Bourne Identity.

Neither Al Gore, nor the government, invented the internet?

Check out this story from the WSJ:

A telling moment in the presidential race came recently when Barack Obama said: “If you’ve got a business, you didn’t build that. Somebody else made that happen.” He justified elevating bureaucrats over entrepreneurs by referring to bridges and roads, adding: “The Internet didn’t get invented on its own. Government research created the Internet so that all companies could make money off the Internet.”

It’s an urban legend that the government launched the Internet. The myth is that the Pentagon created the Internet to keep its communications lines up even in a nuclear strike. The truth is a more interesting story about how innovation happens—and about how hard it is to build successful technology companies even once the government gets out of the way.

Rest of the story here.

Already an oldie but goodie

What I like about things like John Roberts’ decision and Obama’s “you didn’t build that” remarks is that it crystallizes the choice we have before us.  We will decide in November in a way we haven’t been able to do since possibly 1932 what direction we as a people want America to go.  Obama’s reelection may be mitigated by a Republican-controlled Congress but the vote for president is our ultimate nationwide choice of who we want to speak for us as a country.

With that in mind, I absolutely love Scott Brown’s recent video.  Watch:

New Romney ad and Obama’s funny tweets

I’m really enjoying the twitter thing.  Our president’s tweets are downright comedic.  For example, a few minutes ago he said: “Ever since I came into office, one of my biggest priorities has been, ‘How do I support small businesses?’”

Really?  By telling business owners they didn’t build their business or by raising their tax burden or maybe by suffocating them with increased regulations?

Or this one:  POTUS: “When the auto industry was on the brink of collapse and Gov. Romney said, ‘Let Detroit go bankrupt,’ I said no.”

@BarackObama You said no. Think bigger. Let’s bankrupt America!

While Obama was talking Romney released a new ad.  Here it is:

Health care under Obama

Something to look forward to.


A history lesson on fiscal deleveraging

From Nathan Sheets at Citi, courtesy of Zero Hedge:

In the years after World War II, the United States achieved a dramatic reduction in the level of the federal government’s debt. The costs of financing the military had pushed the debt up sharply, from around 40 percent of GDP before the War to a peak of nearly 110 percent of GDP as the War ended. But a combination of strong economic growth and remarkably disciplined fiscal policies, as well as elements of socalled financial repression, brought the debt below 50 percent of GDP by the late 1950s. This remarkable episode provides some important perspectives for us today as the debt is again on a high and rising trajectory.

The sharp decline in the public debt after World War II was driven by several factors. The first was a highly disciplined fiscal policy. During this period, a strong social and political consensus prevailed in favor of budgetary restraint and debt reduction. The government’s budget registered sizable surpluses in the late 1940s as military efforts were wound down, and then cycled near balance through the following decade. Notably, government outlays moved up some during the years of the Korean War, but this increase was matched by revenue measures, which allowed the military spending to be financed without additional debt issuance. Read more…

The Daily Show on the Economy

Link from Zero Hedge.

A Krugman takedown

Must read/watch this Krugman beatdown.

Classic that it comes at the hands of a lowly Spaniard, who reminds us of the utter nonsense that is Krugman economics. So let me get this straight, we’re going to get out of this mess (defined as too much government spending and suffocating debt) by taking on more debt and spending more… I see.

But rest assured the former Enron advisor still has the ear of the president.

And then we told them it wasn’t a tax!


The goose is cooked and it ain’t even Christmas!

I wish I were as flat out optimistic about Romney (and Obama’s chances of reelection) as our good friend Larry Kudlow. But I’m with him and I’m all in for Romney so let’s drink up the kool aid and get this party started. Time for some strong animal spirits for a change.

Read Kudlow on Obama’s goose.

Obama’s sacred stimulus has failed

From Tyler Durden of ZeroHedge, quoting AEI, on the recent jobs data:

This was not the employment report either the American worker or the Obama campaign wanted to see right now. The Labor Department said the U.S. economy created just 80,000 jobs in June, less than the 90,000 economists had been forecasting. And private-sector job growth was just 84,000, down sharply from 105,000 in May. Not doing fine.

The unemployment rate stayed at a lofty 8.2%.

This continues to be the longest streak — 41 months — of unemployment of 8% or higher since the Great Depression. And recall that back in 2009, Team Obama predicted that if Congress passed its $800 billion stimulus plan, the unemployment rate would be around 5.6% today.

– If the size of the U.S. labor force as a share of the total population was the same as it was when Barack Obama took office—65.7% then vs. 63.8% today—the U-3 unemployment rate would be 10.9%. Even if you take into account that the LFP should be declining as America ages,theunemployment rate would be 10.5%.

– The broader U-6 unemployment rate, which includes “all persons marginally attached to the labor force, plus total employed part time for economic reasons,”  is 14.9%, up a bit from May.

– The average duration of unemployment ticked up to 39.9 weeks.

And the chart that dismantles Obama’s stimulus:

Here’s the link.