All about economics: October 2009

Friday, October 30, 2009

Obama' Record $1,417,000,000,000 Budget Deficit --The Real Reason Obama Does Not Call Larry Summers? The Summers Video On Taxes and Budget Deficits!

The Trillion $$$ Dollar U.S. Economic Deficit Caused By Our Government

“It’s tough to make predictions, especially about the future.”

~Yogi Berra

White House National Economic Council Director Larry Summers (R) nods off

Lawrence Summers on Economic Crisis & Conservative Ideology

“…Former Treasury Secretary Lawrence Summers appeared at the Center for American Progress to discuss the current economic crisis facing middle class America and the trickle down economic theory espoused by conservatives. Do tax cuts spur economic growth and pay for themselves with higher revenues on additional economic activity stimulated? This debate will be revived in the coming year as the incoming President and Congress will soon decide whether to renew of a variety of tax cuts adopted starting in 2001 and set to expire in 2010. Economists now have years of experience with this tax policy. What does the evidence show us? What has been the public debate about tax policy and supply-side and has it shifted in light of growing inequality and limited sharing of the benefits of economic growth?..”

<h4 style="text-align:centerNBR | Larry Summers | PBS http://blog.heritage.org/2009/03/24/bush-deficit-vs-obama-deficit-in-pictures/ US ECONOMY IS IN MELTDOWN 1 US ECONOMY IS IN MELTDOWN 2 US ECONOMY IS IN MELTDOWN 3 US ECONOMY IS IN MELTDOWN 4 US ECONOMY IS IN MELTDOWN 5 US ECONOMY IS IN MELTDOWN 6 US ECONOMY IS IN MELTDOWN 7 Background Articles and Videos Larry Summers’ Judgment David R. Henderson, A man of many mistakes ”…The date: Jan. 7, 1993, just 13 days before President-elect Clinton is to take office. The place: Little Rock, Ark. The event: a briefing of President-elect Clinton by his top advisers on the economy. Larry Summers, about to be appointed Undersecretary of the Treasury for International Affairs, agrees with what many of Clinton’s advisers say: It is important to reduce the U.S. government budget’s deficit, even in the short run. What’s striking about this is that the budget deficit at the time was about the same, as a percent of GDP, as it is now. In fiscal year 1993, the deficit was 3.9% of GDP, and for this fiscal year, as noted, it will be at least 3.3% of GDP. Yet, virtually all of Clinton’s advisers, including Summers, wanted to cut the deficit, not increase it. Perhaps the difference is that the unemployment rate was so low then that increasing the deficit would have, in their Keynesian way of looking at things, “overheated the economy.” Well, no, not quite. In fact, the unemployment rate in November 1992, the latest month for which they would have had data, was 7.4%. The most-recent unemployment rate for the current U.S. economy, by contrast, was 6.5%, almost one whole percentage point lower. Why the difference? The main one, I believe, was political. President-elect Clinton had just won a tight election in a three-way race with then-President Bush and Ross Perot. Perot’s major issue had been the importance of reducing the budget deficit, and he had touched a nerve in the American voting public. Perot had emerged with 19% of the vote, even after having suspended his campaign briefly, and he had even received more votes than Clinton in one state, Utah. Obama, by contrast, had no credible opposition that was talking about the budget deficit. Even if John McCain was a critic of budget deficits, he never presented a credible plan for reducing them. So a reasonable question to ask is this: How much will Larry Summers use his brilliance and how much will he simply twist with the political winds?” http://www.forbes.com/2008/11/30/larry-summers-obama-oped-cx_drh_1201henderson.html US budget deficit hits record $1.4 trillion P. PARAMESWARAN “…The US government closed its 2009 fiscal year with a record 1.417 trillion dollar budget deficit as it poured resources to contain a serious financial crisis that plunged the nation into recession. The deficit was some 962 billion US dollars higher than the prior year and amounted to 10 percent of US gross domestic product (GDP), the highest since 1945, officials said Friday. The huge jump in the budget shortfall stemmed from both declining revenues and a massive ramping up of spending in a fiscal stimulus to jolt the world’s largest economy from a prolonged recession following the worst financial crisis in decades. Receipts for the fiscal year that ended in September totalled 2.105 trillion US dollars while outlays were 3.522 trillion US dollars, the Treasury said. Officials, however, pointed out that the deficit was 162 billion US dollars lower than the 1.580 trillion US dollars forecast by the administration of President Barack Obama, who inherited the flood of red ink from his predecessor George W. Bush. …” http://news.smh.com.au/breaking-news-world/us-budget-deficit-hits-record-14-trillion-20091017-h28i.html U.S.: John Harwood Interviews Larry Summers - Economic Adviser Larry Summers Falls Asleep During Meeting AGAIN Related Posts On Pronk Palisades

GDP Up 3.5%. Wall Street Republicans Start Flip-Flopping

In February they said Obama’s stimulus bill wouldn’t stimulate anything.

Now they’re saying the economy is on an unsustainable “sugar high” due to government spending, and we need to start raising interest rates to slow things down.

As Steve Liesman – one of the few sane commentators on the CNBC payroll — scornfully asked last night, “Isn’t 10% unemployment high enough for you guys?”

Never, never, never, never, never give credence to the Wall Street economic talking heads you see on television. They’re Republican political hacks who never met a tax cut that wouldn’t solve all our problems.

Daily Comment - 30th October 2009: The Dollar is a Basket-Case waiting to put Egg on the Bears' Faces

Macro

The Fed, and other central banks, have a tool for controlling interest rates reflected in the base rate they set for banks themselves to borrow. But, as I alluded to in my comment on the 13th October, it is a very blunt tool for what is a delicate operation. To use a rather crude analogy, it’s a bit like a sawn-off shotgun – which simply sprays lots of little pellets in the vague vicinity of where you are aiming. This is no precision instrument like a rifle, it has very poor range and is not accurate at a distance, but at close range, you can’t really miss hitting “something” with a sawn-off shotgun.

We’ve had all this monetary easing from the Fed but ,while we have had massive asset-price inflation in the markets, none of this has really translated to real inflation at the consumer level, why is this? Well, as I mentioned on the 14th October, this is due to the inadequacy of the transmission mechanism within the monetary (banking) system. By taking extreme measures to inflate the monetary base, the Fed has raised the stakes of monetary policy, its put the scalpel back in the drawer and taken out the shotgun. Things are going to get messy.

So now I conclude a week of focus on the Dollar. After reading comments for the last 3 days we are now well versed in many of the fundamental economic attributes contributing to the plight of the Greenback:

We know the difference between: Money, Currency and Capital.
We know why inflation is ultimately a monetary phenomenon.
We know that the Fed is taking extreme monetary policy measures.
And now we know what a sawn-off shotgun is!

But most of all we know what the implications are, structurally, to the stability of the Dollar – it’s a very delicate balance right now. Staying on my “eggs theme”: Bernanke is now required to crack an egg with a shotgun and he only has one shot at this. The theory might be just to graze the shell with a pellet so that only the top of the egg comes off but the reality is; the shotgun is a brutal, crude instrument. He risks either missing altogether or catching the egg with a pellet and smashing it to pieces. His best option is to aim squarely for it, ensure a certain (inflationary) outcome, then try to pick up the pieces later – this is what I have referred to in previous comments as “Hair of the Dog Monetary Policy”. As far as the Fed is concerned, missing the target completely (deflation) is simply not an option. But what’s interesting is that, now the stakes have been raised, there is no option which is good for the Dollar. Extreme measures by the Fed have the Dollar caught between a rock and a hard place.

While the Dollar remains vulnerable, it does not necessarily mean it will continue to go down continuously – afterall this is all a game of relativity and there are other currencies which are precariously balanced too. While none of them are as structurally weak as the Dollar (apart from Sterling perhaps) the “branding” of the Dollar is still largely a subjective art form (in which the US Treasury is currently trying to produce its masterpiece), opinion on this will be subject to seasonality and ambiquity of critiques, like me. Also, in my opinion, the Dollar is oversold on many technical indicators and is due a reversal. Compounding this is “the carry trade” and the fact that I’m pretty sure there is a huge Dollar short out there waiting to be squeezed. There is not telling where the Dollar will go from here in the medium term, but over the long term, asking people to have deep faith in a currency which is being systematically devalued by the Fed and the Treasury is a tall order.

You know it’s quite simple really; if Gucci cut the price of all their produce by 90%, everybody would go out and buy something from Gucci, but then their label will become ubiquitous, the luxury brand would lose it’s gloss and the company would eventually die. So it is with the “luxury brand” of the Dollar. To quote Chris Mayer, in the Daily Reckoning:

The US dollar is a sort of monetary brand. And like any other brand, it can fall out of favor. Even iconic brands can rapidly lose their “must- have” ache. Sometimes, a brand can disappear entirely, as did Pan American Airways or “Members Only” jackets. But there is always something else waiting to take its place. So it is with the US dollar, a brand making lows in the financial markets.

The dollar has been the “Coca-Cola of monetary brands,” says James Grant, editor of Grant’s Interest Rate Observer. But even the best of brands can be lousy investments. Grant uses the analogy of The New York Times. It was the greatest name in newspapers. In 2002, the stock sold for $53 per share – an all-time high, as it turned out. Today, the “Gray Lady” fetches only $8 per share.

Here we get to John Paulson, a presenter at the Grant’s Fall Investment Conference and undoubtedly the richest man in the room. Portfolio magazine dubbed him “The Man Who Made Too Much” after he made $3.7 billion by betting against mortgage-backed securities (MBS). He is one of the greatest hedge fund managers ever.

As to why, Paulson presented a simple, but compelling case. First, the monetary base has exploded in a way we’ve never seen before. The monetary base is essentially the Federal Reserve Bank’s currency and reserves. The Fed, by buying up securities in this crisis, has pumped a lot of money into the economy.

That means that as the monetary base expands, the money supply surely follows, though there is a lag. (Money supply is a broader measure of money than just the monetary base, as it includes personal deposits and more. The monetary base is like a kind of monetary yeast. It makes money supply rise.)

If money supply grows faster than the economy, that will create inflation, says Paulson. As it is impossible for the economy to grow anywhere near that vertical spike in the monetary base, Paulson contends inflation is coming.

While I very much doubt the Dollar will lose its status as the Global Reserve Currency – the message to China and other surplus, savings nations with trillions of Dollars of bank reserves is clear: yolk-hungry Ben’s on the loose with a sawn-off shotgun, do not put all your eggs in one basket.

I leave you with this, courtesy of Bloomberg: Comments on the Dollar

Macro Data to Watch:

Japanese Jobs surprise to the upside!
Japanese CPI comes out roughly in-line at -2.2% YoY
Singaporean Jobs Numbers out today
South Korean Industrial Production
Italian CPI
Belgian GDP

Markets

Well, what a surprise for US GDP, up +3.5% and higher than the average estimate of +3.2%. But what surprised me more what the way the markets traded – equities took a while to get going and the Dow was only up 0.5% at the open. But the markets eventually warmed to the number and equities continued to trade higher into the close completely reversing all the losses from the day before.

After reaching a rather ominous level of 28, the VIX collapsed back down to 25.

The British Pound rallies against both the Dollar and the Euro.

Global Stocks to Watch:

Some huge reversals in the banks (RBS up nearly 10% for example) – worth watching these to see how they close the week.
Miners are reversing losses too – Rio Tinto up 5% already.
Earnings:
- ICICI Bank (India)
- United Overseas Bank (Singapore)
- Hon Hai Precision
- Samsung Electronics
- Sony, Toshiba, Panasonic
- Denso, Toyota
- NTT Docomo
- WPP

The Irrationality of Being Rational

I don’t know whether you know this or not, but I attend the University of Pennsylvania. Ivy League, I know – don’t worry about it, I got in on some random clerical error. And at the University of Pennsylvania, I specifically attend the Wharton School of Business – what some call the preeminent business education institute in the world. It is a place governed by RATIONALITY. A school of ECONOMICS, where HIGHER EDUCATION is dictated by notion of WHAT IS ABSOLUTELY CORRECT and what is ABSOLUTELY FALSE.

At this place, the argument for the idea of life is that RATIONALITY rules the day, and it is the only thing that matters. RATIONALITY is the backbone of economics – most basic theories (which are often difficult enough to grasp anyways) are based on the foundation that the world is full of free-thinking, rational human beings, their purpose to maximize their ends (which we call utility, which, for some reason, is synonymous with wealth – hey, no one’s really explained it to me either). And to maximize (or optimize, depends on the book and the author) said utility, one must think and act ABSOLUTELY RATIONAL – it is the nature of the personified “market.” And since people are so RATIONAL, certain decisions and moral idlings are easy to figure out.

Take, for example, the Ultimatum Game (which some of you may have played at one point) for example. In the experiment, one person is told that he will be given a dollar if he can get a partner to agree that the dollar should be split. If there is no agreement, the dollar is not bequeathed to either: the only thing is, there can be no communication between the partners. Rather, the first partner must simply write the amount that he will split on a sheet of paper, hand it to the partner, and sit back for the decision. If the partner chooses, he or she checks yes and the dollar is awarded.

So what would the Wharton student do here, being ruled by RATIONALITY? He of course offers the least amount of money possible ($0.01) as his partner should accept, owing to the fact that they will, indeed, be one cent richer than they were a moment ago. This is RATIONAL. This is ECONOMICALLY SOUND. This should be ABSOLUTELY CORRECT, as the laws of economics dictate that a person must be RATIONAL and maximize his or her utility.

But the results of the game? Unfailingly, the vast majority of participants choose to divide the dollar in half – hey, either we get the dollar or we don’t; it’s free money, what’s the harm in splitting it? This decision directly spits in the face of LOGIC, yet it’s what occurs. And each time the Ultimatum Game is conducted, at least one person will argue that anybody that offered $0.50 is an idiot, and that under no circumstances should anything above a cent be offered – after all, it’s IRRATIONAL not to attempt to maximize our own standings in life. And to those partners that deny an offer of one cent? Well, our SUPER RATIONAL friend’s face may just explode – “you arbitrarily gave up the opportunity to improve your utility (wealth)!” he screams. “You IRRATIONAL prigs!.”

Are they really irrational though? Isn’t someone that argues so strongly for rationality, even in the face of certain irrationality, irrational himself? I’d argue yes. Because the one thing that Wharton forgets is that people, regardless of your economic theories or the logic behind absolute rationality, are simply not rational. We are not wired that way. Think about your day – I guarantee that at some point today, you did something that made absolutely no sense. I bet whatever this thing was (for me, it was walking on the opposite side of the street that I needed to be on, even though there were multiple instances that I could have crossed, which would have shortened my trip – oh yeah, it was raining, too. No umbrella, even though I knew it was raining well before I left) didn’t further your goals in any way imaginable, utility or otherwise. But you did it, right? And when it was over, is whatever incremental increase you may have received if you would have done things so ABSOLUTELY RATIONALLY make much of a difference to you? Nope.

See, the thing is, in the end, when everything else is irrelevant and turns into dust, the thing that makes us human is that irrationality that is so frowned upon by Wharton. That irrationality leads to spontaneity, it leads to emotions (don’t act like it was rational to cry at the end of Titanic or Marley & Me), and most importantly, it leads to love – after all, rationality agrees with our biology under the notion that we should not be attached to one another, but rather procreate and move on. But that isn’t what we do. And I don’t care what that dude arguing about the Ultimatum Game says, those things that stem from being lovestruck, lovelorn, illogical, flippant, impatient, spontaneous, egregious, quick to laugh, quick to anger, and romantic are more than worth forgoing some utility.

And that, my readers, is as rational as you can get.

A World Without Vision

Why are the two great utopian creeds of religion and socialism in retreat in the western world? Is it because they offer visions of utopia at a time when capitalism rules because it reflects the short-term, fragmented consciousness of an age where distraction and entertainment are used to divert people away from any deeper thought on the bigger issues that might result in a more equal society and world?

Could it be that the more capitalist the society, the greater disconnection from long term conviction, belief and faith in the ability to effect significant change? Does capitalism lead to a feeling of powerlessness against the onslaught of consumerism and diversion where marketing, advertising and PR pave the way for another short term craze, obsession or must-have?

If you want to see what capitalism has done to the western world look at all the parents anxiously scouring the shops and the internet in the run-up to this Christmas for the year’s have-to-get toy. The message of Christmas is consumerism on an epic scale, as over-the-top as the lunch most people sit down to eat on the day itself and, ultimately, as disappointing. The toys that cause such joy on Christmas morning are often discarded and abandoned within days or weeks, some times they don’t even merit a second glance after the wrapping paper is ripped away. It’s a sad reflection of the times we live in that the most important day in the Christian calendar has been transformed into Consumerfest.

Is it any wonder so many of us feel a gnawing emptiness in our lives when we live in a world where disappointment is such an integral part of the package? Desire and anticipation fire through our veins as we hunger for ownership of an item, be it the latest electronic gadget, pair of shoes, CD, DVD, iPhone, but so often, like our children, we begin to feel a tiny trickle of dissatisfaction even as we take them out of their boxes or wrappers.

No wonder we seek to counter these feelings of dissatisfaction over the value of our purchases by seeking validation of their desirability and approbation from our friends and colleagues. But isn’t that what everybody does in the adverts?

Is consumerism also what drives people in the western world who have given up on the arduous requirements of adhering to traditional Christian religions to seek out alternative faiths which place far less burdens on their devotees – be it the Bhagwan Shree Rajneesh, his purple clothes and tolerance of sexual freedom in the 70s to Madonna’s embrace of Kabbalah – and to drop them almost as quickly once they have ceased to be this year’s ‘must-have’ spiritual accessory?

And is it really any wonder politics too has become so meaningless and powerless in a world ruled by consumerism and short-term gratification? How effective can any politician be when he or she must contend with a populace unwilling or unable to recognise that nothing happens overnight, to understand grand plans and visions are subject to set-backs and disappointments before they can reach any type of realisation?

How can anything significant and lasting be achieved when most people in the western world have been conditioned through rampant consumerism to have such a short attention span? Take a look at the current attempt to address climate change. Is it really possible to get people to recognise the scale of the problem and commit to the huge structural changes required to halt it?

Can a generation reared on consumerism really grasp the magnitude of such a challenge when they have spent all their lives being sold the promise of quick and painless solutions to every problem they have ever faced? Furthermore, do politicians have the will to push through the required changes when they rely for their re-election on those very same people – when they actually may be those very same people themselves?

Could it be that without the countervailing forces of religion and socialism to balance consumerism and emphasise sacrifice in the here and now for the greater good, capitalism will prove itself unable to effect any genuine transformation in human behaviour that will stem the tide? The truth is life is a struggle and great things cannot be achieved overnight, even if there are miracles along the way. But without a vision to inspire that involves all of us and recognises the rights of everyone to an equal measure of the wealth and beauty of this planet, we may have no hope of reversing the climate of atrophy and passivity which consumerism has delivered.

U.S. Ranks Ninth Overall In Prosperity

Updated: 10-27-09 06:17 PM

When it comes to prosperity, the United States has nothing on Scandinavia — or, at least, that’s the conclusion that a newly released ranking arrives at.

According to a report released by Legatum, a global investment firm, the U.S. is the ninth most prosperous nation in the world, trailing five Scandinavian countries which dominate the top rankings.

How did Legatum come to these conclusions? Well, their rankings define prosperity “as both wealth and well-being, and finds that the most prosperous nations in the world are not necessarily those that have only a high GDP, but are those that also have happy, healthy, and free citizens.” Legatum ranked countries in the categories of economic fundamentals, entrepreneurship and innovation, democratic institutions, education, health, safety and security, governance, personal freedom, and social capital. The scores were then averaged to find a nation’s overall ranking.

The United States’ ranking was weighed down by a relatively poor performance in Health, (with a ranking of 27th) and Governance (16th). According to Legatum’s data, two-thirds of the U.S. population thinks that the government is corrupt, and only 58% have faith in the judicial system; three-fifths think that local businesses are corrupt.

The category that the U.S. did place first in was Entrepreneurship and Innovation. Some 680,000 businesses were in started in America in 2007 due, in large part, to low barriers of entry for entrepreneurs looking to start companies. Apart from having a high number of personal computers per capita, the United States also has the world’s highest average internet bandwidth levels and high levels of secure internet servers per person.

Here are the top ten:

1. Finland
2. Switzerland
3. Sweden
4. Denmark
5. Norway
6. Australia
7. Canada
8. Netherlands
9. United States
10. New Zealand

To see the complete list, including the lowest-ranking countries, click http://www.prosperity.com/rankings.aspx

Read more at: http://www.huffingtonpost.com/2009/10/27/legatum-index-us-ranks-ni_n_335467.html?view=screen

Strategi Ekonomi Induk

Strategi Ekonomi Induk Tanggal: 26 Oktober 2009
Sumber: infobanknews.com PEREKONOMIAN Asia selama empat dekade terakhir ini mengalami kemajuan bertahap, setidaknya dalam tiga fase. Kawasan inilah yang sekarang merajai ekonomi dan perdagangan dunia dengan tingkat pertumbuhan yang moderat dan cukup tinggi. Sementara, kawasan-kawasan lain, seperti Amerika Serikat (AS) dan Eropa, bertumbuh negatif dan rendah.

Perkembangan fase pertama dari perekonomian Asia terjadi pada 1970-an. Pada fase ini Jepang muncul sebagai negara industri, yang mampu menyaingi negara industri lain.

Fase kedua adalah kemunculan negara-negara kecil tetapi efisien, seperti Korea Selatan, Hong Kong, Taiwan, dan negara-negara yang tergabung dalam ASEAN. Selanjutnya, pada dua dekade terakhir ini muncul dua raksasa ekonomi, yaitu Cina dan India.

Mengapa negara-negara Asia tersebut sukses dalam perekonomiannya? Jawabannya tidak lain karena strategi ekonomi induk yang dijalankan pertama kali adalah strategi bersaing ke pasar internasional. Inilah kunci keberhasilan pertama, yang telah dijalankan.

Memang pada periode berikutnya pemerintah Cina dan India melakukan kombinasi penguatan pasar dalam negeri karena penduduk kedua negara ini sangat besar.

Pasar dalam negeri dijaga dan dikembangkan, terutama agar daya belinya meningkat. Tetapi, tanpa strategi daya saing ke pasar internasional, kedua negara tersebut tidak akan bisa meraih pertumbuhan ekonomi yang tinggi.

Bagi negara-negara berpenduduk besar, pengelolaan pasar dalam negeri sangat penting karena pasar dalam negeri sesungguhnya juga merupakan arena persaingan pasar internasional, kecuali sektor-sektor yang dijaga dan diproteksi karena alasan perlindungan ekonomi.

Karena itu, menjaga dan memperkuat pasar dalam negeri juga merupakan bagian dari strategi induk, yang dikomplementasikan dengan strategi daya saing tersebut.

Pasar dalam negeri Indonesia sangat besar karena jumlah penduduknya yang sangat besar dan sebarannya sangat luas. Tidak hanya itu, kelompok atas dalam katagori 5% sampai dengan 10% memiliki daya beli yang sangat besar sehingga kekuatannya mampu mendorong lokomotif pertumbuhan ekonomi melalui sektor konsumsi.

Potensi pasar dalam negeri yang besar ini perlu dijaga secara selektif dengan tidak mempraktikkan perdagangan terbuka yang sangat liberal.

Kenyataannya, kondisi pasar dalam negeri kita saat ini masih kocar-kacir karena serbuan sejumlah besar produk Cina, yang tidak jelas kualitasnya dan tidak ada seleksi yang bagus untuk melindungi pasar dalam negeri. Jalur merah di bea cukai dan peranan departemen terkait tidak memadai sehingga pasar dalam negeri masih menjadi ajang persaingan global, yang tidak adil bagi Indonesia sendiri.

Sementara itu, produk Indonesia di Eropa dan AS dihalangi sangat luar biasa ketat, terutama ekspor perikanan, makanan, dan lainnya.

Masalah ini juga menjadi keprihatinan Presiden Susilo Bambang Yudhoyono (SBY), seperti dikemukakan dalam pidato kenegaraan, Agustus lalu. “Ekonomi Indonesia,” katanya, “Ekonomi 230 juta manusia yang akan terus bertambah, ekonomi tanah air seluas 8 juta kilometer persegi, juga harus memiliki kesinambungan. Pertumbuhan ekonomi yang kita pilih dan anut adalah pertumbuhan disertai pemerataan, growth with equity, agar benar-benar membawa rasa adil.”

Ke depan kita harus memperkuat ekonomi dalam negeri, pasar dalam negeri, dan tidak boleh hanya menggantungkan kekuatan ekspor sebagai sumber pertumbuhan kita. Strategi yang hanya bersifat export oriented tentu bukanlah pilihan kita.

Jika diamati, strategi ekonomi induk yang disampaikan presiden tidak lain merupakan kombinasi penguatan ekonomi dalam negeri dengan strategi daya saing.

Pertama, pembangunan ekonomi Indonesia ke depan mesti lebih memadukan pendekatan sumber daya (resources), pengetahuan (knowledge), dan budaya (culture). Kedua, ekonomi nasional mestilah berdimensi kewilayahan dengan pertumbuhan ekonomi yang tersebar di seluruh Tanah Air. Daerah-daerah harus menjadi kekuatan ekonomi lokal.

Dimensi strategi daya saing, menurut presiden, adalah membangun ekonomi nasional yang kuat berdasarkan keunggulan komparatif (comparative advantage) dan sekaligus keunggulan kompetitif (competitive advantage).

Karena itu, sesuai dengan Undang-Undang Dasar 1945 yang telah diamandemen, ekonomi nasional juga harus dijaga berdasarkan prinsip efisiensi dan berdasarkan mekanisme pasar yang sehat.

Beberapa waktu lalu Kamar Dagang dan Industri (Kadin) mengritik pemerintah, yang dianggap menjalankan kebijakan dan program ekonomi tanpa strategi induk.

Kini jawaban atas kritik tersebut telah disampaikan pemerintah (presiden) secara terbuka dan gamblang melalui pidato kenegaraan yang formal.

Pemikiran strategis tersebut sudah bergulir. Kini tinggal langkah lanjutannya pada tingkat departemen, daerah, korporasi, dan level yang lebih luas, yakni masyarakat.

Didik J. Rachbini

Penulis adalah guru besar ilmu ekonomi dan juga pengajar pada Universitas Mercu Buana dan Universitas Indonesia.

WHEAT MAY MOVE IN RANGE WITH UP BIAS

Domestic wheat prices have escalated by around 10 per cent

Domestic wheat prices have escalated by around 10 per cent amid concerns of adverse monsoon and flood in Karnataka and Andhra Pradesh, which has raised concern over kharif food grain production particularly rice and maize.

Although there is still some upside left as far as wheat prices are concerned.

The prices will face strong resistance at higher level as supply situation in India and in rest of the world is in healthy shape.

Ample availability of stock at domestic level

At domestic level, wheat inventories have increased after two back to back record crops in the country.

Due to better carry over stock and record purchase government stocks reached to second highest level in the history at 32.29 million tonnes almost double than buffer stock requirement of 17 million tonne.

According to the Agriculture ministry’s fourth advance estimates, India produced a record crop of 80.58 million tonnes in 2008-09, while production was at 78.57 million tonnes in 2007- 08.

With bumper production and steep hike in minimum support price, government made record purchase of 25.3 million tonnes this year, 13 percent more as compared to last year.

Prospects of next year crop

Despite having comfortable supply currently, weak monsoon, flood in Andhra Pradesh and Karnataka and consequent Shortfall in kharif paddy output prospects has started fueling prices in the market.

A smaller paddy and maize crop will lift demand for their substitutes, primarily wheat.

As per crop weather watch report, acreage of kharif paddy this year remained at 324.28 million hectare till October 09, 2009 which is 16.2 percent or 6.26 million hectare lower than same period last year.

However kharif maize acreage remained higher this year but recent flood in Andhra Pradesh and Karnataka has aggravated the concerns of lower output.

As per Agriculture department report, kharif maize acreage was at 71.08 lakh hectares, 0.8 percent or 0.5 lakh hectares higher than last year.

Besides, flood in Karnataka and Andhra Pradesh and weak monsoon also raised concern over prospect of next wheat Crop.

Due to weak monsoon in northern part of India mainly in Punjab, Haryana and Uttar Pradesh, soil moisture condition is not sufficiently good for next wheat sowing.

Water storage in this region has also declined. As per Central Water Commission’s latest data in 81 important water reservoirs monitored by CWC in different parts of the country, total live storage has increased from 90.48 BCM on 01.102009 to 91.75 BCM on 08.10.2009.

But still is far from a satisfactory level.

Stay Tuned for More on this topic.

We would see demand and supply scenario in coming months, price trend and on Export Ban.

Note : For More Latest Industry, Stock Market and Economy News and Updates, please Click Here

How an Insurance Mandate Could Leave Many Worse Off: Tyler Cowen Explains

Tyler Cowen, October 24, 2009

AMERICANS seem to like the idea of broadening health insurance coverage, but they may not want to be forced to buy it. With health care costs high and rising, such government mandates would make many people worse off.

The proposals now before Congress would require just about everyone to buy health insurance or to get it through their employers — which would generally result in lower wages. In other words, millions of people would be compelled to spend lots of money on something they previously did not want, at least not at prevailing prices.

Estimates of this burden vary, but for a family of four it could range up to $14,000 a year over the next decade, according to the Congressional Budget Office. Right now, many Americans take the gamble of going without insurance, just as many of us take our chances with how much we drive or how little we exercise.

The paradox is this: Reform advocates start with anecdotes about the underprivileged who are uninsured, then turn around and propose something that would hurt at least some members of that group.

To ease the burdens of the insurance mandate, the reform proposals call for varying levels of subsidy. In some versions, such as the current Senate bill, subsidies are handed out to families with incomes as high as $88,000 a year. How long will it be before just about everyone wants further assistance, and this new form of entitlement spending spins out of control? It’s possible to lower insurance subsidies, but then the insurance mandate would impose a bigger burden on the people we are trying to help.

A subtler problem is what economists call “implicit marginal tax rates.”

The fiscal reality is that not all income groups can receive equal subsidies; as a family earns more, its subsidy would probably decrease, eventually falling to zero. But then we are taking money away from the poor as they climb into higher income categories. This is a disincentive to earn more, and the strength of the disincentive increases with our initial generosity. For many people, the health insurance aid would phase out when food stamps, housing vouchers and the earned income tax credit also end and the personal income tax kicks in.

This structure of incentives would likely discourage many parents from earning a better life for their children. Congress could tweak the subsidies so they don’t phase out so quickly, but then we’re back to very high fiscal costs and subsidies for many families in the higher income classes.

Defenders of a broad health insurance mandate argue that it will lower average costs in the health care market. The claim is that many of the uninsured are young, healthy or both, and that bringing them into the insurance pool might lower average premiums by spreading risk across low-cost groups. Yet Massachusetts has had a health insurance mandate for several years and this cost-saving mechanism does not appear to be kicking in.

At this point, it seems more plausible that the cost of health insurance will keep rising, just as the costs of health care services have continued to climb. The upshot is that the burdens of mandatory purchase, the subsidy costs and the associated implicit marginal tax rates will all increase, eventually to the point of unsustainability.

A further problem is “mandate creep,” which we’ve seen at the state level, as groups lobby for various types of coverage — whether for acupuncture, alcoholism and fertility treatments, for example, or for chiropractor services or marriage counseling.

There are now about 1,500 insurance mandates among the various states, and hundreds of others are under consideration. The dynamic at work here is that the affected groups have a big incentive to push for mandates, while most other people are unaware of the specific issues and don’t become involved.

Because mandates don’t stay modest for long, health insurance would become all the more expensive. The Obama administration’s cost estimates haven’t considered these longer-run “political economy” issues.

IF there is a problem with mandates, why do they seem to work in countries like Switzerland and the Netherlands? One answer is that mandates are more effective when health care cost inflation is under control, and both of those countries fare better at technocracy than the larger, less tightly ordered United States.

And mandates also fare better in those nations because of their greater equality of incomes. In other words, it’s less of a stretch to offer poorer people coverage that is roughly comparable to that of the wealthy.

If anything, however, European mandates will face growing problems, as health care cost inflation is spreading globally.

We’re often told that America should copy the health care institutions of Western Europe. Yet we’re failing to copy the single most important lesson from those systems — namely, to put cost control first. Instead, we’re putting our foot on the gas pedal and ratcheting up the fiscal pressures on the system, in the hope that someday, somehow, it will all work out.

As it stands, we’re on the verge of enacting a policy that is due to explode, penalizing many of the very people that it was ostensibly designed to help.

Tyler Cowen is a professor of economics at George Mason University. He blogs here

Shifting the world to 100% clean, renewable energy by 2030 – here are the numbers

Stanford Report

Study: Shifting the world to 100% clean, renewable energy by 2030 – here are the numbers
Wind, water and solar energy resources are sufficiently available to provide all the world’s energy. Converting to electricity and hydrogen powered by these sources would reduce world power demand by 30 percent, thereby avoiding 13,000 coal power plants. Materials and costs are not limitations to these conversions, but politics may be, say Stanford and UC researchers who have mapped out a blueprint for powering the world.

Most of the technology needed to shift the world from fossil fuel to clean, renewable energy already exists. Implementing that technology requires overcoming obstacles in planning and politics, but doing so could result in a 30 percent decrease in global power demand, say Stanford civil and environmental engineering Professor Mark Z. Jacobson and University of California-Davis researcher Mark Delucchi.

To make clear the extent of those hurdles – and how they could be overcome – they have written an article that is the cover story in the November issue of Scientific American. In it, they present new research mapping out and evaluating a quantitative plan for powering the entire world on wind, water and solar energy, including an assessment of the materials needed and costs. And it will ultimately be cheaper than sticking with fossil fuel or going nuclear, they say.

The key is turning to wind, water and solar energy to generate electrical power – making a massive commitment to them – and eliminating combustion as a way to generate power for vehicles as well as for normal electricity use.

The problem lies in the use of fossil fuels and biomass combustion, which are notoriously inefficient at producing usable energy. For example, when gasoline is used to power a vehicle, at least 80 percent of the energy produced is wasted as heat.

With vehicles that run on electricity, it’s the opposite. Roughly 80 percent of the energy supplied to the vehicle is converted into motion, with only 20 percent lost as heat. Other combustion devices can similarly be replaced with electricity or with hydrogen produced by electricity.

POLITICAL: Fixing healthcare? Not gonna happen with the gooferemtn involved

http://www.lewrockwell.com/orig10/scott-m1.1.1.html

Your Doctor Serves The State, Not You
by Michael Scott, MD

*** begin quote ***

While I agree that physicians commonly order tests and perform procedures that are medically unnecessary, this fact is due to two main reasons the author completely fails to mention: first, the tort system, which terrorizes doctors in their practices on a daily basis, and second, that patients have minimal if any financial stake in their care. As a consequence, they demand everything in excess, and are often angry when we suggest a desired test or treatment is not indicated, no matter how much time we spend trying to educate them. When people don’t pay for something with their own money, they hardly care about costs. They just milk others for all they’re worth, because after all, that’s what they perceive everybody else is doing to them, too.

*** end quote ***

Clearly, the current insurance system is broken. And, isn’t going to get fixed anytime soon.

We clearly have to get the lawyers out of suing the doctors for everything that goes wrong. They are docs ; not gods.

We clearly have to return to the days of yesteryear, when insurance was insurance. Car insurance doesn’t insure oil changes. And, patients have to pay a percentage of the true cost; not a “co-pay”!

We have to make health care insurance like auto or life; disconnected from employment.

Finally, we have to get the gooferment OUT of health, health care, and health care insurance completely. They can’t do anything right. It’s in their nature. (I still haven’t heard of then doing ANYTHING effectively. Never mind efficiently!)

Argh!

# # # # #

Sunset on an American Week (c. 2009)

I’m considering cutting my ears off.

I’ve recently returned from a trip across America (my latest blog tour), and I’m less happy than I was when I left. That sounds opposite, I know, but you have to understand the emotional roller coaster to which I was subject on a daily basis.

Each day, without exception, my spirits peaked only to be beaten back down again by sunset. In the mornings, we would gear up for another 350-450 mile drive to our next destination, making casual, small-town stops for food, fuel and flushers along the way, and with every new glimpse of America that I absorbed, no matter how remote or involved, my heart became filled with love, my soul with amazement and my mind with stimulation. Who has been here? Who built this? Look at all this greatness! What has gone on at this spot across the centuries? How has this city evolved? My God, look at all this freedom! No number of eyes could have satisfied my gluttony for the visions.

Yet, by nightfall, I was always in a very different state of mind – more disturbed and ambivalent. In the evenings, when I would listen to the news, I could only hang my head despairingly over what I heard. Visions of mountaintops, freight trains and rickety general stores yielded to and vanished behind sounds of police abuse, despotism and control. Sure, I should be desensitized to these stories by now, but they seemed to take on a whole new weight after leaving my Southeast Pennsylvania shell and experiencing America as a whole. Each day, I tried my best to believe in the steadfastness of Americanism – that our core could never be contaminated. Each day, the country that I saw confirmed that we are not like any other country, that our greatness is unparalleled and that we’re kind, hardworking and freethinking people and no thing or no one can EVER take that away from us. But each night, the country that I heard about was very different. In the ensuing week of travel, I experienced two facets of America: the visual and the audible. Here is the tale of two countries.

MONDAY

They say if you could iron out West Virginia, it would be the size of Texas. This finally made sense to me when I stopped there for a concert, and the sight of thousands of people enjoying uninhibited freedom against the mountainous backdrop greeted my eyes.

Later, my mood was ironed out when I heard the latest ObamaCare report: Congress plans to enforce the individual mandate that all Americans MUST own health insurance as a condition of citizenship by wrapping it in the cloak of taxation. Failure to pay this tax (a.k.a. buy health insurance) can result in up to a year in prison. That’s not the America I saw.

TUESDAY

As I crossed from Illinois into Missouri, the vision of the St. Louis skyline engulfed my eyes, and I thought, what other country can claim so many major cities, each displaying such magnificent wealth and achievement? The answer, of course, is none. Countries with more than twice our population and/or landmass aren’t even in our ballpark. What do you think is the reason? If you have an idea, feel free to post them below.

In the evening, my ears were devastated by the sounds of people trying to dismantle our engines of wealth and achievement. In an interview, Nancy Pelosi talked about the possibility of a Value Added Tax (VAT) to manufactured goods as a means of addressing our nation’s fiscal problems. Of course, Ms. Pelosi doesn’t understand that the same principles that drive high-income individuals out of areas where taxes are too high will also drive consumers out of various areas of commerce where taxes are too high, costing us millions of jobs and our standard of living.

http://www.youtube.com/watch?v=T7R9wYLmzKI&feature=related

WEDNESDAY

As I passed through the heartland, I stopped in rural Fanning, MO for a glimpse of the world’s largest rocking chair. Not expecting much at first, I was amazed when I actually saw it. Just look how it dwarfs the house next to it! It was another example of American determination and ingenuity. Sure, it doesn’t serve much of a purpose, but that’s kind of the point: in America, we don’t do things because someone else wants us to or because we have to; we do them because they fulfill us in some personal way. That’s what makes this ridiculous rocking chair essential Americana.

Ingenuity and determination be damned – gimmie what I want for FREE! That night, I heard reports of over 50,000 Detroit residents lining up at a government center for $3,000 stimulus checks. Fights broke out as the people clamored to make it to the front of the line. How will they ever find a job and become self-sufficient if they’re spending all their time waiting in line and filling out applications for government handouts? They won’t; they’ve been enslaved by the welfare state.

http://www.youtube.com/watch?v=YfGLB8LO1aM

THURSDAY

This is a view from I was able to capture from a New Mexican mountaintop. There is no good way to convey the feeling I had up there, observing the vastness of the rest of the landscape. I’ll just say that as I stood on the land that many others had no doubt stood on before me, I felt a powerful aura of freedom and untamed humanity. Many countries have breathtaking sights, but few can instill the same emotion.

Visions of freedom and untamed humanity faded with the sunlight that night as the airwaves contained the sounds of dependency and subservience to overseas masters. A new climate treaty to be executed in Copenhagen in a matter of weeks will cede America’s sovereignty and prosperity to a cadre of unelected world officials. The treaty will enact a fledgling world government charged with enforcing the payment of “climate debts” to third world countries, which have had their climates affected by our carbon emissions. Up to 2% of our GDP could be subject to these payments.

http://www.youtube.com/watch?v=PMe5dOgbu40&feature=player_embedded

FRIDAY

As the sights of Grand Canyon and Sedona, AZ at dusk flooded my vision, thoughts of American exceptionalism carried me away. Forget the Constitution, forget wealth and warfare –America as a land mass is the finest in the world. Nowhere else possesses such diverse terrain and prehistoric landscape. Just being here evokes a sense of greatness. No other venue on Earth is fit to do what America has done.

By night, sights of diversity took a backseat to noises about diversity. In the same vain as the Fairness Doctrine, I was hearing that the proposed Net Neutrality regulations were seeking to censor ideas and speech on the Internet behind the veil of fairness and diversity. To them, diversity is everyone looking different, but thinking the same – robots made of different metals, but running on the same software – the antithesis (and ultimate downfall) of Americanism.

http://www.youtube.com/watch?v=5uULNBso0BU (Not from the night I heard the story, but a good analysis)

SATURDAY

As I moved through the golden California hills, the sight of a freight train rolling along struck me as a classic testament to American innovation. When we invented the railroad, we revolutionized industry. We created a high-speed, low-cost means of transporting goods that attracted enormous levels of overseas investment, created jobs, reduced the cost of goods for everyone and solidified America’s middle class as the strongest in the world. Behold, the power of free enterprise.

But as darkness once again overtook the light, so did the sounds overtake the sights. Lawmakers hell-bent on destroying the enterprise system and spirit of innovation you see above (Rep. Charlie Rangel and company) and calling for a second stimulus package filled the airwaves as my mood sank. The package would add to the already unsustainable deficit of $1.4 trillion. ONE POINT FOUR TRILLION. The number was dizzying and it rang inside my head like the last toll of the liberty bell. Of course I knew the size of the deficit before, but it seemed to take on added weight, and even right now, the thought makes me lightheaded. I feel trapped inside of a mansion on fire – a long wait and no escape.

http://www.youtube.com/watch?v=gI3K5Y_0gDc

SUNDAY

As the sun fell on Manhattan Beach, CA and the other far western reaches of the continental United States, and drew the American week to a close, the metaphor seemed fitting. Once again, the great sights illuminated in the daylight would disappear and give way to the unsettling sounds of the night. At sunset, during the time when our two country’s overlap, it’s a good time to reflect on which will ultimately prevail, to choose your side and to plan your execution. It’s not about the sounds people make about what they believe America should be; it’s about what we can see that America actually is! And we on the side of the American vision will have to prepare for a long and arduous battle with those on the side of the audible. While they may have the edge of media and money, we stand on the side of God and conviction. A quick look at history shows which side seems to prevail. Remember, where the sunsets, it must also rise.

I’ll spare you the Sunday news story.

Who needs ears anyway?

President Obama Announces Initiatives For Small Banks/ Businesses

Oct. 21 (Bloomberg) – President Barack Obama plans to announce new measures to open up credit for small businesses, including capital injections for community banks to spur lending, the administration said.

Community banks with less than $1 billion in assets will be eligible for lower-cost capital if they submit a small business lending plan and document their lending in quarterly reports, according to a White House fact sheet.

If approved by regulators, these banks would pay the government an initial 3 percent dividend on the injection, instead of the previous 5 percent rate.

Obama also will seek legislation raising the limits for Small Business Administration loans from $2 million to $5 million and as much as $5.5 million for manufacturing.

The president will visit a small business in Maryland this afternoon to make the announcement, White House press secretary Robert Gibbs said.
Full Story Here:

**Video Pending**

Retail Investors Lying Low Despite Spate of IPOs/Market Surge

Retail Investors Lying Low despite IPOs and market surge

Despite the spate of initial public offerings and the surge in the equity market, demat accounts have not shown any acceleration in growth in August or September.

Demat accounts rose at a steady rate of 1.34 per cent both in August and September, show data collated from depositories NSDL and CDSL.

Fresh additions — at around 2 lakh every month for the last four months — might seem substantial, but are not commensurate with the bullish sentiment for stocks, said marketmen.

The total number of Demat accounts stands at 155.67 lakh accounts as on September against 153.61 lakh accounts as on August-end.

The increase in new demat accounts is not substantial, given the rising interest in equities, both from existing and new investors.

Experts have cited the reason this is because retail investors are still not entering the market in a big way, it is just a trickle.

There is no significant change in retail investor sentiment during the past few months.

Typically, there is a big surge in new investors during the IPO season, but this time the pattern is different.

One of the reasons is that this time the IPOs, unlike earlier, are not crowd pullers.

Maybe because the issues were rather aggressively priced.

As even the bigger IPOs have not given any remarkable returns on listing, retail investors are shying away from them, said some brokers.

The retail investor appears to be unsure about the sustainability of the rally in the equity markets, said Mr Jagannadham Thunuguntla, Equity Head, SMC Capital.

Frontline: "The Warning"

In The Warning, veteran FRONTLINE producer Michael Kirk unearths the hidden history of the nation’s worst financial crisis since the Great Depression. At the center of it all he finds Brooksley Born, who speaks for the first time on television about her failed campaign to regulate the secretive, multitrillion-dollar derivatives market whose crash helped trigger the financial collapse in the fall of 2008. Watch the full documentary below.

Frontline: The Warning | PBS | October 21, 2009

Philosophical Ethics: Rawls's Maximin Principle

In a series of posts this semester, I am going to blog all (or almost all) the lecture topics for the two Philosophical Ethics classes I am teaching this semester. Each of these posts will primarily explicate the reading or a theme that dominated class discussion in a way that should be accessible to novices (such as my students are). I will also offer some degree of analysis of the ideas considered and then pose suggested discussion questions. These posts will usually feature more speculation than argumentation from me as I try to stimulate your thinking rather than stake out my own positions. Some of my students will be responding to these short discussion primers in a private forum through the university. I’ve told the students they are free to discuss the blog post versions of these discussion primers as well, so they might show up here. The text we are using and from which all citations will be taken is Ethical Theory: classical and contemporary readings, edited by Louis Pojman. Wadsworth: California, 2007). This post briefly explains Rawls’s maximin principle and compares it to alternative ideals of full equality and maximum, utilitarian prosperity.

Rawls argues that justice is characterized primarily by fairness and that fairness is determinable primarily by abstracting ourselves from the peculiarities of our individual circumstances with our specific personal advantages and interests. Only if we imagine circumstances formally in such a way as to imagine how we would judge them if we did not know which party we would be within it can we judge it fairly. In the case of determining principles of political and social justice which should be enshrined in a constitution and in particular laws we must imagine ourselves behind a “veil of ignorance”, behind which we do not know anything about ourselves and our individual interests in the situation. Behind this “veil of ignorance” we do not know anything about our economic status, our social class, our race, our sexual orientation, our religious views or lack thereof, our beliefs about what makes for a good life, our economic origins, our sex, our gender, our race, our ethnicity, our color, our talents or lack thereof, our looks, or any other sources of particular advantages, disadvantages, preferences, or interests we might have that would distinguish us from anyone else. When we imagine ourselves behind this “veil of ignorance” we are able to abstract away from everything which would lead us to biasly prefer what serves those who are in our particular position and who have our particular interests over those in other positions and those who have competing interests to our own. Only to the extent that we reason as though behind a “veil of ignorance” can we suspend our self-interested prejudices and consider what is fair accurately.

In Rawls’s hypothetical “original position” we are to imagine ourselves behind a veil of ignorance creating a constitution for governing our society. As we make this constitution, we must imagine that we will not know who in society we will wind up being. We do not know if we will be rich or poor, male or female, straight, gay, bi, or transsexual, black, white, yellow, red, or brown, Christian, Muslim, Hindu, Jew, Buddhist, Sikh, atheist, or agnostic, born into high social status or into low, etc. We do not know what we will care about, what our conception of the good life will be, how naturally talented we will be, how hard working or not we will be, how well or poorly raised by our parents we will be. We know nothing about our state in this society. The way I like to put this in class is to ask students to imagine tomorrow having to swap places with any random other person in the country whatsoever in our country.

When imagining ourselves behind the veil of ignorance, not knowing the particularities of our station or interests in life, and thinking of ourselves as though we were in the original position, determining what is just according to the standard of what would be tolerable to us regardless of who we wound up being in society, Rawls thinks we would be able to determine the most genuinely fair principles for society. And when it comes to determining principles of distributive justice by which we were to allocate goods within society, behind the veil of ignorance we would each be risk averse and would have as our first priority that the political order guaranteed that if we wound up the very worst off which we could be in terms of wealth and ability, etc. that we would want that state of impoverishment to be the least bad that it could be.

Rawls’s idea of the “maximin” is of the maximum minimum possible. Making the maximin the priority from behind the “veil of ignorance” would mean setting up the economic system in such a way as to maximize the well being of the worst off within society. From behind the veil of ignorance, not knowing if one would be the worst off within society, Rawls believes everyone would prefer this principle to a principle that maximizes the overall economic well being of the entire society at the risk of great suffering for the worst off. Rawls would allow significantly curtailing the overall economic flourishing if it means making the worst off the best off they could be. There can be inequalities within society, some may be better off than others, only if this inequality has the effect of making those lesser off better off than they would have been in another scenario wherein all were equal.

To illustrate Rawls’s claim about our priorities and what they would be behind the veil of ignorance, imagine that you are in my class of 35 students and 1 teacher and tomorrow I will be bringing in pizzas. I give you and the entire class three options for how much pizza I will bring and how I will distribute slices the next day. The three options are as follows: Option A, I will bring 12 pizza pies, containing 96 slices. One random student will receive 6 slices, a few will get 5, a few will get 4, a few will get 3, the majority will get 2 slices, a few students will get 1 slice, and four students will get nothing. Option B, I will bring 9 pizza pies, containing 72 slices, and all 36 of us will be guaranteed at least 1 slice, most of us will get 2 slices, and a few of us will get 3 slices. Option C, I will bring 2.5 pies, containing just 18 slices. I will then divvy up all 18 slices equally among the 36 people present, giving each of us exactly half of a slice. Not knowing what your random slice assignment will be tomorrow, which pizza purchase and distribution scheme would you vote for today?

In considering your options, you might consider your possible best payoffs: In option A you have a shot at 6 slices, in option B you have a shot at 3 slices, and in option C you have a shot only at one half of a slice. On the other hand, you may also consider your possible worst payoffs: In option A you might wind up with nothing at all, in option B you might wind up with only one slice, and in option C you are guaranteed no more than one half of a slice.

If you would vote for option B because it means you are guaranteed at least one slice whereas the other options leave you with nothing or just one half of a slice, then you calculate that the maximin is your preference behind the veil of ignorance. Rawls thinks that choosing our schema of distributive justice we should think in this way. If economic realities are such that a totally equal distribution scheme would make the poor poorer (only getting “one half of a slice”) than they would be in another (wherein they get “one slice”), unequal distribution scheme, then equality is not their highest preference behind the veil of ignorance but rather the unequal distribution scheme that gives them a better outcome is. If economic realities are such that total happiness may go up (we can get 12 total pies for the class rather than 9) and the rich can be as maximally rich as possible (get 6 slices each for themselves) but the cost is that the condition of the worst off is worse (0 slices) than in another scenario (in which there are only 9 pies total but the worst off are guaranteed at least 1 piece), then in the original position, behind the veil of ignorance, we would choose the better fate for the worst off over the greater overall prosperity and possibility of twice as many slices for the top receivers.

This is essentially how Rawls wants us to reason about economic systems and distribution principles: if we can maximize the well-being of the worst off with a certain amount and kind of inequality, we should allow precisely that amount and kind of inequality. If the worst off begin to wind up with less when there is a certain amount and kind of inequality, then that inequality is unacceptable and must be counter-balanced for the maximum benefit of the worst off, even at the expense of overall prosperity.

What do you think? Is Rawls’s maximin principle the best way to determine a fair society? Is it really fair of him to treat our talents and hard work as things we are merely lucky to have and not as things which rightfully earn us greater prosperity that does not also benefit the worst off but allows them to suffer so we can get whatever we can in a completely unfettered market? On the other hand, is inequality tolerable as long as everyone’s material conditions are better than they would be in a more equal society? What distribution scheme would you vote for in the pizza scenario? What kinds of constitutional provisions for distribution would you vote for in the original position? If you agree that the maximin principle as essentially fairer than both unfettered meritocratic or capitalistic utilitarianism and than extreme communist egalitarianism, then what policy implications for our own laws do you think it this principle might make necessary? How do you think a maximin approach would affect the health care debate for example? Do you think it would mean reconsidering the push for total equality? Do you think it would mean, on the other hand, a greater willingness than any politician will currently acknowledge to consciously risk the overall economy suffering if that is what is necessary for the sake of the well-being of the worst off?

Your Thoughts?

GLOBAL: End of the American empire?

http://thehill.com/blogs/pundits-blog/economy-a-budget/63005-going-bust-the-end-of-an-age

Going bust: The end of an age
By Bernie Quigley – 10/14/09 09:50 AM ET

*** begin quote ***

We might consider thinking about the benefits of regionalization, because if the U.S. economy is to contract and consolidate, it might contract within a matrix that makes for better packaging than the internal world-without-walls we have now. Does northern New England really need four farm colleges? One might work better. We might begin to think about tax spending and tax breaks to encourage naturally occurring regional cultures and regional community tier economies. We might feature farming where there are farms and factories where there are or have been factories. Because life in the city is different than the hills and prairies and one size does not fit all in temperament, personality, culture and economics.

And we might begin to ask ourselves, How did we get to where we are? What do we want to be? What have we become?

*** end quote ***

Would seem that we have to hunker down. Get “small”. And, maybe secession is a good idea to do that?

# # # # #

Das Kapital vol. 3 part 1 chapter 7

Capital Vol. III Part I

Chapter 7 Supplementary Remarks

(This post is part of an ongoing project: a close reading of volume 3 of Kapital, one post per chapter. I hope that others who are tackling this book for the first time might find my summaries and thoughts useful. I also hope that others might leave their own thoughts, criticisms, help, etc. here so that this blog might become a good collective resource for those brave souls who take on Vol. 3.)

Marx begins by repeating some points from earlier. The fact that capitalists realize the value of their product in the market causes them to believe that it is through the market that value is created. Marx doesn’t complete this point but if he had perhaps he would remind us that the world of appearance, the subjective valuations between buyer and seller in the market, are the mechanism through which the law of value operates. The law of value is formed through the indirect linkage of all of the social labor process through this act of individual market exchange. Therefore it is easy to confuse the value-creating powers of labor with the subjective valuations that happen in exchange. We have seen, throughout these opening chapters, how that profit comes wholly from surplus value. Yet the rate of profit is modified by a variety of other factors like changes in the value of constant capital, turnover time, changes in value of labor power, etc. This is one more way in which we confuse these changes for the cause of value. We might notice that increased turnover time increases profit but this doesn’t mean that time itself creates value. We might notice that a decrease in constant capital costs causes profits to rise. But this doesn’t mean that constant capital is creating more value.

___________________

Is it possible for a firm to increase in size and maintain the same rate of profit? Obviously the mass of surplus would increase but this surplus would be calculated against a larger cost-price so the rate or profit will stay the same if all of the internal portions of capital stay the same: the organic composition and the rate of exploitation. This distinction between mass of profit and rate of profit will be crucial in Part 3 when Marx discusses the falling rate of profit. _____________________

What causes the rate of profit to change? A change in ratio of surplus value to the price of producing this surplus value is what causes the rate of profit to change. Thus changes in the rate of exploitation, the organic composition of capital, or the market prices of constant and variable capital all act to influence the rate of profit. If the market price of an input is changing this shows us the way productivity is really a social phenomenon. The difference between the labor time it takes a particular, concrete firm to produce a commodity and the labor-time it takes society in general to produce something is the difference between necessary labor time and socially necessary labor time. This explains the devaluation or appreciation of inputs. In general a rising organic composition of capital means a falling rate of profit. A falling organic composition means a rising rate of profit. If just the money value of capital changes due to a change in the value of money itself, then the profit rate only changes in name, not real values.

_____________________

These brief remarks don’t tell us anything new but they do a good job of summarizing some of the crucial points from the last 100+ pages. It is now easy to see how the origin of profit in exploitation is obscured by all of the other contingent factors effecting the rate of profit. This obfuscation will be taken further in Part 2.

The mainsream American Left is ignorant and naive: some recent evidence

Let’s go from least to most egregious. First, Rachel Maddow, a prime example of what Kevin Carson terms “goo-goo” liberalism. He writes:

Recently Rachel Maddow mentioned Congressman Jim DeMint’s planned trip to Honduras, where he intended to encourage coup leaders to defy the U.S. government.

Maddow prefaced her remarks with a long homily on how badly the U.S. government hated military coups, because they ran counter to everything the U.S. government stands for, were so abhorrent to American values that the U.S. government cut off all ties to such repugnant pariah regimes, and blah blah woof woof.

This is amazingly stupid—almost as stupid as the Congressman I saw back in the ’90s, speaking in regard to Clinton’s Balkan wars, who said he’d learned in school that the U.S. never went to war to obtain a square foot of territory or a dollar of treasure. The U.S. government is opposed to coups, especially against democratically elected leaders? Yeah, maybe in the Bearded Spock universe. Um, ever hear of Armas? Suharto? Mourão Filho? Pinochet? I’m sure all those nice folks in the U.S. government cried over such coups, just like Iron Eyes Cody watching somebody litter Central Park—or rather just like Lewis Carrol’s Walrus, weeping even as he polished off the last of the oysters.

Maddow also suggested it was “treason” to encourage another government to defy the policies of the United States government.

Carson adds that “It’s usually Olbermann who’s prone to this kind of liberal mirror-imaging of right-wing know-nothingism”, and I have noticed a more critical attitude toward Obama, however tepid, on her show than on others. Still, she’s part of the choir for sure.

Then there’s our good friend Michael Moore, always playing trenchant critic of the status quo while stumping for what is in effect a slightly more left-wing version of it. From what I have read of his new film Capitalism: A Love Story (no, I have not seen it), he shows an American government owned by Wall Street, and yet peddles the line that the election of Obama is a sign of Hope and Change. And yet who do we find right near the top of Obama’s campaign contributors? That’s right, Goldman freakin’ Sachs! You can rest assured that if McCain were president, Moore would have mentioned this fact in his movie. But Democrats just can’t be corrupted like that. Even the NPR review I heard pointed out that Obama’s policies are largely the same.

Thomas Naylor of the left-secessionist Second Vermont Republic likes the critique of Capitalism, but not the Big Government conclusions.

Moore is fully cognizant of the fact that the American economic machine is driven by money, power, speed, and greed. Unfortunately, he is a lot less savvy in his grasp of the problem of size in America. Moore appears to be oblivious to the fact that our country, our government, our cities, our corporations, our schools, our churches, our military, and our social welfare system are all too big, too powerful, too intrusive, too insular, and too unresponsive to the needs of individual citizens and small local communities.

The reason Moore is blind to the “problem of size” (and the problem of power) is that he is obviously not some anti-establishment rebel, but an authoritarian progressive. Another NPR reviewer, Kenneth Turan, points out:

In the end, perhaps the most startling thing about Capitalism is that Moore stands revealed not as some pointy-headed socialist, but as an unreconstructed New Deal Democrat. He admires Franklin D. Roosevelt, believes in increased democracy and opportunity, and feels that the decades-long weakening of unions has fatally weakened America.

For my money, I’ll take a pointy-headed socialist any day, many of whom actually believe that it was FDR’s incorporation of unions as a people’s movement into a managerial-capitalist structure that led to their ultimate weakening. Naylor’s article also quotes Moore as saying his major hero is Abraham Lincoln, which is quite revealing if you know anything about Lincoln’s economic policies, which were essentially mercantilist, and defined by Murray Rothbard as “a system of statism which employed economic fallacy to build up a structure of imperial state power, as well as special subsidy and monopolistic privilege to individuals or groups favored by the state.” If I may do a bit of shotgun revisionist economic history here, one could argue that the Hamilton-Henry Clay-Lincoln economic nationalist and pro-big banking philosophy led in a direct line to the Goldman Sachs’ America we have now. But could you make a hit movie about that?

Finally we have the selling out of the liberal anti-war movement in the Obama feel-good age (and isn’t he really like the Reagan of the left?), as Code Pink goes to Code Yellow. Founder Medea Benjamin is now thinking it might be a good idea to keep the war in Afghanistan after all, after former Karzai “Minister of Women” Masooda Jalal told her they needed more aid and more troops. Well, if the Minister of Women for a U.S. puppet says so!

You may have noticed a theme in all these stories: a naivete in the face of power on the part of liberals, as long as that power says it is working for the good.

There be wild things

It is wild out there. In the USA I mean. Things are “different,” for sure. Better or worse? Different.

The President’s has appointed various czars. He is not the first to do so. A “czar” is an appointed, not elected, “official.” Unlike Cabinet secretaries, also appointed, the czars are subject to no approval by Congress and no oversight other than the President’s. One of Obama’s czars recently ran afoul when his past was unpacked by the press: he had made many radical statements, some anti-American and pro-Communist etc. He is gone.

One of the czars is the “Pay Czar.” His” job?” To determine salary levels and the like. Acccording to what? Who knows?

Today it has been announced that Ken Lewis, CEA of Bank of America, has “been ordered” to turn back all salary he has so far received for 2009 and to receive no bonuses for the year as contracted for. Who has the power to issue such an order in a free society? The Pay Czar!!!!!

It is wild out there. It is different.

The US Chamber of Commerce is launching a $25 million ad campaign to “defend capitalism” and the private sector. In the USA!

It is wild out there. It is different.

Meanwhile, I am looking forward to seeing the kids’ movie, Where the Wild Things Are. Sendak, the author of the original book bad a great philosophy which disturbed parents who naively assume life can be and should be sugar-coated. He exposed “the dark side” of childhood and life. Such recognition, of course, is the only way to soar above it and triumph as a mature human being. Sugar-coating is both pretense and self-defeating.

There are wild things out there.

I do not pretend to know the intimate details of the BOA dealings at the time of the Merrill Lynch take-over, nor exactly the terms upon which bail-out money was given to banks a while back. But, it would be ‘wild” if it included a written agreement that the Pay Czar could decree that a man, charged with no crimes, had to work a year for nothing! Lewis was due to receive, I understand $53 million, in retirement money. That is certainly a load of dough and seems “unfair” with so many unemployed around. But, is this what the “free society” has come to? That the government can post facto take away what you have been given already? Who’s next? What salary level is to be deemed unfair?

Prophetic faith can cry out about injustice; can lambast “those who eat my people like they eat bread” and the like; dressed in “finery” while others wander in rags. Prophetic faith can and must and, perhaps, all too rarely does. But know this:

In the Bible prophetic faith speaks most often, most directly, most bluntly, and with its clearest pronouncements of doom, to those who abuse political power.

Pelosi promotes government takeover of healthcare

Pelosi makes case for government-run health option

Overthrow of 6% of the economy, 17% of the GDP

House Speaker Nancy Pelosi said Thursday that the case is growing stronger for allowing the government to sell health insurance in competition with private companies, contending recent attacks from the industry should dispel any doubts.

“Competition?” They are taxing, restricting, regulating and demonizing the “Competition” (private sector insurance). It appears that they want a monopoly. Single-payer. Where are the anti-trust laws? Oh, I almost forgot. They are lawmakers.

“The need for a public option is very clear,” the California Democrat told reporters at her weekly news conference, making the argument as lawmakers on both sides of the Capitol worked to finalize sweeping legislation extending coverage to millions of the uninsured.

Whether the Senate bill will include a public plan in any form is a major question mark, but “our House bill will have a public option,” the California Democrat declared.

“Anyone who had any doubts about the need for such an option need only look at the behavior of the health insurance industry this week,” Pelosi said. “The idea that we would have health insurance reform without a public option becomes less likely.”

She was referring to an industry-funded study that said insurance premiums would rise under health overhaul legislation advanced by the Senate Finance Committee earlier this week. Pelosi also referenced an insurance industry ad campaign targeted at seniors.

The “industry-funded study” was done by an independent company with their reputation on the line. It exposed the cost and tax increases that Congress (Nancy Pelosi) supports.

The speaker has been on the attack against health insurers for months, but the latest developments clearly strengthened her resolve to make them pay. She also said the House was now considering adding to its health care bill a $6.7 billion-a-year fee on insurance companies that is part of the Senate Finance package.

…and she calls that “competition????” To be fair, she never said it was honest, fair, uncorrupt, free-market competition.

The More Things Change...

Yesterday, I enrolled in the orientation portion of cardiac rehab for regaining my strength after the 5-way heart by-pass surgery.

One of my fellow enrollees was from the Middle East (Afghanistan), and he had no insurance. He will get exactly the same rehab program that I will get.

Then as I went to the office to give them my payment methodology, the only other person applying was a very YOUNG Latina, who did not speak English — with her brand new baby.

So, who is going to pay for these un-insured – both of whom will get all of the needed medical services?

The answer is a) the taxpayers, or b) the already insured through increased premiums, or c) the hospital will write it off as unrecoverable.

Now, under the five new health bills under Congressional is considering, who will pay the bills of these un-insured — both of whom will get all of the needed medical services?

The answer is a) the taxpayers, or b) the already insured through increased premiums, or c) the hospital will write it off as unrecoverable.

The only difference is that 1) taxes will go through the roof, 2) the government will get more involved in every aspect of your medical life.

(Sigh)

Barack Obama - American Caligula

Is Barack “Little Boots” Obama’s goal to destroy the United States of America as the World has known it? The Nobel Peace Prize was a nod of approval on part of The Socialist in Europe. Behind his smile is a seething and deep rooted hatred of anything European. He disrespects the Queen of England, returns the bust of Winston Churchill and snubbed the PM at the G20 Summit. He is steadfastly destroying the Economy of America with advice from Soros and manipulating the Educational System with Ayers. The numerous “Czars” are the “Shadow Government”.

Why would a prize started by a famous European Industrialist be awarded and honor bestowed upon an individual who seems to be relentless in destroying the strongest nation on Earth? Are they suffering from the “Stockholm Syndrome”?

When will the Domestic Enemy Contingency Operation be triggered?

Walmart V The U.S. Government. A Free People Choose Walmart

Corporations use humans as units of production. Or, as one law firm partner said of his associates, “billable units.” Humans use corporations for a paycheck. Each is attempting to prostitute the other. Sometimes the corporation gets the best of you; sometimes you get the best of the corporation.
Neither the employee nor the employer is evil. It makes no sense to speak of “evil” when people are making voluntary transactions. A company can only be evil when it enslaves. Wal-Mart might not care about its employees, but it does not compel its employees to work.
The consensus, though, is that Wal-Mart is evil. What does that say of the United States Government? If you work, the government forces you to tithe. The government forces you to spend money supporting corrupt institutions like Goldman Sachs. I can quit Wal-Mart. I can’t quit the government – at least if I don’t want to end up in prison.
Why is it that people so willing to recognize the evil of corporations nevertheless want to grow the federal government? If Wal-Mart is evil, what is the U.S. Government?

Should Students Be Paid to Do Well in School?

From Time Magazine:

Few things in France can provoke heated debate faster than moves to tinker with the country’s vaunted public-education system, which embodies republican values that date back to the French Revolution. It’s especially true when the changes involve an idea as capitalistic and nonegalitarian as paying certain students — the ones most apt to fail and drop out — to attend classes and get good grades.

This is exactly what’s happening in a pilot program that started this month at three vocational high schools in disadvantaged suburbs of Paris. Accounts will be set up for two classes in each school, each containing around $3,000 apiece. If the students maintain good attendance records and reach performance targets agreed upon with their teachers, reward payments will be added to their class account. But here’s the catch: the students can’t go and spend the money on a new iPod or an Xbox at the end of the year. Each account, which could reach a maximum of $15,000, can only be used to finance a school-related project or endeavor, such as a class trip abroad to improve foreign-language skills, computer equipment for the classroom or driving lessons to obtain a license. Still, not a bad deal.

The government’s objective is simple: increase student motivation and class attendance and reduce the number of French teenagers who leave school without earning a diploma or professional training certificate, roughly 120,000 to 150,000 each year. The program is being tested at vocational schools, not at the more traditional high schools that most students attend to prepare for the Baccalaureate exam — and university study beyond. The reason: students at vocational schools, particularly those in marginalized, immigrant-heavy areas, tend to have the most performance problems in France. Many students feel like failures after ending up in professional schools. Some also lose interest when they’re moved to classes they’re not interested in due to lack of space in the ones they’d requested. Truancy and dropout rates are high.

Click here to continue reading.

PE-backed Companies Queuing up the Market with IPOs :)

pressure from PE players is forcing companies to take the IPO route

The buoyancy in the capital markets over the past few weeks has seen a spate of initial public offerings (IPOs) hitting the market.

Sectors such as infrastructure, power and real estate are the ones that have been most bullish.

However, most companies that are taking the IPO route for raising funds are the ones that have strong private equity (PE) backing.

And in most cases, it is the pressure from these PE players that is forcing these companies to take the IPO route.

Recently, four real estate companies – Emaar MGF Land, Lodha Developers, Sahara Prime City and Ambience Ltd – filed draft red herring prospectuses (DRHPs) with the market regulator Securities and Exchange Board of India (Sebi) to launch their IPOs.

All the four together are looking to mop up over Rs 11,000 crore.

Said Jagannadham Thunuguntla, equity head, SMC Capitals Limited, “Several companies are filing their IPO prospectuses with Sebi, with the confidence provided by the strong capital market bounceback and the healthy subscription levels seen by the IPOs of Adani, NHPC and OIL.”

“Taking the capital market bounce-back as a good exit opportunity, several PE-backed companies are queuing up with their prospectuses.

While this trend of PE-backed companies filing prospectuses can be seen across industries, it is quite prominent in the real estate industry,” he added.

According to him, “Several companies which have filed their prospectuses in the past three to four days have PE backing at the corporate or SPV levels.

The recent capital market bounce-back is giving a fresh breath of life to PE players” he added.

This trend of PE-backed companies going to the market with IPOs is not a surprise. PE firms are keen to capitalize on the buoyant financial markets and exit certain investments.

An Intellectual Property Debate Continued

A tongue-in-cheek post by Justin Kownacki and a debate at Podcamp Pittsburgh 4 with Justin, Steve Klabnik, and Nick Pinkston has some thoughts about intellectual property (IP). I can’t shake the feeling that the debate could have been more fruitful if some terms had been explicitly defined. Let’s see if I can sum up the gist of Steve and Nick’s point. Afterward, I’ll offer some suggestions for continuing the discussion.

If I understand them correctly, Steve and Nick are arguing the following.

Premises
1. Every person has a right to be secure in his life, liberty, and property. (Watch “The Philosophy Liberty” if this is a new concept to you.)
2. The purpose of law is to protect these rights (ala classical liberalism or libertarianism).
3. A person may dispose of his property as he pleases.
4. Nobody has a right to take my property by coercion or force.
5. Property is defined as any physical entity that is owned by a person or jointly by a group of persons.
6. Intellectual property is defined as “a number of distinct types of legal monopolies over creations of the mind, both artistic and commercial, and the corresponding fields of law”.
7. Monopolies are antithetical to free competition in an open market.
8. Monopolies on ideas are especially harmful because they stifle the free spread of beneficial ideas throughout society.
9. The labor theories of value, defined as “economic theories of value according to which the values of commodities are related to the labour needed to produce them”, and all intrinsic value theories, are bunkum.
10. The subjective theory of value, defined as “an economic theory of value that holds that to possess value an object must be both useful and scarce, with the extent of that value dependent upon the ability of an object to satisfy the wants of any given individual” and distinguishing between value, per se, and exchange value or price, is correct.
11. Ideas are not economic goods, i.e., good that are scarce, but free goods, defined as “available in as great a quantity as desired with zero opportunity cost to society”.
Conclusion
1. Ideas, being intangible, cannot be property.
2. Ideas, not being scarce, have no market exchange or economic value.
3. “Intellectual property”, understood as “idea property” is a meaningless concept.
4. Monopolizing a free good has no proper place in copyright and related law.
5. Since ideas, once expressed for consumption by others, should not be protected, creators can only expect their ideas to have economic value when first expressed, i.e., before they’re reproduced at low or zero cost to others.
6. If someone copies your ideas, suck it up. Life’s hard; wear a helmet.

I’ve done my best to translate what I think I’ve understood of Steve and Nick’s arguments into more concrete and clearly defined terms. If I’ve misrepresented them, I’m sure they’ll let me know in the comments section.

I offer the following thoughts (in no particular order) as suggestions for possible rebuttals. If they are inadequate for Justin, I’m sure he’ll let me know in the comments section.

Are ideas really free goods? Are they really not scarce? Are there really no opportunity costs? The life of a person, being finite, is a scarce good, so a person’s ideas are scarce goods. Except in rare cases of spontaneous inspiration, ideas have opportunity costs; a creator could have been doing something else while spending time in “idle” thought.
If ideas have no intrinsic or economic value, is creating ideas a luxury only the rich can afford (because they can afford resource and opportunity costs without compromising their ability to meet basic needs)?
Must a good be tangible to have economic value? When you buy a book, are you just buying the nice “value added” features of an attractive presentation, a convenient and portable medium, etc., or do you want a copy of a body of ideas to read? Can a book really be judged by its cover (or at least its medium)?
If consumers are willing to pay for ideas (think tanks, consultants, intelligence etc.), aren’t they de facto economic goods?
Isn’t there a difference between a good that could be reproduced at low or zero cost and one that has been widely reproduced, just as there’s a difference between potential and kinetic energy? Is it unethical to use law to make certain free goods scarce, for at least a brief period of time?
Should trade secrets, such as the formula for Coca-cola, not be permitted? Should proprietary formulae, recipes, techniques, plans, etc. be eschewed in favor of free access for all?
Should reverse engineering be permitted?
Without protection for ideas, won’t entrepreneurship suffer? The risks involved in committing resources and paying opportunity costs are compensated for by the prospect of potential reward. If someone can legally copy someone else’s idea for free, i.e., without facing any of the risks faced by the idea’s originator, why would anyone want to accept the risks of idea creation?
Is copying ideas without permission contrary to dignity?

Let the commenting begin!

available in as great a quantity as desired with zero opportunity cost to society.

What you don’t know about trading Gold…

There is no doubt about it – gold is getting a lot of press and media attention lately. So the question is, is the move in gold over or is it just beginning?

I don’t believe the move is over on the upside for gold, but in my new two-minute video I’m going to share with you an alternative to gold that should do just as well for many of the same reasons. This is a big liquid market and has great upside potential and is less volatile than gold.

Click here to watch the video

As always, our videos are free to view and do not require any registration. If you think this is an important video, I strongly suggest you share it with your friends and comment about it on our blog.

All the best,
Adam Hewison
President, INO.com
Co-creator, MarketClub

MONEY: Pirate's chest

http://townhall.com/columnists/PeterFerrara/2009/09/10/making_up_crime

*** begin quote ***

When Fed Ex got started, the Feds charged it with violating the legal monopoly of the post office. When Fed Ex won that battle, it was a landmark victory for all Americans. The case against Liberty Dollar offers another potential landmark victory for American liberty.

*** end quote ***

Everyone needs competition and “dollars” are no different.

Here’s an entertaining thought experiment. You find a “pirates’ treasure chest”. Breathlessly you open it. What finding would excite you most:

(a) A chest full of 1940 Federal Reserve notes. (When our “pirate” buried a million “dollars”, it was worth the equivalent of a a hundred million. Reference: coffee was 22 cents per pound. You do the math.)

(b) A chest full of Confederate money.

(d) A chest full of GM stock.

(e) A chest full of gold coins.

Yea, I know what I’d pick. And, rebury them under the shore house. Just like our proverbial pirate. For the coming “rainy day”.

Argh!

# # # # #

This human being wants to know why currency is treated like a commodity.

Why are governments, private individuals, corporations or funds able to influence the value of money?

Why isn’t a 1970 dollar worth a dollar today?

How can a news article written in a foreign land make the US dollar less valuable?

What about people who trade goods and services between borders. How many millions of people are hostage to this game?

This can make or break not fortunes, but normal people who have enough difficulties in life making ends meet.

There is something wrong with a world trading system that can sway currencies overnight.

G.K. Chesterton on the malady afflicting academics & politicians

It really boils down to a bit of magical thinking.

I am sitting under tall trees, with a great wind boiling like surf about the tops of them, so that their living load of leaves rocks and roars in something that is at once exultation and agony. I feel, in fact, as if I were actually sitting at the bottom of the sea among mere anchors and ropes, while over my head and over the green twilight of water sounded the everlasting rush of waves and the toil and crash and shipwreck of tremendous ships. The wind tugs at the trees as if it might pluck them root and all out of the earth like tufts of grass. Or, to try another despearate figure of speech for this unspeakable energy, the trees are straining and tearing and lashing as if they were a tribe of dragons each tied by the tail.

As I look at these top-heavy giants tortured by an invisible and violent witchcraft, a phrase comes back into my mind. I remember a little boy of my acquaintance who was once walking in Battersea Park under just such torn skies and tossing trees. He did not like the wind at all; it blew in his face too much; it made him shut his eyes; and it blew off his hat, of which he was very proud. He was, as far as I remember, about four. After complaining repeatedly of the atmospheric unrest he said at last to his mother, “Well, why don’t you take away the trees, and then it wouldn’t wind.”

Nothing could be more intelligent or natural than this mistake. Any one looking for the first time at the trees might fancy that they were indeed vast and titanic fans, which by their mere waving agitated the air around them for miles. Nothing, I say, could be more human and excusable than the belief that it is the trees which make the wind. Indeed, the belief is so human and excusable that is is, as a matter of fact, the belief of about ninety-nine out of a hundred of the philosophers, reformers, sociologists, and politicians of the great age in which we live. My small friend was, in fact, very like the principle modern thinkers; only much nicer. …

The man who represents all thought as an accident of environment is simply smashing and discrediting all his own thoughts – including that one. To treat the human mind as having an ultimate authority is necessary to any kind of thinking, even free thinking. And nothing will ever be reformed in this age or country unless we realise that the moral fact comes first.

For example, most of us, I suppose, have seen in print and heard in debating clubs an endless discussion that goes on between Socialists and total abstainers. The latter say that drink leads to poverty; the former say that poverty leads to drink. I can only wonder at their either of them being content with such simple physical explanations. Surely it is obvious that the thing which among the English proletariat leads to poverty is the same as the thing which leads to drink; the absence of strong civic dignity, the absence of an instinct that resists degradation.

– G.K. Chesterton, “The Wind and the Tree,” Tremendous Trifles, 1909

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