July 5th, 2014


As federal officials have begun to send the expected 240,000 migrants and 52,000 unaccompanied minors who have crossed the border illegally in recent months in the Rio Grande Valley to cities around the county, Murrieta so far is the only place that has managed to turn them away. The reactions have been mixed

A country without borders is not a country. Read this vividly reported and disturbing piece by Major Garrett. These people are unhinged. It will be interesting to discover what percentage of Americans are okay with this unprecedented madness and why.

Today’s lesson

July 4th, 2014

King-craft: “they always bestrode the necks of the people”

we have Judge Douglas giving his exposition of what the Declaration of Independence means, and we have him saying that the people of America are equal to the people of England. According to his construction, you Germans are not connected with it.

Now I ask you in all soberness, if all these things, if indulged in, if ratified, if confirmed and endorsed, if taught to our children, and repeated to them, do not tend to rub out the sentiment of liberty in the country, and to transform this Government into a government of some other form. Those arguments that are made, that the inferior race are to be treated with as much allowance as they are capable of enjoying; that as much is to be done for them as their condition will allow.

What are these arguments? They are the arguments that kings have made for enslaving the people in all ages of the world. You will find that all the arguments in favor of king-craft were of this class; they always bestrode the necks of the people, not that they wanted to do it, but because the people were better off for being ridden.

Timelier today than ever, n’est-ce pas? HT: PL


July 3rd, 2014

As John Adams wrote on this date a long time ago:

Britain has been filled with folly, and America with wisdom. At least, this is my judgment. Time must determine. It is the will of Heaven that the two countries should be sundered forever. It may be the will of Heaven that America shall suffer calamities still more wasting, and distresses yet more dreadful.

If this is to be the case, it will have the good effect at least. It will inspire us with many virtues, which we have not, and correct many errors, follies and vices which duces refinement, in States as well as individuals. And the new governments we are assuming in every part will require a purification from our vices, and an augmentation of our virtues, or they will be no blessings.

The people will have unbounded power, and the people are extremely addicted to corruption and venality, as well as the great. But I must submit all my hopes and fears to an overruling Providence, in which, unfashionable as the faith may be, I firmly believe

Sounds kind of modern, neh? Except that the role of folly is now played by this country. HT: AS

Mariel Boatlift 2.0

July 2nd, 2014

The Mariel Boatlift was first regarded as a humanitarian issue. It morphed into something else as it enabled Fidel Castro then to empty Cuba’s prisons, asylums and hospitals. It appears that Mariel Boatlift 2.0 was contrived to hit the news big time just as Lindsey Graham and Eric Cantor won easy anti Tea Party victories. So the news would tout the bi-partisan demand for comprehensive immigration reform aka amnesty and the angle was that it’s all about the children. The children! When Cantor lost decisively and unexpectedly, the air went out of the bi-partisan angle to the media narrative. Pity. It was supposed to be effective political theater for election season, planned last year for roll-out now. As with so much of what this crew in Washington does, the media planning was excellent, but the executive competence was nil. So it’s now a disaster and a political loser, the only remedy for which is cover up and threaten whistle-blowers as usual.

It’s notable that the administration structured the narrative such that they were merely responding to a crisis that somehow appeared out of nowhere, a common enough technique if you find truth to be an inconvenience. (“Seit 5.45 Uhr wird jetzt zurückgeschossen!“) But it was very naive to expect this to remain a cute story for long, not when the kids include criminals and others who have measles, scabies, chicken pox and strep throat as well as mental and emotional issues, up to and including suicide. Nowhere have we seen the media pose these questions: what kind of parents would abandon their kids in this way, and what would be the characteristics of the children that they would choose to abandon? Mariel Boatlift…

Compare and contrast

July 1st, 2014

From WaPo:

My own eyes show rising ocean levels. They show the Arctic ice cap shrinking. They show massive beach erosion, homes toppling into the sea and meteorological records indicating steadily increasing temperatures. The Earth, our dear little planet, just had the hottest May on record. My eyes read projections that are even direr — drought, stifling heat, massive and more frequent storms, parts of coastal cities underwater and, in the American Southeast, an additional 11,000 to 36,000 people dying per year from the extreme heat.

From elsewhere:

Fire and brimstone coming down from the skies. Rivers and seas boiling. Forty years of darkness. Earthquakes, volcanoes. The dead rising from the grave. Human sacrifice, dogs and cats living together – mass hysteria.

Possibly related: “We call Bill the Crust Master, because his pies, I don’t know what he does, whether he puts crack in them”

Meet the new boss, same as the old boss

June 30th, 2014


More on WWI

June 29th, 2014

Max Boot:

The 100th anniversary of the assassination of Archduke Franz Ferdinand on June 28, 1914, has come and gone, prompting a lot of reflections on the significance and implications of World War I. Even if Gavrilo Princip’s shots were only the excuse, not the real cause, of the Great War, it is hard to exaggerate their significance.

The conflict swept away the entire Ottoman and Habsburg empires along with the governments of Germany, Austria, Turkey, Russia, and other states. It led to the creation of the modern Balkans and the modern Middle East. Nazism, fascism, and Communism – all the great ideological ills of the 20th century – would never have become as virulent as they did absent the devastation wrought by the 1914-1918 conflict. There would have been no Stalin in power, no Hitler, and there would have been no World War II – and hence no Korean War or Vietnam War

Today’s bad guys are on the march and the West dutifully fails to notice. Ah well.

100 years ago

June 28th, 2014

Read page 5 of Churchill’s book here. Think this age could measure up at the rate we’re going? HT: PL

Today’s readings

June 27th, 2014

In some ways it’s like we’ve gone back a decade. Here’s Blackfive, for example. Been a long time! History keeps repeating in tightening spirals; well that’s only partly true, since crazy things unknown to us back in ancient days seem almost matter-of-fact today, at least to some. Speaking of old times, we don’t care about soccer and Tom Maguire tells us why. Let’s round negative things out with Jay Cost and Austin Bay. Finally, a couple of pieces on the arts, one entertaining and one that is something else entirely. Have a nice day!

Utopias don’t end well

June 26th, 2014

Wretchard has some thoughts. Meanwhile, there’s fiddling. (And just plain weird stuff that affects numbers that are vanishingly small. Did we say weird?) Our thoughts on the utopians go back a decade. BTW, we think Wretchard is correct and the backlash against the western insanity of recent years is going to be pretty ugly when it comes.

The post postwar era

June 25th, 2014

VDH has a disturbing piece about how the uniquely successful last 69 years have now been more or less squandered. Wretchard has a good companion piece on who showed up when the adults left the room. Finally, we take a quick look at the utterly disgraceful role played by the media in abetting this senseless tragedy.

Revisiting tulipmania

June 24th, 2014

Once again we return to the grooveyard of forgotten oldies to reproduce a piece, this time from the spring of 2008, when oil was approaching $147 a barrel. If the to-date highly successful maniacs in Iraq can figure a way to cause oil chaos, no doubt they will. So far the speculators are on the sidelines, meaning things will get pretty crazy if they all suddenly rush in on the same side of the trade. Stay tuned.

Back in 2008, Hedge fund operator Mike Masters’ Senate testimony on oil speculation, recommended for our review by Dan Dicker in the piece below, reads as quite an indictment of so-called Index Speculators. By the way, the Index speculators are “Corporate and Government Pension Funds, Sovereign Wealth Funds, University Endowments” and other investors who probably thought that sub-prime was the New, New Thing a few years ago. They are by far the largest participants in commodities trading now, though they were a small fraction of trading only a few years ago:

Commodities prices have increased more in the aggregate over the last five years than at any other time in U.S. history. We have seen commodity price spikes occur in the past as a result of supply crises, such as during the 1973 Arab Oil Embargo…unlike previous episodes, supply is ample…What we are experiencing is a demand shock coming from a new category of participant in the commodities futures markets…Index Speculators…distribute their allocation of dollars across the 25 key commodities futures according to the popular indices: the Standard & Poors – Goldman Sachs Commodity Index and the Dow Jones – AIG Commodity Index…

Demand for futures contracts can only come from two sources: Physical Commodity Consumers and Speculators. Speculators include the Traditional Speculators who have always existed in the market, as well as Index Speculators. Five years ago, Index Speculators were a tiny fraction of the commodities futures markets. Today, in many commodities futures markets, they are the single largest force. The huge growth in their demand has gone virtually undetected by classically-trained economists who almost never analyze demand in futures markets.

Index Speculator demand is distinctly different from Traditional Speculator demand; it arises purely from portfolio allocation decisions. When an Institutional Investor decides to allocate 2% to commodities futures, for example, they come to the market with a set amount of money. They are not concerned with the price per unit; they will buy as many futures contracts as they need, at whatever price is necessary, until all of their money has been “put to work.” Their insensitivity to price multiplies their impact on commodity markets.

Furthermore, commodities futures markets are much smaller than the capital markets, so multi-billion-dollar allocations to commodities markets will have a far greater impact on prices. In 2004, the total value of futures contracts outstanding for all 25 index commodities amounted to only about $180 billion. Compare that with worldwide equity markets which totaled $44 trillion, or over 240 times bigger. That year, Index Speculators poured $25 billion into these markets, an amount equivalent to 14% of the total market…

One particularly troubling aspect of Index Speculator demand is that it actually increases the more prices increase. This explains the accelerating rate at which commodity futures prices (and actual commodity prices) are increasing. Rising prices attract more Index Speculators, whose tendency is to increase their allocation as prices rise. So their profit-motivated demand for futures is the inverse of what you would expect from price-sensitive consumer behavior.

You can see from Chart Two that prices have increased the most dramatically in the first quarter of 2008. We calculate that Index Speculators flooded the markets with $55 billion in just the first 52 trading days of this year. That’s an increase in the dollar value of outstanding futures contracts of more than $1 billion per trading day. Doesn’t it seem likely that an increase in demand of this magnitude in the commodities futures markets could go a long way in explaining the extraordinary commodities price increases in the beginning of 2008?

There is a crucial distinction between Traditional Speculators and Index Speculators: Traditional Speculators provide liquidity by both buying and selling futures. Index Speculators buy futures and then roll their positions by buying calendar spreads. They never sell. Therefore, they consume liquidity and provide zero benefit to the futures markets.

Masters’ recommendations to Congress are fairly sweeping:

Number One:…Congress should modify ERISA regulations to prohibit commodity index replication strategies as unsuitable pension investments because of the damage that they do to the commodities futures markets and to Americans as a whole.

Number Two: Congress should act immediately to close the Swaps Loophole. Speculative position limits must “look-through” the swaps transaction to the ultimate counterparty and hold that counterparty to the speculative position limits. This would curtail Index Speculation and it would force ALL Speculators to face position limits.

Number Three: Congress should further compel the CFTC to reclassify all the positions in the Commercial category of the Commitments of Traders Reports to distinguish those positions that are controlled by “Bona Fide” Physical Hedgers from those controlled by Wall Street banks. The positions of Wall Street banks should be further broken down based on their OTC swaps counter-party into “Bona Fide” Physical Hedgers and Speculators.

There are hundreds of billions of investment dollars poised to enter the commodities futures markets at this very moment. If immediate action is not taken, food and energy prices will rise higher still. This could have catastrophic economic effects on millions of already stressed U.S. consumers. It literally could mean starvation for millions of the world’s poor.

Some prefer a laissez-faire approach to market imbalances such as this. But it was the decoupling of futures markets from delivery acceptance obligations that caused tulipmania after all. Thoughtful regulation of futures markets is not in itself unreasonable, just as it is not in the stock market. Personally, we’d prefer public floggings of the offenders.

Lightning speed, from nowhere

June 23rd, 2014

WRM: “The rise of ISIS/ISIL is a disaster that must be examined and understood. How could the U.S. government have been caught napping by the rise of a new and hostile power in a region of vital concern? What warning signs were missed, what opportunities were lost — and why?” No one had heard of these people a month ago, and all of a sudden they’ve taken over half a country and have a major social media powered PR machine. They’ve even got branded clothing lines as well as snuff films. It’s hard to believe that no one saw this coming. (BTW, what’s up at the State Dept?)

Res ipsa loquitur

June 22nd, 2014


For too many years, we failed to rein in the excesses building up in the nation’s financial markets. When the credit bubble burst in 2008, the damage was devastating. Millions suffered. Many still do. We’re making the same mistake today with climate change. We’re staring down a climate bubble that poses enormous risks to both our environment and economy. The warning signs are clear and growing more urgent as the risks go unchecked. This is a crisis we can’t afford to ignore. I feel as if I’m watching as we fly in slow motion on a collision course toward a giant mountain. We can see the crash coming, and yet we’re sitting on our hands rather than altering course. We need to act now, even though there is much disagreement, including from members of my own Republican Party, on how to address this issue while remaining economically competitive. They’re right to consider the economic implications. But we must not lose sight of the profound economic risks of doing nothing. The solution can be a fundamentally conservative one that will empower the marketplace to find the most efficient response. We can do this by putting a price on emissions of carbon dioxide — a carbon tax. Few in the United States now pay to emit this potent greenhouse gas into the atmosphere we all share. Putting a price on emissions will create incentives to develop new, cleaner energy technologies. It’s true that the United States can’t solve this problem alone. But we’re not going to be able to persuade other big carbon polluters to take the urgent action that’s needed if we’re not doing everything we can do to slow our carbon emissions and mitigate our risks. I was secretary of the Treasury when the credit bubble burst, so I think it’s fair to say that I know a little bit about risk, assessing outcomes and problem-solving.

This is the man who made the single most idiotic and near-catastrophic financial decision in the entire world since 1930. Feel free to follow his current advice.

A modest proposal

June 21st, 2014

As almost everyone paying attention knows now, this Washington crew is all about: (a) emotional narratives planned way in advance to advance their agenda and demonize opposition; and (b) spin-and-cover-up in case of snafus. Lights, action, camera! Example from last year’s planning sessions: let’s get the final push for amnesty to coincide with a big Lindsey Graham victory next year in 2014. See? Bi-partisan, get it? Hmmmmm. Better start advertising in Jan 2014 a few new agents for photo ops with the 65,000 cuties, ok? And on and on. Can you possibly doubt this massive media-political collusion at this point? The WoW was planned far in advance as a core theme for the 2012 election, and was introduced by the very nexus of political-media collusion on January 7, 2012 to start the new year right. And on and on and on. It’s the same tiresome story, over and over again.

So when we see the opposition is talking about page 27 of some letter and looking for smoking guns, we wonder, what’s up with that? Toss the green eyeshades and get with the big picture, especially since the media are going to publicly report the spin, however ludicrous it may be, as making any issue at hand a 50-50 thing at best for the opposition. So forget being accountants and go for the gut as best you can. We recommend ridicule, simple and repetitive to gain it some brand equity with the masses. Our leading candidate would be, “if you like your (issue specific thing), you can keep your (issue specific thing). Period.” You’ve heard that somewhere before, yes? Stop with the “nobody believes you.” Instead, make the witness repeat after you, “If you like your email, you can keep your email. Period.” Make him say it three times; if he won’t then you keep repeating it. “If you like your greatest achievement, you can keep your greatest achievement. Period.” And so forth.

Oh, BTW, this proposal isn’t original. It’s rule number five.

Compare and contrast

June 20th, 2014

“We observe today not a victory of party but a celebration of freedom — symbolizing an end as well as a beginning — signifying renewal as well as change.” First speech that we watched live, remembered, and even understood some of. Then there’s this: “They said this day would never come. They said our sights were set too high. They said this country was too divided, too disillusioned to ever come together around a common purpose.” The latter speech is emptier and more blathery, but we never realized something about its construction until just now. If you add “today” to the first line, and “hey hey” to the second, you’ve not only got iambic pentameter but something that evokes chanting from the audience. Very clever. No wonder Ezra Klein and others were (perhaps literally) mesmerized: the “finest speeches do not excite. They do not inform. They don’t even really inspire. They elevate. They enmesh you in a grander moment, as if history has stopped flowing passively by, and, just for an instant, contracted around you, made you aware.” These guys were mesmerized and their cerebrums stopped calling the shots — sort of like going, properly medicated, to a Santana concert at the Fillmore East. But that hangover is nothing compared to the one the country has now.

Unacceptable language in these times

June 19th, 2014

It’s finally been established! The term Washington DC has been determined to be an offensive and insulting slight. Plenty of good reason for that. Oh wait, Oops!

China’s growth rate reconsidered again

June 18th, 2014


Nearly every story about China’s extraordinary growth over the past 30 years asserts two things as a given: a). China has grown about 10% a year for 30 years and b). China’s long-term growth record in unsurpassed in modern history. A new report by the Conference Board says both of those assertions may be untrue. According to the report, written by economist Harry X. Wu, a senior advisor to the New York-based business research group, China’s economy grew at 7.2% a year between 1978 and 2012 — a rate far lower than what Beijing claims and nowhere near 10%…

What sets apart the Conference Board report is the length of time that Mr. Wu examines, which spans a number of rough economic patches for China. A great deal of the difference between the Conference Board data and official data reflects the years when China hit rough spots. In 2008, the year the U.S. financial crisis spread globally, Mr. Wu calculates that China’s economy grew 4.7% compared to China’s reported 9.6%. In 2012, when Europe was battered by recession, he estimates China’s GDP increased just 4.1%, compared to China’s reported 7.7%. The Chinese overestimates, he says, greatly affected the 30-year growth numbers. China’s statistics bureau didn’t respond to requests for comment.

Mr. Wu argues that China’s numbers especially diverged from reality after the country joined the World Trade Organization in 2001. That was a period, he says, in which “significant overcapacity was built in state-dominated and influence industries,” and localities competed fiercely to be top GDP dog and attract investment…

Mr. Wu argues that China overstates productivity growth and underestimates inflation, which tends to make inflation-adjusted GDP numbers –- the ones that get highlighted every quarter — higher than they otherwise would be. He also suggests that politics plays a big role, particularly the desire of local officials to exceed GDP targets, which have long been an important way to boost official promotion chances

No doubt the growth rate in China’s GDP has been impressive, no matter what the actual numbers are. However, always take note of the problems with PPP and bad loans, perhaps especially in the shadow banking system. Stay tuned.

Fiddling would be an improvement

June 17th, 2014

A lunch in DC:

It’s a great, great honor for us to welcome, as our luncheon keynote speaker, His Serene Highness Prince Albert II of Monaco. I want to begin just by congratulating – we have a chance to meet and talk for a little while here this morning privately, and one of the things we talked about was the fact that he is the, as I mentioned this morning, only head of state who’s been to both the South Pole and the North Pole, the Antarctic and the Arctic. And we talked a lot about the Arctic and Antarctic because the United States assumes chairmanship of the Arctic Council next year, and we’re already beginning to think hard about that agenda, which will be even more critical given some of the things we’re talking about here today. So I wanted to thank him for his leadership in making those two journeys, which are an important statement about his commitment…

In 2009, when scientists first began to discover that carbon pollution was dramatically disturbing the chemistry of the ocean and causing it to acidify, Prince Albert brought together a group of 150 scientists from more than two dozen countries to alert policy makers around the world about the troubling findings. Thanks in part to his commitment and sense of urgency, last year the International Atomic Energy Agency established a new international coordination center in Monaco in order to better understand the global impacts of ocean acidification…we have long considered Monaco a critical partner in the effort of protecting our ocean, thanks to Prince Albert’s leadership, everything from acidification to marine protected areas.

More of this at PJ. Meanwhile, on the other coast: “nobody ignored the science. I don’t remember anyone saying the moon wasn’t there, or that it was made of cheese.” For response to the latter, see this.

Oh yeah, and as for the rest of the news…..

Final point: both Bret Stephens and Mark Steyn, and even in a way Doug Schoen note that the pace of the disasters in the real world is speeding up markedly (and will continue to do so in our view over the next two years).

The ISIS ad campaign

June 16th, 2014

Here’s a bragging and recruitment video from ISIS. It is very disturbing, featuring as it does many murders. At 3 minutes in, it praises the “see you in New York” guy whom we referred to the other day. Not to worry, however, it’s all holy struggle. HT: PL