Saturday, December 22, 2012

Neal Boortz Returns To Libertarianism

Neal Boortz Returns To Libertarianism Talk radio's Neal Boortz, who introduced me to libertarianism more than a decade ago, was once a nearly-ideologically-pure libertarian. Unfortunately, during the Bush years, Boortz adopted neoconservatism and even changed his voter registration from Libertarian to Republican. Now, finally, after witnessing years of GOP bungling and advocacy for Big Government, the Talkmaster appears to have returned to his libertarian roots. He published an epic rant about the GOP's social conservatism following this year's Republican electoral embarrassment, and, yesterday, he posted the following on this Facebook fan page:

Neal Boortz Returns To Libertarianism - Facebook page 1

Neal Boortz Returns To Libertarianism - Facebook page 2

Notice the number of "likes" Neal's comments have received in less than 24 hours.

Friday, December 21, 2012

Congress Could Double Milk Prices Jan. 1

Congress Could Double Milk Prices Jan. 1
Without action, the cost of "bovine juice" could double Jan. 1, reports the New York Times via CNBC:
Forget the fiscal crisis and the automatic budget cuts. Come Jan. 1, there is a threat that milk prices could rise to $6 to $8 a gallon if Congress does not pass a new farm bill that amends farm policy dating back to the Truman presidency.

Lost in the political standoff between the Obama administration and Congressional Republicans over the budget is a virtually forgotten impasse over a farm bill that covers billions of dollars in agriculture programs. Without last-minute Congressional action, the government would have to follow an antiquated 1949 farm law that would force Washington to buy milk at wildly inflated prices, creating higher prices in the dairy case. Milk now costs an average of $3.65 a gallon.

Higher prices would be based on what dairy farm production costs were in 1949, when milk production was almost all done by hand. Because of adjustments for inflation and other technical formulas, the government would be forced by law to buy milk at roughly twice the current market prices to maintain a stable milk market.

But the market would be anything but stable. Farmers, at first, would experience a financial windfall as they rushed to sell dairy products to the government at higher prices than those they would get on the commercial market. Then the prices customers pay at the supermarket would surge as shortages developed and fewer gallons of milk were available for consumers and for manufacturers of products like cheese and butter.

For dairy farmers like Dean Norton in upstate New York, who are struggling with high feed costs caused by this summer’s drought, a jump in prices would be welcomed.
“But it would be short-term euphoria followed by a long hangover that would be difficult for us to recover from,” said Mr. Norton, who is president of the New York Farm Bureau. “I don’t think customers and food processors are going to pay double what they are paying now for dairy products.”

The Senate passed a farm bill in July. A House version of the bill made it out of committee, but House leaders have yet to bring its version to the floor.
Under the current program, the government sets a minimum price to cover dairy farmers’ production costs. If the market price drops below that, the government buys dairy products from farmers to buoy prices and increase demand. Since milk prices have remained above that minimum price in recent years, dairy farmers usually do better by selling their products commercially rather than to the government.

But if 1949 rules go into effect, the government would be required to buy dairy products at around $40 per hundredweight — roughly twice the current market price — to drive up the price of milk to cover dairy producers’ cost.

“It would be bad for consumer demand in the long run,” said Chris Galen, a spokesman for the National Milk Producers Federation, which represents more than 32,000 dairy farmers.
Mr. Galen and others in the dairy industry said reverting to 1949 policies could probably force the makers of butter, cheese, yogurt and other dairy products to look for cheaper alternatives, like imported milk from countries like New Zealand.

Most dairy companies declined to discuss plans to buy dairy supplies from abroad if they are forced to pay higher prices for milk.

But Land O’ Lakes, a dairy company based in Arden Hills, Minn., said the 1949 law could be potentially disruptive for dairy industry operations.
“Congress needs to pass a comprehensive farm bill that helps farmers continue to feed the world, keeps food prices affordable and provides farmers some financial stability in the very unpredictable profession of farming,” said Rebecca Lentz, a company spokeswoman.
In a conference call with reporters on Thursday, Tom Vilsack, the agriculture secretary, said the department was exploring all its options to deal with the possibility of the 1949 law going into effect.

“We will do whatever we are legally obligated to do,” said Mr. Vilsack, who declined to say what specific steps the department would take to prepare for what dairy lobbyists and industry officials are calling the “milk cliff.”

Among the options: the agriculture secretary could drag his heels on the milk purchases until Congress passes a new farm bill or an extension of the 2008 one that expired in September, said Vincent Smith, a professor of agriculture at Montana State University in Bozeman.

“This is a totally antiquated law that has nothing to do with farming conditions today,” Professor Smith said. “It was put as a poison pill to get Congress to pass a farm bill by scaring lawmakers with the prospect of higher support prices for milk and other agriculture products. Letting it go into effect for even a few months would be particularly disastrous for consumers and food processors.

Thursday, December 20, 2012

75% Chance Of Going Over Fiscal Cliff?

75% Chance Of Going Over Fiscal Cliff?
Wall Street Journal contributor Stan Collender said last week that there's a 75% chance of going over the cliff:
With 17 days as the crow flies before it happens, it's time for me to do something I've been resisting for a week or so: formally increase my odds that we'll go over rather than avoid the fiscal cliff.

Back in September I said it was better than 50-50 that no deal would be in place by January 1. I raised that to 60 percent immediately after the election. Today, I'm raising my predicted likelihood of no deal before January 1 to 75 percent, and I may still be overstating the possibility that an agreement will be reached and put in place before the tax cuts and spending increases go into effect.

I really hope I'm wrong, and will gladly and publicly say that if a last-minute deal materializes. But here's why I don't think I am:

1. The Politics Have Become Worse, Not Better. The House GOP is digging in its heals even further in spite of the fact that the polls all show public opinion -- including among Republicans -- being firmly against it. Meanwhile, the White House, no doubt strongly encouraged by the president's high job approval rating and the polls showing that it's position on taxes is very popular, apparently -- and understandably -- sees no reason to compromise.

2. The GOP Has Little To Lose At This Point By Letting The Cliff Happen. With their polling numbers already in the tank, it's hard to see what Republicans will gain politically by voting to increase taxes in incomes above $250,000 a year other than the lasting enmity of the most anti-tax members of their base and Grover Norquist.

3. Boehner Really Can't Cut A Deal With The White House Before January 3. My  prediction that this would happen was scoffed at by some when I made it months ago, but it's now become a mainstream story. The fiscal cliff hits January 1 and  Boehner's formal election as speaker is January 3. Any deal with the White House and especially a deal that includes the tax increases the White House wants, could cause Boehner to lose enough votes at least on the first ballot on January 3 to prevent him from being speaker. Even if he subsequently wins on a later ballot, he will be seriously weakened. Note: The fact that Boehner has been openly asked this week if he's concerned about being reelected is a sign that the possibility has become more real than anyone but me previously was willing to consider.

4. It's Still Not Clear That A Boehner-Obama Deal Would Be Agreed To Before January 1. Very simple: The political work needed to get the votes in the Democratic and Republican caucuses in the House and Senate hasn't yet occurred and that makes the vote count very dicey. A tax cut that's acceptable to Boehner may not be to his caucus, and larger-than-expected changes in Medicare and Medicaid that's acceptable to the White House may not be acceptable to Senate Democrats. In addition, it's not clear how many of the lame duck members of Congress will even show up to vote a week before their term is over
It's certainly possible that Obama and Boehner have been performing at Oscar-worthy levels in recent days to make their respective caucuses think they are both pushing the other very hard. I doubt it. Not only are neither of them that good an actor -- My Beautiful and Talented Wife (The BTW) is an outstanding professional actor so and know what that is -- it's hard to imagine how a conspiracy like that could stay a secret in Washington given how many people would have to be involved in it.

As a result, I've come to the conclusion that there's only a one in four chance that a deal to avoid the fiscal cliff will be enacted before January 1. It's far more likely we'll go over the cliff and then fix it retroactively in January than that it can be avoided completely.

College Questionable Investment

College Questionable Investment
As part of its series on income inequality in America, Reuters recently published an in-depth look at Massachusetts, one of the nation's most educated states, where incomes have been declining since 1989 for most college degree holders except those in the highest quintile.

The article included this damning graph:

College Questionable Investment - income graph

As you can clearly see from the graph, the percentage of Bay State residents holding college degrees has gone through the roof, but the return on investment for higher education has eroded for nearly everyone except the wealthy. But, in Massachusetts, as in the rest of the country, students are borrowing their futures away for the questionable investment of higher education:

College sure hasn't been paying off for many:

College Questionable Investment - student loan default chart

Wednesday, December 19, 2012

Big Government Decimating Middle Class

Big Government Decimating Middle Class
Big Government, in partnership with Big Central Banking, is decimating the middle class for the benefit off the poor and the rich. Indeed, Reuters has published a must-read series on the matter from which this chart was taken:

Big Government Decimating Middle Class - income chart

As is reflected in the chart, the majority of jobs created in this depression have been part-time low-wage positions, and Benanke's Fed, which even China has labeled a "murderer of the middle class".

 ZeroHedge said it best:
This is nothing but the inevitable outcome of a co-opted, conflicted and controlled marionette government, which does the bidding of the wealthiest lobby powers (read corporate shareholders and Wall Street), partitioning the bulk of the wealth to the richest, while sending the scraps to the poorest in order to keep itself in power due to the power of the ever poorer, democratic majority.

Monday, December 17, 2012

Notable Investment Strategist: We're In Recession

Notable Investment Strategist: We're In Recession
Societe Generale's Albert Edwards makes the case that the economy is contracting again. From ZeroHedge:

“Something bad happened in November”……
...I have spotted the excellent Lakshman Achuthan of the Economic Cycle Research Institute (ECRI) doing the rounds reiterating his call that the US economy is already in a recession. He seems to be getting a bit of stick recently, but as I am fully aware, bearers of bad news are usually derided. I think he is doing an excellent job of explaining his stance patiently and clearly in the face of some very hostile interviewers. His recent 7 December analysis on the ECRI website of why a recession is likely to have started around four months ago is well worth an uncomfortable read - link (see also the related video link).

Certainly if the US has already slipped into recession, this would help explain why our preferred measure of whole economy profits declined, albeit marginally, in Q3. We have always monitored pre-tax, domestic, non-financial, whole economy profits particularly closely because this measure of the underlying profitability of the business sector is probably the best leading indicator of domestic business investment, and that has also been weak recently.

Many have attributed the weakness in investment to uncertainty about the fiscal cliff. But if underlying profits are under pressure, then so too will be investment. So although much of the S&P eps downgrading by analysts is being attributed to severe weakness abroad, what the latest whole economy profits data show is that the domestic business situation is also weak. The ECRI recession call should be listened to more closely.

Certainly the latest National Federation of Independent Business (NFIB) survey in November was entirely consistent with an economy already firmly back in outright recession. The headline optimism series plunged 5.6 points in November to 87.5, which the NFIB itself says is one of the lowest optimism readings in the survey's long 30 year history.

“Something bad happened in November…and it wasn’t merely Hurricane Sandy”, the NFIB chief economist Bill Dunkelberg is quoted as saying - see chart below and link. Even scarier than the decline in the headline measure was the 37% slump to an all-time low in those firms who believe economic conditions will improve over the next six months. That 37% drop is twice the previous record 18% decline, which occurred in the immediate aftermath of the Lehman’s collapse (see chart below). For those who might immediately retort that this is a sentiment indicator that should be used as a contrary indicator - you are wrong. It is a good leading or at worst coincident indicator. I would say this datum is more than consistent with the recession that Lakshman Achuthan of the ECRI has been warning of, wouldn't you?
Notable Investment Strategist: We're In Recession - optimism

Rifles Rarely Used In Murders

Rifles Rarely Used In MurdersThe following table from the FBI shows the method in which homicides were committed in the United States in the years 2006-2010. There are a number of takeaways from this table: 1) Rifles were used in a very small percentage of murders. 2) Firearms weren't used at all in approximately 1/3 of murders. 2) The total number of homicides steadily decreased during the 5 year period. 4) Approximately twice as many murders were committed using hands, fists, and feet than using rifles. (We need fist control NOW!)

Rifles Rarely Used In Murders - homicide table

Sunday, December 16, 2012

The Best Anti-Gun Control Arguments

The Best Anti-Gun Control Arguments
I'm a firm believer in Occam's razor, the philosophy that the simplest explanation is usually the correct one. Occam's razor can be well-applied to the "right to bear arms" argument.

Yesterday, I came across this simple, brilliant tweet in my Twitter feed:

The Best Anti-Gun Control Arguments - celebrity bodyguard

In 140 characters or less, the author of this tweet reminded the most vociferous gun control advocates that they, too, depend on private gun ownership for protection. Brilliant!