Cartoon of the Day: The Original Extremists

The Declaration of Independence and the US Constitution are still the two most radical political documents ever written. They are so radical in their advocacy of personal freedom and individual responsibility that entire political movements have been created to subvert, distort and destroy their original intent so that the populace can once again be "subjects living off the benevolence of a King George III supersized government."

Quote of the Day: Frederic Bastiat

"Poor people! How much disillusionment is in store for them! It would have been so simple and so just to ease their burden by decreasing their taxes; they want to achieve this through the plentiful bounty of the state and they cannot see that the whole mechanism consists in taking away ten to give it back eight, not to mention the true freedom that will be destroyed in the operation!"

~ Frederic Bastiat, 1848

The Always Entertaining Marc Faber on Bear Markets, US Debt and Personal Responsibility

Some highlights:

"The Treasury market is telling you that the economy is in recession. So if the bond market is telling you that the economies of the Western world are weakening, but at the same time the stock market is still relatively high, I think the stock market is vulnerable."

"The politicians are all useless individuals. Nobody is reducing the problems in the US or Europe, just putting on a band aid and postponing the problems endlessly."

"Some analysts think that there's a chance economic data will surprise on the upside but I think, if anything, it will be on the downside."

"China disappointing is a much bigger risk for the global economy than the US because the US is no longer a major commodities buyer.... If commodity prices are falling, then commodity producers will buy fewer goods from China. This is something that the world central bankers can't deal with."

Quote of the Day: Warren Meyer

Having once been successful through excellence, leading businesses typically get lazy and senescent, and become vulnerable to more innovative, lower-cost or more nimble new competitors. Sears lost its electronics sales to Circuit City, which in turn succumbed to Best Buy, which is now struggling to compete with Wal-Mart, who is being challenged by Amazon.com.

Unfortunately, businesses that were once successful can feel a sense of entitlement, believing that this new competition is somehow unfair, or that consumers are somehow misguided in taking their business elsewhere. When they have money or political connections, these businesses may run to Congress and beg for special protections against competition, or even new subsidies, mandates, stimulus projects, and bailouts.

Where is the threat to capitalism and individual liberty coming from today? Is it from some aggrieved proletariat, or is the threat from bailed out Wall Street firms, and AIG, and GM, and Chrysler, and ethanol manufacturers, and electric car makers, and windmill builders?

~ Warren Meyer, from James Taggart is Alive and Well

Squirrels

The Talking Budget Apocalypse Satan Sandwich Blues

Now that it looks like the budget will get approved by both houses of Congress, let's catalogue for posterity (compiled from Twitter hashtag #ConsequencesofDefault) the apocalyptic predictions of what would happen if the government really shutdown:

Beltway policy experts begin living by own wits; after 45 minutes there are no survivors.

Roving bands of outlaws stalk our streets, selling incandescent bulbs to vulnerable children.

Unregulated mohair prices at the whim of unscrupulous mohair speculators.

NPR news segments no longer buffered by soothing zither interludes.

Breadlines teeming with jobless Outreach Coordinators, Diversity Liaisons, and Sustainability Facilitators.

Cowboy poetry utterly lacking in metre.

General Motors unfairly forced to build cars that people want, for a profit.

Chaos reigns at Goldman Sachs, who no longer knows who to bribe with political donations.

Mankind's dream of high speed government rail service between Chicago and Iowa City tragically dies.

Sesame Street descends into Mad Maxian anarchy; Oscar the Grouch fashions shivs out the letter J and the number 4

No longer protected by government warning labels, massive wave of amputations from people sticking limbs into lawn mowers

New York devolves into a dystopian hellscape of sugared cola moonshiners, salty snackhouses and tobacco dens.

At-risk Mexican drug lords forced to buy own machine guns.

Chevy Volt rebate checks bounce, stranded owners more than 50 miles from outlet.

WH communications office reduced to sending talking points to Media Matters via smoke signals and log drums.

Potential 5-year old terrorists head to boarding gates ungroped.

Defenseless mortgage holders forced to live in houses they can actually afford.

Without college loan program, America loses an entire generation of Marxist Dance Theorists.

Embarrassing state dinners, as Obamas are forced to downgrade from Wagyu to Kobe beef.

President Obama places tarp over Washington Monument to conceal from Chinese repo men.

With the Dept of Ed shuttered, national school quality plummets to 1960s levels.

Anthony Weiner is forced to pay for own sex addiction therapy.

Displaced teenaged policy wonks organize under Supreme Warlord Ezra Klein.

Nation's freeway exits croweded with desperate bureaucrats waving 'will regulate for food' signs.

State Department diplomacy becomes 38% less diplomatic.

WH holds rummage sale Rose Garden; all HOPE merchandise, styrofoam Greek columns 95% off.

At-risk Mexican drug lords forced to buy own machine guns.

Airline passengers forced to pat-down their own genitals before boarding their flights.

With funding cut, research scientists may never know what a howler monkey’s favorite song is.

Huge spike in mattress label removal as populace goes haywire.

Cowboys must fund their own poetry

Some children left behind, where they belong.

We may never know how much toenail nicotine is present vs saliva swabbing (yes, *this* is actual gubmint study!)

We may never find out if rats on cocaine will abandon their babies.

Dept. of Education cancels programs considered to be non-essential such as Reading, Writing, & Arithmetic.

Next state visit to Britain all PM gets is a "Bowery Boys" movie collection on VHS.

Michelle Obama's vacations limited to watching the Travel Channel.

Nation's freeway exits filled with desperate bureaucrats waving 'will regulate for food' signs.

Government ceases doing some of the things it doesn’t have the constitutional power to do.

Why I Love Crises and 100+ Point Down Days on the Dow

One of the secrets to being a successful investor is you must invest when times look bleakest and hold your cash when everyone is euphoric. Emotionally, this is very hard to do. The natural reaction of most people is to run for the exits when the market starts heading down and to buy after a large run-up in prices when everyone in the office is standing around the water cooler lying about how much money they just made in the markets. But you must resist this instinct to be one of the herd, unless you are satisfied with less than average returns.

By nature, I'm a long-term, buy-and-hold passive investor. I don't time the markets and try to get out at the highs and in at the lows. I don't have the skill to do that. But I do, however, try to use my investable cash wisely, which means I may sit on it for a while when I think the markets are frothy and wait for a pullback. Crises, such as the current debt ceiling debate, present one of those opportunities. All the angst and hysteria in the news media over financial Armageddon have caused a sell off. On Friday, I was putting a chunk of my cash to work at what looked to be a bleak moment in this crisis. If the current budget compromise goes down in flames, I'll be back nibbling at equities again.

Always keep in mind that the cheaper the asset price the higher your potential returns. Long-term investors should take great pleasure in these temporary pull-backs and use these golden opportunities to fulfill their goals of investing for retirement, a new house, etc. Emotions are the worst enemy of the investor. If you can discipline yourself to take the opposite action of what your emotions tell you to do, you'll be a much more successful investor.

Quote of the Day: Milton Friedman

When “fairness” replaces “freedom,” all our liberties are in danger. In Walden, Thoreau says: “If I knew for a certainty that a man was coming to my house with the conscious design of doing me good, I should run for my life.” That is the way I feel when I hear my “servants” in Washington assuring me of the “fairness” of their edicts.

~ Milton Friedman