Tuesday, March 18, 2014

U.S. Stock Market: A Government Sponsored Enterprise

     One may wonder why, with the tinder box in Ukraine and the free falling economy at home, the stock market continues to reach new highs. This question can be largely answered by examining the behavior of Fannie Mae and Freddie Mac's soaring share prices just before the financial crisis of 2008. But even years prior to the crisis, their balance sheets were almost entirely constructed of toxic assets backed by sub-prime mortgage loans they bought from the banks who were forced by government authorities like the Justice Department to originate, knowing they would never be paid back.
     If you have not guessed by now, the thesis of this post is that the stock market has become a Government Sponsored Enterprise, somewhat in the mold of Fannie and Freddie. Partial evidence of my theory is something I read today, the theme of which has become the dominant driver of the market over the last five years. The piece I read seriously considered how the Federal Reserve could prop up the market if the situation in Ukraine escalated. We have long ago abandon a time in this country when the financial markets were coupled to the economic health of the nation. Recently it has become clear that the markets see themselves as insulated from the economy. Because no matter what happens, Big Momma Fed will be there with her trillions of monopoly money to pour into the empty hole of the market.
       More evidence that the market has become a prattling child grasping tightly to the apron strings of the Federal Reserve, is the anticipation of new Federal Reserve Chairman Janet Yellen's forthcoming comments this Wednesday. The direction of the market being dependent upon what some government official says or does not say is a sign of an unhealthy relationship between the markets and government. There was a time when the market rose or fell based on hard economic data, not based on some artificial solace provided by a shill of the administration.
     Barack Obama, shortly after he became president, said he wanted to "even out the markets so there were no busts or booms." When the market does not reflect economic reality in this way, it loses its credibility and becomes a buffoonish instrument of the administration. As such, the market becomes impervious to reality because it lives in a manufactured world where Momma Fed is ready on the pump handle to flood it with trillions of created-out-of-thin-air dollars.
     The problem with this approach, besides the obvious hyper-inflation that is bound to come, is that government has removed the natural fear from the market. The two emotions that run the market are fear and greed. Each emotion keeps the other in check when their counterpart begins to dominate. When government interferes and upsets this natural balance, greed in the market becomes out of control and causes a much bigger fear-induced crash when the Fed can no longer mask and veil the very real and fearful aspects of the economy.
     The government sponsored enterprise of the stock market is bound for failure like any other private sector business controlled by government. The reason is simple: Those who populate government in general, and especially those who populate it specifically in the current administration, have the hubris to think they can run private enterprise, coupled with the severe ignorance as a result of never having worked in the industries they control. This leads to spectacular failure like the one caused by Fannie Mae and Freddie Mac, which were at the epicenter of the crisis of 2008. Of course those in government that cause the crash are never held responsible, in fact their disastrous economic theories and ignorant policies are recycled and repackaged as some new "brilliance" in the future that is bound to start the cycle all over again, and it is the average American who pays the price for such foolishness.

Monday, March 17, 2014

Obama And The Peace Whores

     The outcome of the vote in Crimea to succeed from Ukraine and join Russia was about as surprising as President Obama taking another vacation. And while the feckless, useless, and evermore irrelevant United Nations voted not to recognize the outcome of the Crimean vote, Putin, I am sure, had already laid in a course for his next move. As has been the case in the modern era of Obama and his pseudo-intellectual peace whores throughout the world, Putin has out maneuvered them again. If Vladimir Putin was not such a commie bastard, I would almost have admiration for his skill in making President Obama and the "international community" look about as useful as a valet at a hobo convention.
     While Crimea is sorting out the particulars of just what matriculation into the Russian family means, Putin has his eye on more chunks of real estate in eastern Ukraine. And who could blame him, he has not exactly had worthy adversaries opposing his expansionist appetite. While Putin is more than willing to use force to achieve his goals, he knows that the lack of resolve to do the same by Obama and the peace whores, makes their protestations nothing more than static in the distant background of his well scored symphony.
     Vladimir Putin has a memory of history that reaches back further than just the most recent mind-numbing speech by President Obama. He remembers that United Nations proclamations and resolutions hold about as much water as a paper bag with a hole in the bottom. He remembers how Saddam Hussein thumbed his nose at the U.N. and their useless resolution. Until, that is,  U.S. president George W. Bush provided the backbone for that resolution and added heft to the empty words of the United Nations' intellectual elites who need a courage transplant just to enter a darkened room.
     Mr. Putin is well aware that without courageous U.S. leadership to lead the world, he can be fairly certain to have his way with Ukraine, and possibly even more of eastern Europe. Watching the phony bluster consisting of the impotent words of Barack Obama, John Kerry, et al, is analogous to watching a nest of rabbits confront an angry grisly bear.
     Meanwhile Mr. Putin has played his cards wisely. The invasion of Crimea was masterfully orchestrated as a grass roots effort by the Crimean people themselves. And now with a vote by the Crimean parliament last week and the people this past weekend to join Russia, Putin has standing to protect the wishes of those ethnic Russians. The fact that the "international community" does not recognize the outcome of Sunday's vote in Crimea, means little in the face of the current situation's reality. It is analogous to Saddam Hussein's Ministry of Information representative going on Iraqi television, with what was clearly U.S. forces in the background, and saying American troops had not breached Iraqi borders. Therein lies the inherent weakness of the intellectual elites, i.e., their unwillingness to see things as they are, instead choosing to believe that their big brains can solve every problem in the world without messing their finely tailored suits and calf-skin shoes. 
    

Saturday, March 15, 2014

Paul Ryan Demonstrates Republican Weakness

     In the past five years Republicants have taken some very limp-wristed stands on important issues. It seems that even when they take the right stand, they are easily backed off it by criticism from the Left. To Witt: Congressman, and House Budget committee chairman, Paul Ryan recently made a statement on a radio talk show about the cultural rot that has caused poverty, especially in the inner-city. To be precise, Congressman Ryan said that the generational dependence on government that exists in impoverished areas has required generations of young boys to grow up witnessing the men in their lives not working and not even having the desire to work.
     Mr. Ryan correctly and succinctly illustrated that poverty in the United States is a cultural problem and not an economic one. Congressman Ryan was excoriated by those on the Left like Al Sharpton, who characterized his statements as racists, as he does with any truth that comes from a conservative. In fact the entire Left has trouble accepting or debating any truth when it opposes their agenda of dependence. The fact that trillions of dollars have been transferred from producers to non-producers in the last fifty years since the War On Poverty began, and it is worse today than ever, is proof of the validity of Mr. Ryan's statement.
     I applaud Paul Ryan for his courage, and yet I am chagrined that I must immediately rescind that applause for his apologetic statement that followed the criticism. He couched his apology in terms that characterized his statement as being "not well articulated," and other such back-peddling gobbly gook. His original statement was articulate and factual, but it may have been offensive to those who have a vested interest in continuing the cycle of poverty that their policies are intended to propagate. Leftism has deliberately destroyed the meaning of manhood in impoverished areas. Young boys are not being raised to value work and responsibility for the families they create. They are not taught the manly virtues of honesty, courage and respect for ones community that built this great nation. The family business in the inner-city has become dependence.
     Paul Ryan destroyed the effectiveness of his argument by essentially mitigating it with apology. I never understood why Democrats can say the most outrageous things and never have to apologize, but conservatives self-censor and apologize for telling the truth. This seems to be a Republican disease, that even when they have the right ideas, they underscore them with weakness by apologizing for them.
     Conservatism demands and deserves unapologetic defense. Republicants can not expect the American voter to support them when their own support for their ideas seems flaccid, and acquiescent to criticism. Republicants would be wise to remember that of all the great and inspiring words written and spoken in defense of American liberty, not one contained even the hint of conciliation.

Friday, March 14, 2014

What The Market Movers Are Trying Not To Tell You

     I have recently read much analysis of the stock market by executives of some of the larger investment firms in the United States. The general flavor of their analysis is that the market is headed for a downturn, but that investors should not abandon stocks just yet. This of course is a signal for individual investors who are not dupes to head for the hills. The market movers are always one step ahead of the rest of us, and I have learned that when they say stay put, that is exactly when you should be moving your money into cash. These market mavens are basically saying, "Don't get out until we have had our chance to divest away from stocks."
     One of the methods used to fool the unsophisticated investor into losing his money, is the old bait and switch instrument used for hundreds of years by con men. The way it works in the market was aptly illustrated with the Commerce Department's retail sales data for the month of February. Retail sales rose by three tenths of a percent in February, which was, as they say, "better than expected." But it is better than expected by the very persons telling you to stay in the market. So it behooves them to prepare everyone for a horrible number so when it merely comes in bad, it looks good in comparison. During normal economic times and during previous recoveries from recessions, retail sales increased by whole numbers, not by tenths.
     The trick used by market movers to keep unsophisticated investors in the market is analogous to your employer telling you that your pay is going to be cut by 15%, and then when it is only cut by 10% you consider it a raise. Historically, the month of February is a boon month for retail because the normal lull in January is over and people are buying again. So the three tenths of a percent increase looks even more pathetic in this context.
     The market did lose ground yesterday, the DOW's 231 point drop being exemplary of this fact. But it was based on uncertainty over the Ukraine situation and the fear of a global slowdown highlighted by lower than expected economic data from China. It has been interesting to watch the market react negatively to a drop in Chinese production and consumption that is still much better than the United States, whose pathetic data has lately been blamed on Winter weather.
     Whether or not yesterday's significant drop in the market was the end of the bull market that just began its sixth year, is hard to say. But as an investment strategist once said, "I would rather miss an opportunity than miss capital." With both the U.S. and global economies heading into a slowdown and probable recession, uncertainty in the Ukraine, and the Federal Reserve pulling away its artificial supports that have been propping up the market for the last five years, stocks are even a riskier asset than normal. Follow the advice of market movers, whose job it is to keep one step ahead of the average investor, at your own risk. 
    

Thursday, March 13, 2014

Republicans Hope For Jolly Mid-Terms

     Republicant David Jolly had barely been crowned the victor in Florida's 13th district's special election for the vacated House seat of deceased congressman Bill Young, when the champagne corks on the Right began to fly uncontrollably. The most oft repeated refrain was that Mr. Jolly's victory was a harbinger of what was to come for Republicants in this November's mid-term elections.
The theory goes that if a flawed candidate like Jolly, a former lobbyist and recent 41 year old divorcee with a girlfriend 14 years his junior, could win in a district that voted solidly for Barack Obama in 2012, then Republicants will glide to easy victory over the Democrats in both the House and Senate races this Fall.
     Mr. Jolly was not supported by the Republicant establishment in Washington during the primary, in fact he was their favorite whipping post during that process. As far as his election victory being a harbinger of better things for his party in November, I can not say one way or the other. I do not think anyone can accurately predict, based on one event, the support of voters this Fall. Mr. Jolly was  supported by the Tea Party, placing another victory firmly in the column of that oft abused, and mis-characterized movement, both by the Left and the Right.
     Assured victory for Republicants this Fall is not unequivocal as a result of this special election, but it does illustrate two things very aptly as far as I am concerned. One is that the Tea Party is not some extremist organization that only supports radical candidates as they have been accused by both the Republicant and Democrat establishments. Mr. Jolly was a committed centrist in the mold of his predecessor, Bill Young. Secondly, this victory, along with the many others by Tea Party-supported candidates since 2010, shows the electoral influence and heft possessed by members of that movement.
     If Mr. Jolly's victory is a bell weather of this Fall's mid-terms, it disproves the supposition by some pundits that the Republicants will have to find more to run on than simply replacing ObamaCare. David Jolly constructed his campaign almost entirely of repealing and replacing the Affordable Care Act. Even his Democrat opponent, Alex Sink, campaigned on "fixing" the major problems with ObamaCare.
     Maybe David Jolly's victory will turn out to be an augury of November's mid-term elections. However, I am very solicitous over the frolicsome predictions of a mass Republicant victory that I heard yesterday by many in talk radio. If there are two things I know about politics they are that nothing is a sure thing, and Republicants recently have found new ways in which to snatch defeat from the jaws of victory. 

Wednesday, March 12, 2014

The Case For Compassion-Less Law

     Leftism is rife with dichotomy and hypocrisy, so much so that intellectual support has abandon the ideology many years ago, and the only defense of it is purely emotional. A case in point is the Lefts insistence that those with money, i.e., the evil wealthy people, should not be given special privileges by the legal system. That the ladder of justice should, in essence, have no top and no bottom, and all should be equal under the law. The very core of Conservatism is constructed of this idea, but those on the Left prove their antipathy towards this ideal every day.
     The Left is very vociferous in their support of a compassionate legal system where a person's upbringing and economic status is considered when being punished for a crime that they committed of their own volition. However, that compassion, according to Leftists, should only apply to the disadvantaged and the poor, and not to those who are wealthy. If special treatment by the legal system is wrong to bestow upon the rich, then it is just as wrong when bestowed upon the poor. This is a concept of which Leftism does not have the slightest understanding, or willingness to acknowledge.
     Barack Obama and the modern Lefts idea of "social justice" is anything but just. Justice demands equal protection under the law, which special dispensation based on race, economic status, or family heritage violates in the most grandiose manner. No one should be given privilege under the law because of political or social status or connections, nor should that privilege be given because of a lack of status. In order for the law to carry the sacred duty of justice, it must be free of discrimination. Something the Left does not understand is that it is just as wrong to discriminate in favor of someone as it is to discriminate against them.   
     So as in the case of the Constitution, the law which receives its duty from it, must not contain compassion or charity. Otherwise both can be set aside for reasons that are politically manipulative. When the law is mitigated for those who have money and connections, it can be said to have lost its legitimacy. Setting aside the full effects of the law for reasons of poverty and dire circumstance is just as illegitimate.
     The Founders of this great nation, and framers of its legal system, knew that no civilized society could long exist if its laws were subject to the whims of emotion, and not guided by the steady hand of reason. Compassion is one of the finest human characteristics for individuals to posses, but when done so by a legal system it leads to the tyranny of unequal application of the social code upon the citizenry based on arbitrary metrics created by politicians and judicial activists. Law guided by compassion is not law but suggestion based on the subjective nature of the emotion-filled moment.

Tuesday, March 11, 2014

"Son Of God" No "Passion"

     It is to the detriment of history that movie makers have a penchant for using the big screen to proffer their own interpretation of the past. So it is with the Christian-produced film, Son Of God. The producers of Son Of God, which primarily retells the story of Jesus of Nazareth's public life and crucifixion, seem to be comfortable taking more liberties with scriptures than the much more effective, Passion Of The Christ. For those familiar with scriptures, the variations of popular New Testament accounts of Jesus' life are significant in their lack of purpose in telling the story.
     The revision of history begins almost immediately with the scene of the Savior's birth, which includes a Joseph as young as the Virgin Mary. As any Sunday school participant or otherwise Bible-educated Christian knows, Joseph was quite an old man when he was commanded by the Angel of God to take Mary as his wife. There are several other key scriptural accounts which are given short-shrift by the film makers. One in particular is when Jesus tells Peter that he will deny him three times before the cock crows. In the movie, Jesus just says, "...by morning." The denials in the movie happen one right after another, where the scriptures are clear that Peter denied Jesus three times over the space of the entire night, and when he hears the cock crow he remembers Jesus' prediction.
     One of the most egregious repackaging of the scriptures in which the movie engages, is when Jesus walks out of the temple and bends down to speak to a small child and says, "Look at these stones. Not one will remain standing." In the scriptural account Jesus is speaking to the Pharisees and others inside the Temple. He states that He will destroy the Temple and rebuild it in three days. This is an important point because it is the foundation of Christianity, for Jesus is speaking about Himself and His resurrection, which is the fulfillment of man's salvation.
     Beyond the scriptural inaccuracies of Son Of God is the troublesome portrayal of Jesus. The movie Jesus, I thought, had an air of hubris about Him. When the Pharisees tried to verbally trap Him, and his response made them look foolish, movie Jesus displayed a self-satisfied smirk that smacked of arrogance and condescension.
     I do think Son Of God did a good job of portraying the political pressures that surrounded Pontius Pilate. He was the classic "pickle in the middle," caught between the Jewish religious leaders and Caesar. He could not allow himself to be held responsible for the Jewish uprising which the elders convinced him would happen if he allowed Jesus to live. A parenthetical aside; years after the death of Jesus, Pontius Pilate converted to Christianity and was executed for his faith.
     While I appreciate a big screen movie about the life of Jesus Christ, I fail to understand why key scriptural accounts must be sacrificed to the gods of artistic interpretation. In my opinion, changing scripture is a dumbing down of them for the sake of appealing to a contemporary audience. The film makers missed an opportunity to expose the scripturally uninitiated to an accurate account of the life and death of Jesus Christ. I think Son Of God is worth seeing, even with its inaccuracies, but I would recommend waiting until it is released on DVD and save the price of theater admission.