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Jul 21, 2015

Is Obama's Deal Less Damaging Than Bush's Invasion?

The left is saying that Obama’s agreement with Iran is less damaging than Bush invading Iraq.  Given their own arguments, this can’t be true.  As the left reminds us constantly, Iraq had no weapons of mass destruction. Under Barry the Brilliant's agreement, Iran will have nuclear weapons in at most 10 years time. A failed state in Iraq can inflict at most one World Trade Center scale attack on the US. While that would be terrible, three thousand killed would be dwarfed by the casualties of a successful nuclear attack on New York City. The left seems to be arithmetic challenged in both budgetary and military matters.

The Smartest President Ever has maneuvered the world to the point where Israel's only option appears to be war with Iran. Ironically, this appears to be the only option left to Saudi Arabia as well. The Saudis and Israelis have been quietly discussing cooperation in the last year or so.

The deal gives Iran access to $150 billion of frozen assets. To put this in perspective, Iran has about $55 billion in oil revenue per year. I don't think Iran's enemies in the region will permit Iran to sell oil in addition to the $150 billion they will have to spend on weapons and financing terrorism. About 90% of Iranian oil exports pass through the Kharg Island oil terminal, which is about 16 miles offshore. It is packed with oil storage tanks. We will know the war has started when we see a big fire on Kharg Island which destroys the oil terminal. In the Iran Iraq war (1980-1988), Saddam Hussein's air force knocked out Kharg Island.

The biggest problem that the Community Organizer in Chief has created with his extended diplomacy is the fortification of Iran's nuclear infrastructure. It's now the case that to destroy key facilities would probably require a 30,000 pound enhanced bunker buster bomb. Only the US Air Force has the capability to deliver this conventional explosive bomb against Iran's current air defenses. The Saudis and Israelis would need to use nuclear weapons. The Israelis have an estimated 150 nuclear warheads. The Saudis financed Pakistan's bomb, so they can always buy a few if they need to.

So all of this "peaceful" diplomacy has created a situation where war is almost inevitable. The only good news is that it won't involve US military action right away. We will probably have to pay some ransom to get back our troops in Iraq from Iran's control, but that's the end of our short term involvement.

Longer term, the world will be a huge mess we have to live in.

Who's the Bigger Spender, Bush or Obama?

Liberals are still trying to tell everyone that Bush is a bigger spender than Obama.  What I look at are the total debt figures published by the US Treasury. Using Treasury figures, the total federal debt now stands at $18.15 trillion. On 9/30/2009 at the start of the first full fiscal year of the Obama administration, the debt was $11.91 trillion. Doing the math gives an increase of $6.24 trillion so far for Obama. On 9/30/2001, the start of the first full fiscal year after Bush took office, the debt was at $5.81 trillion. Subtracting that from the 11.91 trillion in 2009, we get $6.1 trillion for Bush's full 8 years. Using just simple math and US government figures, Obama is already ahead with more than 2 years to go. The figures liberals are using are contrived to hide what's actually going on. The net debt figures are never messed with. These are readily available figures, but they are never mentioned on MSNBC, because liberals believe that welfare comes from an always full pot of gold at the end of the rainbow and never has to be worked for or paid for.

Liberals Force Me to Play Identity Politics

I'm tired of liberals assuming I'm intolerant racist due to their ignorant prejudices. So let's play identity politics. My sister in law is black and she's the best thing that ever happened to my little brother. I go to a Protestant church once a year for Easter. My wife is not a Christian. Three of my grandparents were from three different varieties of Christianity. One of my grandfathers was Jewish. My family was always in favor of civil rights since the 1850's, when they freed all of their slaves in Virginia, bought them passage to Liberia and gave them money to buy land once they got there. It wasn't safe for freed slaves to remain in 1850's Virginia.

In Montana we were unpopular because we paid "white" wages to Indians working on our ranch. My Jewish grandfather was not able to buy real estate or rent apartments in certain areas in and around Chicago. My grandmother, a Methodist, had the deed or the lease in her name so they could live wherever they wanted. The Civil Rights Act of 1964 outlawed the restrictive covenants on deeds and leases that kept Jews from buying land in restricted areas.

Historically it's true that Republicans were more in favor of civil rights than Democrats. I think that's still true.  Today there are two black Senators, Democrat Cory Booker from New Jersey and Republican Tim Scott from South Carolina. If Republicans are all as racist as liberals assume, then they must all need new glasses down there in South Carolina. I think Mr. Scott was elected for being a Tea Party Republican. I don't think his race mattered at all. I also think his existence gives the lie to the Democrats' narrative that America has not improved since the Jim Crow Era, especially in Dixie. In 1963, Mr. Scott would not have been able to register to vote in South Carolina. Today, he's Senator Scott, the first black US Senator ever elected from South Carolina, the Cradle of the Confederacy with an electorate that's over 60% white. It's curious that the mainstream media did not think Mr. Scott's election was newsworthy. I wonder why that is?

Jul 13, 2015

Why Liberals See Racism Everywhere

In the past year, the loud dominating liberal drum beat of racism charges has been a constant presence in domestic news coverage.  Any evidence to the contrary is ignored.  In 2014, South Carolina elected a Tea Party Republican to finish out the Senate term of Jim DeMint.  This doesn't sound too exciting until you look at Tim Scott's picture.  Mr. Scott is the first black Senator ever elected by South Carolina, the Cradle of the Confederacy.  The liberal press didn't think Mr. Scott's election was newsworthy, so they didn't cover it.  Liberals try to hold on to black votes by giving the impression that Jim Crow racism is alive and almost unchanged throughout the country.  Further, all of the racism they see is brought to you by lily white Republicans.  When an event, like Mr. Scott's election, does not fit this narrative, it's ignored.  

If black voters actually examined the record of what Democrats have done for them, or more accurately to them, black voters would not give 90% of their votes to Democrats.  The worst pockets of inner city minority poverty have almost without exception been under one party governments for generations.  The record of failure is quite clear.  Fear is needed to motivate minority voters stuck in these hell holes to keep voting for the failed policies that leave them with no hope.

This isn't to say that racism has been totally eliminated.  But saying that racism today is just as bad as it was in 1963 is ridiculous.  In 1963, Tim Scott couldn't even have registered to vote in South Carolina.  Now, he's US Senator Scott. 

Jul 12, 2015

Supreme Court Reignites Culture Wars

According to the main stream media, aka the Pravda Press, the culture wars have been rekindled.  I agree, but I think the Supreme Court lit the match.  The Supreme Court has made it a habit of removing social issues from legislative debate by issuing edicts under the color of legal opinions. It's the edicts, not the social issues themselves, which cause big emotional arguments. The Supreme Court is abusing its power by rewriting laws and inventing Constitutional provisions.  I think that Roe v Wade should have taught us that the problem is not the issue of abortion itself.  The problem is the Supreme Court finding things in the Constitution that are not really there.

In 1868, when the 14th Amendment was adopted, homosexual acts were illegal in every state. The legislators who ratified it thought it was about race. The Supreme Court had to make it up to use the 14th Amendment to proclaim same sex marriage as a Constitutional right. If the Supremes had ruled that under the full faith and credit clause of the Constitution, a marriage legally performed in one state must be recognized on all states, there would have been right wing grumbling but not the explosion you're seeing now. The way the decision was reasoned basically says that 5 Supreme Court Justices can do whatever they want. There are no Constitutional limits which they will respect.

In the bakery case, it's rule of law, free speech and freedom of religion versus political correctness. The basic idea of the rule of law is that everyone should be able to know what the law is in advance so they can obey it. In this case, nobody could know that the fines imposed for refusing to create a wedding cake for gay marriage were going to be more than the annual profits of the entire bakery. People would generally feel that you sell standard goods to everyone, but you have the right as an artist to refuse to put images and messages on custom cakes that go against your convictions or religious beliefs. For example, you should not be forced to make a Hitler themed birthday cake, especially if you're Jewish. The administrative law "judge" made it up. There was no precedent for the finding. There was no precedent for the size of the fine or damages, whatever you want to call the $135,000 assessment against the Oregon bakers. It was a lawless act. 

It's typically minorities that need a strong rule of law to protect themselves from angry mobs. At the moment, gay marriage has an angry mob on its side. Liberals must be very foolish not to see the possibility that mobs might form with irresponsible opposing viewpoints. If there's no law, whoever has the biggest mob wins.

At this point most liberals tune out because they assume I’m a Christian fundamentalist racist bigot.  So now I have to play identity politics.  I believe that married gay couples need to own guns to protect their homes, children and marijuana plants. I go to a Protestant church once a year for Easter. My wife is not a Christian. My sister in law is black and she's the best thing that ever happened to my brother. I'm 64. I grew up in Montana. My family was a little unpopular because we paid "white" wages to Indians working on our ranch. I plan to attend a gay wedding in August where two of my friends are getting married.  This is not about the state of civil rights in 1964. This is about now.

I haven’t been able to find a link to anything about the Oregon law, either statute or administrative law. If any reader has information concerning the letter of the law in Oregon, please leave me a link in a comment. I would like a link to any published article that spells out what the law was the day before the offense. Please include any reference you find to specific penalties. To me, this looks more like $100 first offense than $100,000. Unless the law spelled out over $100,000 penalties or damages, it's abuse of power.

Liberals say the bakers had it coming because they publicly declared they would not make cakes for gay weddings.  This bothefree exercise of religion, freedom of religionrs me. I thought we had a right to free speech. Wedding cakes are an artistic product. How far does Oregon law go? If the cake is ugly, are the bakers in violation? If the bakers intended to make it ugly as a form of civil disobedience, does that come into whether they are in violation? Do devout Muslim or Orthodox Jewish bakers have to make birthday cakes with bacon on them if an administrative law judge in Oregon says they do? (Hint: Pork products, like bacon, are not kosher for devout Muslims and Orthodox Jews.)

Liberal comments give away what's actually happening. The bakers are being punished for having the effrontery to actually have Christian religious beliefs that they want to live by. My 4 grandparents had 4 different religious traditions. Three were different varieties of Christianity. One of my grandfathers was Jewish. We all got along fine because nobody insisted on conformity. You have to have some tolerance for other folks' beliefs. In the vernacular, you have to cut people some slack.  Punishing Christians for their beliefs is not a good way to gain acceptance and gradually wear down resistance to this major change. It's religious bigotry, which encourages extreme reactions. Liberals believe everyone should conform to your views of the truth and anyone who doesn't should be severely punished. Liberals think it's justified, but it's every bit as extreme as the religious intolerance of ISIS or Al Qaeda. The difference is that Liberals just want to impose severe fines. Liberals don't want to kill the dissenters, yet.

So what can we do about it?  The first step is to raise a fuss. If everybody objects loudly, we can gather sufficient number to change this. It's also vital to make clear that the problem is the law is being changed in an unlawful, dangerous way. Most people today evaluate any judicial proceeding, including a Supreme Court decision, by whether they like who "won" rather than by the reasoning used to get the outcome. It's not gay marriage itself that is threatening, at least to me. If gay marriage was adopted by state legislatures or state referendums then the people would have decided on a matter that was clearly left to the states by the Constitution. It's that the government no longer respects written law. It is doing whatever it wants. Not enough folks seem to recognize that if the law is fickle, no outcome is secure. Nobody's life, liberty or property is secure from government seizure.

So gay people celebrate the Supreme Court ruling on gay marriage with no thought that the decision makes no sense. When the 14th Amendment was ratified in 1868, homosexual acts were illegal in every state. If the Supreme Court had used the full faith and credit act to say that a marriage legally performed in one state must be recognized in all states, it would have been a small but understandable stretch. Using the 14th Amendment as the reason gay marriage is legal tells people that 5 Supreme Court Justices can do whatever they want with the flimsiest of excuses. When the Supreme Court finds that when the law says an "exchange set up by the state" really includes exchanges set up by the federal government as well, they're making it up. The law has no meaning anymore.

Republican candidates should make clear that process is much more of a problem than the outcome.  We want legislatures to deal with these thorny problems where the Constitution has nothing much to say.  We do not want the Supreme Court finding rights to privacy and dignity that aren’t there.  Because once they start finding things that aren’t there, everyone instinctively knows there’s no end to it.

Our original revolution was started by people writing letters to each other. Committees of Correspondence are a lot easier to set up with the internet and its social media. Raise a fuss. That's what I'm doing.

Will the Dollar's Status Prevent a Slip on a Greecy Slope?

The topic for the last 10 days has been Greece, which then evolves into all the reasons that the US is not like Greece.  The main reason given is that the US can print as many dollars as it wants to, because it’s a reserve currency.  This reason is not only false, it’s dangerously so.  There are limits to how much currency any government can issue before inflation wrecks the economy. It's a long standing tradition for broke governments to pay off by using cheaper metals in coins to issue more of them or printing more money.  The temptation of paying off the government’s debts in cheaper money is so hard to resist that the government wants to believe the risks are less than they actually are.

When money was coins, governments lessened the amount of silver or gold in them and substituted cheaper materials so they could issue more coins. One historical example is that Henry VIII was known as "Old Coppernose" because his early attempts at sandwich coins allowed the copper in the middle to show through when the silver on his nose wore off.  Henry VII only resorted to debasing the coinage towards the very end of his reign.  The chancellors of his son saw the danger and quickly put England back on a sound footing, avoiding a crash.

With paper currency, governments just crank up the presses. In extreme cases, people use wheel barrows full of currency to buy a loaf of bread, like Germany after WWI, or print $100 trillion banknotes like Zimbabwe in 2006-2009.

In modern US terms, we electronically print more money. Calling it quantitative easing doesn't change what's going on. The ultimate result is convenient only in the short term. It wrecks the economy and creates political instability. Hitler would have been trapped in beer halls if it hadn't been for the instability of runaway inflation.

We're already a long way down this road. When I was a kid, gold was fixed at $35 per ounce and silver was fixed at $1.25. A recent gold price was $1,167 and silver was $15.69. The question of how far we can go is as much a matter of the psychology of crowds as it is mathematics. At some point investors are going to calculate the odds of the US returning real value on the bonds and currency issued and decide it's not worth accepting either of them. They won't be fooled by the nominal value of dollars, because they will know about how much inflation to expect. As economist Herbert Stein famously observed, "If something can't go on forever, it won't." 

Keynes was wrong about the benefits of government spending.  If government stimulus worked, Greece would be booming. There is no magic multiplier for money spent by government. Government is uniformly less efficient that private enterprise for the very understandable reason that individual bureaucrats have no incentive to be efficient. The larger their departments are as measured by budgets and personnel, the more power they have. If they improve efficiency, they get budget and personnel cuts as a reward.

If we have learned anything from the Great Depression and the Great Recession, it's that capricious government regulation suppresses economic activity, especially entrepreneurial activity. The hands off recovery under Calvin Coolidge from a steeper recession in 1920 was far superior to the intervention plagued recovery from the 1929 crash. The decreasing regulation of Reagan was much more effective than the increasing regulation of Obama in stimulating growth from comparable recessions.

Some desciples of Keynes say that government debt doesn’t matter because we owe it to ourselves. However, over a third of the federal debt now is held by foreigners. So even in pseudo Keynesian terms, current government policy is ill advised.

If the challenge is inflation, then in my lifetime we've been losing big time. When I was a kid, gold was fixed at $35 per ounce and silver was fixed at $1.25. A recent gold price was $1,167 and silver was $15.69. I used to buy a candy bar for 5 cents and you really could get individual wrapped candy pieces for a penny.

For me the issue isn't whether the federal debt has to be paid off, because it’s true that it really doesn’t have to be completely paid off. The issue is how big the debt service can get before it eats the rest of the budget. Quantitative easing has basically monetized the debt during the Obama years. Interest rates have been held to historic lows which has masked the debt service problem. At some point all of the money spread around with quantitative easing is going to start moving around faster than it has moved since 2009. At that point, inflation will balloon and the Federal Reserve will try to hit the brakes by raising interest rates. When they do, federal debt service will expand roughly $60 - $100 billion for each percentage point the interest rates increase, depending on the maturity structure of short term versus longer term bonds outstanding. This will throw any contemplated budget balancing out the window. 

Quantitative Easing money went into excess reserves, that is reserves larger than what's required to support outstanding bank loans. The liberal assumption that they have to remain reserves forever is false. The other problem with their argument is the tacit assumption that inflation will not increase due to any unexpected shocks in commodity markets. I think this assumption willfully ignores the chaos in the Middle East which could easily drift into a general, perhaps nuclear, war.

The classic explanation of inflation is too much money chasing too few goods.  For me, the explanation of recent low inflation is that the supply of goods and services kept up with the huge increase in the supply of money, at least so far. I think this is due at least partially to increased oil and natural gas production in the US from fracking. Recently, the Saudi Arabian desire to cripple Iran and Russia by forcing low oil prices played a substantial role. If a war in the Middle East disrupts world oil deliveries and the price of oil spikes from $57 a barrel to $130 in a very short time, there will be massive inflation. At that point the Federal Reserve is going to have to sell the bonds they bought during multiple QE programs to tighten the money supply and fight inflation. This will depress bond prices, raise interest rates and torpedo the federal budget.

I view a crisis in the Middle East which impairs oil and gas deliveries as very likely. Liberals may believe that war doesn't solve anything, but Iran, Saudi Arabia, the United Arab Emirates, Syria, Hezbollah, Hamas, Islamic Jihad and ISIS do not agree. (I don't either.)

When discussing inflation, liberals like to talk about how much better the “Lifestyle” of Americans is today.  (They talk out of the other side of their mouths when discussing poverty.)  When you start making "Lifestyle" arguments it usually ends up as nitpicking and semantics. I like to use concrete examples from my own life.  I used to spend my summers on my grandfather's ranch in Montana. We sold it in 1963. I don't think we could afford to rent it for a week now. When we moved from Montana to the Chicago suburbs, my dad bought a house for $64,000. It would go for a million bucks today.

Please note that the rise in real estate values is a rise in current dollar value, not actual value.  The house my Dad bought is still the same house. Only the nominal dollar value has increased. The actual value remains pretty much unchanged. Considering taxes are levied on nominal values, the federal government wins two ways. They pay their debts in cheaper dollars and tax illusionary capital gains. I'm not arguing that the standard of living is stagnant. I am saying that the Federal Reserve is manipulating the money supply to favor the government at the expense of the rest of us.

Whether you got hurt by inflation or not depends on how any assets you own were distributed. It also depends on whether your salary, after taxes, kept up with inflation. If you were trying to save towards retirement, inflation robbed you of the value of your savings. If you bought your house for $1 down in 1986, you came out even or maybe a little ahead. If you work for the government, especially the federal government, no problem. Your wages were adjusted for inflation. Your savings are minimal but you have huge pension benefits that are indexed to inflation and are worth millions in the actuarial present value of the income.

Inflation makes it hard to estimate economic risk because the way it changes values is not uniform across asset classes. To paraphrase Orwell, some assets are more equal than others. When you add the different tax treatment for different assets, it gets worse. In general, inflation diminishes the information value of prices, which in turn reduces efficiency in the economy as a whole. Inflation is not something you wish for. It's something you live through.  If the government takes the inflation to extremes, the economy breaks down, which leads to the government and society breaking down.  Glib talk from liberal pundits is just whistling past the graveyard.

Let's Treat Illegals the Way Mexico Does

I believe we should be every bit as tolerant of illegal aliens as Mexico is in its Constitution. Illegal immigrants in Mexico generally get deported. If foreigners use false documents to get into Mexico, it's a felony and they got to jail. In Mexico, even legally naturalized citizens are barred from almost all government jobs. The Mexican government can deport any foreigner administratively. No judicial finding is required. Foreigners have to register and produce their documents on demand, in Mexico. There is a national population registry in which the Mexican government tracks every person in the country. If you go to Mexico as a tourist, you are given an exit slip to turn in when you leave. If you don't leave on time, Federales start looking for you.

As you read this, you’re thinking we’d need a Constitutional Amendment to treat people this badly.  OK, you're right. We can't be as nasty to illegal aliens as Mexico is because the US Constitution won't allow it. Actually that was my point.  Realistically, we can’t even aspire to their level.  Think about what that says about pro illegal immigration groups with Mexican origins.

Here are some links with extensive quotes from the Mexican Constitution.