Wednesday, June 29, 2011

Quote of the Day: Nassim Nicholas Taleb

“Greece’s economic ills are a trivial menace to the global economy compared with the much graver threat posed by a heavily-indebted and seemingly immobile U.S. government, author Nassim Taleb said Monday. ‘There is a serious problem in the U.S.,’ Taleb said after speaking at a business conference here. ‘The U.S. deficit is around $1.5 trillion. It’s far more dangerous than Greece.’”

“Mr. Taleb said investors and government officials around the world are unwise to focus so much on Greece when the real ‘elephant in the room’ is the U.S.”

“This is not an insoluble problem,” he said of the U.S. debt crisis. “You can fix it with some fiddling here and there. But you need the will to do it. And you need consciousness about the importance of debt. I don’t see that. Politicians are good at getting elected, not at solving problems like this.”

~ Nassim Nicholas Taleb as reported by Taos Turner, Dow Jones

Monday, June 27, 2011

David Stockman on Bernanke and the Blackberry Panic of 2008

This is David Stockman at his best. He agrees that Ben Bernanke is a dead man walking after his "clueless" comments last week. Especially enjoyable are his musings on Supreme Crony Capitalist Jeff "I Melt Money" Immelt.

Sunday, June 26, 2011

Quote of the Day: Donald Boudreaux

Regarding the graphic pictures that, by government decree, will adorn all cigarette packs sold in America, Christopher Buckley writes: “I’m not against the new cigarette labels, but I’m not sure I’m for them. Cigarettes kill – no argument there. So does alcohol. If that pack of Marlboros is going to look like a page from a medical textbook, shouldn’t bottles of Bud carry pictures of car crashes, or cirrhotic livers, or beaten wives? Shouldn’t Big Macs come with photos of early contestants from ‘The Biggest Loser’?” (“Thank you for not warning me about smoking,” June 24).

True dat. But why not also require that graphic warning pictures be draped over government buildings? The Federal Reserve building, for example, might be covered with a huge picture of a graph showing that, since the Fed’s creation, the dollar has lost 96 percent of its value. Truth in advertising would be further promoted if the U.S. Capitol’s exterior featured a supersized photo of Rep. Barney Frank who, after applauding Fannie and Freddie for promoting more home-ownership than would be promoted by the market, proclaimed in 2003 'I want to roll the dice a little bit more in this situation towards subsidized housing.'

And from the roof of the White House to its lawn, let's hang ginormous photographs of American troops returning home in body bags from Vietnam, Iraq, and other theaters of war in which Uncle Sam had no business acting.”

~ Donald Boudreaux

Saturday, June 25, 2011

Quote of the Day: Mark Steyn

As to white-collar crime, what about the one type of white-collar crime that goes entirely unpunished? For an accounting fraud of $567 million, Enron's executives went to jail, and its head guy died there. For an accounting fraud ten times that size, the two Democrat hacks who headed Fannie Mae and Freddie Mac, Franklin Raines and Jamie Gorelick, walked away with a combined taxpayer-funded payout of $116.4 million. Fannie and Freddie are two of the largest businesses in America, but they're exempt from SEC disclosure rules and Sarbanes-Oxley "corporate governance" burdens, and so in 2008, unlike Enron, WorldCom or any of the other reviled private-sector bogeymen, they came close to taking down the entire global economy.

~ Mark Steyn, from The Reincarceration of Conrad Black

Football Cops

Saturday, June 18, 2011

40 Years of Drug War Failure: LEAP's Neill Franklin

On June 17, 1971 President Richard Nixon launched the modern-day drug war, an effort perpetuated by every one of his successors.

As the reform group Law Enforcement Against Prohibition (LEAP) documents in a new comprehensive study, the drug war has destroyed lives and property, shredded the constitution, and distorted American education, health care, and even foreign policy. That's why, notes LEAP, fully 75 percent of Americans and 69 percent of police chiefs agree that the drug war has failed.

Reason's Nick Gillespie talked with LEAP's Executive Director Neill Franklin, a retired major in the Maryland State Police. As Franklin explains, he was one of the most bellicose drug warriors around until a comrade was killed during an undercover operation. The best way, argues Franklin, we can pay tribute to his fallen friend - and all the other people whose lives have been laid waste by a war on drugs that has caused far more bad than good - is to turn away from prohibition and embrace regulation and control similar to that used for alcohol.

Making the Case for Owning Older Cars

Marlowe from ALCHEMYcreative on Vimeo.

Thursday, June 16, 2011

The Land of the Free? California, New York and New Jersey Rank the Lowest in Individual Freedoms

The National Anthem might use the words "The Land of the Free," but many states are not living up to this lofty goal.

In a study conducted by the Virginia based think tank, the Mercatus Center, New York, New Jersey and California are ranked the least free states in the U.S., based on an index of public policies affecting your individual freedoms. I can't say I'm surprised by these results after observing the political scene for a number of years. The states that tend to be the most "progressive" do so at the price of personal liberty. In contrast, New Hampshire, South Dakota and Indiana are ranked the most free states.

New York is far and away the least free state, has the highest taxes, and over the past decade had the most resident leave to go live in other states.  The study recommends that NY should legalise same-sex partnerships, cut spending, privatise transportation systems and cut taxes.

Europe's "Lehman Moment": Will Greece Fall?

With each day that goes by, Greece looks more and more likely to default on their debt. Their citizens are unwilling to accept the austerity measures required by any potential debt settlement. Will Greece split from the EU and go back to the drachma? Who knows. Will the contagion spread to the other PIIGS and bring down the world economy like the economic crisis of 2008? Who knows.

So what's an investor to do? For money that is already invested, the best advice is to ride it out and over time markets will recover, and you'll get back to break even and eventually return to the black. Remember, the issue is not where markets will be tomorrow or next week, but where they will be in 20 to 30 years or longer. For anyone with new money to invest, I'd probably sit on the sidelines until it looks like we've reached the point of maximum pessimism for this crisis and then start nibbling at the markets. It's hard to control emotions, but those that can will take advantage of this crisis to pick up stocks at cheap prices.

Wednesday, June 15, 2011

Conan O'Brien commencement speech at Dartmouth

Most of these are snooze fests, but not with Conan O'Brien as the commencement speaker. The first 18 minutes are priceless.

Quote of the Day: David Mamet

Our politicians, left and right, are, to belabor the metaphor, the wastrel son: they are free to spend, to chase fantasies, and to squander resources, for the resources are not theirs, and there is no penalty for their misue or loss.

~ David Mamet, from The Secret Knowledge

Tuesday, June 14, 2011

Larry Swedroe-- The Quest for Alpha: The Holy Grail of Investing

Larry Swedroe succinctly makes the argument for passive investing vs active investing in his latest book, "The Quest for Alpha: The Holy Grail of Investing".

The Dream Ticket for 2012

After watching the Republican Debate in New Hampshire last night on CNN, I'd like to weigh in on my choices for 2012. The country is in turmoil. The current occupant of the White House is clueless about the economy. The announced opposition candidates leave a lot to be desired. It's time to put someone in the White House who's in touch with common people, and understands their needs and desires.


Monday, June 13, 2011

"The Big Man," Clarence Clemons, At His Best

Learned today that Clarence Clemons of the E Street Band suffered a stroke and is seriously ill. I wish him all the best and hope for a full recovery. The above footage is from a Bruce Springsteen concert in Stockholm June 7, 2009.

"When the change was made uptown and the Big Man joined the band
From the coastline to the city all the little pretties raise their hands."

~ Tenth Avenue Freeze-Out

Markets in Everything: The Anthony Weiner Action Figure

The Weiner action figure can be found online at: Herobuilders.  The Australian reported:
A TOY company known for producing action figures of US political figures has started advertising its latest addition, the Anthony Weiner doll. is offering two versions of the doll modelled after the New York Democrat who shot to fame around the world last week after admitting to having sent a lewd photo of his crotch to a Seattle college student on Twitter.
The Weiner doll comes as a standard doll for $US39.95 ($37.85) and an adults-only “anatomically correct” version for $US49.95 ($47.35).
Both figures are dressed in a T-shirt and gym shorts — with the words “tweet this” printed on the shorts.
For an extra $US18.00 ($17) customers can add a toy BlackBerry for the doll to hold.

The Grouch:  It's time for Rep.Weiner to respect the office by resigning his position in Congress, and recognize that his conduct was disgraceful and inappropriate, and outside the norm of acceptable behavior.  He should just go away quietly, get the help he needs and heal his relationship with family and friends.  I hope he has the good sense to stay away from public office again, and live the rest of his life without much fanfare in the private sector.

My LeBron Prediction Comes True

As part of my predictions for 2011 (see, I stated that LeBron James would not win an NBA championship this year in spite of and because of all the hype surrounding his move to Miami. The gods always have a way of bringing mere mortals back down to earth. I never would have guessed that the Mavs, known for playing "soft" basketball over the years, would outperform the vaunted threesome so dramatically in the 4th quarter of the championship series with Nowitski and a bunch of role players. Hubris is a harsh mistress.

My next prediction is that LeBron will win the NBA championship at least once with the Heat in the next five years, but only after he swallows some humble-pie, and the Heat get some better coaching, a beefed-up bench and a center who can rebound and play defense.

Sunday, June 12, 2011

More Jim Rogers

On his investment strategies:

“I am long commodities, long currencies, and short stocks. But we will see what happens. You should invest in only what you know, otherwise keep your money in cash. The reason people lose money is because they keep jumping around investing in things they don’t have a clue what they are doing. Normal people should just wait. Wait until there are good opportunities and take advantage of them. There are plenty of opportunities besides banks. Cotton is going through the roof, corn is making all time highs. Invest in farmers. Invest in agriculture. I think agriculture is going to be one of the great industries of our time.”

On what one commodity he would invest for the next 10 years:

“Agriculture. I am a terrible market timer but maybe rice. Maybe sugar.”

On the United States deficit:

“America is the largest debtor nation in the history of the world. These clowns in Washington are running up the debts. They are not solving the problem, they are making the problem worse. We have a serious crisis facing us and no one seems to understand it.”

On what it will take for Congress to get serious about passing a deficit plan:

“Throughout history, countries have never dealt with this kind of problem until there is a crisis or a semi crisis. The way things are going we are going to have a crisis. It is going to be in the currency markets. Perhaps as early as this fall you will see a lot of currency turmoil in the dollar or the euro. That’s how these things usually start.”

On whether a crisis in Europe would impact world markets:

“Of course it will. We are going to have problems. Nobody wants to take pain even when its staring you in the face. We have made a lot of mistakes. We have got to deal with those mistakes and saying we don’t have a problem is going to make the problem that much worse. There is going to be some pain. We have had pain before. People have been going bankrupt for a few thousand years. Hopefully if that happens you have got shorts. That’s why you are hedged.”

On when our economy will recover:

“When we accept reality, stop spending money we don’t have, go down to a lower level, and start over. We are no longer what we used to be. The largest creditors are in Asia. I don’t like this. I am an American citizen, but we have got to face the facts.”

On who he would like to see running the Federal Reserve:

“I would rather Trichet were running the Federal Reserve than Ben Bernanke are you kidding? I would rather anyone run the Federal Reserve than Ben Bernanke. Mr. Bernanke has been wrong about everything in the last seven or eight years. I would rather have Touché but if I could have anyone I would have Merkel. I would want Merkel to sit there and say you guys have got to take a haircut.”

On whether bond holders should take a haircut:

“Absolutely. They made the mistake, why should innocent German taxpayers wake up one morning and say oh I have got a bill here to pay off some Greeks sitting on the beach. It’s just not right. It’s not morally right and it’s not economically right.”

Friday, June 10, 2011

Jim Rogers at His Best

“Ben Bernanke has been wrong every month for eight years. I don’t know why anyone listens to him?”

One of the world’s most successful investors, Jim Rogers, speaks his version of the truth over and over again, yet few people listen to him.

Rogers always claims to be a poor trader, but his strategic bets over the years have been excellent as well as his reading of global political and economic trends.

Thursday, June 2, 2011

Bitcoin and the End of State-Controlled Money

Bitcoin is the world's first fully decentralized, peer-to-peer (p2p) virtual currency. It allows users to make anonymous and untraceable cash transactions anywhere in the world without any sort of real-world intermediary. So unlike PayPal and other online services, it can't be squeezed in the same way by governments or other control agents.

Created in 2009 by a shadowy figure who goes by the name Satoshi Nakamoto, there are currently about 6 million bitcoins in circulation. That number will eventually rise, in regular intervals, to a total of 21 million by 2033. A money system without any sort of central bank? A currency whose supply increases at a steady and predictable rate according to a concept elucidated by the Nobel laureate economist Milton Friedman?

Just how revolutionary is Bitcoin? sat down with Mercatus Senior Research Fellow Jerry Brito to learn how Bitcoin operates and what the implications are for traditional state-based fiat currencies. “Whether Bitcoin succeeds or fails is neither here nor there,” says Brito, who predicts that currencies in the future will almost certainly be deregulated and decentralized - with or without governments’ consent.