Archive for the ‘Uncategorized’ Category

The Vegan Terrorist?

April 21, 2009

Yesterday, the FBI announced that Daniel Andreas San Diego has been added to their “Most Wanted Terrorists” list.  This is the first time a domestic terrorist has been added to the list.  He is an animal rights activists and detonated two bombsin 2003 near the headquarters of companies that engaged in animal testing.  No one was killed or injured, but there was property damage.

Here is San Diego, on the same list as Osama bin Laden.  According to the FBI, these were very sophisticated bombs that used kitchen timers.  Since when are kitchen timers sophisticated?  He also might be armed with a 9mm handgun, so you should consider him armed and dangerous.  Seriously, how does this man pose more of a threat than any criminal that is on the loose right now?

Also, the timing of his addition to the list is very curious.  Just last week, a Department of Homeland Security memo was leaked identifying “right wing extremists.”  Their reaction to the memo was that they track “left-wing extremists” as well.  The point is that our police state is starting to monitor more and more domestic activity, from militias to protesters.

Is the FBI, DHS, and the Federal Government getting more concerned with our activities in the US?  Do they fear that as we progress further into the New Great Depression that people are going to try and rise up against the government?  Are they trying to suppress our actions with scare tactics?

Just think if protests turn into riots and property is damaged?  Could these protesters be classified as terrorists?  What happens then?  Are they locked up in a military prison somewhere?  If you donated money to their cause, would you be implicit to their crimes? 

In each case of the government flexing its muscles, the actions become less fitting of the crime.  At what point will opposition to the government be considered extremism or terrorism?  We need to stand up for our rights and liberties before they are all stripped away.  This might sound extreme, but if we do not push back against the police powers our government is taking, what else do you expect to happen?

Advertisements

Tea Parties or Bank Runs?

April 19, 2009

Last week, there were hundreds of new-age “Tea Parties” all across the country on Tax Day, April 15th.  There is currently a lot of frustration out there, which has led to tremendous momentum for financial reform in our country.  Thousand of people attended the protests.  Some people wanted to protest the role of the Federal Reserve, others were mad about our tax dollars being spent to bail out failing companies.  Others wanted to reduce the size of government and federal spending.

The problem with the Tea Parties, is that the media and Democrats have miscontrued the meaning behind them.  They are saying they are just politcal stunts, organized by Republicans and Fox News, who are against anything President Obama does.  Even though there were both Democrats and Republicans at the Tea Parties, the protests have been marginalized by the mainstream media.  All of the effort that people went through to organize these rallies is essentially being wasted because those in Washington are not taking the protests seriously.

There is another method of protest though, that the government, big corporations, and Wall Street cannot stop.  We can all take our money out of big banks that are getting bailouts and put it in a local, community bank.  Most of these smaller, local banks have been able to withstand the downturn because they were prudent with the money we deposited and did not get involved in all sorts of derivatives, trying to make a quick buck.

If we are so upset about the government using our money to bail out banks, why not show the government that we have no confidence in these institutions?  As a business, banks depend on us, the consumer to lend them (deposit) our money so they can make loans.  If we all pulled our money out of the big, failing banks, they would be forced out of business.  We need to literally, put our money where our mouths are.

Local banks are at a disadvantage because they do not have the resources to devote to technology and security that the big, national banks.  But if we all deposited our money with them, their business would naturally grow and they would be able to make banking as convenient and easy as a Wells Fargo or Bank of America.

The same can be said for our investments.  If we are upset that JP Morgan and other Wall Street investment firms are getting our tax dollars, move your account to another broker.  We can’t protest with our words and then let our actions directly contradict our views.

A lot of talking heads have made fun of people for withdrawing their money from banks so they can have cash (as if this is such a bad thing in the first place).  In fact, MSNBC’s Rachel Maddow called Senator Richard Burr of North Carolina “Bank Run Burr” and Keith Olbermann named him the “Worst Person in the World” because he told his wife to withdraw $500 from an ATM.  They said it showed Republicans do not have a plan and that it was unpatriotic to pull his money out of the bank.  Burr said that he does not have any cash at home, and after a briefing that basically told him that banks would be out of cash, he panicked adn told his wife to take out the money.  Like $500 in his account is going to make a difference, anyway.

My plan is not to just take your money out and put it under your mattress in fear of failure.  It is a protest against the big, national banks that are on life support, sucking up billions of our tax dollars a day.  We should embrace our local banks, that know the local economy and community.  They will make prudent decisions and not take unnecessary risks trying to please Wall Street and investors.  Instead of making clever signs and protesting with our words on Tax Day, we should give the banks a vote of “no confidence.”  Only with our actions and our money will we show the government that we do not support the bailouts, or the banks and institutions they are propping up.

The Police State Puzzle Taking Shape

April 16, 2009

There have been a number of police state measures recently that might look benign at first, but when you put them all together the picture becomes awfully scary.  While there might not be a coordinated effort or specific target group, there is enough momentum going that anyone who speaks out against the government could have their homes raided and be detained and jailed.

It started after 9/11, when we were outraged that the government could not protect us from coordinated terrorist attacks.  At the time, we wanted the government to be able to listen in on potential terrorists.  After all, the authorities said that if they were coordinated and were allowed to access information, they could have prevented the tragedy.

This led to the establishment of the Department of Homeland Security and their program of listening in on our phone conversations, checking our internet browsing history, and being able to detain suspected terrorists without charging them with a crime.  Of course, the government told us that they were only spying on suspected terrorists, so none of us thought twice about it.

Over time, the efforts of the DHS have made some arrests that have resulted in convictions.  Other efforts though, have detained foreigners and US citizens for years without any charges being filed.  The government alleges that some of these detainees were fighting for Al Qaeda and aiding the enemy.  If this were the case, why weren’t they leveling charges?  If their allegations cannot hold up in a court, they should let the “terrorist” go.

In a separate effort, the Federal Government, led by agents from the FBI and IRS have been raiding homes of high profile individuals under the guise of “tax charges.”  Just recently, twenty agents raided the home of Barry Bonds’s trainer, Greg Anderson’s mother-in-law.  While this was clearly an intimidation technique to try and get Anderson to testify against Bonds, it was completely legal in the government’s eyes because of “tax charges.”  If they sent 20 agents to her house, then hundreds must have surely shown up at Tim Geithner and Tom Daschle’s homes, right?

Another example of the Federal Government’s new authority to raid the homes of private citizens has been playing out in family or co-op farms in the Midwest.  In Ohio, a family was raided by federal agents from the Food and Drug Administration because they were selling organic produce without the proper permits.  The agents seized the food from the co-op and food that belonged to the family.  They also took the family’s computer and went through all of their belongings.  Couldn’t they have just issued them a letter or met with the family?  Was this force necessary?  The scary part is that the government believed they were acting within the law.

So, now we’ve established that the government can spy on you  and detain you indefinitely if they think you are a terrorist, and they can raid your home and seize your property on bogus charges.

This now takes us to a case in a town near me, Tustin, California, where a Muslim man was arrested by Federal Agents on immigration fraud charges.  However, the entire story revolves around this man and how he donated money to a charity that was sympathetic to Al Qaeda, how his brother-in-law at one point was an associate of Osama bin Laden, and how this man said on a wiretapped phone conversation that bin Laden was “an angel.”  The agents raided his home and went through and seized his belongings and financial statements.  All this for lying on his immigration papers? The real reason is because they are going after him for being a “terrorist” but they do not have enough evidence to convict him.

While I do not know what the outcome of the trial will be.  If he indeed lied on his papers, then he should be punished.  The actions of the government though, allowing them to spy on us and raid our homes for reasons completely unrelated to what we are being charged.  It’s like getting a speeding ticket and having the government come and raid your home and take your computer for it.  It might keep us safe a fraction of the time, but it encroaches on all of our civil rights the majority of it.

So far though, most of the spying was relegated to “terrorists.”  Just yesterday though, I read a new DHS report about “right wing extremists” and how they could be forming militias in response to the bailouts and the recession we’re in.  The DHS was warning local law enforcement to be on the lookout for them.  These extremists would recruit soldiers returning from Iraq and turn them against the government.  In order for the DHS to look unbiased, they also said that they are investigating left-wing groups as well.  So, as long as you’re spying on both groups, it’s okay?

The question now, and what all this has been building towards, is “at what point do these ‘extremists’ become ‘terrorists’ in the government’s eyes?”  If the government went after someone for calling Osama bin Laden an “angel” in a private conversation, will they go after Rush Limbaugh for wanting Obama to fail?  Will they raid supporters of Ron Paul who believe in the Constitution and small government?  Will anyone who disagrees with Washington a “terrorist”?

We are told they are there to keep us safe, but government will almost always abuse their powers and overstep their limits.  The Justice Department came out with a report today saying the DHS survelliance program has violated the law by going past the legal bounds.  How are we supposed trust the government to keep us safe when they can be listening to your phone conversations or monitoring your internet use right now?  We need to wake up and see these police state measures as the violations of our rights that they really are.

Obama’s “New Foundation”

April 14, 2009

Today, President Obama gave a speech entitled “New Foundation” which gave an update on the economy and all of the government policies that are currently underway.

His opening portion of the speech ended with this remark:

And most of all, I want every American to know that each action we take and each policy we pursue is driven by a larger vision of America’s future – a future where sustained economic growth creates good jobs and rising incomes; a future where prosperity is fueled not by excessive debt, reckless speculation, and fleeing profit, but is instead built by skilled, productive workers; by sound investments that will spread opportunity at home and allow this nation to lead the world in the technologies, innovations, and discoveries that will shape the 21st century. That is the America I see. That is the future I know we can have.

The funny thing is that most of what he says makes sense and I totally agree with.  We do need an economy based on production and savings and not debt and spending.  This is the fundamental problem with our current economic system.  He goes on to blame our current crisis on “greed” and “instant gratification” but those arguments don’t hold any water.  We’ve always had greedy people who want things now.  If that were the case, we’d be in a permanent depression.

The problem is that Obama thinks that only the government can implement policies and programs that will accomplish these goals.  I believe that government is the worst possible agent to try and lead us into the future, and that they are only making matters worse.

From a purely economics standpoint, the government is taking resources away that the private sector would be using, or they are undertaking tasks that are not being done by private sources because they are unproductive and inefficient.  Look at the auto bailout, for example.  Imagine what a startup like Tesla or some other company could do with one billion dollars, a fraction of what the Big Three have gotten so far.  We could have a brand new, competitive auto industry for the amount of money that has been wasted propping up dead bankrupt companies.  I do not believe in bailouts and handouts, but if we are going to give money away, it should go to new production, not financial means.

Other examples of Obama’s “stimulus” are building roads, weatherizing homes, and building green energy sources.  If these were profitable endeavours, don’t you think the private industry would already be doing these things?  The reason they aren’t is because there is not any money or benefit to gained at this point in time.  By directing resources to these projects, we are taking money that could be used for other, more profitable forms of production, and putting it to unproductive uses.

To make matters worse, we are funding these projects and bailouts with printed money.  When you think about how a bank works, you realize that they need to have people depositing and saving money in order to make new loans.  The more money saved, the more money that can be loaned out.  The same should be true for the government, except Bush and Obama have been running trillion dollar deficits.  We aren’t funding our “stimulus” with saved resources.  We are just piling on more debt and creating money out of thin air.  In the long run, this misguided form of “stimulus” will hurt our economy more than help it.

Obama has the right intentions, and he keeps talking about fiscal responsibility.  However, his actions to spend more, inflate more, and expand the central government will only dig us deeper into a depression.  We need to stop printing money trying to reinflate our spending bubble, and let the markets work.  Right now, Obama needs to resist the urge to intervene and let the economy readjust and liquidate all of the malinvestment.  How can a small group in Washington know more than an economy of 700 million?  Stop trying to play hero and get out of the way, that’s what he should have said today.

The Problem with Tea Parties

April 13, 2009

There is going to be a Tea Party in Santa Ana, which is close to my hometown of Huntington Beach.  There is a series of speakers, one of which is Dana Rohrbacher, who is my Congressman.  He’s been in the House since 1988.

My big problem with this is that he was in Congress during the Bush years, when the Federal Government grew to the largest it’s ever been.  Now, all of a sudden he’s outraged?  Where was he speaking out against the budgets and taxes under the Bush Administration?

There is a political theory that when a party is out of power, they go back to their core principles, only to abandon those principles and grow the government when they go back into power.  How true is this of the Republican party?  They pushed for the biggest growth in government spending in the history of our country when they were the majority, but now that they are in the minority, they are all about fiscal responsibility again.  We need to see this for the fraud it is and not fall for this trap again.

Also, many of these figures act like they support limited government, but all they want to do is trim a program here or there and shift the tax brackets around.  We need more than these little, inconsequential tweaks right now.  We need real change and a political revolution.

We need to start to question the need for central economic planning, led by the Federal Reserve and the monopoly it has on our money supply.  We need to question our fiat currency, and if local currencies backed by gold might be a better way to manage our money.  The first step would be to repeal legal tender laws and to eliminate capital gains taxes on gold money.  Ron Paul has laid out this plan to open up our money supply to competition of gold backed money and fiat money.  This needs to be discussed at any Tea party.

We also need to not just be mad at our money being used for bailouts, but we need to be mad that the government, as Rothbard put it, “legally plunder” from us.  Why is the government entitled to a third of our hard earned money?  We should not just be mad about our money going to bail out Wall Street, but we need to be mad that it is going to build bombs, fight foreign wars, build foreign bridges and roads, and support our welfare state.  In order to truly reform our government, we need to take as much out of the hands of Washington as possible.  Our Constitution lays out the framework for a limited central government and strong local and state power.  We have moved so far from this vision that we have a tyrannical government that has overriding rule over all.  This is what we should be revolting about!

The anger and frustration over the bailouts is a good way to start to build energy towards a revolution, but we can’t keep our scope so limited.  Every one of these Tea Parties need to go beyond the bailouts and taxes and to the Constitution and the vision of our Founding Fathers.  They should have speakers who believe in eliminating the Federal Reserve, cutting or ending the income tax, ending our empire, and drastically reducing the size of our government.  We need to move beyond the symptom, which is the recession we’re in and the bailouts, and really fix our country.

Good or Bad News?

April 10, 2009

Today, a source close to the Treasury Department said that no banks failed the government mandated “stress test” and would have to be shut down.  He went on to say that some banks would still need more capital injections.  The story is linked here.

While to the layperson, this looks like good news, to a supporter of the free markets, this is just more bad news.

First, the banks administered the stress tests themselves, and then submitted their results to the Treasury.  How are we to be certain they were being honest?  Of course, they would not want to show that they were going to fail, so why do we put any faith in this report?  If a bank came out and said, “we failed,” their stock would plummet and depositors would immediately withdraw their money.

Second, in the same statement, the source said some companies would still need more government aid.  So, doesn’t that mean these banks that need aid failed?  If they passed, they should not need any more propping up by the Federal Government.  If they still need more money, they can still fail, stress test or not.  That’s just common sense.

And finally, how can we be in the midst of one of the worst banking crises in the history of the US, and only a handful of firms have failed?  We have Lehman, Bear, Wachovia, and WaMu.  That’s it!  We need to weed out the bad apples, now.  We can’t keep propping up everyone.  The government is going about this all wrong, pre-emptively saving banks.  If the government should get involved, it should be after the banks fail, helping clean up the mess.  At least this way the rotten firms and bad assets would be liquidated, and we would be able to move on.

There is always more to the story than what the media and government reports.   Initially, the story might sound like good news, but if you read between the lines and put two and two together, you see that it is just a positive spin on more bad news.  The solution to our crisis is simple:  let the bad banks fail and liquidate the bad debts.  The sooner we allow this to happen, the sooner we will return to prosperity.

The 401k Problem

April 9, 2009

I read an interesting point in Tom Woods’ book, Meltdown, last night regarding our retirement savings.  His basic premise was that we should not have to worry about 401k’s and other retirement plans.  We should be able to put our cash in a savings account or put our money in gold coins, and be able to rely on that money when we are ready to retire.

However, this is impossible because of our inflationary monitary policy.  You have to invest in the stock market and risky instruments because you have to try and stay ahead of inflation.  You need to build a bigger nest egg because every dollar you save loses tremendous value over time.

The government only helps feed the need to risk our retirement money by giving us a tax break when we invest in a 401k.  If we did not have this incentive, most people would put their money in accounts where they would have more control of their money.

I hate the fact that I need to put money in mutual funds.  The managers of these funds are looking for short term returns, not sustainable gains over 30 years.  I’d rather have an account that had no gains for 29 years and then went up 10 times in one year, rather than riding the rollercoaster of big gains and even bigger losses.

But back to inflation and our need to invest to outpace it.  You would think that in this day and age, prices of everything would be dropping.  We have so much technology in every single sector that we should be able to pay less for everything we buy.  If prices were allowed to fall like they should, we could just sit on our money and not have to worry about higher prices in the future.

Everyone is outraged that Wall Street greed stole their 401ks.  They have the right to be mad, but they should be mad out our inflationary monetary policy and the government’s encouragement to invest in 401ks.  If greed was the problem, we’d have been dust years ago.  The problem is the government’s central economic planning and encouragement for malinvestment.

Another Look at Our Banking System

April 7, 2009

With Wall Street and the Banking System at the heart of our current economic meltdown, I think it would be good to take another look at our banks in terms that are not normally used.  I’m not an economist, so this might be pretty crude, but it really is important to think about banks as businesses, and not failsafe financial institutions.

First, when you put your money in a savings account, you are not a “depositor.”  You are actually the lender, letting the bank borrow your money to invest.  Your return on this investment is the percent yield you earn on your account.  Banks then will lend this money to businesses or people who want to buy a home.  They charge these people a higher amount of interest than they are paying you.  This is called leverage, which is using borrowed money to make money.

The big question now, is why don’t we look at a bank’s finances and what they are planning on doing with our money when we put it in a savings account?  If we went to get a loan, they would look at all of our records and make sure we had a sound plan for the money.  We just deposit our money into any old bank without a question asked.

The main reason for this is the FDIC, which used to only insure interest bearing accounts (savings) but now insure non-interest bearing (checking) accounts as well.  They also just upped their limit from $100,000 to $250,000.  The reason the FDIC exists is to protect us, the depositors in a bank, in case it goes under.  As long as we have less than $250,000 in that bank, we know the Federal Government will make sure our money is safe.

The unintended consequence of this insurance is that the bank can basically gamble with the first $250,000 of every savings account.  They can put it in all sorts of speculative products because they know if all their investments go bust, the goverment will be there to pick up the tab.  It’s like me going into a casino knowing that if I lose my first thousand dollars, the casino will give it back to me.  The real world does not work this way.  Why then, do we think it’s alright for the people who are supposed to be keeping our money safe to do this?

If banks were not backstopped by the Federal Government, they would have to take less risks, or no one would deposit their money with them.  Without depositor money, a bank cannot make loans to make a profit.  Rather than just putting our money in Any Bank USA, we would make sure that they were making safe investments and know the risks that are involved.  This would weed out the speculative and aggressive banks before the seeds of a banking collapse are sown.

The idea of the FDIC sounds great to the consumer if we think of banks as the keepers of our money.  If we view them as borrowers and business partners, we see the FDIC program makes no sense.  It just allows the banks to gamble with our money and make the taxpayer pick up the tab when their bets go bad.  We need to stop relying on government institutions to protect us and to start making informed decisions of what banks we will lend our savings.  This will help stop bank speculation and keep them honest, and be a part of preventing a crisis like this from happening again.

Why Does Our Financial System Need Reform?

March 28, 2009

Treasury Secretary Tim Geithner and the Obama Administration are pushing for powers to regulate all aspects of the financial system.  These areas include hedge funds, private firms, and derivatives.  They also want the power to intervene with any company to make sure their collapse will not bring down the financial system.

While these ideas sound great, especially in the middle of the crisis we’re in, they are misguided attempts to intervene, when intervention is the last thing we need.  The perfect example of the need to get involved when it was not necessary was the Sarbanes-Oxley Act after the Enron case.  Everyone wanted regulation, so we strapped every publicly traded company with the huge burden of archiving every piece of data for 7 years.  However, the executives that were in charge of Enron were found guilty of fraud, and the company was bankrupted and dissolved.  The system for weeding out Enron worked, but our government felt the need to act, so they did.

In the current crisis, if we did not bail everyone out, would we need to regulate hedge funds, private equity firms, and derivatives?  Those were fringe investments to begin with, but since the Federal Reserve made credit cheap and easy to obtain, they became too large.  Warren Buffet even called the derivatives market the “financial weapons of mass destruction.”  If we let them fail and liquidate their assets, they would go back to being fringe investments only for specialty firms or the super rich people of the country.

By propping them up, we now have the need to regulate them.  By regulating them, we are acknowledging their existence as a major part of the financial system, when they should only be bit players.  Our system needs to be cleansed of these bad investment vehicles and instead we are implementing rules to legitimize them.

Also, the power to intervene with any company by the Treasury Department is setting a dangerous precedent for the future.  They want the power to take over a company and sell off assets before the company collapses.  Looking at how well the bailouts and toxic assets plans have gone, I question whether they really know what is best for our system to begin with.  Why not just let the companies go bankrupt and liquidate their assets letting the market set the prices?

Also, I question whether these reforms and protections will really help.  We all knew the derivatives market was a problem waiting to happen, and all of the financial geniuses who are now calling for regulation just sat back and watched.  The SEC had rules to prevent things like Enron from happening, but it still happened.  Madoff kept a ponzi scheme going for decades and the SEC couldn’t figure it out.  How can we expect our government to regulate when they have failed us so far?  If another bank does commit fraud or crooked accounting and it slips through the cracks, can we sue the government for their lack of oversight?

These broad government regulations just give us a false sense of security because we think the government is looking out for us.  That gives us the impression that they are watching what funds are doing, and they know that their investments are legitimate.  We fail to do our own due diligence because we think the government already has for us.  Then we will again be burned when the government fails to regulate like they promised.

We need to let the market liquidate the bad investments and let the companies that made these decisions fail.  Once that happens, we can see how widespread the problem was and if there is a need for sweeping regulations.  If anything, we need to regulate the Federal Reserve to make sure that our boom-bust economic policy comes to an end.  We can treat the symptoms (hedge funds, private equity and derivatives) only after we treat the cause of the cancer, which is the Federal Reserve.

Geithner – From Zero to Hero?

March 26, 2009

Read this glowing piece on Tim Geithner from Marketwatch.  How disgusting.

I cannot believe, in anyone’s mind, that a three day stock market rally turns this insider cronie to some sort of market guru.  He’s had almost 3 months in office, and so far has come up with a half baked plan that is bound to fail.

Since when is making the stock market rise the job of the Treasury Secretary anyway?

Also, the author, David Weidner goes as far to bash the free market.  Here’s an excerpt:

The power grab is likely to stick in the craw of anti-government, free-market types who rightfully worry that Uncle Sam is overstaying his visit to Wall Street.

What they need to remember is that the government is not only an unwelcome guest; it’s a reluctant traveler. Wall Street’s despair is of its own making. Had it not threatened to bring down the rest of us with it, the government might have been justified in watching Citigroup and AIG burn in the same way it’s keeping General Motors Corp. and Ford Motor Co. a contained blaze.
Geithner finally seems to understand the delicate political tightrope he must navigate to push through his rescue plans. He must be tough on bonuses. He needs to protect the taxpayer. He has to be positive. That’s why he sold the plan’s details through multiple media outlets this week — and sold them well.

This is such a crock of lies that I cannot believe a financial website like Marketwatch would publish it.  He acts like the free market is responsible for all this, when it has been the actions of the Federal Reserve that fueled the fire.

The reason we’re still even talking about toxic assets is because the government got involved and now has no other path but to keep blowing through money.  If we had let the banks fail and the toxic assets be liquidated, we would have had a deeper, sharper downturn, but we’d already be pulling our way out of it.  The actions of Geithner, and his predecessor Paulson, have just prolonged the crisis and made it worse.

Finally, there is a big reason why Wall Street loves Geithner’s plan: it takes the toxic assets off their books and shoves them on the taxpayer.  The plan is great for banks and financial firms because it gives them a no-risk, all-reward proposition.  It’s like going to Vegas with $100, but if you lose, the casino will give you all but $7 of your money back.

Mark my words, the scandal of Geithner’s plan will be that the same firms strapped with these bad investments will sell them for above their real value and then buy them back for a fraction of that.

Before we put Geithner up on a pedestal, we need to really see how his plan is going to play out.  How will the assets be valued?  Who will buy them?  How long will this plan take to implement?  A three day stock rally is no reason for a parade, and this will all just be false hopes and empty promises.