Monthly Archives: January 2011

Is the weather really becoming more volatile?

In a story about Scientists warn California could be struck by winter ‘superstorm,’ I read this “interesting” line:

The risk is gathering momentum now, scientists say, due to rising temperatures in the atmosphere, which has generally made weather patterns more volatile.

Has anybody seen a study verifying that weather patterns have become more volatile? How does one even measure weather volatility?

As I’m sure you guessed, I am skeptical of this claim. But if there is any evidence to it, I’d sure be interested in seeing it. (Please post links in the comments to any studies.)

Way back when people were talking about Global Warming, that is before it became Global Climate Change, which was before it was called Global Climate Chaos, I predicted that Global Warming would be renamed Global Climate Volatility. Now, I see this is true, though they have not yet adopted my name for it.

To return to the article:

The threat of a cataclysmic California storm has been dormant for the past 150 years. Geological Survey director Marcia K. McNutt told the New York Times that a 300-mile stretch of the Central Valley was inundated from 1861-62. The floods were so bad that the state capital had to be moved to San Francisco, and Governor Leland Stanford had to take a rowboat to his own inauguration, the report notes. Even larger storms happened in past centuries, over the dates 212, 440, 603, 1029, 1418, and 1605, according to geological evidence.

So this “cataclysmic” event has happened many times before. But remember, next time it occurs, it surely was caused by Global Climate Volatility.

Boston Fed President invents new 1984-style system of economics.

Fed’s Rosengren: Higher gas prices may hurt growth:

Rising energy prices are a concern not that they will lead to higher inflation but that they will subtract from household income and thus weaken the economy, said Eric Rosengren, the president of the Boston Federal Reserve Bank on Friday. Rosengren said the lasting effect on energy prices on overall inflation “has been surprisingly small in recent years.” The surge in oil prices in mid-2008 were followed by significant declines in core inflation, he noted. Rosengren said the Fed’s innovative monetary policy has not been inflationary. “It has been more than two years since the Fed’s balance sheet expanded dramatically. Sine that time core inflation has fallen to something like 50 year lows, he said. Rosengren is not a voting FOMC member this year. He spoke to an event hosted by the Connecticut Mortgage Bankers Association.

Maybe Mr. Rosengren can explain to me how rising oil prices leads to falling household income? Spending money on oil is spending, obviously, not a change in income. I assume he meant that the rising prices eats up a larger portion of household income; in other words, non-discretionary spending rises. But there’s a term for this phenomenon of rising prices: INFLATION.

Trying to give the Fed President the benefit of the doubt, I thought maybe the article was misconstruing what he said. So I searched Google and found his actual words:

My primary concern about rising energy prices is not so much that they will lead to higher inflation, but that they will subtract from household income and thus weaken the economy.

Apparently, we live in a new economic reality. In the new economics, rising prices weaken the economy (by somehow hurting “household income” but I assume he meant income available for discretionary spending) but does not lead to inflation. Get that? I admit, this new economics is confusing so here it is in simple English: rising prices cause deflation or, at the least, disinflation.

We really are living in George Orwell’s 1984. “WAR IS PEACE, FREEDOM IS SLAVERY, and IGNORANCE IS STRENGTH.” And now, INFLATION IS DEFLATION.

The war on charity continues

I’ve previously written about the explicit war on charity. However, the larger war on charity is done through bad policies, not an outright dislike of charity. For example:

City puts a stop to homeless outreach
Couple must have proper permit to continue feeding dozens each day
Jan. 13, 2011, 11:14PM

Bobby and Amanda Herring spent more than a year providing food to homeless people in downtown Houston every day. They fed them, left behind no trash and doled out warm meals peacefully without a single crime being committed, Bobby Herring said.

That ended two weeks ago when the city shut down their “Feed a Friend” effort for lack of a permit. And city officials say the couple most likely will not be able to obtain one.

“We don’t really know what they want, we just think that they don’t want us down there feeding people,” said Bobby Herring, a Christian rapper who goes by the stage name Tre9.

Anyone serving food for public consumption, whether for the homeless or for sale, must have a permit, said Kathy Barton, a spokeswoman for the Health and Human Services Department. To get that permit, the food must be prepared in a certified kitchen with a certified food manager.

The regulations are all the more essential in the case of the homeless, Barton said, because “poor people are the most vulnerable to foodborne illness and also are the least likely to have access to health care.”

Bobby Herring said those rules would preclude them from continuing to feed the 60 to 120 people they assisted nightly for more than a year. The food had been donated from area businesses and prepared in various kitchens by volunteers or by his wife.

I understand the city’s concern that the food the clean and free of foodborne illness. But the most important line above is: “And city officials say the couple most likely will not be able to obtain one.” The story continues:

City officials in the past had considered passing a “public feeding” ordinance that would make it easier for people like the Herrings to comply with rules designed to protect people’s health and well being. The ordinance could involve easier and cheaper permitting processes, she said, although there had not been discussion of the matter for some time.

Obviously, city officials have done nothing to “make it easier” for charitable people to help the poor. Houston has laws to protect the health of the poor, but can’t find the time to pass a law enabling the generous citizens to feed those less fortunate. God willing, this story will push Houston into action.

The oldest and best warning against big government

From Samuel I Chapter 8:

10 Samuel told all the words of the LORD to the people who were asking him for a king. 11 He said, “This is what the king who will reign over you will claim as his rights: He will take your sons and make them serve with his chariots and horses, and they will run in front of his chariots. 12 Some he will assign to be commanders of thousands and commanders of fifties, and others to plow his ground and reap his harvest, and still others to make weapons of war and equipment for his chariots. 13 He will take your daughters to be perfumers and cooks and bakers. 14 He will take the best of your fields and vineyards and olive groves and give them to his attendants. 15 He will take a tenth of your grain and of your vintage and give it to his officials and attendants. 16 Your male and female servants and the best of your cattle and donkeys he will take for his own use. 17 He will take a tenth of your flocks, and you yourselves will become his slaves. 18 When that day comes, you will cry out for relief from the king you have chosen, but the LORD will not answer you in that day.”

Notice the progression in the king’s oppression. As I write in The Path to Tyranny:

Samuel’s warning in the Bible follows a logical progression. He starts by predicting the king will impose a military draft, a reasonable decree when the people desired a king to defend the country and defeat the Philistines. But the situation worsens with time as the king soon drafts men to farm his land and then women to cook, bake, and make perfume. Then the king takes away the people’s land followed by their servants and their livestock. Finally, “you will be his slave. On that day you will cry out because of your king whom you have chosen for yourselves – but God will not answer you on that day.”

I analyze Samuel’s warning in even more detail in The Path to Tyranny. Also note that Thomas Paine comments on Samuel’s warning in Common Sense and W. Cleon Skousen does as well in The 5000 Year Leap.

A broke Japan bails out Europe

So now Japan is bailing out the at-risk Euro countries.

Japan on Tuesday threw its support behind Europe’s bailout efforts, saying it will take a major stake in a bond offering for Ireland later this month by one of the special funds set up in the wake of the euro-zone sovereign debt crisis.

The government plans to buy more than 20% of a bond offering by the European Financial Stability Facility, expected some time this month, Finance Minister Yoshihiko Noda said at a press conference. The EUR440 billion fund was set up in June 2010 to help finance bailout efforts.

But where exactly is Japan getting the money from to buy these bonds? Japan’s been running big deficits for years and has debt of 201 percent of GDP, much larger than those European countries. But Japan pays almost nothing in interest rates on its own debt and is buying higher yielding bonds, profiting from the spread.

From a more macro viewpoint, Japan is monetizing the Euro debt just as the Fed is monetizing the US debt. But the difference is huge. These Euro countries are much closer to defaulting than the United States is and the spread between short-term Japanese rates and long-term Euro rates is much larger than the spread between short- and long-term rates in the US. Though Japan’s purchase is “only” 88 billion Euros compared to the Fed’s $600 billion in QE2 alone, Japan has a smaller economy and is taking a much larger risk.

The Yen and Nikkei index fell after the news. Japan should worry about its own fiscal and economic situation before trying (and likely failing) to help others.

The socialist promises of the Nazis

A “friend” of mine just wrote “Hitler’s Mein Kampf is a conservative favorite” in a comment to a facebook post of mine. As a conservative and a Jew, I am upset and angered by this comment. Furthermore, as somebody who has studied conservatism and Nazism, I am perplexed by people’s ignorance and/or stupidity.

In a first, I am going to post an entire section from my book, The Path to Tyranny: A History of Free Society’s Descent into Tyranny. (The bracketed numbers are the citations which are not included here.) Of course, it helps to read the previous sections showing how Germany got to where it was in the late 1920s and also the previous chapters which explain some of the terminology, including what is meant by socialism and fascism.

Nazi Promises

Throughout the 1920s, the Nazis were a non-entity in German politics. In the May 1928 federal election, the National Socialist German Workers Party received just 2.6 percent of the vote.[766] Within four years, the Nazis would become Germany’s largest political party. After another year, Adolf Hitler would become dictator of Germany and all other political parties would be banned. This remarkable rise to power came about through the skilled use of populist rhetoric, including promises of wealth, equality, and national rebirth. The German people, disillusioned with the failures of the center-left coalitions of the 1920s, were swayed by this new party that promised the benefits of both left-wing socialism and right-wing authoritarianism and nationalism.

As the name implies, the National Socialist German Workers Party was founded primarily to promote socialism in Germany. National Socialism originally stood for partial collectivism aimed primarily at large industrial corporations, leading financial institutions, and wealthy landowners, as detailed in the party’s Twenty-Five Points of 1920.[767] The Twenty-Five Points included the following socialist demands:[768]

  • “Every citizen shall have the possibility of living decently and earning a livelihood.”
  • “All unearned income, and all income that does not arise from work, be abolished.”
  • “Total confiscation of all war profits.”
  • “Nationalization of all trusts.”
  • “Profit-sharing in large industries.”
  • “Increase in old-age pensions.”
  • “Communalization of large stores which will be rented cheaply to small tradespeople.”
  • “A law to expropriate the owners without compensation of any land needed for the common purpose.”
  • “The abolition of ground rents, and the prohibition of all speculation in land.”
  • “Usurers, profiteers, etc., are to be punished with death, regardless of creed or race.”
  • “The State must assume the responsibility of organizing thoroughly the entire cultural system of the people.”
  • “Specially talented children of poor parents, whatever their station or occupation, be educated at the expense of the State.”

Many today believe that the Nazis were capitalists, despite the evidence of Nazism’s socialist roots and agenda. Jacques Ellul, a leader of the French Resistance in World War II, philosopher, and law professor, writes, “The dogmatic and elementary interpretation of Nazism as having been conceived by capitalists to counter communism, and a bourgeois tool in the class struggle, has gained incredibly broad acceptance as a self-evident fact, despite its contradiction of fact. Even after his alliance with certain capitalists, Hitler controlled them as much as they did him.”[769] In 1927, Hitler said, “We are socialists, we are enemies of today’s capitalistic economic system for the exploitation of the economically weak, with its unfair salaries, with its unseemly evaluation of a human being according to wealth and property instead of responsibility and performance, and we are determined to destroy this system under all conditions.”[770]

The Nazis failed to draw left-wing support away from the Social Democratic Party and the Communist Party, so they toned down their socialist economic propaganda beginning in 1927, though they continued to believe in government control of the economy.[771] The Nazis adopted the “third way” style of the Italian Fascists by supporting partial socialism with some government ownership of business and heavy regulation of large businesses, but limited regulation of small businesses and individuals.[772] In 1931, Hitler said, “I want everyone to keep the property he has acquired for himself according to the principle: common good takes precedence over self-interest. But the state must retain control and each property owner should consider himself an agent of the state… The Third Reich will always retain its right to control the owners of property.”[773] Hitler claimed that property could be privately owned but, in reality, the individual would not retain control over it. By controlling “the owners of property,” the state obviously controls the property as well. As Stanley Payne, the eminent authority on fascism writes, Hitler “boasted that there was no need to nationalize the economy since he had nationalized the entire population.”[774] As late as 1941, Hitler declared, “basically National Socialism and Marxism are the same.”[775]

Though Hitler and the Nazis remained committed to socialism throughout, in theory and in practice, their new toned-down “third way” socialism found support among the middle class,[776] who feared the radical left but were still enchanted by the utopian promises of socialism. The new Nazi economic platform also found support among the land-owning farmers. Whereas the Twenty-Five Points vowed to take land away from its owners without compensation “for the common purpose,”[777] by 1930 the Nazis had dropped that proposal[778] and were offering aid to the land owning peasant farmers and praising the peasants as the defenders of German morality and tradition.[779] The Nazis also promised high prices and ready markets for the farmer’s agricultural products and extolled the virtues of “blood and soil” and the “agricultural estate.”[780]

Considering the working class was already aligned with the Marxist parties, Hitler and the Nazis focused their campaign on the middle class, who were also suffering under the weak economy.[781] The new strategy resulted in gains in state elections and increased campaign donations.[782] The Nazis also sought the support of the industrialists, a natural ally when they started presenting themselves as the alternative to the communists and other radical left-wing socialists. Many industrialists were wary of the new, unstable, violent, and radical Nazis, yet some industrialists still gave the Nazis much needed financial support in the 1920s, though they also supported the much larger and less radical conservative German National People’s Party.[783] As the Nazis attracted larger shares of the vote in elections and especially after Hitler became Chancellor, the industrialists gave much more money to the Nazis,[784] partly to help the Nazis defeat the communists, but also to win their favor after their inevitable political victory.

The Nazi agenda went well beyond promises of economic prosperity. The Nazis also promoted German nationalism and Aryan superiority, which helped lift the spirits of many native Germans after the humiliating defeat in World War I, the disastrous hyperinflation of the early 1920s, and the economic depression that began in 1929. Point four of the Twenty-Five Points detailed the Nazis’ German exclusivity: “Only those who are our fellow countrymen can become citizens. Only those who have German blood, regardless of creed, can be our countrymen. Hence no Jew can be a countryman.”[785] Although this anti-Semitism became a centerpiece of the Nazi agenda once in power, it was not instrumental in the Nazis’ rise to power because they toned down their anti-Semitic propaganda during their election campaigns.[786] Thus, the rising fortune of the Nazis had little to do with any anti-Semitic rhetoric, though everybody voting for the Nazis understood their hatred of the Jews, given that it was part of the Twenty-Five Points and was a centerpiece of Hitler’s Mein Kampf. Nevertheless, by promoting Aryan superiority and blaming the Jews, capitalists, republicans, and other liberals for Germany’s problems, German nationalism became the centerpiece of the Nazi agenda and enabled the Nazis to attract members from all economic and social classes.[787]

Like their fascist cousins in Italy, the Nazis also took a pro-military position. After World War I, the Weimar republic did not support the military, even refusing to build a monument to the war dead or issue a commemorative medal.[788] Of course, this upset many veterans and families of the war dead, and the Nazis pursued these disaffected Germans by favoring a strong military, reoccupation of territory lost in the war, and expansion of Germany to include all German-speaking people. The Nazis claimed “National Socialism means peace,” arguing that only a strong Germany can defend against an invasion by France or the Soviet Union.[789] Like the Fascists in Italy, the Nazis were always seen in their military uniform. When Hitler met Mussolini for the first time in 1934, Hitler wore civilian clothing at the insistence of his advisors, whereas Mussolini was dressed in his military uniform. Hitler appeared weak next to Mussolini and he vowed never to make that mistake again. From then on, Hitler was always in uniform when making public appearances.[790]

The Nazis managed to exceed the Italian Fascists in their development of a myth culture, with their ever-present swastika and promotion of the old German folk traditions and rituals. The Nazis also exalted Hitler, well beyond what the Italians did with Mussolini. Many Nazis saw Hitler as a Christ or a Messiah[791] who will save Germany from Jews, foreigners, capitalists, and communists. For example, in 1941, the Nazi newspaper Volkischer Beobachter announced, “The Fuhrer is the highest synthesis of his race… He embodies the universalism of Goethe, the depth of Kant, the dynamism of Hegel, the patriotism of Fichte, the genius of Frederick II, the realism of Bismarck as well as the tumultuous inspiration of Wagner, the perspicacity of Spengler.”[792] Thus, their youth organization was not called the German Youth or even the Nazi Youth, but the Hitler Youth. Hitler became the infallible god of the Nazis and of Germany.

By adapting their agenda to meet the desires of the people and courting unaffiliated groups, the Nazis drew support from various geographic areas and several economic and social classes.[793] Their focus on nationalism, a strong military, authoritarian leadership, and “third way” socialism, with promises of economic prosperity and equality, enabled the Nazis to win over industrialists on the right, peasants on the left, and many in the center, especially World War I veterans. By organizing this coalition of disparate interests, the National Socialists quickly grew from a political non-entity into Germany’s dominant political party.

* This was an excerpt from The Path to Tyranny: A History of Free Society’s Descent into Tyranny.

Portugal ready for its bailout?

In a follow-up to yesterday’s “Ready for round three of the sovereign debt crisis?Marketwatch is covering the Portugal story. Here’s the lead:

Portugal remained in the spotlight Monday as Lisbon fought intensifying speculation that it would be forced to become the third euro-zone nation to seek a fiscal bailout due to rising borrowing costs.

News reports over the weekend and on Monday said the Portuguese government was under pressure from European Union partners to tap the rescue fund established by the EU and the International Monetary Fund in hopes such a move would quell the ongoing turmoil in European sovereign-debt markets.

Portugal has continued to insist that it won’t need aid but a key test looms on Wednesday when the government attempts to sell between 750 million and 1.25 billion euros ($936 million and $1.6 billion) of three- and nine-year bonds.

Now the part I find most relevant:

The yield on 10-year Portuguese government bonds pressed above the 7% threshold on Friday to trade around 7.14% and likely would have jumped even higher had the European Central Bank not been an apparent buyer of Portuguese bonds, analysts said.

It took Greece 16 days and Ireland 20 days to request EU/IMF aid after their 10-year yields breached the 7% level, said Gary Jenkins, head of fixed income at Evolution Securities. He noted that Portugal has been through the 7% barrier previously and then saw yields retract somewhat.

The cost of insuring Portuguese government debt against default via credit default swaps continued to rise Monday, with the spread of five-year swaps widening by 12 basis points to a record 555 basis points, according to data provider Markit.

A bailout of Portugal could be imminent. But Portugal is a small country and not likely to have any major impact. However, this will only further push Spain and Italy toward bailouts.

And let’s not forget Belgium either:

King Albert II of Belgium on Monday called on the country’s caretaker government to write a new budget in an effort to calm worries the nation will be unable to meet its budget goals, The Wall Street Journal reported. The nation has been left without a formal government since a June election due to disagreements between politicians from the Dutch-speaking north and the French-speaking south. The yield premium demanded by investors to hold 10-year Belgian debt widened by 12 basis points to around 138 basis points, or 1.38 percentage points, the report said, near record levels seen in November. The king asked current Prime Minister Yves Leterme to draft a 2011 budget with a deficit below the 4.1% of gross domestic product agreed with the European Commission last year, the report said.

Europe is a total mess, not that the US is much better. So far, everything that has been done has been stop-gap. Countries with 12 percent deficits propose reducing them to 5 percent. Countries with debt of more than 100 percent of GDP have no plan to reduce them. These countries are only proposing to reduce the rate of decline, but not stop it nor turn things around. Until I see countries with plans to reduce the size of government and balance their budgets, I will continue to worry and write about the sovereign debt crisis and the economic doom it will cause if not addressed.

Ready for round three of the sovereign debt crisis?

First came Greece. Next was Ireland. Next up may be Portugal.

Portugal under pressure to seek EU/IMF aid

Pressure is growing on Portugal from Germany, France and other euro zone countries to seek financial help from the EU and IMF to stop the bloc’s debt crisis from spreading, a senior euro zone source said on Sunday.

Some preliminary discussions on the possibility of Portugal asking for help if its financing costs on markets become too high have taken place since July, the source said.

No formal talks on aid have started yet, a number of euro zone sources said, but the pressure was rising in the Eurogroup, which brings together euro zone finance ministers.

“France and Germany have indicated in the context of the Eurogroup that Portugal should apply for help sooner rather than later,” the senior source said, adding Finland and the Netherlands had expressed similar views.

The article continues that Portugal and Germany are denying all the above, but then points out that this was the case before Ireland got its bailout. The article then returns to reality.

The growing pressure on Lisbon follows a sharp rise in Portuguese 10-year bond yields at the end of last week to euro lifetime highs above 7 percent, as investors worried about the prospect of up to 1.25 billion euros of bond supply it will offer at an auction on Wednesday.

The yield of five-year Portuguese bonds on the secondary market is 6.43 percent and 10-year paper trades at 7.26 percent. Economists say a key question for Portugal is how long it can sustain the high yield levels, and the auction will be an important gauge of that.

Portugal and the EU can fight reality for only so long. In all likelihood, the bond market will force Portugal to get help. And then it will force Spain and Italy to do so. Belgium may also need help if they can’t form a government. With the at-risk economies slowing due to austerity and countries like Germany and France giving free money to them, even those countries will be in economic trouble.

How long will Germany and France give away their money to others instead of saving it for themselves? How much longer will the Euro last?

The sovereign debt crisis continue, but the MSM is keeping it a secret.

You really have to dig to find information about the continuing sovereign debt crisis in Europe. The only article on the subject I saw on Marketwatch, a large financial website, had the story buried within a piece about the U.S. Dollar:

Renewed pressure on bonds in the euro-zone periphery, as well as pressure on Belgian debt, helped drag down the single currency, strategists said. Fears that rising borrowing costs could force Portugal to seek a bailout were renewed as Lisbon outlined plans Thursday to tap credit markets next week.

Proposals to potentially require senior debtholders to take write-downs in the event of future bank crises also led to a selloff in peripheral bonds, pushing higher bond yields and the cost to insure the debt.

Even Greek bonds are still falling, with the premium investors demand to own them instead of German bonds hit a fresh intraday high, according to Dow Jones Newswires.

I searched and couldn’t find any details at The Wall Street Journal.

Thankfully, Bloomberg has the story:

Portuguese Bonds Lead Peripheral Euro-Area Decline Amid Looming Auctions

Portuguese government bonds led declines by securities from the euro-region’s most indebted nations amid concern demand at auctions next week may flag.

Spanish 10-year bonds fell, driving the extra yield investors demand to hold the securities instead of similar- maturity German bunds to the highest in more than a month. The European Union proposed yesterday that bank regulators be granted powers to write down debt in future crises. Belgian debt dropped amid a political impasse. German notes were little changed after the U.S. added fewer jobs than analysts estimated.

The yield on Portuguese 10-year bonds rose 16 basis points, after a 27 basis-point increase yesterday, to 7.34 percent at 4:24 p.m. in London. The 4.8 percent security maturing in June 2020 fell 0.955, or 9.55 euros per 1,000-euro ($1,295) face amount, to 83.10. The yield is up 33 basis points since Dec. 30.

The cost of insuring against default on European government debt, measured by the Markit iTraxx SovX Western Europe Index, increased four basis points to a record 217. Contracts on Portugal rose 10 basis points to 535, the highest level since Nov. 30, according to CMA. Spain increased 4.5 basis points to 353, Italy climbed 9 to 251, and Belgium reached a record 249.

Spanish 10-year yields climbed three basis points to 5.52 percent. The yield premium to bunds increased to 263 basis points, after reaching 264 basis points, the most since Dec. 1.

Italian 10-year bond yields rose four basis point to 4.82 percent, with Irish yields increasing six basis points to 9.25 percent.

In case you thought the sovereign debt crisis was over, just the opposite. We are still in the early stages of it.

Crabs believe in global warming; die for those beliefs.

James Taranto is his usual witty self in a recent Best of the Web:

Global Warmist Crab Antics
“Thousands of dead crabs have washed up along the Kent coast, with environmental experts believing the cold weather in Britain is to blame,” London’s Daily Mail reports. That can only mean one thing: global warming! Seriously, that is what these guys are claiming:

The Velvet swimming crabs – also called devil crabs – are thought to be victims of Britain’s coldest December in 120 years, which left sea temperatures much lower than average. . . . Coastal warden Tony Sykes said: ‘We suspect that climate change and warmer weather has lured the crabs towards the shoreline.

So this isn’t the same ridiculous claim we’ve been hearing lately, that global warming causes cold weather. Rather, the problem here seems to be that the crabs made the mistake of believing in global warming.