Wednesday, November 30, 2011

Monday, November 28, 2011

The Tax Mess Deepens

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As Congress and the Administration struggle to come up with any kind of fiscal policy other than spend, spend, spend, a number of tax increases will kick in over the next two years:

Expiring in 2011
• 2% Social Security payroll-tax cut for employees
• Alternative minimum tax patch
• IRA charitable contribution for people older than 70½.

Expiring in 2012
• Bush tax cuts of 2001 and 2003.
• top tax rate on wages reset to 39.6% from 35%
• top rate on long-term capital gains to 20% from 15%
• Special 15% rate on dividends
• estate-tax provisions.
• 10 million lower-income families and individuals restored to the tax rolls

These additional revenues may help the deficit, at least be prepared to hear that the argument from the mainstream media, but recent history shows that Congressional spending increases will outstrip any increases in revenue.  That looks like a trend no one is willing to stop.

Sunday, November 27, 2011

Chuck Woolery Cuts $1.2 Trillion From the Budget

Game show host Chuck Woolery shows the not-so Super Committee how to get the job done. If we were serious about preventing economic collapse, we wouldn’t be asking what to cut from the federal budget, but rather what not to cut.

Saturday, November 26, 2011

Charlie Rose Interviews Seth Klarman

The first 18 minutes is about "Facing History", his nonprofit organizaiton. Then they turn to his book of "Margin of Safety". Klarman's discusses his view of Warren Buffett's three stages of investing:

1. Buy cigar butts at good prices.
2. Buy great companies at great prices.
3. Buy great companies at so so prices.

Klarman thinks that his own personal investing strategy is still at stage 1.

TEDx Talk: The Next Big Shift in the Internet

"The next big shift in the Internet is now, and it’s not what you think: Facebook is the new Windows; Google and Windows must be sacrificed. Ten years from now we will interact with the Internet in completely different ways. In this TED talk, Roger McNamee identifies six changes that are already transforming the ways we consume and create content."

Friday, November 25, 2011

The Real Story of the First Thanksgiving

This article originally appeared in 1985 in The Free Market and is from the Mises Institute.

The Great Thanksgiving Hoax

by Richard J. Maybury

Each year at this time school children all over America are taught the official Thanksgiving story, and newspapers, radio, TV, and magazines devote vast amounts of time and space to it. It is all very colorful and fascinating.

It is also very deceiving. This official story is nothing like what really happened. It is a fairy tale, a whitewashed and sanitized collection of half-truths which divert attention away from Thanksgiving’s real meaning.

The official story has the pilgrims boarding the Mayflower, coming to America and establishing the Plymouth colony in the winter of 1620-21. This first winter is hard, and half the colonists die. But the survivors are hard working and tenacious, and they learn new farming techniques from the Indians. The harvest of 1621 is bountiful. The Pilgrims hold a celebration, and give thanks to God. They are grateful for the wonderful new abundant land He has given them.

The official story then has the Pilgrims living more or less happily ever after, each year repeating the first Thanksgiving. Other early colonies also have hard times at first, but they soon prosper and adopt the annual tradition of giving thanks for this prosperous new land called America.

The problem with this official story is that the harvest of 1621 was not bountiful, nor were the colonists hardworking or tenacious. 1621 was a famine year and many of the colonists were lazy thieves.

In his History of Plymouth Plantation, the governor of the colony, William Bradford, reported that the colonists went hungry for years, because they refused to work in the fields. They preferred instead to steal food. He says the colony was riddled with “corruption,” and with “confusion and discontent.” The crops were small because “much was stolen both by night and day, before it became scarce eatable.”

In the harvest feasts of 1621 and 1622, “all had their hungry bellies filled,” but only briefly. The prevailing condition during those years was not the abundance the official story claims, it was famine and death. The first “Thanksgiving” was not so much a celebration as it was the last meal of condemned men.

But in subsequent years something changes. The harvest of 1623 was different. Suddenly, “instead of famine now God gave them plenty,” Bradford wrote, “and the face of things was changed, to the rejoicing of the hearts of many, for which they blessed God.” Thereafter, he wrote, “any general want or famine hath not been amongst them since to this day.” In fact, in 1624, so much food was produced that the colonists were able to begin exporting corn.

What happened?

After the poor harvest of 1622, writes Bradford, “they began to think how they might raise as much corn as they could, and obtain a better crop.” They began to question their form of economic organization.

This had required that “all profits & benefits that are got by trade, working, fishing, or any other means” were to be placed in the common stock of the colony, and that, “all such persons as are of this colony, are to have their meat, drink, apparel, and all provisions out of the common stock.” A person was to put into the common stock all he could, and take out only what he needed.

This “from each according to his ability, to each according to his need” was an early form of socialism, and it is why the Pilgrims were starving. Bradford writes that “young men that are most able and fit for labor and service” complained about being forced to “spend their time and strength to work for other men’s wives and children.” Also, “the strong, or man of parts, had no more in division of victuals and clothes, than he that was weak.” So the young and strong refused to work and the total amount of food produced was never adequate.

To rectify this situation, in 1623 Bradford abolished socialism. He gave each household a parcel of land and told them they could keep what they produced, or trade it away as they saw fit. In other words, he replaced socialism with a free market, and that was the end of famines.

Many early groups of colonists set up socialist states, all with the same terrible results. At Jamestown, established in 1607, out of every shipload of settlers that arrived, less than half would survive their first twelve months in America. Most of the work was being done by only one-fifth of the men, the other four-fifths choosing to be parasites. In the winter of 1609-10, called “The Starving Time,” the population fell from five-hundred to sixty.

Then the Jamestown colony was converted to a free market, and the results were every bit as dramatic as those at Plymouth. In 1614, Colony Secretary Ralph Hamor wrote that after the switch there was “plenty of food, which every man by his own industry may easily and doth procure.” He said that when the socialist system had prevailed, “we reaped not so much corn from the labors of thirty men as three men have done for themselves now.”

Before these free markets were established, the colonists had nothing for which to be thankful. They were in the same situation as Ethiopians are today, and for the same reasons. But after free markets were established, the resulting abundance was so dramatic that the annual Thanksgiving celebrations became common throughout the colonies, and in 1863, Thanksgiving became a national holiday.

Thus the real reason for Thanksgiving, deleted from the official story, is: Socialism does not work; the one and only source of abundance is free markets, and we thank God we live in a country where we can have them.

What to be Thankful For in the Land of Evil Capitalism: 25 Wonderful Trends of the 20th Century

Click to Enlarge

Monday, November 21, 2011

OWS Pictures of the Week

Zuccotti Love

Obviously an English major. Maybe someone should tell him the Government nationalized the student loan program a while back.

A little rest and relaxation on a cold day.

Looking at the world through rose-colored glasses.  Why can't we all be dreamers?

Applying deodorant.

Cheered on by the troops.

Cheered on by Wall Streeters.

Friday, November 18, 2011

Hypocritical "Patriotic Millionaires" Demand Congress Raise Their Taxes But Won't Voluntarily Pay More

Washington — "Two dozen “patriotic millionaires” traveled to the Capitol on Wednesday to demand that Congress raise taxes on wealthy Americans.

The Daily Caller attended their press conference with an iPad, which displayed the Treasury Department’s donation page, to find out if any of the “patriotic millionaires” were willing to put their money where their mouth is."

Grouch: Are their reactions not 100% predictable? And supremely hypocritical? What fool would give the government extra money that he wasn't forced to give? The name of the game is to pay the government as few taxes as legally possible because you know they are going to do a bunch of stupid and wasteful things with the money. Better to keep it and grow a business that employees more people or give it to a low overhead charity who will the dollars are put to good use.

Smackdown: Rep. Bachus vs. Peter Schweizer

Rep. Bachus responds to Peter Schweizer and 60 Minutes:

Peter Schweizer responds to Rep. Bachus:

(Evil) Profits

Elvis has Left the Building

The last of the mutual fund rock stars, Bill Miller of Legg Mason Value Trust, has decided to give up active management of that fund in the near future to assume the role of Chief Investment Officer.

Bill Miller became a household name and his fund, a member of many 401k plans, amid a 15-year streak of beating the S&P 500, beginning in the early 1990s. But in recent years reversion to mean has punished Miller run funds and their shareholders mightily.

Some might argue that the era of the mutual fund and superstar stock pickers have gone the way of AOL, one of the stocks Miller built his reputation on. Ultimately, Miller's gunslinging twist on value investing was unable to match his past superior performance due to his love of financial stocks and an expense ratio of over 1.76% at a time when certain ETFs and index funds are charging as little as .07% in fees.

Thursday, November 17, 2011

Five Lessons for America from the European Fiscal Crisis

The five lessons she identifies are:

  1. Higher taxes lead to higher spending, not lower deficits. Miss Morandotti looks at the evidence from Europe and shows that politicians almost always claim that higher taxes will be used to reduce red ink, but the inevitable result is bigger government. This is a lesson that gullible Republicans need to learn – especially since some of them want to acquiesce to a tax hike as part of the “Supercommitee” negotiations.
  2. A value-added tax would be a disaster. This was music to my ears since I have repeatedly warned that the statists won’t be able to impose a European-style welfare state in the United States without first imposing this European-style money machine for big government.
  3. A welfare state cripples the human spirit. This was the point eloquently made by Hadley Heath of the Independent Women’s Forum in a recent video.
  4. Nations reach a point of no return when the number of people mooching off government exceeds the number of people producing. Indeed, Miss Morandotti drew these two cartoons showing how the welfare state inevitably leads to fiscal collapse.
  5. Bailouts don’t work. This also was a powerful lesson. Imagine how much better things would be in Europe if Greece never received an initial bailout. Much less money would have been flushed down the toilet and this tough-love approach would have sent a very positive message to nations such as Portugal, Italy, and Spain about the danger of continued excessive spending.
The only thing I think she left out is that the private sector needs to grow faster than government, which, sadly, hasn't happened for quite a while, and doesn't seem to be in the cards for the near term.  The current cast of characters seem hellbent on increasing the power and influence of government over individuals.

Time Lapse Photography from the International Space Station

Earth | Time Lapse View from Space, Fly Over | NASA, ISS from Michael K├Ânig on Vimeo.

Time lapse sequences of photographs taken by Ron Garan, Satoshi Furukawa and the crew of expeditions 28 & 29 onboard the International Space Station from August to October, 2011, who shot these pictures at an altitude of around 350 km.

Shooting locations in order of appearance:

1. Aurora Borealis Pass over the United States at Night
2. Aurora Borealis and eastern United States at Night
3. Aurora Australis from Madagascar to southwest of Australia
4. Aurora Australis south of Australia
5. Northwest coast of United States to Central South America at Night
6. Aurora Australis from the Southern to the Northern Pacific Ocean
7. Halfway around the World
8. Night Pass over Central Africa and the Middle East
9. Evening Pass over the Sahara Desert and the Middle East
10. Pass over Canada and Central United States at Night
11. Pass over Southern California to Hudson Bay
12. Islands in the Philippine Sea at Night
13. Pass over Eastern Asia to Philippine Sea and Guam
14. Views of the Mideast at Night
15. Night Pass over Mediterranean Sea
16. Aurora Borealis and the United States at Night
17. Aurora Australis over Indian Ocean
18. Eastern Europe to Southeastern Asia at Night

What Does Unhate Mean?

What does unhate mean?  UN-hate or stop hating altogether?  I'm not really sure, and this ad campaign, besides grossing me out, is not exactly presenting a clear and compelling message.

The Washington Post reports:

The Benetton has dropped the image of the Pope kissing an Imam from the campaign after complaints.

Benetton returns to its controversial marketing roots with a new campaign that features President Obama and other world leaders engaging in a kiss. In two separate ads, Obama is seen kissing Venezuelan president Hugo Chavez, and Chinese President Hu Jintao.

The Unhate Foundation, founded by the Italian clothing company, is an advocacy group for tolerance. The controversial ad campaign is an attempt for Benetton to regain its status from the “United Colors” ads that regularly shocked viewers with subjects that had nothing to do with clothing: A priest kissing a nun, a man dying of AIDS, a just-born baby with umbilical cord still attached, a trio of real human hearts.

In the new campaign, the leaders of North and South Korea lock lips, and the Pope kisses Ahmed Mohamed el-Tayeb, the Imam of al-Azhar mosque in Egypt. The Vatican condemned the image, and the company decided to remove it from all publications after complaints. German Chancellor Angela Merkel smooches Nicholas Sarkozy, president of France (What will Carla Bruni think?). Palestinian President Mahmoud Abbas and Israeli Prime Minister Benjamin Netanyahu also share a kiss. The campaign was inspired by a kiss between Soviet leader Leonid Brezhnev and East German communist leader Erich Honecker in 1979.

Monday, November 14, 2011

A Random Act of Journalism: How Congress Critters Enrich Themselves

A random act of investigative journalism occurred last night on CBS's 60 minutes. In case you missed it, I've embedded the video below:

(CBS News) -- "Martha Stewart went to jail for it. Hedge fund honcho Raj Rajaratnam was fined $92 million and will go to jail for years for it. But members of Congress can do the same thing -use non-public information to make stock trades -- and there's no law against it. Steve Kroft on "60 Minutes" reports on how America's lawmakers can legally make tidy profits on information only they know, simply because they won't pass a law against themselves.

If senators and representatives are using non-public information to win in the market, it's all legal says Peter Schweizer, who works for the Hoover Institute, a conservative think tank. He has been examining these issues for some time and has written about them in a book, "Throw them All Out." "Insider trading laws apply to corporate executives, to Americans...If you are a member of Congress, those laws are deemed not to apply," he tells Kroft. "It's really the way the rules have been defined... lawmakers have conveniently written them in such a way as they don't apply to themselves," says Schweizer.

Efforts to make such insider trading off limits to Washington's lawmakers have never been able to get traction."

Update:  A 2011 research article in the journal Business and Politics ("Abnormal Returns From the Common Stock Investments of Members of the U.S. House of Representatives") found that the stock portfolios of House of Representative members outperformed the overall stock market by 55 basis points per month, or 6.6% on an annual basis between 1985 and 2001, suggesting that lawmakers have a "substantial informational advantage" over the general public and even over corporate insiders.

Grouch: I thought the 60 Minutes piece was much less scathing than it could have been and should have been. Corruption in Congress and Government in general runs deep in both parties. This was a surface treatment of the issue. treading lightly around the problem. I would have expected a more penetrating report from this reputable news organization. For a deeper look at the problem see Government Gone Wild! -- How Congressmen Enrich Themselves While in Office.

Sunday, November 13, 2011

Michael Moore's Vacation Hovel

Michael Moore: "Capitalism did nothing for me. The system is not set up to help somebody from the working class."

Grouch: When Michael Moore is not stepping out of his multi-million dollar dwelling in NYC to urge the OWS croud to rage on against capitalism and greed, he spends time relaxing over a copy of the Communist Manifesto, Mao's Little Red Book of The Collected Works of V.I. Lenin in this squalid hovel on the shores of Torch Lake, Michigan---one of the most elite communities in the United States. He is indeed a true revolutionary and a man of the people.

Wednesday, November 2, 2011