Category: Uncategorized

Thomas Friedman explains why the Iranian elections are fake:

Iran’s ruling mullahs were always ruthless. But they disguised it a bit with faux elections. I say faux elections because while the regime may have counted the votes accurately, it tightly controlled who could run. The choices were dark black and light black.

Yes, this is completely different in the United States, where we have a wide range of candidates from across the political spectrum. When one considers the huge ideological gap that separated Barack Obama from John McCain in the last presidential election, how can one help but be grateful for the electoral freedom enjoyed by the American people?

I have to admit, the funniest thing about most secularists is the way they are totally clueless about what their kind have done to society and what it is in the process of becoming. I’m quite confident that the shiny, sexy, science fiction world they had in mind didn’t look anything like this. It was supposed to be Logan’s Run minus the hand expiry, not Kull the Conquerer meets Tarl Cabot.

The end game is pagan barbarian culture, with all the lunacy and violence that historically entailed. My question for the true-believing secularists is this: Assume for the sake of argument that I am correct regarding where the West is heading. Would you have sought the end of traditional Western Christian culture if you’d known it was going to be succeeded by pagan barbarism rather than the progressive sci-fi vision that was assumed?

This week’s discussion concerns the first chapter and Benito Mussolini, although questions concerning matters from the Introduction may be posted as well. This should not be interpreted to mean that long-winded comments concerning tangential matters derailing the topic will be permitted. And remember, the purpose of these quizzes is to strengthen your memory about the basics of the book; it’s a (mostly) multiple choice quiz so it’s not going to get into any deeper, philosophical tangents. There are no trick questions, so if you know the material well, it should strike you as fairly easy. You have only to look at the score reports to see that it’s not quite as easy for those who haven’t read the book or don’t recall it well. Please note that if you missed the first quiz on the Introduction, you can still take it here.

The reading for next week will be Chapter 2 – “Adolf Hitler: Man of the Left”. The quiz for that chapter will be posted on Saturday, June 27th.

An Old Goat ruminates about modern television at the Friday Challenge:

One of the boys is watching something. I don’t know what he’s watching, but if the show is a sitcom or cartoon I can make the following prediction without any fear of being wrong; the father on the show is a bumbling idiot who is always being shown up by his smart aleck children and is always being corrected by his wonderful and wise wife…. Apparently it wasn’t enough for fathers to be morons. These days, most of the boys are idiots, too. I am hard pressed to name a single cartoon that doesn’t have at least one boy who complete and utter moron. Conversely, I can’t name a single cartoon which has even one girl who isn’t clever and forever having to pull the moron boy’s fat out of the fire.

It is ironic, as Henry points out, that being repeatedly told that they are morons incapable of feeding themselves without the help of a girl is just fine for boys, while being told that they are superlatively lethal bad asses capable of noble and heroic action will permanently harm them in some mysterious manner that justifies keeping them in a drugged stupor. I’d always assumed that boys and young men preferred electronic games to television because they are dynamic and active rather than static and passive. But, it’s true. If you were a boy, would you want to be more like the well-beloved Raymond of television or BJ Blazkowicz of Wolfenstein 3D fame? Or, to use a more recent example, would you rather be one of the effeminate boys of High School Musical or Niko Bellic of GTA IV?

Please note that I’m not complaining or lobbying for Hollywood to change in any way. I’m quite content to see an outdated 2D medium I despise transform itself into the same sort of societally irrelevant ghetto for gays and girls that Broadway has.

Stocks – capital good or capital? How about derivatives? And if an option is capital, why isn’t a lottery ticket?

As bad as the Congressional Republicans of 2000-2006 were, the Obama Democrats look likely to surpass them in terms of utter economic incompetence:

Democratic leaders have committed to enacting by the end of the year the biggest regulatory revision to the U.S. financial system since the 1930s – an undertaking so ambitious it has some lawmakers worried about missteps…. Obama wants to empower the Federal Reserve to oversee the largest and most influential financial firms. He also wants to create a council of federal regulators, chaired by the treasury secretary, to monitor risk across the broader market.

Let’s see. The Fed has “stabilized” the economy by destroying 95 percent of the dollar’s value in 96 years, “strengthened” the banking system by concentrating financial institutions so that a smaller number of banks with a larger amount of deposits are failing, and by preventing the 2001 recession by blowing the housing bubble that triggered the 2008 depression. And total credit market debt is now at 375 percent of GDP, higher than the previous high of 270 percent in 1933 or the 250 percent in Japan circa 1990.

Clearly, the correct solution is to give the arsonists more matches. Naked Capitalism has a review of the Obama proposal

Paul Krugman attempts to weasel out of his past statement about the desirability of a housing bubble in his August 2002 column when he wrote: “To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.”

Yesterday, Krugman claimed the following:

It wasn’t a piece of policy advocacy, it was just economic analysis. What I said was that the only way the Fed could get traction would be if it could inflate a housing bubble. And that’s just what happened.

However, Mark Thornton of the Mises Institute easily explodes that claim, as Krugman made multiple statements about the desirability of the Fed’s rate-cutting at almost precisely the same time that I was warning of the eventual consequences of doing so.

There’s no question that Krugman believed the Fed should cut rates to stimulate the housing market, that he advised the Fed to cut rates to stimulate the housing market, and that his only concern was the possibility that the rate cuts would not be sufficient to launch ahousing bubble to replace the broken tech equity bubble.

When we did the AGD study, a few of you mentioned that you were interested in knowing where I part theoretical company with Rothbard. I never did get around to answering that question until now, with this suggested alteration of his version of the Austrian business cycle. I should be quite interested in hearing where my logic breaks down, if it does.

The conventional Austrian business cycle theory rests upon the expansion of bank credit causing a shift in investment to capital goods from consumer goods, which creates malinvestment that is exposed when when consumption patterns revert to the previous norm. The subsequent contraction is brought about by the liquidation of those malinvestments. My two problems with this middle step are (1) it doesn’t apply as well to an information and service economy as to an industrial manufacturing economy even though we see the same pattern of expand-malinvest-contract in both, and, (2) I see neither evidence nor logical rationale for insisting that consumption patterns must return to their previous form in order to trigger a contraction.

I suggest the cycle can be better understood if we broaden our perspective when looking at the middle phase of the cycle and consider how the expansion of bank credit will also lead to malinvestment for reasons that are not dependent upon the shifting production ratio between capital goods and consumer goods by utilizing a price-based variant of the Keynesian acceleration principle. This begins with recognizing that the obvious causal connection between increased bank credit and price distortions, since cheap credit permits consumers to purchase goods at prices they could not otherwise have afforded; this is what cheap credit is expected to do and is the reason loan consolidations and other forms of consumer credit are advertised on television. The easy availability of cheap credit permits the purchase of houses, college tuitions, and cars by a much broader range of buyers than would otherwise be the case, so as the law of supply and demand dictates, an increase in the availability of debt will lead to an increase in demand which will necessarily drive the price of those goods being purchased by debt higher relative to the price of goods not being purchased by debt.

As these debt-purchased goods rise in price, more potential suppliers become interested in entering the market while existing suppliers ramp up their manufacturing capacity. This increase in production capacity requires additional investment in the capital goods that produce them. But it’s not necessary to insist that consumers will revert to their old consumption patterns, instead, it’s enough to note that although consumption patterns are altered in the short term, there is a material limit to the extent they can be altered that the continued increase in capital investment must eventually exceed. Once that limit is exceeded, the inevitable contraction begins, exacerbated by the fact that the excessive production has increased supply far beyond the furthest limits of demand, causing prices to decline even faster than the shift in consumption patterns would dictate. This may sound very similar to the acceleration principle described by Paul Samuelson, but it is rather different because it does not rely on any mechanistic production assumptions or a fixed capital–output ratio. It merely requires postulating three things: (1) the availability of debt increases prices, (2) there is a finite limit to the maximum consumable quantity of every consumer good available, and (3) money used to purchase debt-enabled goods cannot be used to purchase other goods that are not debt-enabled.

Both the recent housing and automotive booms are examples of what for lack of a better term I will call the Austrian acceleration principle. Bank credit expansion increased the demand for both houses and cars, (among other things), as first lower interest rates, then subprime and Alt-A mortgages, expanded the pool of home buyers, while at the same time, the plethora of low-interest leasing options vastly increased the number of potential car buyers. Consumption patterns were drastically altered. The percentage of homes purchased as second and even third residences didn’t only increase in the U.S.A., but in every country where a housing boom took place. Whereas the number of vehicles per household had remained flat, at 1.8, from 1998 to 1994,2 that rose to 2.3 per household by 2008 with nearly 35 percent of U.S. households owning three or more vehicles. But the number of houses and cars a consumer can afford to own is limited, so the expansion cannot continue indefinitely. In the meantime, the consumption patterns have been shifted towards the debt-enabled purchase houses, cars, and ancillary products and away from whatever the consumers had been buying before. The best efforts of the financial institutions to expand the enlarged demand base finally fail, and then the contraction begins.

It must be understood that this is very different from the Keynesian concept of underconsumption. There is no shortage of consumption, in fact, the problem is rooted in the credit-based creation of consumers that cannot truly afford to be purchasing the consumer goods they are buying. It should be obvious that in the real world of economic scarcity and finite resources, there will always be material limits on consumption. Once the artificially enhanced demand limits are reached, or even worse, consumers cannot afford to service their debt on the goods they previously purchased, the boom will come to a hard and fast end.

Rothbard asserts that the Keynesian acceleration principle only explained fluctuations in specific industries, not general economic depression, and even declares it to be wholly invalid because it does not take prices into account. But, as I have already noted, prices are an integral part of this Austrian variant on the concept so that aspect of Rothbard’s criticism does not apply. As for the matter of specific industries versus the general economy, my response is to point out that bank credit does not expand at the same rate throughout the economy as a whole, but is concentrated in the specific sectors upon which the financial institutions are focused regardless of whether they are capital or consumer goods. This is why the initial contractionary signs that precede a general depression tend to be seen first in the price movements of the sectors in which the credit expansion was concentrated before spreading across the entire economy.

After posting a story about nine people being shot and killed by the Iranian military, Michael Ledeen asks an incredibly stupid question.:

[H]ow can any American remain aloof from this sort of thing?

Easily. Very easily. Effortlessly. It’s neither our business nor our concern. No American cares any more about minor state violence in Iran than they do about state violence being committed anywhere else in the world. The US is a bankrupt paper tiger; it’s simply not capable of playing world policeman.

Mr. Ledeen’s faux concern about the violent state crackdown in Iran might be a bit more convincing if a) he was similarly concerned about much greater violence being committed in Tibet, the Sudan, and various African countries, and, b) if Mr. “Faster, please” hadn’t been actively calling for violent US-imposed regime change in Iran since the Iraqi invasion.

Obama is doing the right thing to avoid meddling in Iranian affairs. He shouldn’t be meddling in Israeli affairs either.

Middle-aged woman cheats, divorces, and therefore concludes the institution of marriage must be outmoded. The personal is no longer political, it is now the social science.

Heart-shattering as this moment was—a gravestone sunk down on two decades of history—I would not be able to replace the romantic memory of my fellow transgressor with the more suitable image of my husband, which is what it would take in modern-therapy terms to knit our family’s domestic construct back together. In women’s-magazine parlance, I did not have the strength to “work on” falling in love again in my marriage.

I rather look forward to the moment when all the short-sighted, self-seeking pseudo-intellectuals suddenly realize with horror that if marriage is outmoded in a society, the long-term consequences are neither positive nor liberating. All it means is that your society has demographically doomed itself and is well on the way to being replaced by a more vigorous, ideologically fit culture. But my favorite part of the article is this:

As far as the children are concerned, how about the tribal approach (a natural, according to both primate and human evolution)? Let children between the ages of 1 and 5 be raised in a household of mothers and their female kin. Let the men/husbands/boyfriends come in once or twice a week to build shelves, prepare that bouillabaisse, or provide sex.

Yes, I’m sure the matriarchal tribal model will suit the average white suburban woman wonderfully well. Just look at how well it’s working in Africa and the American inner cities. It may be time to begin looking into investing in companies that manufacture grass huts.

UPDATE – It gets better. Oh, it gets very much better indeed, especially when she admires the bedtime ritual of one lesbian couple: For the past twelve years, Teri and Pat have had a special Monday-night ritual. They order an extra-large cheese pizza (sixteen slices). While waiting—and I am not making this up—they settle in on the couch with large twin bags of Doritos. Each chip is dipped first in Philadelphia cream cheese and then in salsa. Cream cheese, salsa. Cream cheese, salsa. Cream cheese, salsa. The Doritos are finished to the last crumb, and then, upon arrival, the pizza as well. For Teri and Pat, this night of a million carbs is, by special agreement, guilt-free. Both feel that it is better than sex.