Saturday, July 30, 2016

Free Trade Falls Victim to Over-Regulation

Free trade was once popular.  In an economy with strong job creation, no one worries much about losing jobs to Mexico or anywhere else.  If good jobs replace those that are no longer globally competitive, everyone wins.

By over-regulating the economy and replacing free markets with government controlled and regulated markets, the political process has obliterated the strong job creation that characterizes free market economies.  Thus lost jobs are not replaced.

But the enemy is not free trade. The enemy is big government and over-regulation.

Blocking free trade just means an economy will be less healthy, less productive and provide fewer jobs.  Unfortunately, both political parties have now signed onto this foolish program.

Combining the elimination of free trade with increasing mandated minimum wages means that the burden falls substantially upon the poor and unemployed.   These policies, endorsed by both political parties, will slow the economy, make inequality worse, and exacerbate political divisions.

If you want a healthy economy, support freedom and free markets.

Friday, July 29, 2016

The Obama Boom Continues

Second quarter GDP up 1.2 percent (that is actually the same as the Eurozone, 0.3 percent for the quarter, the 1.2 percent number for the US is annualized, unlike the Eurozone number).

So, same old, same old.  Buoyant forecasts, abysmal results.  Never in American history have we seen a recovery like the pitiful showing of the past seven years.  But, this is what over-regulation and big government guarantee. Don't expect anything much better in the future.  This is the new normal, even though forecasters will continue to predict that prosperity is just around the corner.

The Boom in Europe Continues

The Eurozone clocked in at 0.3 percent GDP in the second quarter (that's 0.3 percent absolute growth over first quarter).  For the umpteenth time, forecasters had been overly optimistic.

“Second-quarter growth is disappointing given the forecasts,” French Finance Minister Michel Sapin said, according to the Wall Street Journal.

It's always disappointing, but never unusual.  Both the US and the Eurozone no longer have any economic growth worth announcing, even through economists continue and will continue to forecast 3+ percent growth. It just never, ever happens.  Instead, we get post-mortem comments like that at Michel Sapin above.

US GDP for the second quarter is soon to be released.  Look for a big number, near or above 3 percent, and then look for that number to be later revised down to reflect the absymal reality.  But, for now, the Democratic Party needs some good news.  Look for the Commerce Department to provide temporary relief by bragging about an economy that is sorely in need of some pep, instead of a pep rally.

Wednesday, July 27, 2016

Is Trump a Free Market Guy?

Trump is about as far from a free market advocate as one can imagine. He is not a socialist in the normal tradition.  He is more a corporate statist who leans heavily on contentious legal actions to produce his personal wealth.  Trump does say that he opposes regulation, but his support for a return to Glass-Steagall belies an anti-regulation philosophy.  His approach to free trade, like virtually all politicians these days, is also not friendly to a free market agenda.

Trump's views on entitlements are bizarre.  Perhaps he hasn't thought about the subject much.

If there is any virtue about the Trump candidacy, maybe it is that he really hasn't thought about any of this very much.  The same could have been said about Harry Truman and he turned out to be a pretty good president.  But, who knows? Harry Truman was a pretty humble fellow, unlike Donald Trump.

Trump is a big, big question mark.  He could be a great president, he could be a terrible president. 

Tuesday, July 26, 2016

Socialism versus Free Markets -- The Record

Socialism has a record.  Historically, it is the oldest economic system in the world and most prevalent.  Free market economies are relatively rare.  They both have records for all to see.

Socialism leads to economic collapse and political tyranny.  Free markets lead to economic growth and prosperity for its citizens.  The poorest citizens in free market economies live in in circumstances any socialist citizen could only dream of, other than the political elite.

Hitler Germany, Stalin's Soviet Union, and modern day Venezuela are the outstanding socialist models.  We know how they turned out.  The US, Britain, and the eastern half of today's China are the outstanding examples of free market models.  Which of these would you have preferred to live in.

We know Bernie Sanders preferences.  When married, he chose Moscow for his honeymoon at a time when Stalin's henchmen were still firmly in power.  Certainly Sanders recognized what his goals were and what examples inspired him. 

The Bernie Sanders Platform

The Democratic platform, if enacted, would obliterate any hope for economic progress in the future for the US.  Virtually nothing is left for the free market.  In many ways, it is advocating the system that was in place in the old Soviet Union, where the rhetoric was helping the poor and eliminating inequality, but the reality was dictating virtually every aspect of life.  Individual freedom is not in this platform.  Government mandates are all that this is about.

There will be winners.  Take a trip to Washington DC and walk through the NW section of the District.  Most work days you will see people walking their dogs, jogging quietly through the beautiful homes and lush landscape.  This is where the modern bureaucracy lives.  These folks have protected lives, protected jobs.  These folks graduated from the elite schools that most Americans can no longer afford.  They live in a sheltered, protected world free from the struggles of ordinary Americans, who they consider their inferiors.

They think that most Americans are ignorant slobs that require their (dictatorial) guidance.  These elitists feel that the Americans who love their churches, their guns, obey local laws, have respect for law enforcement and the American flag are contemptible racists.

It's now all about going to the right elite schools, parroting the same politically correct ideology to pave your way into political power or plant your feet into the bureaucracy to live the good life.  Those other Americans who are out fending for their economic lives in what is left of the private sector are beneath contempt to these elitists who bask in the self adulation that they and they alone occupy the moral high ground.  No need to permit dissent, when you have all the answers.

In short, these are the new class that Miljovan Djilas spoke about when he opined on the rise of the communist apparatus in the old Yugoslavia and the Soviet Union.  Those who make the rules don't have to live by the rules.  Congress and the bureaucracy don't pay minimum wage to their interns, but everyone else is required by law to do so.  Do as I say, not as I do. Why the double standard?  Because the folks in power have the "correct" ideology.  They went to the "right" schools and believe the "right" things.  Everyone else is destined to follow the rules made by this elite.

These kinds of double standards are encoded in the Democratic platform adopted by its convention on Monday. Everything from abolishing the energy industry to eliminating due process from a variety of everyday activities are in this platform.  What is completely absent in this platform is any effort to deal with the public school disaster that millions of Americans have to deal with every day.  No concern with the lack of jobs that forces increasing numbers of millenials back into their childhood homes after well past adulthood.  This is the old Soviet model absent respect for the rule of law.  The next thing to come will be forcing families to combine into small dwellings, normal housing no longer affordable in the brave new world that this platform leads to.

The Democrats will soon nominate a candidate who thinks the rule of law applies to others, but not to the wealthy and powerful.  This is always where contempt for free markets leads.

Donald Trump is no angel.  Far from it.  But he has yet to give up completely on free enterprise.  The Democrats, if you believe their platform, give freedom no room to maneuver, in the economy or anywhere else.  Only the wealthy and the bureaucracy will win if the Democratic platform becomes the law of the land.

Once economic freedom has been totally proscribed, as required by the Democratic platform, the Venezuela model kicks in.  Political freedom will be obliterated as well.  There is already movement in that direction in the current adminstration's effort to silence those who disagree with the "climate change" religion.  Again, the old Soviet model is instructive.  Force dissent out, force orthodoxy in.

Once you think you have right on your side, then get might on your side, so goes the theme of the Democratic party and platform.  Then, the next stop is modern day Venezuela.

Monday, July 25, 2016

The Millennials Love Socialism

The left has a history of eating its own. That's why today's fascination with socialism by the millennials is so intriguing.  Virtually all of the millennials who like socialism were born in the lap of luxury fed by a history of capitalism.  Where has socialism ever produced any economic prosperity?  The answer: no where.

The millennials in socialist countries are too busy combing garbage cans to find food to indulge in political speculation.  The millennials should read "The Gulag Archipelago" for a little insight to what goes on in socialist countries, or perhaps "One Day in the Life of Ivan Denisovich" to see how working folks fare under socialism.

We can already see in America how well socialism performs.  Look at government run health care.  Try the VA hospital system.  Try dealing with any government agency.  Try getting a permit to do something from your local government.

Bureaucrats are the winners in socialism.  Ordinary people are the losers, some might even say the prisoners. 

Eventually, the socialists eat their won.  Modern day Venezuela is the socialist end game.  Or try the old Soviet model where real disposable income declined over the life of the Soviet Union and hundreds of millions were shot or starved by their socialist leaders.

Socialism is not pretty in practice and the world has had lots of practice:  Hitler, Mussolini, Stalin, Chavez, Castro, and the list goes on and on.  Which of those leaders would the millennials like to live under?  Maybe Bernie can tell us.

Thursday, July 21, 2016

Everyone is Ignoring the Sovereign Debt Problems

Economic forecasters paint a pretty rosy future for the US and Europe.  The forecasts seem to be independent of the historic levels of debt that every developed country has accumulated in the last two decades.  The West and Japan have been on an unprecedented spending binge far exceeding their resources.  This has been financed by exploding sovereign debt.  Greece is the most prominent example of what eventually happens when debts explode while GDP remains stagnant.

No western countries have any real GDP growth.  Even the 2 percent rates in the US are pitiful by any historical comparison with past GDP growth in the US.  But the Eurozone has nothing, zip, in the way of economic growth.  All that grows in Europe is the level of sovereign debt.  Everything else stagnates.

So, what is the future for these countries?  There really is no economic future for the Western countries.  They have opted for stagnation and they are getting it.  The US is limping toward the end of its historic economic expansion that began at the end of the 19th century civil war.  The clamps are on and the private sector is in retreat--what's left of it.  The economic debate in the US has now shifted to how to divide a shrinking pie.  No one really believes economic growth is possible any longer and one major political party seems opposed to economic growth in principle.

With no economic growth in the future, the levels of sovereign debt continue to explode.  It was once argued that 70 percent of GDP is the maximum debt level for a country before debts become unsustainable.  No western country is now below that level.  When rates start heading up, simple debt payments will consume all of these countries annual fiscal budgets.  Entitlements will be slashed either directly or by currency inflation.  There is no alternative.  It is simple arithmetic.

There is an inflation and interest rate take-off in our future, implied by the burgeoning levels of sovereign debt and the central bank monetization of that debt.  Financial assets will be punished when this sovereign debt disaster begins to implode.

Wednesday, July 20, 2016

Glass-Steagall is the Wrong Fix

True enough, banks were crushed in 2008.  The government stepped in and bailed them out.  There is no way that this is intelligent economic policy.  Agreed.

But, Glass-Steagall never made any sense in the first place.  Enacted in 1933, Glass-Steagall separated commercial banking from investment banking.  This was driven from the concern that the government was planning to insure commercial bank checking accounts.  If taxpayers stand behind checking accounts, then banks should not be permitted to speculate.  Investment banking was viewed by legislators as a form of speculation.

In 1999, Glass-Steagall was repealed.  Now, the Republican platform has called for re-instating Glass Steagall.  Big, big mistake.

The right answer is not to guarantee checking accounts or any other liabilities of the commercial banking system.  Take the government guarantees away. Then permit banks to do what they want to do, be it investment banking, commercial banking, whatever.  The problem is the FDIC guarantee, not the repeal of Glass-Steagall. The FDIC should be eliminated, along with government guaranteed checking accounts.

It certainly doesn't protect small investors, who are not likely to hold millions of dollars in the their checking accounts. A small investor can simply access money market funds that contain predominantly treasury securities and that would provide all the guarantee that would be needed.  Low income folks don't have large checking account balances.  The guarantee mainly guarantees the accounts of rich folks and large corporations, not poor folks.

Let markets decide who wins and loses, not government.

Going back to Glass-Steagall is bad policy.  Eliminate the FDIC. That's the right direction, if economic growth, fairness, and taking the taxpayer out of this fool's game is the plan.

Tuesday, July 19, 2016

Public Pension Funds Post Ridiculous Results

From July 1, 2015 to June 30, 2016, the S&P500 gained slightly under 4 percent.  The most widely used measure of fixed income returns, the Barclays Aggregate was up 6 percent.  The most widely used asset allocation until the last two decades was 70 percent S&P500 and 30 percent Barclays (in those days, Lehman) Aggregate.  This allocation would have produced 4.6 percent returns through simple zero cost indexing.

To achieve this almost five percent return for the period July 1, 2015 to June 30, 2016 would have cost nothing.  One simple phone call to Vanguard would have done the trick.  No need for investment committees, highly paid investment staff, nothing. 

Meanwhile, the fees paid to Wall Street are completely absurd.  CALPERS, the large California public pension fund, paid over $ 1 billion in fees in each of the past ten years.  How about Virginia?  Virginia paid over $ 300 million annually on average to Wall Street over the past ten years.

So, what did these public pension funds, with all their high powered  (mostly political) trustees and investment committees and fees get for their money?  This past year is instructive.  CALPERS, produced a 0.6 percent return for the year ended June 30, 2016 (that's their fiscal year) and VRS, the Virginia public pension fund beat CALPERS by clocking in at 1.5 percent.  [Hedge funds should consider shorting the CALPERS or VRS portfolios and going long the S&P500.  They would have been consistent winners, year after year, over a very long period of time]

It is hard to imagine how they could do as badly as these funds did, but this is just one more year in a string of years over the past two decades with results that are not only terrible, but absurd.  These results are hard to believe.  How did they manage to find investments that performed this poorly?  Maybe that's what they had to spend the fees on: searching for losers.  Unfortunately, they found them.

A back of the envelope calculation shows that CALPERS poor investment performance over the past two decades has cost the state of California taxpayers over $ 200 billion, while VRS has cost the taxpayers of Virginia over $ 40 billion.

This is how government manages your money.  Pretty hard to believe, but true.

Sunday, July 17, 2016

Post Brexit Stumble with Theresa May

The new British Prime Minister will be Theresa May, the leader of the Conservative Party.  Her first official speech echoed George H W Bush's retreat from Reaganomics.  Bush pledged a "kindler, gentler America," which translated into a program of more government, more taxes, more regulation.  It looks like May might be headed in the same direction.

Bush ended up as a one termer, deservedly so.  Bush one never quite understood free markets and seemed viscerally opposed to them.  So, apparently is May, the new British leader.

Ironically, both Bush and May seemed concerned about spreading prosperity when, in fact, their proposals had and will have the effect of curbing prosperity and enlarging the bureaucracy.

Free markets are the only prescription that helps the poor, the minorities, those left out of the economic prosperity enjoyed by the one percenters like Bush One, Soros, Clinton, Buffett, Kerry, Pelosi and Obama. 

Real people need real opportunities.  They can't trade State Department influence for hundreds of millions of dollars like politicians and bureaucrats can.

George H W Bush governed from the left.  It looks like May plans to do the same.  The result should be similar.  Four years from now, May will be long gone, similar to the fate of Bush one.

Friday, July 15, 2016

They Can't Afford To Defend Themselves

If you're wondering why Europe can't seem to avoid terror attacks, look no further than the end game of the entitlement state.  There is no money left to provide for their own defense.  Resources are currently being squandered in grand style to fund the entitlement state and feed bloated bureacracies.  Things that folks really need, like protection from foreign enemies are no longer feasible.

In the US, social security has already run out of money.  Medicare is due to go broke in 2020.  So, how can the US find the resources to defend itself.  The answer: it can't.

You can't provide the Bernie Sanders program, if you want to protect your citizenry from enemies sworn to kill them.  That's why Obama doesn't even try.  It would interfere with his interest in funding the chimerical global warming crusade and maintain the massive, but broke, entitlement system.

There is just nothing left to provide for national defense in either Europe or the US.  So, expect attacks like Paris and Nice to come to our shores soon.  Hand wringing is the new national defense policy -- in Europe and the US.  How about banning truck sales?

Thursday, July 14, 2016

The Brexit Disaster? Really?

Well, well Mr. Soros.  What happened?  The Brexit vote came and went and you lost.  Hope you shorted the market.  How's that worked out for you?

Low Interest Rates Indefinitely?

Numerous pundits are now arguing that low and negative interest rates are the new normal.  Wishful thinking.

Why wishful?  Because low interest rates on sovereign debt are hiding the most serious sovereign debt problem in world history.  Once rates start moving higher, sovereign debt levels everywhere in the western world as well as in Japan will explode, far beyond current historically high levels.

Without question, this debt will be monetized, as it increasingly is in the United States and Europe.  This means inflation and higher rates.

So, the real problem ahead is not low rates.  Those will end in a flurry not far down the road.  The real problem will be the return of inflation and higher rates, much higher rates.

We are at a crucial turning point in interest rates and inflation.  Watch out!

Monday, July 11, 2016

Frustrations in the Minority Community

What drives a lot of the angst in minority communities is their economic situation.  Minorities in America are losing ground and have been for more than a decade. That isn't going to change anytime soon.

The proposals by Hillary Clinton and Bernie Sanders have zero chance of being funded.  Why?  Existing programs are running out of money.  We are less than a decade away from a time when the entire US fiscal budget is devoted to existing entitlements, leaving no room for anything else, much less the pipe dreams of Hillary and Bernie.

Free this and free that have no chance of becoming a reality, unless the reality you want is what existed in the old Soviet union, where no one had anything, except the ruling elite.

The best hope for minorities is the spread of free markets.  Free markets produce economic prosperity, not the economic stagnation that characterizes the western economies.  Minorities have no hope in a government-dominated economy.  They are a minority.  It is absurd to assume that the majority will prostrate itself before the minority.  It won't.

Minorities need freedom to dig their way out of the situation that they are in, not more shackles such as the Clinton-Sanders program.  The politicians goal is to convince gullible voters that the impossible is possible, while the truth is, the impossible is impossible.

Unless someone is educated, works hard and makes sacrifices, no economic progress is possible.  The naive and absurd ideas of the Clinton-Sanders crowd will simply continue to frustrate those at the bottom of the economic pile, who are being led to believe what will never be.

Maybe, Clinton and Sanders should step down from their limousines and jet planes long enough to take a real hard look at the plight of minorities in the US.   Proposing free this and free that will only make matters worse and lead to increasing frustration and civil unrest.  Returning to free markets helps those at the bottom of the economic pile, no matter what liberals, resting comfortably in their mansions, think.

Friday, July 8, 2016

Eliminating US Financial Insitution Bailouts

There is a bill working its way through the US House of Representatives that would reform the bankruptcy process for large financial institutions.  The bill would make bankruptcy for these institutions resemble the bankruptcy process for airlines and other industries. This is all to the good.

No one hesitates to fly on an airline that is in Chapter 11 bankruptcy.  Similarly, no one should be hesitant to do business with a financial institution that is in a bankruptcy situation that parallels Chapter 11.

The key here is that Chapter 11 bankruptcy blows out the common stock holders and puts the company in the hands of the bondholders (and other creditors).  Bondholders should take over and agree to a workout that reorganizes the balance sheet and permits the enterprise to continue.  Basically, that's what the house bill provides.  With bondholders providing the backstop, the financial institutions could continue to do business, as airlines do today when operating under a Chapter 11 bankruptcy.

This bill would take the taxpayers off the hook for foolish and irresponsible behavior of large financial institutions and make the bondholders and creditors (and common stockholders) pay the piper.  Hopefully, it will become law.

The 2008-09 bailouts of financial institutions engineered by Bernanke, Paulson, Geithner, and Obama led to the most repressive financial institution regulation in American history and destroyed any prospects for serious economic growth since.  This is the price paid by average Americans for the bailouts and over-reaction by politicians.  There was no real need for the bailouts in any event, but this bill, if enacted, would eliminate what remains of the largely irrational arguments advanced by bailout supporters.

Thursday, July 7, 2016

Shortage of Sovereign Debt?

The WSJ has a lengthy story today by Min Zeng and Christopher Whittall about how sovereign debt is in short supply.  How can that be?

The answer: central banks are purchasing record amounts of outstanding sovereign debt.  This is the very same debt that governments are issuing record amounts of.

This is the process:  the government sells bonds to the public, the central bank then buys them.  What is the difference between this process and the government simply printing money and buying things with the money printed?  The answer: absolutely nothing.

Here are the facts:  The Federal Reserve now owns more than 20 percent of all outstanding US Treasury bonds.  Bank of Japan owns more than 34 percent of all outstanding Japanese government bonds.  This represents a massive amount of money printing.

In the short run, a very, very weak economy can be propped up by printing money and spending it.  That's what is happening now in the US and in Europe. 

In the long run, as everyone knows, simply printing money and spending it will be inflationary.  Such a process is ultimately inflationary even if the economy has no growth, as we witnessed in the US in the 1970s.

The so-called "shortage of sovereign debt" is simply another way of saying that western governments and Japan are embarked upon a money printing spree.  That can't end well.

Wednesday, July 6, 2016

Brexit is Not the Problem

As the western economies continue to stagnate, Brexit is now being cited as the culprit.  Brexit is a new event, stagnation is an old story.  Brexit doesn't merit a footnote in this ongoing saga.

This focus on Brexit is similar to the media focus on the Fed and the ECB.  Nothing that the Fed and the ECB might or have done is relevant to global economic growth.  They just don't matter.

You wonder that perhaps by focusing on Brexit, the Fed, and the ECB, the media is simply taking the path of least resistance.  Instead of taking a hard look at why western economies are so moribund, the media treat the world economy like a puppet on a string, where the puppet-masters are things like Brexit, the Fed and the ECB.  That is so ridiculous as to be laughable.

The western economies suffer from too much government bureaucracy, too many rules, too many quixotic crusades (climate change, for example).  European economic growth is something one can study in historical data, but it is not something relevant to the future.  There will be no future economic growth in Europe and the reasons are all too obvious. Ditto for the US.

So, how do stocks look?  Not good.  What's the economic future for the average American, the average European?  Not good.

Studying Brexit, the Fed and the ECB are a waste of time.  They don't matter.

Tuesday, July 5, 2016

Undermining the Rule of Law

Free market economics cannot really work if there is a lack of faith that laws will be executed fairly and without regard to political or prejudicial considerations.  Uncertainty as to whether laws are laws or just conversation, that can be flouted by the wealthy and powerful, will keep important economic investments from occurring.

There must be a certainty that the right of contract as well as other laws will be recognized as inviolable.  Admittedly, justice can slip up from time to time,  People are human.  But, when laws are blatantly disregarded and lawbreakers are given a pass, simply because of their wealth and political power, not only does the political system begin to fray, but the economic system will begin to lose confidence in basic contract law.

Arbitrary actions by government and picking and choosing winners and losers in the judicial system based solely upon political affiliation will damage an already frail economy.  It might "feel good" in the short run to run roughshod over the administration of law in an attempt to protect friends and political allies, but, in the long run, such arbitrary government rule will eat away at the economic foundations of the economy.

Social Security Trust Fund is Already Broke

Very quietly the left has quit talking about the funding problems of the Social Security program.  It is already broke. It has been issuing, quietly and with no fanfare, US treasury bonds to fund current payments.  That will accelerate in the future.

Because of the fuzzy accounting embodied in the notion of a "Social Security Trust Fund," the public is being deliberately mislead into believing that something has been set aside over the years to fund the system.  Nothing has been set aside.  Worse, payroll tax payments in the past have been diverted to pet projects and wasted instead of being preserved to fund future benefits. The amount cited as being held in the SSTF is actually the amount paid in through payroll tax payments and then frivolously spent.  The idea of a Trust Fund is a cruel hoax.

So, forget about the 2030 projections and all of that.  Social Security is already broke in the sense that current payments to recipients require the immediate sale of US treasuries.  Last year, the amount of the shortfall was $ 90 billion.  That number is set to grow astronomically in future years.

Meanwhile, the no-nothings (Hillary Clinton, Bernie Sanders) are advocating increasing benefits to a system that no longer has sufficient cash flow to pay current benefits without surreptitiously selling more newly created US treasury debt to the public.  Politicians, to no one's surprise, remain silent on this obvious funding disaster.

WaPo Deliberately Misleading Its Readers?

Catherine Rampell's article today is misleading in the extreme.  It's basic theme is that "wedge" issues are costing taxpayers a bundle.  This, from a reporter, who has been a cheerleader for the doubling of the US National Debt in the past eight years.  The costs cited by Rampell in this article wouldn't pay for Hillary Clinton's jet fuel last year.

Rampell, instead of focusing on real spending issues, seems to be attempting to deliberately mislead her readers by citing the minimal costs of the bathroom controversy in North Carolina.  Meanwhile the completely out-of-control spending of her political bedfellows in the Obama Administration have never merited a comment.  She's worried about a half million dollar cost, while $ 8 trillion cost by her political allies goes unnoticed.

Monday, July 4, 2016

Italy and Illinois on the Front Burner

You cannot hide financial disasters indefinitely.  Italy's bank problems and Illinois' (and Chicago's) fiscal problems have been swept under the rug for decades.  The arrogance of their political leadership and the fawning media has been that somehow, someway they could provide goods and services without producing them.  That only works as long as you can fool gullible bondholders and naive voters.

Let's take Illinois first.  Years of running Chicago as a Mayor Daley fiefdom is now coming home to roost. Chicago, run for half a century by a combination of crooked politicians and the mob, never properly funded anything and the mob and corrupt politicians routinely looted city coffers. Promises of funded retirement for state and city workers were made, but not funded.  Bondholders were lied to routinely by politicians no longer in office.  All of this was praised by the adulatory press with the idea that Chicago worked, because of the great Mayor Daley(s).  Well, guess what?  It doesn't work, as we shall all soon see.

There is currently a total of $ 8 billion (yes, you read that right) of unpaid bills facing the state of Illinois.  There is no longer funding for things like public school teachers, 911 calls, etc.  City and state services are beginning to be eliminated.  Meanwhile, taxes, which are already at absurd heights can only be raised if you want to see a mass exodus by businesses and the wealthy from Chicago and Illinois.  This is Obama's hometown.  To see what Obama's plans were for America, watch Chicago and Illinois unfold.  This will make Detroit's problems seem like a non-event.

As for Italy.  Italy is a poster-child for why the EU can't possibly work.  Built on a tissue of lies, the Italian banking system is essentially insolvent.  The ECB has winked and nodded and failed to enforce its own rules, so that Italy could appease it's far left, absurdly bureacratic government.  It's worth noting that the head of the ECB is Italian-- Mario Draghi -- the face of the Greek bailout.  Like Illinois, the theme in Italy is extend and pretend.  No one seriously ever contemplates setting aside the necessary funding for government promises. But, they keep making the promises, nevertheless, to gullible voters (Bernie Sanders must be using Italy as a blueprint for his own plans).

So, for a while, Italy and Illinois will seem like functioning, ongoing operations.  But, the clock is ticking. 

Those remaining in the EU can add Italian debts to Greek debts as part of their future indebtedness.  This is why even Germany is headed for bankruptcy. They can't underwrite everyone in the Eurozone, even though Merkel thinks they can.

As for Illinois, they are only the first American shoe to fall (Detroit was a mere pebble).  The state of New York, New Jersey and California are waiting in the wings.  None of these states have any real hope of avoiding bankruptcy.  Only the arrogance and duplicity of their politicians can keep the public in the dark and only for a while.


Friday, July 1, 2016

Climate Change is the Left's Religion

There is little or no scientific evidence that there is any particular predictive substance to the relationship between atmospheric carbon dioxide levels and climate patterns.  That's just a fact, no matter what the climate change cheerleaders would like you to believe.  It's not as if we don't have a lot of data on carbon dioxide levels, which, in the past history of the earth, have been more than sixteen times as high as they are today without one iota of discernible connection to weather patterns.  The claims for climate change amount to little more than religious dogma.  It certainly doesn't represent a scientific conclusion.

That said, there are certainly good reasons to be concerned about the environment including concerns for clean air and clean water.  No question about it.  But by perpetuating the climate change hoax, described by its high priests as  "settled science," today's environmentalists and leftist politicians are discrediting legitimate concerns for the environment.

The real agenda seems to be to shut down the western economies.  In that regard, they have succeeded beyond their wildest dreams.  The elimination of the US coal industry, while China dramatically expands its own coal industry, does little more than reduce American living standards for average Americans. This doesn't bother the wealthy and the bureaucrats hell bent on this course, but, overall, these policies don't impact atmospheric carbon dioxide levels at all.  (Not that such changes in carbon dioxide levels would matter in any event). China will more than make up for the self-flaggelation going on in the American economy.

This is reminiscent of the "gun control" religion.  By deflecting attention away from real issues, the "climate change" and "gun control" religions add comfort and serenity to those camped out in their jets and mansions, dictating their religious viewpoints from afar.  None of these wealthy folks and bureaucrats will ever have to deal with the consequences of these religious dictates and pushing these religious themes allows them to bask in the glow of narcissism.  Meanwhile the average American and the poor continue to lose ground as the left's religious wars grind on.