The Fed essentially makes direct payments to banking executives. Direct payments.

Guaranteeing a Fat Spread on Interest Rates

Well, as Bloomberg notes:

“The trading profits of the Street is just another way of measuring the subsidy the Fed is giving to the banks,” said Christopher Whalen, managing director of Torrance, California-based Institutional Risk Analytics. “It’s a transfer from savers to banks.”

Harry Blodget explains:

But these days, trading isn’t risky at all. In fact, it’s safer than walking down the street.

Why?

Because the US government is lending money to the big banks at near-zero interest rates. And the banks are then turning around and lending that money back to the US government at 3%-4% interest rates, making 3%+ on the spread. What’s more, the banks are leveraging this trade, borrowing at least $10 for every $1 of equity capital they have, to increase the size of their bets. Which means the banks can turn relatively small amounts of equity into huge profits–by borrowing from the taxpayer and then lending back to the taxpayer.

Paul Abrams chimes in:

Congress should put an immediate halt to this practice. Banks should have to show that the money they are borrowing from the Fed is to provide credit to businesses, or consumers, or homeowners. Not a penny should be allowed to be used to purchase Treasuries. Otherwise, the Fed window should be slammed shut on their manicured fingers.

To get a clear picture of what is going on here, ignore the intermediate steps (borrowing money from the fed, investing in Treasuries), as they are riskless, and it immediately becomes clear that this is merely a direct payment from the Fed to the banking executives…for nothing. No nifty new tech product has been created. No illness has been treated. No teacher has figured out how to get a third-grader to understand fractions. No singer’s voice has entertained a packed stadium. No batter has hit a walk-off double. No “risk”has even been “managed”, the current mantra for what big banks do that is so goddamned important that it is doing “god’s work”.

Nor has any credit been extended to allow the real value-producers to meet payroll, to reserve a stadium, to purchase capital equipment, to hire employees. Nothing.

The bankers rob you. They loot your future wealth. The Fed runs the chop shop where the economy is cut up and auctioned to offshore banking cartels.

Again and again I ask, with deadly seriousness. What must be done?

Not.

CBO estimates that total authorized costs in the first two categories probably exceed $115 billion over the 2010-2019 period. We do not have an estimate of the potential costs of authorizations in the third category.

Robbers. Plain and simple.

The Bureau of Labor Statistics (BLS) today released their Producer Price Index (PPI) report for March 2010 and the latest numbers are shocking. Food prices for the month rose by 2.4%, its sixth consecutive monthly increase and the largest jump in over 26 years. NIA believes that a major breakout in food inflation could be imminent, similar to what is currently being experienced in India.

Some of the startling food price increases on a year-over-year basis include, fresh and dry vegetables up 56.1%, fresh fruits and melons up 28.8%, eggs for fresh use up 33.6%, pork up 19.1%, beef and veal up 10.7% and dairy products up 9.7%. On October 30th, 2009, NIA predicted that inflation would appear next in food and agriculture, but we never anticipated that it would spiral so far out of control this quickly.

The PPI foreshadows price increases that will later occur in the retail sector. With U-6 unemployment rising last month to 16.9%, many retailers are currently reluctant to pass along rising prices to consumers, but they will soon be forced to do so if they want to avoid reporting huge losses to shareholders.

Food stamp usage in the U.S. has now increased for 14 consecutive months. There are now 39.4 million Americans on food stamps, up 22.4% from one year ago. The U.S. government is now paying out more to Americans in benefits than it collects in taxes. As food inflation continues to surge, our country will soon have no choice but to cut back on food stamps and other entitlement programs.

Most financial experts in the mainstream media are proclaiming that the recession is over and inflation is not a problem in the U.S. Unfortunately, they fail to realize that rising food and gasoline prices accounted for 58% of February’s year-over-year 3.85% rise in retail sales. NIA believes price inflation is beginning to accelerate in many areas of the economy besides food and energy, and all increases in U.S. retail sales this year will be entirely due to inflation.

The enterprises funded by malinvested capital chase ever smaller returns. Consumers, both individuals and businesses, are broke.

The government didn’t let failing businesses fail. It didn’t reallocate assets from failed concerns to entrepreneurs in orderly bankruptcies. No. The Fed printed money. Lots of it. Now they’re printing more money to bail out Europe.

The invisible tax of inflation will crush consumers and small businesses. Then, government and big financial institutions will gain near total political and economic control. The bankers want it all. They’re going to get it.

We will see civil unrest. It’ll be worse than Greece. Count on it.

Unfortunately, too many Mexican-americans and illegal aliens hate white people and hate the United States. I’m sick of it.

Watch L.A. teacher Ron Gochez call for violent insurrection and the extermination of white people.

Gochez gets one thing right. Americans do not oppose Mexican illegal immigration because of race. No. It’s because too many illegal aliens are communists and collectivists. They oppose the basic principles of individual liberty, free enterprise and the Constitution. We don’t want them to turn our country into a morass of socialism and corruption like Mexico.

Watch Mexican-americans strike down a US flag.

Watch illegal Mexican immigrants attack police with rocks and bottles.

Go here. Watch illegal-immigration insurrectionists chase and beat peaceful anti-immigration protesters. Watch the corporate media try to hide the truth: illegal aliens tried to burn down buildings with white people still inside.

If you love freedom, low taxes, and the Bill of Rights. I’m bringing beer to your party, no matter what your race. Hell, if it’s a party I like Mexican girls.

But if you want to take my wealth by confiscatory taxation and welfare, take over our health care and insurance systems, take my guns, take my freedom – then I’m bringing my big, swinging dick to to your party.

Illegal aliens are a threat to the peace. Stand against the horde of racist marxists and their enablers in the US. Stand with Arizona and state’s rights.

Related: Government ignores 12 million illegal immigrants with expired visas.

If you think the massive sudden drop happened because one lowly trader hit one wrong button, if you actually believe that the entire stock market can plunge because of one mistaken key stroke by a low level trader, you are stunningly naïve. I hate to burst your bubble, but this was a direct attack.

In a market where 70% of all trades are executed by computer algorithms via High Frequency Trading (HFT), Goldman Sachs has the power to make the market crash or rise at will. In fact, Goldman has a major Weapon of Mass Destruction in its Program Trading monopoly of the New York Stock Exchange, as Tyler Durden described on Zero Hedge:

Goldman’s dominance of the NYSE’s Program Trading platform, where in addition to recent entrant GETCO, it has been to date an explicit monopolist of the so-called Supplementary Liquidity Provider program, a role which affords the company greater liquidity rebates for, well providing liquidity, and generating who knows what other possible front market-looking, flow-prop integration benefits. Yesterday [5/6/10], Goldman’s SLP function was non-existent. One wonders – was the Goldman SLP team in fact liquidity taking, or to put it bluntly, among the main reasons for the market collapse….

… here is the most recently disclosed NYSE program trading data….

What is notable here is that of the 1.4 billion in principal shares, or shares traded for the firm’s own account, Goldman was the top trader by a margin of over 100% compared to the second biggest program trader.

We have long claimed that Goldman is the de facto monopolist of the NYSE’s program trading platform. As such, it is certainly the case that Goldman was instrumental in either a) precipitating yesterday’s crash or b) not providing the critical liquidity which it is required to do, when the time came. There are no other options.

This is an open conspiracy, folks. The oil, metals, and stock markets are captured. There is very little free market left. All is monopoly and fraud. Or maybe, it’s all just coincidence. Not.

Amped Content goes on to note that coincidentally the day after the crash, the “break up the too big to fail banks” amendment was soundly defeated by a 61 to 33 margin in Senate. And, a deal was struck to eliminate key provisions from the audit of the Federal Reserve bill. And, Goldman was meeting with the SEC to work out a settlement in their case against them.

An act of premeditated sabotage. Theater level economic subversion. That means the Patriot Act applies to the bankers.

It’s time to arrest without charge all senior banking executives suspected of involvement. No habeas corpus, just waterboarding and stress positions and “coercive confinement.” We must make them give up their terrorist comrades.

There might be another financial time bomb. Think of the children, people.

(h/t Max Keiser)

In a statement on its website, the U.S. Federal Reserve said “In response to the re-emergence of strains in U.S. dollar short-term funding markets in Europe, the Bank of Canada, the Bank of England, the European Central Bank, the Federal Reserve, and the Swiss National Bank are announcing the re-establishment of temporary U.S. dollar liquidity swap facilities. These facilities are designed to help improve liquidity conditions in U.S. dollar funding markets and to prevent the spread of strains to other markets and financial centers. The Bank of Japan will be considering similar measures soon. Central banks will continue to work together closely as needed to address pressures in funding markets.”

How long can we support this nonsense?

Support Ron Paul’s bill to audit the Fed.

Outrageous Update: Ron Paul’s “audit the fed bill” compromised in Senate.

More specifically, Paul’s language (passed by the House) to audit the Federal Reserve has been stripped from the Sanders Amendment to the Senate financial reform bill. Instead, the Sanders Amendment now contains softer compromise language that exempts monetary policy decisions, discount window operations, and agreements with foreign central banks from Government Accounting Office (“GAO”) audit.

This is of particular concern when several countries such as Greece, Portugal, and Spain are seeking IMF help in the midst of their financial crises, because American taxpayers provide fully 17% of all IMF funding.

“Taxpayers are weary of bailing out privileged banks and corporations in the US, and we certainly cannot afford to bail out entire countries. The possibility of this happening behind a veil of Federal Reserve secrecy is not acceptable,” stated Congressman Paul. “This compromise language represents a huge missed opportunity by Congress to finally make the Fed accountable for trillions of taxpayer dollars it administers. Full transparency, via a full GAO audit, is the only acceptable option. However, I am grateful to Senator Vitter for offering the original full audit language in an alternative amendment to the bill.”

The Fed is arguably the most powerful institution in the United States. It operates in secret, with taxpayer money, beholden to no political authority.

The language was added to the amendment soon after the market crash. Coincidence? Remember, The Fed and Treasury threatened Congress with martial law during negotiation over the bailouts.

Was the crash a manufactured event to prevent a full audit of the Fed? It looks like it. Scott Creighton has the scoop.

The market didn’t crash by a “glitch” and it wasn’t the European Union or Greek riots either… it was terrorism.  It was a message: Don’t Fuck With Us. Congress got the message and acted accordingly.

The banking oligarchs sent a clear and unmistakable message that they could drop this nation’s economy into the toilet at any time they wished and if congress thought for a minute that they really ran America, they had better rethink that position.

That’s what happened yesterday.

It isn’t a “coincidence” that the super-computer “glitch” happened a few hours before that senate vote and just a while before the White House had a chat with Sanders about his Audit the Fed bill. It was financial terrorism, pure and simple.

Related: Jim Rogers says stock decline is just the beginning.

Update: Dow futures up over 250. If you don’t follow the markets, that’s just huge. Truly massive. Is the Plunge Protection Team already at work? Fixing things after they got what they wanted from Congress? The PPT usually take huge position in futures to swing the current markets in the “right” direction. That’s how price fixing works in America.

Update: American Taxpayers Looted To Bail Out The Euro.

American taxpayers have been freshly liberated of hundreds of billions more dollars as part of the IMF’s new bailout package which is principally going straight to European banks, in addition to the Federal Reserve program to ship U.S. dollars to Europe, in a move that represents little more than a desperate effort to save the Euro and rescue the credibility of economic global governance [...]

As we reported last time this program was enacted, the Federal Reserve refused to say which foreign banks had received an estimated half a trillion dollars in credit swaps. The program is unconstitutional under Article 1 of the U.S. Constitution which states, “No money shall be drawn from the treasury, but in consequence of appropriations made by law.”

In addition to the credit swap program being re-enacted, the IMF portion of a separate European bailout package amounts to around $287 billion dollars. Since American taxpayers represent around 20 per cent of IMF funding, they will fork out something in the region of $57 billion dollars which which primarily go straight to French and German banks, not to mention the billions more in transfers of wealth that will occur through the Fed’s credit swap program.

Even the world’s most savvy stock-market giants (e.g., Warren E. Buffett) have warned over the past decade that derivatives are the fiscal equivalent of a weapon of mass destruction (WMD) – potentially lethal. And the consequences of such an explosion would make the recent global financial and economic crisis seem like penny ante. But generously lubricated lobbyists for the unrestricted, unsupervised derivatives markets tell congressional committees and government regulators to butt out.

While banks all over the world were imploding and some $50 trillion vanished in global stock markets, the derivatives market grew by an estimated 65 percent, according the Bank for International Settlements. BIS convenes the world’s 57 most powerful central bankers in Basel, Switzerland, for periodic secret meetings. Occasionally, they issue a cry of alarm. This time, derivatives had soared from $414.8 trillion at the end of 2006 to $683.7 trillion in mid-2008 – 18 months’ time.

The derivatives market is now estimated at $700 trillion (notional, or face, value, not market value). The world’s gross domestic product in 2009: $69.8 trillion; America’s, $14.2 trillion. The total market cap of all major global stock markets? A mere $30 trillion. And the total amount of dollar bills in circulation, most of them abroad: $830 billion (not trillion).

With risk over ten times world GDP, it’s just a matter of time.

When the derivative market explodes, the bankers will try to to take everything. Someone will have to stop them.

The welfare state’s death spiral is this: Almost anything governments might do with their budgets threatens to make matters worse by slowing the economy or triggering a recession. By allowing deficits to balloon, they risk a financial crisis as investors one day — no one knows when — doubt governments’ ability to service their debts and, as with Greece, refuse to lend except at exorbitant rates. Cutting welfare benefits or raising taxes all would, at least temporarily, weaken the economy. Perversely, that would make paying the remaining benefits harder.

That’s the IMF’s third step, with the planned “IMF Riot” at the end. Watch what happens when millions of Americans lose unemployment payments. You’ll get your austerity riots, right on schedule.

The bankers must be stopped. So, what must be done?

In February, the White House released its “Annual Report on the Middle Class” containing new regulations favored by Big Labor including a bailout of critically underfunded union pension plans through “retirement security” options.

The radical solution most favored by Big Labor is the seizure of private 401(k) plans for government disbursement — which lets them off the hook for their collapsing retirement scheme.  And, of course, the Obama administration is eager to accommodate their buddies.

Vice President Joe Biden floated the idea, called “Guaranteed Retirement Accounts” (GRAs), in the February “Middle Class” report.

In conjunction with the report’s release, the Obama administration jointly issued through the Departments of Labor and Treasury a “Request for Information” regarding the “annuitization” of 401(k) plans through “Lifetime Income Options” in the form of a notice to the public of proposed issuance of rules and regulations.

It’s all part of a well-understood pattern of organized banditry developed by the IMF.

Step One is Privatization – which Stiglitz said could more accurately be called, ‘Briberization.’ Rather than object to the sell-offs of state industries, he said national leaders – using the World Bank’s demands to silence local critics – happily flogged their electricity and water companies. “You could see their eyes widen” at the prospect of 10% commissions paid to Swiss bank accounts for simply shaving a few billion off the sale price of national assets [...]

After briberization, Step Two of the IMF/World Bank one-size-fits-all rescue-your-economy plan is ‘Capital Market Liberalization.’ In theory, capital market deregulation allows investment capital to flow in and out. Unfortunately, as in Indonesia and Brazil, the money simply flowed out and out. Stiglitz calls this the “Hot Money” cycle. Cash comes in for speculation in real estate and currency, then flees at the first whiff of trouble. A nation’s reserves can drain in days, hours. And when that happens, to seduce speculators into returning a nation’s own capital funds, the IMF demands these nations raise interest rates to 30%, 50% and 80%.

“The result was predictable,” said Stiglitz of the Hot Money tidal waves in Asia and Latin America. Higher interest rates demolished property values, savaged industrial production and drained national treasuries.

At this point, the IMF drags the gasping nation to Step Three: Market-Based Pricing, a fancy term for raising prices on food, water and cooking gas. This leads, predictably, to Step-Three-and-a-Half: what Stiglitz calls, “The IMF riot.”

The IMF riot is painfully predictable. When a nation is, “down and out, [the IMF] takes advantage and squeezes the last pound of blood out of them. They turn up the heat until, finally, the whole cauldron blows up,” as when the IMF eliminated food and fuel subsidies for the poor in Indonesia in 1998. Indonesia exploded into riots, but there are other examples – the Bolivian riots over water prices last year and this February, the riots in Ecuador over the rise in cooking gas prices imposed by the World Bank. You’d almost get the impression that the riot is written into the plan.

And it is. What Stiglitz did not know is that, while in the States, BBC and The Observer obtained several documents from inside the World Bank, stamped over with those pesky warnings, “confidential,” “restricted,” “not to be disclosed.” Let’s get back to one: the “Interim Country Assistance Strategy” for Ecuador, in it the Bank several times states – with cold accuracy – that they expected their plans to spark, “social unrest,” to use their bureaucratic term for a nation in flames [...]

Now we arrive at Step Four of what the IMF and World Bank call their “poverty reduction strategy”: Free Trade. This is free trade by the rules of the World Trade Organization and World Bank, Stiglitz the insider likens free trade WTO-style to the Opium Wars. “That too was about opening markets,” he said. As in the 19th century, Europeans and Americans today are kicking down the barriers to sales in Asia, Latin American and Africa, while barricading our own markets against Third World agriculture [...]

“It’s a little like the Middle Ages,” the insider told me, “When the patient died they would say, “well, he stopped the bloodletting too soon, he still had a little blood in him.”

I took away from my talks with the professor that the solution to world poverty and crisis is simple: remove the bloodsuckers.

Notice the IMF’s NewSpeak. Privatization is nationalization. Market liberalization is monopoly. Market-based pricing is price-fixing by governments. Poverty reduction is theft by taxation.

Real free markets are the greatest goods a nation can have. But most people who claim to advocate free markets really support economic fascism. Their pretty words obscure the havoc and death they cause.

The bankers are destroying us. What must be done?

Demand for workers who haven’t much education—which includes many men, particularly minority-group men—is waning. A shrinking fraction of them are working. Some are looking for work; some have given up [...]

Women have suffered less in this recession. They were more likely to be in health care and other jobs that weren’t hit as hard as construction and manufacturing. They are increasingly likely to have the education so often required to get or keep a good job these days.

That’s good for their families. But will there be good-paying jobs in the future for prime-age men, particularly the ones who don’t go to college? [...]

One way to resist these market forces is to reduce the supply of workers who aren’t in demand and increase the supply of workers who are. That is, educate more and better: Fix K-12 schools, improve worker-training programs, strengthen community colleges, give more aid to college students [...]

Another option is on the demand side: Force employers to be less efficient so they have to hire more, or limit imports of goods that threaten jobs of less educated, prime-wage men—solutions with unwelcome side effects [...]

A third option is surrender to market forces and tax the winners to subsidize the losers. Sending checks to idle men is unappealing, but the government could do more to supplement wages (or health insurance costs) for those who work at low wages.

Pffft.

Wessel’s first option is nonsense. Education is not the problem. Never has been. Highly educated workers cannot find jobs. Degreed professional have a higher unemployment rate than high school dropouts. Education makes you more expensive, and more expensive workers are highly vulnerable to foreign outsourcing. Education can make workers overqualified for jobs that are not outsourced.

Yes, I know. Overqualification is the most stupid idea ever. But what do you expect from the dullards in Human Resources.

Wessel’s second option misunderstands the problem. The problem isn’t imports. The problem is that the tax-paying US worker is forced to fund his own labor competition. The government pays companies to locate overseas and hire foreign workers in the US. To make matters worse, companies get a tax credit for foreign outsourcing. The US government uses tax dollars to put taxpayers out of a job. That’s insane.

If redistributing wealth from US workers to foreign workers is bad, then so is transferring wealth from successful workers to unsuccessful ones. That means Wessel’s third option is preposterous too.

Everyone is asking the wrong question.

We need better. Why are companies laying off men and keeping women employed? Why are companies more willing to hire women and less willing to hire men?

Because of government EEOC regulations, women employees provide a unique economic good, and hiring men imposes a unique economic cost.

Hiring women reduces regulatory risk. Vastly fewer men bring EEOC cases. Of the few men who do, vastly fewer are won. No company has ever got into trouble hiring too many women. Firing women imposes huge regulatory risk. Vastly more women bring EEOC cases, and vastly more win those cases.

Hiring men imposes a regulatory cost. Every man a company hires is a lost opportunity to reduce regulatory risk by hiring a woman. Firing a man imposes almost no regulatory risk at all. Men are not a protected class at law.

Hiring women reduces regulatory risk. Firing women vastly increases risk. Hiring men slightly increases regulatory risk. Firing men imposes only a slight risk.

That’s why men lost 80% of the jobs in this recession. That’s why high male unemployment is structural not a market phenomenon. That’s why men are giving up.

When the dice are loaded, why toss them? When everything is stacked against a man, maximizing leisure is quite rational. Smart even.

There is, however, another option that the Shadow Committee recommends be considered. Freddie and Fannie have been placed in conservatorship and the Treasury has confirmed that their debt is now guaranteed by the U.S. Government. This means that their debt is essentially identical to Treasury debt. The Treasury could simply issue Treasury debt to Freddie and Fannie with the offsetting accounting transaction being an IOU to the U.S. Treasury. Freddie and Fannie could then swap the acquired Treasury debt for MBS held by the Federal Reserve. This transaction would have several desirable features. It would place housing debt on the books of Freddie and Fannie where it belongs and remove the Fed from financing U.S. housing policy, which is appropriately a fiscal policy and not a monetary policy function. This would also help to re-establish Federal Reserve independence from the Treasury and fiscal policy. Finally, it would free the Fed to device [sic] strategies to reduce its balance sheet by engaging in more traditional asset sales in the much deeper Treasury market where the pricing impacts would be smaller and would accommodate a more rapid reduction in excess reserves.

“Several desirable features”?!?!

• It would place housing debt on the books of Freddie and Fannie where it belongs. But the Fed took over the debt in the first place! If it rightly belonged with the Big MACs, the Fed should have left it there to begin with.
• [It would] remove the Fed from financing U.S. housing policy, which is appropriately a fiscal policy and not a monetary policy function. That’s a lie. For fifty years, the Fed has used interest rates to manipulate the debt market for real property. It’s the main mechanism used by the Fed to regulate the quantity of M3. It’s notable that the Treasury and the Fed stopped reporting on M3 in 2005.
• This [transfer of debt to the Big MACs] would also help to re-establish Federal Reserve independence from the Treasury and fiscal policy. True. However, Fed independence is a very bad thing. ‘Independent’ means independent of control by the citizenry. Fed independence is unconstitutional. The Congress cannot delegate the power to coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures. Monetary regulation is expressly put under control of the People. An independent Fed is a criminal enterprise.

The Fed is not a free-market institution. In free markets some businesses fail, and then entrepreneurs acquire the assets in an orderly bankruptcy, and then the process of creative destruction creates jobs, wealth, and freedom. That’s not what the Fed promotes. Now you know that’s not what AEI promotes.

AEI bills itself as a free-market organization. Now you know. AEI are liars and crony capitalists.

Everyone in the Fed, the heads of the large banks, everyone in Goldman Sachs, all of the Fed member banks, and most of the Treasury department – they’re hyenas feeding on the citizenry. They have stolen more money than any organized mafia in human history. The country is in thrall to a criminal gang of international bankers.

The bankers have stolen quadrillions. They are dispossessing the citizenry. They will destroy what’s left of individual economic freedom in this country.

I ask you, in grave tones, what must be done?

Related: International Monetary Fund socializes losses and privatizes profits. Neo-feudalism.

Veronique de Rugy explains the chart.

[...] According to seasonally adjusted data from the Bureau of Labor Statistics, last month, over 44.1% of unemployed workers (6.5 million workers) had been unemployed for 27 weeks or more; at the start of 2008, 18.3% of unemployed workers fell into this category. Importantly, these measures of unemployment exclude workers who want employment but were, for various reasons, not included in BLS’s unemployment calculations – an estimated 5.8 million workers [...]

Consider also the rate of underemployment.

Over 40% of Americans have lost their careers. Half of these dispossessed citizens have no prospect for future employment.

Yet, it’s easy to find empirically blind, faith-based economic assessments like this from Georg Riesman.

Contrary to the negative associations it has, outsourcing serves to reduce the prices that Americans pay by more than it reduces their incomes. In fact, on overall, net balance, under today’s monetary conditions, it does not even reduce the money income of the average American worker at all, while it does reduce the cost of production and price of some of the things that he buys. The reason for these results is that the reduction in cost of production, and ultimately in the price of a service that is outsourced, corresponds to the extent to which the relevant wage rates in India, or wherever else, are lower than those in the United States. At the same time, however, the fall in income of the American workers whose jobs have been outsourced is much less than this, and in the economic system as a whole, a fall in income is non-existent.

Reisman goes on to argue,

Thus, for example, assume that workers who provide telephone support to software buyers or credit-card holders must be paid $15 per hour in the United States, while comparably good workers can be employed in India at $1 per hour. The cost saving will probably not be as great as a reduction to one-fifteenth of its original amount, because now there is the cost of setting up and maintaining a longer-distance and probably more elaborate communications network. So let’s say that when allowance is made for this additional cost, the cost works out to be the equivalent of Indian workers having to be paid $1.50 per hour. Thus the cost is ten percent of what it was.

Now when there are cost reductions, competition operates sooner or later to bring about corresponding price reductions, just as when there are cost increases there will sooner or later be corresponding price increases. To the extent that the cost of producing something is reduced by ninety percent, the corresponding part of its price will also tend to be reduced by ninety percent.

At this point, we must ask why the American workers who had been earning $15 per hour do not meet the competition of the Indian workers and retain their jobs by agreeing to work for just under $1.50 per hour. To ask the question is to answer it. There is no thought of meeting the competition of the Indian workers in this way because the alternatives available to the American workers while perhaps significantly less than $15 per hour are still far, far in excess of $1.50 per hour—say, $10 or $12 per hour.

Thus here we have a case in which the cost of production, and ultimately the price of something that Americans will pay, falls by ninety percent, while the wages of the affected workers fall by much less: twenty percent or thirty-three and a third percent.

And here we see the error. Cost inputs in India do not determine the real price of a good in the US. This is a surprising oversight by Riesman, because it’s is an application of the erroneous surplus labor theory of value.

It is not true that a ninety percent lower supplier input-price implies a ninety percent lower consumer price! Just because someone can buy something for less doesn’t mean they will sell it for less. Riesman must surely know it. To make his claim is to ignore the most basic facts of the free-market supply and demand model. It doesn’t get more basic than that.

This is the kind of muddled thinking one encounters among faith-based economists. Everything is consistent, the arguments are relevant and interesting – until we reach the question of outsourcing. Then, it’s all fallacy and obfuscation.

That’s the logical counter-argument, but there’s an empirical one too. Fact: real wages fall and stagnate. Fact: real prices don’t fall in response to imports. This chart shows that real wages and real prices track one another over time.

Real wages have declined. Real prices track wages.

How can this be? It’s obvious, once you see it. Currency values act as a third equilibria with the supply and demand of goods. It creates the opportunity for arbitrage instead of trade.

Our hypothetical call center capitalist, call him Joe Shmoe, outsources to India as an act of arbitrage not an act of trade. Joe hopes to increase the bid-ask spread for his services and thereby increase his profits. He buys labor where it is cheap relative to the US dollar. Each dollar will buy more in the Indian economy than the rupee will buy in the US economy. This fact is neither a result nor a cause of imbalances in supply or demand. Hence, it is not entrepreneurial activity strictly defined. Labor arbitrage is a result of fiat currency values.

Governments set the values of their currency to manage the rate and degree of both trade and arbitrage. This is the economic theory of Monetarism. It is a liberal trade philosophy, but it is not a free trade philosophy.

Who benefits from currency-based labor arbitrage? Owners of capital benefit; they get the larger bid-ask spread. The Indian call center workers benefit; they get jobs at US$1.50. Do US workers benefit? Reisman says they get lower prices. I have shown that claim is false. Prices have not fallen relative to wages, even with massive import and outsourcing levels.

Gomory and Baumol explain further,

Right. Suppose you make a good in the U.S. Why would you lose it to overseas? Because somebody outside can make it more cheaply. True, consumers are coming out ahead in that one industry. But they’re paying a price somewhere else. The goods they always imported get more expensive.

Outsourcing is labor arbitrage not trade. It should be analyzed as absolute advantage not comparative advantage. Outsourcing involves multiple equilibria and requires a more thoroughgoing logical analysis. Outsourcing, unlike trade, does not necessarily benefit everyone. It can profit owners of capital and workers in foreign countries, at the expense of US workers.

That’s why we have insanely high long-term unemployment. That’s why we must end crony capitalism. That’s why we must create real free markets.

Throw the financial terrorists out of the country. Start with Goldman Sachs.

“We’re poorer for this [phony] GDP growth, not richer.”

Stossel showed a chart called the “Clothing Price Index.” I’ve been unable to find the data for that chart, but here’s the Consumer Price Index since 1990 when outsourcing began in earnest.

As outsourcing increases, so do prices. According to faith-based economists, that can’t happen. Their theory says outsourcing should produce lower prices.

It would be true, if money were asset-based. It’s not. Money exchange rates are set by fiat. Lower price inputs in China do not imply lower real prices for the imported goods in the US.

It’s a fact, real prices have steadily increased as we have imported goods from countries with lower price inputs. If the theories of faith-based economists cannot account for this fact, then their theories are either inconsistent or incomplete. I think Monetarism is inconsistent, while the Austrian School theory is incomplete.

The Austrian School has ignored the effect of multiple equilibiria – money-price and product-price equilibiria in a fiat currency system. Multiple equilibiria changes radically the logical analysis of trade under comparative advantage. Austrian School economists ignore this fact. They simply duck under the water and fish out one red herring after another.

Faith-based economist are still ducking the issue. Man up boys. Hear that Stossel?

Probably not.

You won’t find coverage of this in the mainstream media. Even the business press ignores it. Why?

One chapter in this story took place in July 2005, when the Senate Banking Committee, then controlled by the Republicans, adopted tough regulatory legislation for the GSEs on a party-line vote—all Republicans in favor, all Democrats opposed. The bill would have established a new regulator for Fannie and Freddie and given it authority to ensure that they maintained adequate capital, properly managed their interest rate risk, had adequate liquidity and reserves, and controlled their asset and investment portfolio growth.

These authorities were necessary to control the GSEs’ risk-taking, but opposition by Fannie and Freddie—then the most politically powerful firms in the country—had consistently prevented reform.

The date of the Senate Banking Committee’s action is important. It was in 2005 that the GSEs—which had been acquiring increasing numbers of subprime and Alt-A loans for many years in order to meet their HUD-imposed affordable housing requirements—accelerated the purchases that led to their 2008 insolvency. If legislation along the lines of the Senate committee’s bill had been enacted in that year, many if not all the losses that Fannie and Freddie have suffered, and will suffer in the future, might have been avoided.

Why was there no action in the full Senate? As most Americans know today, it takes 60 votes to cut off debate in the Senate, and the Republicans had only 55. To close debate and proceed to the enactment of the committee-passed bill, the Republicans needed five Democrats to vote with them. But in a 45 member Democratic caucus that included Barack Obama and the current Senate Banking Chairman Christopher Dodd (D., Conn.), these votes could not be found.

Recently, President Obama has taken to accusing others of representing “special interests.” In an April radio address he stated that his financial regulatory proposals were struggling in the Senate because “the financial industry and its powerful lobby have opposed modest safeguards against the kinds of reckless risks and bad practices that led to this very crisis.”

He should know. As a senator, he was the third largest recipient of campaign contributions from Fannie Mae and Freddie Mac, behind only Sens. Chris Dodd and John Kerry.

Read the whole thing.

(h/t RSM)

It’s obvious. It’s directly observed. The faith-based economists still deny it. As Ralph Gomory explains, it’ll impoverish us.

Unfortunately, among the sheep [who think they understand comparative advantage] are some who tell us that it doesn’t matter if we lose one industry after another to our rapidly developing trading partners. We will just do something else that is in accord with comparative advantage in the new economic situation.

I have suffered through too many discussions of this sort to view this with anything approaching equanimity. One of these I remember particularly vividly came at an economics meeting during a panel discussion on trade. An audience member asked a university professor on the panel how he would feel if most of the professor’s courses were delivered from India by someone else and at a lower price. His reply, delivered with perfect confidence, was that it would not matter; he and his peers would rather just teach graduate students anyway. [...]

Ignored in all these discussions is the obvious fact that when you don’t make for yourself the things you need, you will have to trade for them. If you have to import cars and all sorts of manufactured goods, you will be importing on a large scale; to trade for them you will need to create additional goods or services that you can export on an equally large scale.

[...] Similarly, you simply cannot pay for large-scale imported education by teaching smaller numbers of graduate students, even if they were all visiting foreigners so that all the teaching you did counted as export.

If you give up large things and specialize in exporting small-scale things for which the demand is limited, you will not be able to buy many of the things that are needed on a large scale. If the things you are going to export don’t add up to something big, you will be neither making nor importing what you need. You will simply not have them. You will be a poor nation.

How long will faux-free-trade advocates duck the issue? How long will they claim that innovation is the answer? It’s just not true.

Friedman is only the latest to assume that we can avoid this fate by emphasizing designs, ideas, and R&D and trading them for the items we need. This is an attractive idea; we often hear about innovation parks and university research centers and often their work is both exciting and good.

But the chasm-sized flaw in this otherwise alluring proposition is scale. Balancing trade on ideas and R&D simply cannot be done. The most elementary analysis shows that the scale is entirely wrong. As one who spent many years as the head of research of a large corporation, I know how much R&D matters; I also know how small it is. Eight percent is a very large percent of revenue to spend on R&D. Even in manufacturing, which is relatively R&D intensive, 4 to 5 percent is typical. It is really wrong to think that you can scale up R&D to be big enough so we can trade it for the huge quantity of things we need but don’t make in this country.

It’s time to wake up.

A 70 year old Political Prisoner in Los Angeles is going to have his day in court, when the United States Supreme Court holds a conference hearing on the matter of  Richard I. Fine vs  L.A. County Sheriff Leroy D. Baca. Fine, an anti-trust attorney, submitted an application for a “Stay of Execution” even though he has never been charged with or convicted of a crime, yet has been held in solitary “coercive confinement” in the Los Angeles Central Men’s Jail for more than a year.

Representing himself, Fine has filed petitions, motions and writs in all the California and U.S. Courts, without success until now.  Justice Ruth Bader Ginsberg found enough support among her colleagues to warrant serious consideration of Fine’s plea for a “Stay of Execution”.    The Execution being the punishment inflicted by L.A. Superior Court Judge David P. Yaffe for Fine having publicly exposed the corrupt practices of the Judges, the Sheriff and the County.

This is happening all over the United States. For example,

In one of the most shocking cases of courtroom graft on record, two Pennsylvania judges have been charged with taking millions of dollars in kickbacks to send teenagers to two privately run youth detention centers.

For years, the juvenile court system in Wilkes-Barre operated like a conveyor belt: Youngsters were brought before judges without a lawyer, given hearings that lasted only a minute or two, and then sent off to juvenile prison for months for minor offenses.

Another one,

Guillory, who practices in nearby Nacogdoches, Texas, estimates authorities in Tenaha seized $3 million between 2006 and 2008, and in about 150 cases — virtually all of which involved African-American or Latino motorists — the seizures were improper.

“They are disproportionately going after racial minorities,” he said. “My take on the matter is that the police in Tenaha, Texas, were picking on and preying on people that were least likely to fight back.”

Daniels told CNN that one of the officers who stopped him tried on some of his jewelry in front of him.

“They asked me, ‘What you are doing with this ring on?’ I said I had bought that ring. I paid good money for that ring,” Daniels said. “He took the ring off my finger and put it on his finger and told me how did it look. He put on my jewelry.”

Texas law states that the proceeds of any seizures can be used only for “official purposes” of district attorney offices and “for law-enforcement purposes” by police departments. According to public records obtained by CNN using open-records laws, an account funded by property forfeitures in Russell’s office included $524 for a popcorn machine, $195 for candy for a poultry festival, and $400 for catering.

In addition, Russell donated money to the local chamber of commerce and a youth baseball league. A local Baptist church received two checks totaling $6,000.

And one check for $10,000 went to Barry Washington, a Tenaha police officer whose name has come up in several complaints by stopped motorists. The money was paid for “investigative costs,” the records state.

It’s your government. It’s oppressing your fellow citizens.

Peaceful political solutions are out there. What are you going to do?

Uncommom Misconception says,

The data are oscillating about a slowly increasing value, indicating that, if anything, unemployment claims are increasing. That means that for the past 5 1/2 months, every time the administration has told us that the unemployment situation is slowly recovering, and that the data show “the right trend,” they have been absolutely mistaken.

The media has been doing their typical baby duck analysis: every day is a brand new day, every unemployment claims report is the first one they’ve ever seen. So we get headlines like, “job situation improving” when the number of claims drops, and “unexpected increase” when the number rises.

For half a year the claims data has just been oscillating – going nowhere. And nobody seems to have noticed.

It’s getting worse. No recovery is underway.

As it is, achieving a full repeal of the recently-passed health care law will be extremely difficult. Given that Obama would veto any bill to undo his signature legislative accomplishment, it means that to get rid of the law, Republicans will have to not only take back Congress, but capture the White House. It also means that conservatives will have to relentlessly campaign against ObamaCare during the next two elections and keep public outrage at an elevated level for at least the next three years. And even if they achieve all of this, they will have a short window to repeal the bill in 2013, because by 2014 the federal government will begin to dole out hundreds of billions of dollars in subsidies, which will create a whole new constituency to preserve the law.

If Romney were the Republican presidential nominee in 2012, it would make this already challenging fight even harder. Romney’s role in creating a health care program quite similar to the one that just passed nationally would allow Obama to neutralize the issue during an election that would otherwise be a prime opportunity to make the case for repeal.

When it comes to their own, Republicans are a trusting lot. It’s time for Republican voters to grow up. Politics isn’t Us Magazine with a vote. Republicans must look at issues not image.  Issues not image.

Romney advocates government healthcare that’s angered the people and brewed the Tea Parties. Palin has a similar problem. She supports the policies of John McCain. His policies boil the blood of Tea Partiers faster than Obamacare.

If you favor limited government, if you look at issues and not image – then you cannot reasonably support Romney, and you cannot reasonably support Palin.

#1) There simply are not enough jobs for everyone.  The number of unemployed Americans per job opening has started to increase again, hitting 5.5 in February.  Even many of those who are able to get some work find themselves only able to obtain part-time employment.  Gallup’s underemployment measure hit 20.0% on March 15th.  This was up from 19.7% two weeks earlier and 19.5% at the start of the year.

#2) More Americans than ever find themselves having to rely on the U.S. government just to survive.  According to the U.S. Department of Agriculture, about 39.4 million Americans, a new all-time record, received food stamps in January.  This was up 22% from a year earlier.  In fact, the number of Americans on food stamps has hit all-time records for 14 consecutive months [...]

#7) Meanwhile, corruption in the financial system is running rampant.  The CEOs of bailed-out regional banks are actually getting big raises.  The guy who helped bring down AIG is going to get off scott-free and will be able to keep the millions in profits that he made in the process.

#8) But the biggest fraud is being committed by the boys at the top of the food chain.  A whistle blower has come forward with “smoking gun” evidence of price manipulation by major financial institutions in the precious metals markets.  The scope of this fraud is in the trillions of dollars.  The American people can’t stomach much more of this type of thing [...]

#11) In addition, the new health care law that was supposed to give all of us much better health care is actually going to force the cancellation of at least 60 doctor-owned hospitals that were scheduled to be opened according to the executive director of Physician Hospitals of America.  Why?  Well, it turns out that the new law singles out physician-owned hospitals, making new physician-owned projects ineligible to receive payments for Medicare and Medicaid patients.

In a fight, anger is as good as courage.

Pussy Galore: less pussy than Republicans

[...] today some Republicans are losing their nerve on repeal. Rep. Mark Kirk, who is running for the Senate in Illinois, signed the repeal pledge and even vowed to “lead the effort” for repeal, but has since backed off, declaring “I voted against it, but we lost.” Sen. Richard Burr of North Carolina , who is running for reelection, has said that “total repeal” is unlikely. And Sen. Lamar Alexander of Tennessee, who is in charge of messaging for the Republican Senate leadership, says that instead of repeal, Republicans should promise “at least big changes” to the bill.

Spineless. Weak.

re·cov·er·y – (1) return to an original state; “the recovery of the forest after the fire was surprisingly rapid;” (2) convalescence: gradual healing (through rest) after sickness or injury; (3) the act of regaining or saving something lost (or in danger of becoming lost).

Now read this,

The long-awaited recovery is now under way, but it’s a slow, painful slog that’s short on animal spirits and long on a drumbeat of numbers that mostly shift from dreadful to less depressing.

Twenty-seven months after the recession began, unemployment is stuck at 9.7%.

Nevermind the fact that real unemployment is more like 22%. While there are massive job losses, Fortune reports the “recovery is underway.”

Hmm. How can that be? Let’s see. From that Fortune article again,

Amazingly, as consumers struggle, U.S. corporations are staging a nearly unprecedented comeback that’s largely escaping notice. The gargantuan, dispiriting job cuts that seem to dominate the news have also been the spur for an epic resurgence in profits.

Jobs are down and profits are up. This third group gets mentioned, consumers. These people continue to struggle. Consumers have lost their jobs. Even in the short run, companies cannot sustain profits when their customers are “struggling” to afford goods. Forbes can’t really call this a recovery. But even this is beside the point.

‘Recovery’ now means ‘profits for large corporate interests and banks.’ Since large business interests and banks use the government to extort rents, we aren’t talking free-market profits here. We’re talking monopoly profits.

 Large businesses and banks have “comeback” profits only at the expense of consumers. That’s what ‘recovery’ means today: you’re out of work, but fat cats get their corporate bonuses.

See, it’s a recovery. War is peace. Slavery is freedom. Ignorance is strength.

Don’t make me tell you twice. You’ll go to Room 101.

Update: Rising jobless claims add worries about recovery. Whoda thunkit?

They want to keep secrets.

Continued legal appeals will delay or block the first public look at details of the central bank’s $2 trillion in emergency lending during the 2008 financial crisis. The Clearing House Association LLC, a group that includes Bank of America Corp. and JPMorgan Chase & Co., joined the Fed in defense of a lawsuit brought by Bloomberg LP, the parent company of Bloomberg News, seeking release of records related to four Fed lending programs.

The U.S. Court of Appeals in Manhattan ruled March 19 that the central bank must release the documents. A three-judge panel of the appellate court rejected the Fed’s argument that disclosure would stigmatize borrowers and discourage banks from seeking emergency help.

The biggest U.S. commercial banks will take their fight against disclosure of Federal Reserve lending in 2008 to the Supreme Court if necessary, the top lawyer for an industry-owned group said.

Meanwhile, Ron Paul’s bill to audit the Fed has passed the House, and it quietly gathers momentum in the Senate.

What is Bernanke hiding?

Lori Whisenant knows that one way to improve the writing skills of undergraduates is to make them write more. But as each student in her course in business law and ethics at the University of Houston began to crank out—often awkwardly—nearly 5,000 words a semester, it became clear to her that what would really help them was consistent, detailed feedback.

Her seven teaching assistants, some of whom did not have much experience, couldn’t deliver. Their workload was staggering: About 1,000 juniors and seniors enroll in the course each year. “Our graders were great,” she says, “but they were not experts in providing feedback.”

That shortcoming led Ms. Whisenant, director of business law and ethics studies at Houston, to a novel solution last fall. She outsourced assignment grading to a company whose employees are mostly in Asia.

The founder of Edumetry, Mr. Rajam, says

“People need to get past thinking that grading must be done by the people who are teaching,” says Mr. Rajam, who is director of assurance of learning at George Washington University’s School of Business. “Sometimes people get so caught up in the mousetrap that they forget about the mouse.”

Ah yes, mouse and mousetrap. I think Mr. Rajam confuses trap for mouse.

The trap is the outsourced system itself. Part-time, unverified people in third world countries, operating in dingy sweatshops, with no knowledge of the classroom context – these people will decide the grades and academic future of American college students.

The mouse is the duped American student who pays $1,500+ for a class taught by a git like Ms. Whisenant.

According to some free market advocates, everyone benefits from this trade. 

Other free trade advocates think not.

Economic theory assumes that capitalists pursuing their individual interests are led to benefit the general welfare of their society by an invisible hand. But offshoring, or the pursuit of absolute advantage, breaks the connection between the profit motive and the general welfare. The beneficiaries of offshoring are the corporations’ shareholders and top executives and the foreign country, the GDP of which rises when its labor is substituted for the corporations’ home labor. Every time a corporation offshores its production, it converts domestic GDP into imports. The home economy loses GDP to the foreign country which gains it [...]

The more US corporations prosper by offshoring, the greater the US trade deficit will grow and the more unbearable the pressure will be on the dollar’s role as reserve currency.

At some point crisis will force Congress, economists and think tanks to deal with the real issues.

It’s that multiple equilibria thing again. And it’s in the classroom.

The Fed is utterly, fundamentally, intentionally corrupted. The entire money and credit system of the US is utterly corrupted, turned to plunder of the people by inflation and deflation.

As Andrew Jackson said of the Second Bank of America which he eradicated,

The bold effort the present (central) bank had made to control the government … are but premonitions of the fate that await the American people should they be deluded into a perpetuation of this institution or the establishment of another like it.

It’s worth a read of his letter explaining why the Second Bank of America was closed.

Is there no danger to our liberty and independence in a Bank that in its nature has so little to bind it to our country. The president of the Bank has told us that most of the State banks exist by its forbearance. Should its influence become concentered, as it may under the operation of such an act as this, in the hands of a self-elected directory, whose interests are identified with those of the foreign stockholders, will there not be cause to tremble for the purity of our elections in peace, and for the independence of our country in war. Their power would be great whenever they might choose to exert it; but if this monopoly were regularly renewed every fifteen or twenty years, on terms proposed by themselves, they might seldom in peace put forth their strength to influence elections or control the affairs of the nation. But if any private citizen or public functionary should interpose to curtail its powers, or prevent a renewal of its privileges, it cannot be doubted that he would be made to feel its influence.

Should the stock of the Bank principally pass into the hands of the subjects of a foreign country, and we should unfortunately become involved in a war with that country, what would be our condition? Of the course which would be pursued by a bank almost wholly owned by the subjects of a foreign power, and managed by those whose interests, if not affections, would run in the same direction, there can be no doubt. All its operations within would be in aid of the hostile fleets and armies without. Controlling our currency, receiving our public moneys, and holding thousands of our citizens in dependence, it would be more formidable and dangerous than the naval and military power of the enemy [...]

Experience should teach us wisdom. Most of the difficulties our Government now encounters and most of the dangers which impend over our Union have sprung from an abandonment of the legitimate objects of Government by our national legislation, and the adoption of such principles as are embodied in this act. Many of our rich men have not been content with equal protection and equal benefits, but have besought us to make them richer by act of Congress. By attempting to gratify their desires we have in the results of our legislation arrayed section against section, interest against interest, and man against man, in a fearful commotion which threatens to shake the foundations of our Union.

Think about the second paragraph. Now think about World War I.

How well did the Federal Reserve use its original powers? During World War I it abandoned penalty rates for “easy” money, and then began buying Liberty Bonds to support the government’s war effort. Those actions helped hoist the inflation rate from close to zero in 1915 to almost 20 percent in 1920 — a level not seen since the Civil War. When the war ended the Fed reversed course, triggering the severe (though mercifully brief) plunge of 1920-1921.

Instead of learning a lesson, in the later 1920s the Fed turned to easy money again. But bankers had learned a lesson, and so refused to borrow from it even at low rates. Consequently the Fed, taking advantage of some fine print in the Federal Reserve Act, started buying large quantities of U.S. securities on the open market. The result was an unprecedented stock bubble, which the Fed only managed to prick, in late 1929, by choking-off normal business credit. During the ensuing panic the Fed, pleading impotence, stood by while the U.S. money stock lost a third of its pre-crash value. The “great contraction” — the worst credit-crunch in U.S. history — culminated in the national bank holiday of March 6th through March 12th, 1933, during which the domestic gold standard, which the Fed was supposed to preserve, was permanently disabled.

There’s more here. The Fed funded the war. Did the Fed go beyond funding to influence war policy itself?

Click through to YouTube. Watch the whole playlist.

Now, what do you think? Now, what do you think of the third paragraph excerpted from Jackson’s letter?

And what are you going to do about it?

Immigration was at the centre of the election campaign today as it emerged that virtually every extra job created under Labour has gone to a foreign worker.

Figures suggested an extraordinary 98.5 per cent of 1.67million new posts were taken by immigrants [...]

Arguably, the most damaging charge of them all. New Labour’s election manifestos made little or no mention of immigration policy.

But according to a draft report by the Cabinet Office, written in 2000, ministers had a secret plan to ‘maximise the contribution’ of migrants to the Government’s ‘social objectives’.

Former Labour advisor Andrew Neather, who worked on the report, said the aim was to ‘rub the Right’s nose in diversity and render their arguments out of date.’

It’s nothing to do with free trade.

The NYT and “free trade” economists haven’t caught on, because they mistakenly think that offshoring is trade. In fact, offshoring is labor arbitrage. US labor is simply removed from production functions that produce goods and services for US markets and replaced with foreign labor. No trade is involved. Instead of being produced in America, US brand names sold in America are produced in China [...]

The messy details of multiple equilibria don’t have the ideological elegance of faith-based free trade theories.

There is no evidence that consumer prices fall by more than incomes so that US citizens can be said to benefit materially. The psychological experience of a citizen losing his career to a foreigner is alienating.

The free market economists ignore that a country that offshores its production also offshores its jobs. It becomes dependent on goods and services made in foreign countries, but lacks sufficient export earnings with which to pay for them. A country whose workforce is being reallocated, under pressure of offshoring, to domestic services has nothing to trade for its imports. That is why the US trade deficit has exploded to over $800 billion annually.

Among all the countries of the world, only the US can get away with exploding trade deficits. The reason is that the US inherited from Great Britain, exhausted by two world wars, the reserve currency role. To be the reserve currency country means that your currency is the accepted means of payment to settle international accounts. Countries pay their oil import bills in dollars and settle the deficits in their trade accounts in dollars.

Faith-based free trade advocates claim that prices will fall offsetting the loss of income caused by outsourcing.

When I ask for evidence of that claim all I get are exasperated non sequuntur.

I explain that real prices are subject to fiat control through the money system. That the same people who benefit from fiat money also benefit from inflation. That inflation means real prices rise. That we actually have real declining income from outsourcing and real increases in prices.

It’s like talking physics with an Aristotelian who denies the evidence before his very eyes. Whatever.

This exploitative situation cannot continue indefinitely. As Roberts wrote,

When free market economists align, as they have done, with foreigners against American citizens, they destroy their credibility and the future of economic freedom. Recently, the Independent Institute, with which I am associated, stressed that free market associations “have defended completely open immigration and free markets in labor,” emphasizing that 500 economists signed the Independent Institute’s Open Letter on Immigration in behalf of open immigration.

Such a policy is satisfying to some in its ideological purity. But what it means in practice is that the Americans, who are displaced in their professional and manufacturing jobs by offshoring and work visas for foreigners, also cannot find work in the unskilled and semi-skilled jobs taken over by illegal immigrants. A free market policy that gives the bird to American labor is not going to win acceptance by the population. Such a policy serves only the owners of capital and its senior managers.

The cat is out of the bag. The people know the bailouts were a theft from the middle class to the bankers. The people know that outsourcing  and unfettered immigration hurt them.

Unlike the faith-based economists, the average person can plainly see that wages are down, prices are up, and that owners of capital loot the wealth of the people.

It’s too late. People know,

[..] why in the world should an employer pay an American $50,000-$100,000 a year, plus benefits including health care, social security, disability, retirement, worker’s comp, 12 weeks unpaid (and some in the Obama Administration want it to be paid leave.) unemployment insurance, fear of wrongful termination suits, etc., etc.? Increasingly, employers are choosing to get work done by automation, part-time/temp workers, and offshoring. The latter is becoming ever more prevalent even for the previously thought-to-be-immune knowledge work, as Asian universities are revamping their curriculum to emphasize creativity, entrepreneurship, etc. And all those Asian workers can be hired for a fraction of the cost of an American.

Too, the uncontrolled inflow of illegal immigrants exerts downward pressure on salaries. The average illegal immigrant has little education and poor English skills and so is willing to do low-level jobs, on which they pay little or no tax. That floods the market of applicants for higher level jobs thus driving their salaries down, and making it harder to land a job at all [...]

For the foreseeable future, ever more Americans will have to settle for $10-an-hour jobs, living very modestly, paycheck to paycheck, with little or nothing saved for retirement. We’ll work ’til we drop…if we’re lucky enough to have a job. It’s part of the decline and fall of the American empire.

Most of the indicted militia members accused of being anti-government extremists have active voting records, a check with area voter registration offices showed yesterday.

One is a registered Democrat, and the party affiliations of the rest could not be determined.

Jacob J. Ward, 33, of Huron, Ohio, voted as a Democrat in the 2004 and 2008 primary elections, and in 10 other elections since 2000. Voters’ political affiliations in Ohio are determined by which party’s ballot they request during even-year primary elections.

(h/t Insty)

In May 2004, FBI agents driving a black Suburban and wearing SWAT gear ran Evertson off the road near his mother’s home in Wasilla, Alaska. When Evertson was face down on the pavement with automatic weapons trained on him, an FBI agent told him he was being arrested because he hadn’t put a federally mandated sticker on a UPS package.

A jury in federal court in Alaska acquitted Evertson, but the feds weren’t finished. They reached into their bag of over 4,500 federal crimes and found another ridiculous crime they could use to prosecute him: supposedly “abandoning” hazardous waste (actually storing, in appropriate containers, valuable materials he was using for the clean-fuel technology he was developing). A second jury convicted him, and he spent 21 months in an Oregon federal prison.

Heritage has been on this for a long time, but the inexorable march of jack-booted tyranny continues.

The origin of modern criminal law can be traced to early feudal times. From its inception, the criminal law expressed both a moral and a practical judgment about the societal consequences of certain activity: to be a crime, the law required that an individual must both cause (or attempt to cause) a wrongful injury and do so with some form of malicious intent. Classically, lawyers capture this insight in two principles: in order to be a crime there must be both an actus reus (a bad act) and a culpable mens rea (a guilty mind). At its roots, the criminal law did not punish merely bad thoughts (intentions to act without any evil deed) or acts that achieved unwittingly wrongful ends but without the intent to do so. The former were for resolution by ecclesiastical authorities and the latter were for amelioration in the tort system. As Hanousek demonstrates, this classical understanding of criminal law no longer holds.

To these fundamental changes in the nature of criminal liability one must also add significant changes in the subject matter of criminal law. At its inception, criminal law was directed at conduct that society recognized as inherently wrongful and, in some sense, immoral. These acts were wrongs in and of themselves (malum in se), such as murder, rape, and robbery. In recent times the reach of the criminal law has been expanded so that it now addresses conduct that is wrongful not because of its intrinsic nature but because it is a prohibited wrong (malum prohibitum) — that is, a wrong created by a legislative body to serve some perceived public good. These essentially regulatory crimes have come to be known as “public welfare” offenses.

This is a direct result of the rise of the Administrative State.

The rise of the administrative state that is such an integral feature of modern liberalism thus required the defeat of the separation of powers as a governing principle, at least as it was originally understood, and its replacement by a system that allows delegations of power, combination of functions, and the insulation of administration from the full measure of political and legal control.

And how do unaccountable government administrators act? Just like thugs.

If you don’t like living in a police state, then know your rights, insist on your rights, use your rights, lobby elected officials, support pro-liberty candidates, act in your local community to stop excessive criminalization.

Do it! Go!

(h/t Cato)

The current $350 million ad campaign for the 2010 Census, including the much-maligned $2.5 million Super Bowl spots, urges individuals to “Tell your story.” The Census Bureau is particularly eager for minorities and illegal immigrants to do so, as they are traditionally believed to be the most undercounted.

Yet widespread non-compliance, especially among those most likely to be discriminated against by a majority, may not be rooted strictly in the “ignorance” the ads are designed to overcome. History—including very recent history—shows that the information provided to the Census can be used against you.

The most recent examples occurred in 2002 and 2003, when the Census Bureau turned over information it had collected about Arab-Americans to Homeland Security.

Data from the 1940 Census was used to intern Japanese, Italian, and German Americans following the U.S.’s entry into the war, and to monitor and persecute others who escaped internment. In addition to providing geographic information to the War Department, the Census Bureau released the name, address, age, sex, citizenship status and occupation of Japanese Americans in the Washington, D.C., area to the Treasury Department in response to an unspecified threatagainst President Franklin Roosevelt in 1943.

The government exempts itself from its own rules. They have always done what they will, when they will. You and your data are not safe.

The Constitution only delegates the power to enumerate the citizenry for the purposes of apportioning taxes and representation.

Representatives and direct taxes shall be apportioned among the several states which may be included within this union, according to their respective numbers, which shall be determined by adding to the whole number of free persons, including those bound to service for a term of years, and excluding Indians not taxed, three fifths of all other Persons.The actual Enumeration shall be made within three years after the first meeting of the Congress of the United States, and within every subsequent term of ten years, in such manner as they shall by law direct.

Nevertheless, courts have ruled that the census can gather any information the government wants.

It is constitutional to include questions in the decennial census beyond those concerning a simple count of the number of people. On numerous occasions, the courts have said the Constitution gives Congress the authority to collect statistics in the census [...]

The census does not violate the Fourth Amendment. Morales v. Daley, 116 F. Supp. 2d 801, 820 (S.D. Tex. 2000). In concluding that there was no basis for holding Census 2000 unconstitutional, the District Court in Morales ruled that the 2000 Census and the 2000 Census questions did not violate the Fourth Amendment or other constitutional provisions as alleged by plaintiffs. (The Moralescourt said responses to census questions are not a violation of a citizen’s right to privacy or speech.) “…[I]t is clear that the degree to which these questions intrude upon an individual’s privacy is limited, given the methods used to collect the census data and the statutory assurance that the answers and attribution to an individual will remain confidential. The degree to which the information is needed for the promotion of legitimate governmental interests has been found to be significant.

For the courts, it doesn’t matter that census data has actually been used against people in flagrant violation of fourth and fifth amendment protections. The courts just declare that the intrusion upon people is “trivial.” Ask the interned Japanese about that one. It’s not “trivial.”

For the courts, it doesn’t matter that the plain meaning of the census clause provides a single goal of the census – enumeration. It then gives the government broad discretion “in such a manner” to achieve that goal. The courts invent new tyrannical powers by conflating and combining means and ends.

It’s a transparent semantic inversion to advance the Big Brother state.

Ricardo makes it clear that for trade to make both countries better off, trade must be based on comparative advantage. Ricardo gives reasons why, in his time, factors of production are internationally immobile.

Since the time of Ricardo, the key assumption of trade theory remains, in the recent words of trade theorist Roy J. Ruffin, “the inability of factors to move from a country where productivity is low to another where productivity is higher.” In a recent article in History of Political Economy (34:4, 2002, pp. 727-748), Ruffin shows that Ricardo’s claim over Robert Torrens as the discoverer of the principle of comparative advantage lies in Ricardo’s realization that comparative advantage, the basis of the case for free trade, lies in “factor immobility between countries.” Ruffin notes that “of the 973 words Ricardo devoted to explaining the law of comparative advantage, 485 emphasized the importance of factor immobility.”

If factors of production are as mobile as traded goods, the case for free trade–that it benefits all countries–collapses. There is no known case for free trade if factors of production are as mobile as traded goods. [...]

The international mobility of factors of production is a new phenomenon. It permits first world businesses, seeking lower costs, greater profits, and a stronger competitive position, to substitute cheap foreign labor for the entire range of domestic labor involved in the creation of tradable goods and services. Only labor involved in non-traded goods and services is safe from foreign substitution. It is not yet possible to package hair cuts, surgical operations, dentistry or home repairs as internationally tradable services.

Many people confuse the workings of capitalism that lead to lower costs and greater profits with free trade. They overlook the necessary conditions for free trade to be mutually beneficial. The same people tend to confuse the free flow of factors of production with free trade. I have been amazed at the number of fierce adherents of free trade, even among economists, who have no idea of the necessary conditions on which the case for free trade rests. [...]

Some try to avoid the issue of comparative advantage with an argument that we always benefit anytime we can acquire a good or service at a lower opportunity cost. This is true as partial equilibrium analysis. If 20,000 US workers involved in the production of brassieres lose their jobs to cheaper foreign producers, their loses will be outweighed by gains to 100 million American women. However, we cannot generalize this argument without the assumption of trade based on comparative advantage. If the full range of domestic labor involved in tradable goods and services can be replaced by cheaper foreign labor, the loss of incomes outweighs the lower prices. The lower prices themselves will be lost to currency devaluation. [emphasis mine ...]

Another widely made error is to assume that US labor displaced by outsourcing, off shore production or the Internet moves into US export industries to meet increased demand for US goods from countries whose labor is made more productive by the inflow of US capital and technology. This model assumes that comparative advantage reigns. The model does not work if absolute advantage reigns.

Outsourcing companies acquire an absolute advantage not a comparative advantage. Outsourcing is not creative destruction. It’s just destruction.

It’s time free trade advocates stop ducking the issue. Outsourcing is bad for Americans.

On December 30, in one of the deadliest attacks in CIA history, an Al Qaeda double agent schemed his way onto a U.S. base in Afghanistan and blew himself into the next life, taking seven Americans with him. How could this have happened? Agency veteran Robert Baer explains, offering chilling new details about the attack and a plea to save the dying art of espionage [...]

What John Deutch set in motion was the deprofessionalization of the directorate of operations, handing it over to bureaucrats who only went overseas to get a quick taste of life in the field before returning to the safety of the Beltway. The idea that an officer would spend his entire career abroad learning the fundamentals of espionage is incomprehensible to the new CIA. [...]

The fact is that Kathy, no matter how courageous and determined, was in over her head. This does not mean she was responsible for what happened. She was set up to fail. The battlefield was tilted in Al Qaeda’s favor long ago—by John Deutch and his reforms, by the directors who followed him [...]

Experience matters. Talent matters. No law, no bureaucracy can overturn The Natural Aristocracy.

President Obama’s fiscal 2011 budget will generate nearly $10 trillion in cumulative budget deficits over the next 10 years, $1.2 trillion more than the administration projected, and raise the federal debt to 90 percent of the nation’s economic output by 2020, the Congressional Budget Office reported Thursday.

In its 2011 budget, which the White House Office of Management and Budget (OMB) released Feb. 1, the administration projected a 10-year deficit total of $8.53 trillion. After looking it over, CBO said in its final analysis, released Thursday, that the president’s budget would generate a combined $9.75 trillion in deficits over the next decade.

“An additional $1.2 trillion in debt dumped on [GDP] to our children makes a huge difference,” said Brian Riedl, a budget analyst at the conservative Heritage Foundation. “That represents an additional debt of $10,000 per household above and beyond the federal debt they are already carrying.”

The Congress under Bush tripled the size of government. That was really bad. Obama has taken fascist economics to the ascending heights of insanity.

Our maniac president and his congressional minions must be stopped.

Female high school students are better students on average compared to male high school students, and they are equally or better prepared than males for the math SAT exam based on the number and level of math classes taken in high school. And yet, male students score significantly higher on the SAT math test than females, and the statistically significant male-female test score gap of more than 30 points persists over time.

And yet, we hear statements like this: “There just aren’t gender differences anymore in math performance,” says University of Wisconsin-Madison psychology professor Janet Hyde. Stereotypes are very, very resistant to change,” she says, “but as a scientist I have to challenge them with data.”

Alas, Ms. Hyde is no Dr. Jekyll. She’s just wrong.

All of these reports and many more like them are false.  In fact, consistent with many earlier studies (JSTOR), what this study found was that the ratio of male to female variance in ability was positive and significant, in other words we can expect that there will be more math geniuses and more dullards, among males than among females.  I quote from the study (VR is variance ratio):

Greater male variance is indicated by VR > 1.0. All VRs, by state and grade, are >1.0 [range 1.11 to 1.21].

Notice that the greater male variance is observable in the earliest data, grade 2.  (In addition, higher male VRS have been noted for over a century).  Now the study authors clearly wanted to downplay this finding so they wrote things like “our analyses show greater male variability, although the discrepancy in variances is not large.”  Which is true in some sense but the point is that small differences in variance can make for big differences in outcome at the top.  The authors acknowledge this with the following:

If a particular specialty required mathematical skills at the 99th percentile, and the gender ratio is 2.0, we would expect 67% men in the occupation and 33% women. Yet today, for example, Ph.D. programs in engineering average only about 15% women.

So even by the authors’ calculations you would expect twice as many men as women in engineering PhD programs due to math-ability differences alone (compare with the media reports above).  But what the author’s don’t tell you is that the gender ratio will get larger the higher the percentile.  Larry Summers in his infamous talk, was explicit about this point:

…if one is talking about physicists at a top twenty-five research university, one is not talking about people who are two standard deviations above the mean…But it’s talking about people who are three and a half, four standard deviations above the mean in the one in 5,000, one in 10,000 class. Even small differences in the standard deviation will translate into very large differences in the available pool substantially out.

(h/t Female Mysoginist)

The question of whether deposit insurance was necessary is worth asking, and I will ask it later on. But for now, the key fact is that once deposit insurance took effect, the FDIC feared that it had created what economists call a “moral hazard”: bankers, now insulated from bank runs, might be encouraged to make riskier loans than before. The moral-hazard theory took hold not only in the United States but in all of the countries in which deposit insurance was instituted. And both here and abroad, the regulators’ solution to this (real or imagined) problem was to institute bank-capital regulations. According to an array of scholars from around the world — Viral Acharya, Juliusz Jablecki, Wladimir Kraus, Mateusz Machaj, and Matthew Richardson — these regulations helped turn an American housing crisis into the world’s worst recession in 70 years [...]

The theory behind deposit insurance was (and remains) that banking is inherently prone to bank runs, which had been common in 19th-century America and had swept the country at the start of the Depression.

But that theory is wrong, according to such economic historians as Kevin Dowd, George Selgin, and Kurt Schuler, who argue that bank panics were almost uniquely American events (there were none in Canada during the Depression — and Canada didn’t have deposit insurance until 1967). According to these scholars, bank runs were caused by 19th-century regulations that impeded branch banking and bank “clearinghouses.” Thus, deposit insurance, hence capital minima, hence the Basel rules, might all have been a mistake founded on the New Deal legislators’ and regulators’ ignorance of the fact that panics like the ones that had just gripped America were the unintended effects of previous regulations.

Myth 1: This is a universal health care bill.

Fact: The bill is neither universal health care nor universal health insurance. According to the Congressional Budget Office:

• Total uninsured in 2019 with no bill: 54 million
• Total uninsured in 2019 with Senate bill: 24 million

Myth 2: Insurance companies hate this bill.
Fact: This bill is almost identical to the plan written by AHIP, the insurance company trade association, in 2009.

The original Senate Finance Committee bill was authored by a former Wellpoint vice president. Since Congress released the first of its health care bills on October 30, 2009, health care stocks have risen 28.35%. [...]

Myth 4: The bill will make health care affordable for middle class Americans.

Fact: The bill will impose a financial hardship on middle class Americans who will be forced to buy a product that they can’t afford to use.

A family of four making $66,370 will be forced to pay $5,243 per year for insurance. After basic necessities, this leaves them with $8,307 in discretionary income — out of which they would have to cover clothing, credit card and other debt, child care and education costs, in addition to $5,882 in annual out-of-pocket medical expenses for which families will be responsible. [...]

Myth 6: This bill provides health care to 31 million people who are currently uninsured.

Fact: This bill will mandate that millions of people who are currently uninsured purchase insurance from private companies, or the IRS will collect up to 2% of their annual income in penalties. Some will be assisted with government subsidies. [...]

Myth 15: This bill will stop insurance companies from hiking rates 30%-40% per year.

Fact: This bill does not limit insurance company rate hikes. Private insurers continue to be exempt from anti-trust laws, and are free to raise rates without fear of competition in many areas of the country.

Devastating.

Debt isn’t working anymore. The effect of new government debt on the economy is negative.

There’s two reasons for it. Excessive debt creates uncertainty about the US dollar. Also debt creates future obligations for tax payers, reducing the capital for private economic action.

Eventually, the national debt creates so much financial friction that it grinds the economy to a halt. That’s really bad, since it’s the economy that keeps us all alive.

The effect of a new US debt is actualy minus 45 cents in economic activity. The engines of debt are totally broken, the saturation levels reached. Ironically and tragically, the response from American leadership will be to press the monetary pedal even harder, thus achieving even worse results. Where is Paul Samuelson now, when his incorrect quantitative theory of money has been discredited? His Nobel Prize should be removed and replaced with a thousand foreclosure notices bound and sealed.

Obama’s programs will triple the national debt.

• While President Obama claims to have inherited the 2009 budget deficit, it is important to note that the estimated 2009 budget deficit has increased by $400 billion since his inauguration, and the whole point of the “stimulus” was to increase deficit spending to nearly $2 trillion based on the unproven notion that would it alleviate the recession.
• The 22 percent spending increase projected for 2009 represents the largest government expansion since the 1952 height of the Korean War (adjusted for inflation). Federal spending is up 57 percent since 2001.
• In 2009, Washington will spend $30,958 per household–the highest level in American history–and under President Obama’s budget, the figure will rise above $33,000 by 2019.
• The White House brags that it will cut the deficit in half by 2013. The President does not mention that the deficit has nearly quadrupled this year. Merely cutting it in half from that bloated level would still leave budget deficits twice as high as under President Bush.
• The public national debt–$5.8 trillion as of 2008–is projected to double by 2012 and nearly triple by 2019. Thus, America would accumulate more government debt under President Obama than under every President in American history from George Washington to George W. Bush combined.

Learn why the stimulus isn’t working.

Government just takes money out of the private economy and then puts it back. It has no net effect, a zero effect, except to enrich government cronies at the expense of Washington outsiders. By borrowing, the government avoids the zero effect. With declining utility of debt, even that option is going to kill us.

The Great Recession may be over, but this era of high joblessness is probably just beginning. Before it ends, it will likely change the life course and character of a generation of young adults. It will leave an indelible imprint on many blue-collar men. It could cripple marriage as an institution in many communities. It may already be plunging many inner cities into a despair not seen for decades. Ultimately, it is likely to warp our politics, our culture, and the character of our society for years to come.

Economist Don Boudreaux wrote to the Wall Street journal about the media’s improper comparisons between Europe and the US.

From 1990 through 2008, America’s unemployment rate averaged 5.5 percent while western Europe’s unemployment rate averaged 8.4 percent – just about what America’s unemployment rate reached only last month [March 2009] (8.5 percent).  Moreover, in each and every one of these years, America’s unemployment rate was lower – and in many years 40 and even 50 percent lower! – than western Europe’s rate.  How can Mr. Rasmussen rationally conclude that American capitalism has failed relative to European state welfarism if unemployment in the U.S. only last month, for the first time in more than a quarter century, reached a level that has haunted Europeans consistently for the past two decades?

Mr. Rasmussen cannot “rationally conclude,” but he can prey upon the ignorance of many Americans about the real standard of living in Europe.

Americans today are not bound to meekly accept the most far-ranging assertions of congressional power based on large extrapolations from Supreme Court cases that themselves come from a short period (the late 1930s and early 1940s) when the Court was more supine and submissive to claims about centralized power than was any other Supreme Court before or after in our history. American citizens, in the political process and in their personal lives, will ultimately have the final word on the Constitution.

A large and permanent majority of the American people immediately accepted Social Security as a constitutional solution to poverty among the elderly and to massive unemployment (since Social Security would open up jobs by encouraging people to retire sooner). The American people have not accepted Obamacare as a constitutional solution to health insurance problems. If the American believe that there is a “crisis” about the high cost of health insurance, then the American people can also believe that the solution is not to punish people for refusing to buy overpriced insurance that they don’t want. The American people can reject the notion that our Constitution should be contorted and distorted to accommodate such a destructive and intrusive scheme.

It is eminently within the authority of We the People to act politically on our constitutional beliefs that the congressional power to regulate interstate commerce does not extend to forcing people to buy a product which Congress has forbidden to be sold across state lines; that the power to regulate interstate commerce is not the power to compel a person to participate in instrastate commerce; and the that power to levy income or excise taxes does not include the power to impose punishment in the form of punitive taxes on persons who choose not to buy something–or who choose whether to wear hats and when to sleep.

Look. We are a free peoples. Political action is social action.

You must act to convince your fellow citizens not to accept statist interpretations of the Constitution. You must explain your reasons, and you must therefore be informed and be reasonable.

Neither your fellow citizens, nor you, have a right to an opinion. We have a duty to change the opinions of our fellows, if they have a mind for tyranny.

Act. Convince. go crazy and actually read the laws you live under. Go to city council meetings. Write your congressman. Write an op-ed. Obstruct statist measures in your local community. Use your rights to the fullest, on principle, to program the government to back the hell off. Advocate for freedom. Do something. If you won’t, then who will?

Get the lead out, get off your ass, and get to work on your own liberty.

The Democrats’ economic thinking — and other thinking — did not begin with the inauguration of Obama. Almost ten years ago, I interviewed Phil Gramm, the economist-politician who had just announced his retirement from the Senate. He said that of course the Democratic party was socialist, “if by ‘socialist’ you mean the redistribution of wealth, more decisions made by the central government — no question about it. My grandmother thought of the Democrats as the party of the people. What they are is the party of government.”

But for most contemporary “liberals,” the people are the government, and the government is the people — no difference, really. (And, frankly, you could make a case.)
It has long been the dream of contemporary liberal Democrats to make the United States more like Scandinavia, more like Europe in general. They have long been embarrassed by American “exceptionalism.” I think in particular of the kids — the American kids — I studied abroad with. Every American difference made them cringe. They are the ones who slapped the Canadian maple leaf on their backpacks. And now people much like them are in control of the American government, or most of it.

Pelosi & Co. kept calling Sunday’s vote and achievement “historic.” They were quite right. This is a milestone on the way to American Europeanization, or de-exceptionalization.

Many Americans think that Europe is a nicer place. They’re wrong.

If you’re very wealthy, of course, you can re-create an American living standard in the heart of Europe.  In fact, while Europe is a bad place to get rich, it is arguably the best place to be rich.  Consider: in exchange for steep taxes and tolls, European motorists get the ability and de facto right to drive 100 miles per hour.  If you’re in the top 5% of the American income distribution, that’s a pretty good deal.  For Bill Gates, it’s a steal.

[...] as a social scientist, I have to give credit where credit is due.  Europe is a better place for most people to visit.  But America is a better place for most people to live.

Europe’s future looks even darker than ours. America has a higher standard of living. America is richer than Europe.

America today is richer than Western Europe. Indeed, per-capita living standards are about 30 percent higher in the United States — and that’s according to the statists at the Paris-based Organization for Economic Cooperation and Development (see page 6 of this report). And we have been growing faster, which presumably should not be the case according to convergence theory (see Annex Table No. 1 ofthis OECD database) [...]

Left-wing populists genuinely seem to believe that the economy is a fixed pie, so even though they are fundamentally wrong, their fixation on redistribution is understandable. After all, given their inaccurate view of the world, robbing Peter is the only way to lift Paul. What is more mystifying is why the (presumably) thoughtful left wants America to be more like Western Europe, where living standards lag America and the gap grows wider with each passing year. The only logical conclusion is that they are so fixated on differences in income (or, less charitably, are so resentful of success) that they are willing to make poor people worse off if they can impose even greater damage on rich people.  As Winston Churchill noted, “The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries.”

By objective measures, America is a better place to live than the Europe. We shouldn’t copy Europe, but Europe should copy us.

What of any consequence remains beyond the state’s reach in the United States today? Not wages, working conditions, or labor-management relations; not health care; not money, banking, or financial services; not personal privacy; not transportation or communication; not education or scientific research; not farming or food supply; not nutrition or food quality; not marriage or divorce; not child care; not provision for retirement; not recreation; not insurance of any kind; not smoking or drinking; not gambling; not political campaign funding or publicity; not real estate development, house construction, or housing finance; not international travel, trade, or finance; not a thousand other areas and aspects of social life [...]

The areas of life that remain outside the government’s participation, taxation, subsidization, regulation, surveillance, and other intrusion or control have become so few and so trivial that they scarcely merit mention. We verge ever closer upon the condition in which everything that is not prohibited is required. Yet, the average American will declare loudly that he is a free man and that his country is the freest in the world. Thus, in a country where more and more is for the state, where virtually nothing is outside the State, and where, aside from pointless complaints, nothing against the State is permitted, Americans have become ideal fascist citizens. Like the average German during the years that Hitler ruled Germany, most Americans today, inhabiting one of the most pervasively controlled countries in the history of the world, think they are free.

You think he’s exaggerating? Think again. Consider this bill.

An individual, including a citizen of the United 13 States, determined to be an unprivileged enemy belligerent 14 under section 3(c)(2) in a manner which satisfies Article 15 5 of the Geneva Convention Relative to the Treatment of 16 Prisoners of War may be detained without criminal 17 charges and without trial for the duration of hostilities 18 against the United States or its coalition partners in which 19 the individual has engaged, or which the individual has 20 purposely and materially supported, consistent with the 21 law of war and any authorization for the use of military 22 force provided by Congress pertaining to such hostilities.

If it passes, citizens would face suspension of habeas corpus, lose the right to legal counsel, fear indefinite detention without charge, and endure cruel and unusual interrogations. This fascist bill was sponsored by Mussolini wannabe, John McCain (R-AZ).

This is the new America. Neo-conservatives take your liberty to protect law and order. Liberals take your liberty to protect the “less fortunate.”

There is no moderate middle ground between fascism and socialism. There is no middle way. We must stand together before the government beast and say, “no way!” It’s the only way.

* For younger readers, that’s a play on the acronym USSR.

Congress can pass a federal health care bill and President Obama can sign it, but that doesn’t mean the states plan to abide by it.

Lawmakers in 30 states are pressing for constitutional amendments to exempt individuals from the requirement to purchase health care, a pivotal piece of the legislation under debate in Congress.

State attorneys-general are filing suit to prevent enforcement of socialist helath care in their states. Texas. Virginia. South Carolina. Florida. And seven others.

Obama’s socialist health care law is blatantly unconstitutional.

A mandate requiring all individuals to purchase health insurance would be an unprecedented form of federal action. The government has never required people to buy any good or service as a condition of lawful residence in the United States. An individual mandate would have two features that, in combination, would make it unique. First, it would impose a duty on individuals as members of society. Second, it would require people to purchase a specific service that would be heavily regulated by the federal government.

59% of Americans disapprove of the USSA socialist healthcare law. The Democratic congress may have destroyed the Democratic Party. It’s a political suicide attack.

It’s easy for a Democratic suicide attack to succeed tactically, but they can’t win their war for socialism with kamikaze tactics. It ain’t over until it’s over.

The Senate bill is primed to become law once President Obama signs it, but the Senate must still pass the reconciliation bill that will alter the main bill in order for Democrats’ work on health care to be over. Among other things, the bill would strip the Senate bill of politically-toxic provisions like the so-called “Cornhusker Kickback.”

Republicans, however, plan to obstruct the process every way they know how, from offering hundreds of amendments to challenging whether elements of the bill are allowed under the rules of the special process of reconciliation. For anyone who may have expected Republicans to give up their opposition after last night’s vote, Sen. Judd Gregg (R-N.H.), the top Republican on the Senate Budget Committee, made it clear yesterday passing the reconciliation bill would be a battle.

So, keep fighting.

Update: There is a silver lining in the dark cloud of Obamacare socialism.

In an Obamacare world, what is the GOP’s message? “We need to become the party of liberty and freedom,” Ryan argues. “We’re not doing enough. We can do better, and we will — because we have no choice. If we’re going to offer the country a completely different vision, we can’t be Democratic-lite or resign ourselves to be slightly more efficient managers and tax-collectors for the welfare state. We have to break with that and give people a clear and distinct difference.”

Related: 36 state legislatures seek to nullify or limit Obama’s socialist healthcare law.

States have an extensive and complicated shared power relationship with the federal government in regulating various aspects of the health insurance market and in enacting health reforms.

As part of state-based responses to federal health reform legislation, individual members of at least 36 state legislatures are using the legislative process to seek to limit, alter or oppose selected state or federal actions, including single-payer provisions and mandates that would require purchase of insurance. In general the measures seek to make or keep health insurance optional, and allow people to purchase any type of coverage they may choose.  The individual state language varies.

Related: Enslaved at last! Thank God Almighty we’re enslaved at last!

Update: Political consciousness, arise! Klatu, barada nictu.

Now the political consciousness of an enormous number Americans is entirely focused on government and the political class. There is a genuinely grassroots “liberty movement” in this country that has not existed in my lifetime – perhaps not in a century or more. And they are not interested forming in a third party.

If the Democratic Party could survive slavery, it should be able to survive the passage of this health care bill. But then again, until the Civil War, slavery was less unpopular in the United States than is this bill.

Read it and weep.

Gallup’s underemployment measure hit 20.0% on March 15 — up from 19.7% two weeks earlier and 19.5% at the start of the year. Gallup Daily tracking makes it possible to monitor the underemployment rate throughout the month, rather than just once per month, making it the best and most timely way to measure the U.S. jobs situation.

The ugly truth.

Your government caused this. Your government hates you. Hate it back.

Why are you blind? Because you won’t read up on the Federal Reserve system. It was designed to steal the country from the people.

We have a system of self-government. Please, read up on this stuff before it’s too late.

At the very least, know what money really is.

Do you get it now?

Private banks don’t make loans because they have extra deposits lying around. The process is the exact opposite:

(1) Each private bank “creates” loans out of thin air by entering into binding loan commitments with borrowers (of course, corresponding liabilities are created on their books at the same time. But see below); then

(2) If the bank doesn’t have the required level of reserves, it simply borrows them after the fact from the central bank (or from another bank);

(3) The central bank, in turn, creates the money which it lends to the private banks out of thin air.

It’s not just Bernanke … the central banks and their owners – the private commercial banks – have been running the printing presses for hundreds of years [...]

It is – in fact – a monopoly system. Specifically, only private banks and their wholly-owned central banks can run printing presses.

[...] last October that more than 80 percent of the first $1 billion in grants to wind energy companies went to foreign firms. Since then, the administration has stopped making announcements of new grants to wind, solar and geothermal companies, but has handed out another $1 billion, bringing the total given out to $2.1 billion and the total that went to companies based overseas to more than 79 percent.

The government takes your money and gives it to foreign companies to employ foreign workers.

They tell you to become more productive, to work harder, to compete in the global market. You know the truth. The dice are loaded. The government uses your own money against you.

Go Galt. Live cheap and work less. Deny the system your productivity and tax dollars.

Software giant Microsoft will begin outsourcing general legal work to India after signing a deal with legal process outsourcing (LPO) company CPA Global. The news comes as CPA outlined plans to expand its Indian workforce from 600 to 1,000 by the end of 2011, and hinted at opening another outsourcing centre.

The tax code encourages outsourcing. The US government forces taxpaying citizens to subsidize jobs for foreigners.

If you are a US worker at any level - blue collar or white collar – your government hates you. The government wants you broke and dependent.

It’s just that simple.

Mike, from Washington County, got married and he and his wife had a baby girl.

Years later, he found out that his wife had been cheating on him for the entire length of their marriage.

Mike filed for divorce and demanded a paternity test on the child.

“Got the results back and it was zero percent chance that I am the biological father,” he said.

His wife moved in with her lover and took the daughter with them. Then she sued Mike for child support and in a ruling that shocked Mike, the courts ordered him to pay, declaring Mike to be the lawful father.

“So they’re basically rewarding the adulterous liars for being adulterous and lying and deceiving,” he told KDKA-TV.

Judge David Wecht, who ruled in the case, says his hands were tied by state law – an old law that states when a child is born into an intact marriage, the husband in that marriage is presumed to be the father.

The law was written before paternity tests and Wecht says he couldn’t even consider the scientific evidence.

When men marry, they lose all of their reproductive rights. All of them.

When you think about marrying, stop. Don’t do it. There is no rational reason to marry.

Related: Huge numbers of men are forced to pay child support for children that aren’t theirs.

Last year, the Tennessee Department of Human Services tested more than 7,000 men who had been named as fathers by women seeking child-support or government assistance. Approximately 2,000 of the men — roughly 27 percent — were not the biological father, DHS records show.

The percent is roughly the same in the Davidson County Juvenile Court, which sometimes orders its own DNA testing. In addition, researchers estimate that in the general population about one in 10 Tennessee men named as biological fathers in specific cases are not.

That number, experts say, is true nationally.

Related: A woman must demonstrate sexual self-control and fidelity. Few modern women can do it.

Men do not have to prove their worthiness to anybody. They are the ones who bear the primary costs of marriage. It is a woman’s responsibility to prove she is worthy of the privilege of becoming a man’s helpmeet and bearing his children. It takes a strict upbringing to form a tiny female savage into such a lady. Today, that form of upbringing is mostly a thing of the past: marriageable women are becoming difficult to find, and the costs of searching for them are getting too high.

A man should never base his self-image on what women think of him in any case, because women’s concerns are too materialistic and self-centered.

The image of banks locking their doors to keep customers from making withdrawals during a bank run is what immediately came to mind when we heard that Citigroup was telling customers it has the right to prevent any withdrawals from checking accounts for seven days.

“Effective April 1, 2010, we reserve the right to require (7) days advance notice before permitting a withdrawal from all checking accounts. While we do not currently exercise this right and have not exercised it in the past, we are required by law to notify you of this change,” Citigroup said on statements received by customers all over the country.

Related: FDIC failed bank list.

Related: Only 21% Say U.S. Government Has Consent of the Governed. The bailouts were such obvious thefts, they changed forever how the American people understand their government. Americans now see what our government really is – a massive extortion operation for the economic elites.