WC Varones

Don't lend your hand to raise no flag atop no ship of fools

No Mr. Bond, I expect you to DIE!

Florida Congressman Grayson has been mentioned on this blog before. His questioning of the Federal Reserve fantastic. But just when you think there's a guy in Congress who might actually "get it", he goes and pulls something like this: Saying the Republicans' plan "is for you to Die Quickly". Seriously, Mr. Grayson, go ahead and disagree with the other party, promote your side. Fight for your cause. Please keep fighting for transparency at the Fed. But really? You've gotta go and make some of the most idiotic statements we've seen come out of that body in a long time while you're at it?

He had a chance to step back from those comments later, but instead, he went further down the road of lunacy, invoking the Holocaust itself as he tried to describe the current Health Care situation! I worry this man will make himself into a laughing stock and give Fed-lovers a way to make him out to be an irrelevant kook, when really he's one of the only Congressman asking the right questions of the right people!



Macro Economics #4 - Keynesian in Japan and USA

So Japan had a demand side recession after a real estate bubble burst in 1989, while the USA is now having a demand side recession that started in 2007. At this point we can see that both Japan and USA were maxed out on their consumer credit because of housing bubble burst. Will Keynesian stimulus work the same way in both country? Are we walking on the same path as Japan? Let's explore.

In my last post, we mentioned that government printing and spending will cause inflation in commodities or imported goods. What if you are an EXPORTING country like Japan, China, or Taiwan? First, let's pull back to 1989 when Japan's real estate bubble all in a sudden popped. Japan has been an exporting country for a long time. When their central bank started to print money, and put this money in bank reserves, it did not re-inflate the housing bubble. Japan was making more USD from exporting than it was spending on raw materials with same USD. It did not trigger commodity bubble as long as government did not spend more than it earned from exporting.

Let me use a simple example to explain this. Japan couldn’t borrow anymore money because it was completely loaded with debt. When there is free money to borrow from the private bank, who can benefit from that cheap JPY? The answer is the firm that produces and exports the finished goods. They can borrow JPY with cheap money, expand the facility, buy more raw materials and then export to USA. The increased revenue in USD will pay off the cost of raw material and still have net income left. This net income may pull them out of recession as long as there are no other country compete with them in the export business and their trading partner can accept the increased output from. Unfortunately, Taiwan, China, South Korean, etc, joined the game and started to compete to devalue it's own currency by printing in order to boost their export market.

In addition to the increased competition, the strict immigration policy of Japan and aging working population also added forces to the deflationary effect of the economy. The net result is that corporations in Japan probably could not earn enough to boost everyone's income in order to increase the borrowing power of the Japanese, while more and more Japanese were heading to retirement and increasing the liabilities of their companies through pension commitments.

What about the Japanese government? Did not they also spend a lot of money? Yes, Japanese government also spent a ton of money and tried to boost up the demand. Again, with tapped out consumers who could not increase their income, government's spending is simply wasted. People may argue that Japanese government built the high speed railroad, and the economy sky rocketed, so how could you say government spending is wasting money? The answer is that there are very few infrastructure construction projects that boosted productivity. Where there are construction projects like that, government spending will successfully boost income and make the economy grow very fast. However such "SMART" spending is rare; it does not happen often. Most of the time when the government hires people to dig a pothole on the road, and fill it next day, it does not boost productivity and the money is simply wasted.

Moreover, we also need to notice that when Japan is borrowing money from the market, the central bank may not need to create JPY from thin air as the US government because with all the foreign currency they made from international trade. The JPY is backed by foreign currency; it is not some blind printing that creates JPY from thin air.
Now, with all these wasted efforts by the Japanese government, we see that their economy goes up and down further and up and down even further, and never fully recovered. I think the main reason is that their economic health is largely based on how much they can EXPORT! So when US is heading for a super depression, I think the lost two decades that Japanese currently experiencing will finally also turn into a super depression. The difference between is that America will NOT go down the same path of Japan and instead jump right into a depression, much quicker since we have not established contact with extraterrestrial life to export and save our demand recession.

See also posts #1, #2, and #3.

ABC News thinks Constitution is "Arcane"

I heard on ABC radio news today that the Supreme Court has agreed to hear a case on gun restrictions in Chicago, which is similar to the Washington, D.C. handgun ban that the Supreme Court struck down.

The reporter referred to the legal issue at hand as "an arcane law".

I guess this means that the reporter's freedom of speech is also "arcane", as is her freedom from religious persecution, and also from tyranny.

Empire State Building Lights Honor Communism

Today is the 60th Anniversary of Communist rule in China. Someone decided it'd be a good idea to honor the Communist Government on its 60th Birthday by lighting up the Empire State Building in NY with Red and Yellow lights!

Oklahoma Student's is Smarts!

A thousand (high school) students were surveyed by telephone and given 10 questions drawn from the U.S. Citizenship and Immigration Services item bank. Candidates for U.S. citizenship must answer six questions correctly in order to become citizens.

Here are the questions with the percent correct in parenthesizes. After each question is my suggestion for an updated 2009 answer.

What is the supreme law of the land? (28%) ~ The Fed
What do we call the first ten amendments to the Constitution? (26%) ~ Suggestions
What are the two parts of the U.S. Congress? (27%) ~ The embezzling part and the money laundering part
How many justices are there on the Supreme Court? (10%) ~ There's a Su-preme Court??
Who wrote the Declaration of Independence? (14%) ~ JP Morgan
What ocean is on the east coast of the United States? (61%) ~ The Gulf of Mexico
What are the two major political parities in the United States? (43%) ~ Socialists and Communists
We elect a U.S. senator for how many years? (11%) ~ Till they die
Who was the first President of the United States? (23%) ~ Marriner Eccles
Who is in charge of the executive branch? (29%) ~ Ben Bernanke

Fame

Our friend Jr. Deputy Accountant gets linked in the FT's Alphaville for this post.

For the record, I disagree with JDA's view on this one. I see her argument as that the Fed's accounting standards are so twisted that to perform an audit would be an excercise in futility. To me, that's like saying the cops shouldn't have read the Unibomber's manifesto because it's so insane it can't possibly have any clues, or the cops shouldn't search the home of a mastermind serial killer because he's obviously smart enough to hide all the evidence. You still want to raid the place and hope he missed something. And the Fed's vast financial dealings are so complex that they can't have covered all their tracks perfectly. We may never be able to make complete sense of all the books, but I guarantee there would be some giant scandalous headlines coming out of a full rectal exam of the Fed.

Mom's serving meat loaf again

Pet-food industry enjoys strong sales in weak economy

They're not even pretending anymore

CFO Ross Kari gets $5.5 million dollars to run bankrupt Freddie Mac for the government as a conduit to lose billions of taxpayer dollars trying to prop up house prices.

Jim Cramer's greatest hits

Jim Cramer has lost a lot of money for his followers, but this may be his all-time greatest hit.

Top 10 Stocks from February 2000:
You want winners? You want me to put my Cramer Berkowitz hedge fund hat on and just discuss what my fund is buying today to try to make money tomorrow and the next day and the next? You want my top 10 stocks for who is going to make it in the New World? You know what? I am going to give them to you. Right here. Right now.

OK. Here goes. Write them down -- no handouts here!: 724 Solutions (SVNX), Ariba (ARBA), Digital Island (ISLD), Exodus (EXDS), InfoSpace.com (INSP), Inktomi (INKT), Mercury Interactive (MERQ), Sonera (SNRA), VeriSign (VRSN) and Veritas Software (VRTS).

We are buying some of every one of these this morning as I give this speech. We buy them every day, particularly if they are down, which, no surprise given what they do, is very rare. And we will keep doing so until this period is over -- and it is very far from ending. Heck, people are just learning these stories on Wall Street, and the more they come to learn, the more they love and own! Most of these companies don't even have earnings per share, so we won't have to be constrained by that methodology for quarters to come.

HT: Denninger

Macro Economics #3 - Keynesian stimulus and the Recession

Whenever we have a recession and the government thinks that it is because demand is falling; our government thinks that by using expansionary monetary and fiscal policy it can jolt the economy back to life. This is dangerous if they assume this is a cure-all elixir and start to abuse it.

First, let's discuss how Keynesian stimulus works. Why do demand side recessions happen? It is usually because we overbuild and over-expand our production facility using debt and when the asset appreciation starts to slow down, the profit is unable to keep up with the interest payment on the debt used to expand the facility. When this happens factories and retailers starts to go out of business and rising unemployment causes the demand to fall even further and make the problem worse.

Governments think that Keynes was very smart because he says that when this happens all the government needs to do is simply spend a lot of money by borrowing, and also lower the interest rate by supplying more cash to the market. Then the consumer will start to borrow and spend again, demand will pick up and economy will come back to life. This worked in 2003 but what was the result? We got the biggest housing bubble in history! When the interest rate is lowered, and the government starts to spend money to save people's job, yes, those who got saved and those who still have a job with a smaller house or without a house will upgrade their housing because when mortgages are cheaper they can afford bigger loan amount, i.e. their purchse POWER goes up. Housing bubbles will also produce profits for other industries; it creates construction jobs, and other jobs that supply things like furniture and electronic that people usually also upgrade with their new house. This higher profit leads to increased income and further increases the loan amount one can afford. The virtuous cycle will successfully push the demand back up and the economy is SAVED.

Will it work this time when we already had a housing bubble and when everyone's credit card is already maxed out? My question to the government and Keynesian economists is this: what asset will people now buy when credit card interest rates are around 30% if they already knew it was a bubble when mortgage interest rates were at 5%? Will lowering it to 5% again successfully boost the house market back to the bubble level? Will people be as stupid again?

If we can't find another driver for jobs what will happen if government keeps borrowing money by printing? Remember, Quantitative Easing means government borrow money from the market, while Fed prints money to buy the debt back from the market. Now, we are going to touch the core topic of this analysis: Inflation VS Deflation.

First, when government prints people will start to fear inflation is coming because the money is so cheap. Businesses will expect the economy to come back to life and those who still manage money, like fund manager, will go in and push commodity prices up. We will see commodity prices to go up as a result (inflation on commodity front). The key question is will this introduce inflation on FINISHED GOODS? I doubt it because consumer debt is maxed out. When consumer debt is maxed out, the retailer and producer has little power to increase price. The demand is shrinking, so increased price will make smart consumer find the more efficient stores that can keep price the same and still make some money. When the economy is booming even most efficient retailer can't supply every demand in the country so inefficient stores can profit as well. But when the demand is falling fast, more and more businesses will be driven out by more competitive retailers.

So what can the retailer do to keep profit? They need to be more efficient, and that means they need to cut wasting and fire non-competitive workers. This will make the problem worse for non-efficient retailers. Eventually, big department stores like Macy's will go down first because their cost of operation is too high. When a major department store goes down, so goes the shopping center. A major bankruptcy will take down many other firms with it and the liquidation sale will cause the commodity price and finished goods to crash include housing. Then the surviving firms may or may not raise price because there is less competition but at this time people also will have less money to spend because of higher umemployment. Please remember this is a long process, it takes months to play out and you will still feel deflation at this point because of liquidation crash on consumer goods.

What if the government stops printing and borrowing at this point? We will get super great depression! But what if they keep printing? The entire cycle will repeat but there will be even higher inflation on commodities and even though there are less businesses around to fail, eventually we will cross the point when every business and job is saved by government which will result in Zimbabwe style hyper-inflation.

Another key point to remember is that Japan and US are different because Japan is an exporting country while the US is an importing country. My past analysis is based on an importing country because our business profit is largely based on importing costs. The case will be a bit different in Japan case because they are more exporting oriented. I will analyze Japan in my next post.

So will government keep printing? I think they will because hope is always the greatest when you try something for the first time. When this same trick fails again and again, eventually political pressure will force the governement to try something different. This is why I am expecting super depression instead of hyper-inflation because I believe Americans are smarter than Zimbabweans and won’t let their country create hyper-inflation which is far worse than a super depression. The American will will finally force the bad debt to be purged from the system.

Of course another risk is that America goes the same path as Weimer Germany where we elect a fascist president and wage war against other country to rob their resources. If that happens, then it is time for the third world war. I certainly hope that won't happen.

Next post will compare Japan and USA.

See also posts #1, #2, and #4.

Mark Williams is not the founder or the face of the Tea Party movement

A Republican-oriented political action committee (PAC) called Our Country Deserves Better has tried to hijack the non-partisan, grassroots Tea Party movement for its own purposes.

Not content to just participate and ride the wave with the rest of us, Mark Williams and company are sowing discord and damaging the movement. Southern California Tax Revolt Colation and Leslie Eastman have the details.

Bottom line: Tea Party Patriots good, Tea Party Express bad. I know the Tea Party Patriots personally, having teabagged with them many times, and I can vouch for their grassroots authenticity, non-partisanship, and all-around good-people-ness.

A little mistake ...

"He's a brilliant guy, and he made a little mistake 32 years ago. What a shame for Switzerland," said photographer Otto Weisser, a friend of Polanski.


Since when is drugging and raping a 13-year-old a "little" mistake? Damn hate to see what some people consider a big fucking mistake. Shit, the guy can't even face responsibility for his little mistake. What a freaking coward. He's man enough to drug a child, but not man enough to deal with consequences. Gotta love it.

Macro Economists - blind people touching elephant #2

Inflation VS Deflation - The role of Debt plays

We all know what debt is when someone borrows money from someone else. But what kind of role does it play when we talk about inflation or deflation? Let's take an example:
Let's say an average American makes $3,000 a month after taxes. How much can he spend, from 0 to $3,000? No he can spend from zero to $5,000 if he can say borrow $2,000, or even more if he can borrow more. Therefore, the total purchase power for this American is the amount of money he has earned minus his expenses, then plus the credit he can borrow.

Now, let's think about the 1930’s. During that period of time:
1. Consumer debt exploded
2. Government was on gold standard system, so it had no freedom to print money to borrow, they could only borrow every cent from average Americans.

In that scenario, when the economy was expanding by more and more borrowing, we have a great time before the market crash in 1929. It is simple to see that if everyone is borrowing, everyone can spend a lot more than he has earned, and it makes every business happy because things, including houses, get sold very fast. But one day when your income can't even pay your interest, you need to start cutting your spending or sell your inflated asset. But there may be no greater fool left to buy it. That is the day of reckoning. However, with gold standard system, government has limited ability to battle against this situation, since the government cannot borrow unlimited amounts money because the total amount of money is limited by total amount of gold.

So, what about the fiat currency system that started since 1971? It is the system that US is running now, and our money is backed by national debt which is explained by Chris Martenson's website that I mentioned in first post. Now with fiat currency system government can borrow money from the people, or even easier, just from the Fed Reserve Bank. The way to do it is simply auction the national debt, then ask Fed to buy it back, in this case, you have government has unlimited borrowing power. What can government do when it has the power to print money? Keynesian economists says government can use this tool to fight deflation because if government print too much money; we will have inflation and therefore, avoid the deflation. Is it true? We will find out.

In 1973, we had an oil crisis. This was a SUPPLY side recession because our supply of oil was interrupted so companies started to lay people off because they did not have enough goods to sell, didn’t need to employ as many people. The government thought this recession would lead to deflation so it started to borrow money by printing. Guess what happened? STAGFLATION!! why? because when you have supply side recession, print more money will just make the supply even more expensive, and people still lose job while resource price and wages both go up at a crazy rate! Ok, so even neo-Keynesian admit expansionary fiscal and monetary policy is useless to battle adverse change in supply.

What about DEMAND side recession? Well, sometimes it works, like in 2003 we successfully ended the recession fairly quickly. Does it always work? And it seems to be working this time right? Why doesn't it seem to be working in Japan? Again, let's explore the graph of total the US Debt since 1920. We see that our debt is increasing at an exponential rate. We cannot have unlimited debt vs our GDP number, so I think the Keynesian's expansionary policy to borrow more will work until the day we hit a wall that we can not borrow anymore. I personally believe this wall is at where CONSUMER debt is maxed out. When does consumer debt max out? When majority of Americans cannot pay their credit card bills, when Americans housing price is falling so they can not borrow with home equity loans, and when American's can not borrow any more money to boost house price.

Interestingly our government has stepped up to the plate to borrow where the consumer no longer can. The government is now borrowing and using printed money to fill the void left by the missing consumer. Do you think this is going to work? My next post will be: Demand Side Recession, how does Keynesian stimulus work, and does Keynesian stimulus always work?

Animal Farm

New Hampshire Rep. Carol Shea-Porter handling a dissenter, when Shea-Porter herself was a dissenter just a few short years ago.

"No question now, what had happened to the faces of the pigs. The creatures outside looked from pig to man, and from man to pig, and from pig to man again; but already it was impossible to say which was which."

- George Orwell, Animal Farm, Ch. 10

Reality check

As Goldman Sachs figures out how to pay bonuses out of the billions they've made from owning the Treasury Department and Federal Reserve, those of us in the real world are having a different experience.

For example, this comment from "beaufou" at Barry Ritholtz's blog:

Well folks,
looking at the weeks ahead and the current state of things, I had to lay off three guys tonight.

If one a**hole wants to talk about green shoots, I’d be happy to meet him in a dark alley right now and let him feel what it’s like to tell people they are no longer needed.

Is Jeff Macke broke?

UPDATE: Jeff Macke is not broke! See his response below.

We haven't heard much from Jeff Macke since he did his bizarre "car people" rant on CNBC and was shortly thereafter relieved of his on-air duties.

The W.C. Varones blog gets some of its best tips from googlers, and somebody arrived here yesterday by googling "jeff macke broke." Was Macke's on-air breakdown related to a financial collapse?

Macke's web site doesn't say much but projects the image of a large, successful firm in San Francisco. SEC filings paint a slightly different picture. Filings from 2002 and 2005 list the address of Macke Asset Management as 2001 Union Street #320 in a mixed retail/residential/restaurant neighborhood. Coincidentally, W.C. Varones world headquarters used to be just up the street from there. It could not be ascertained over the weekend whether Macke still rents an office there, but my money is on "no."


Macke Asset Management world headquarters

The same SEC filings show Macke holding shares in a midwestern retailer called Duckwall-Alco. His CNBC and Minyanville bios still claim he's on their board of directors, but according to this company press release, he resigned in 2007. One would think CNBC, with a purported journalistic reputation to uphold, would verify the accuracy of the bios of its on-air personalities every once in a while. And one would think Macke would correct that little error on Minyanville, where he continued to post as recently as two weeks ago.

Recent SEC holdings data do not list any ownership of Duckwall-Alco by Jeff Macke or Macke Asset Management. In fact, I could find no evidence of Macke Asset Management holding any shares of anything lately.

If Macke Asset Management remains a real firm, there's remarkably little evidence of it doing anything. This web site shows them having $26 million under management as of some unknown date -- not enough to support even a tiny office with a couple employees, and that figure may be stale. "Macke Asset Management" appears to be an empty shell, possibly just the name he gives for running his own money -- if he has any left.

Bottom line, I think Macke could be another Lenny Dykstra -- all hat and no cattle.

UPDATE: Macke responds.
I hadn’t seen that column, not being in the habit of Googling myself and never having heard wcvarones’ blog spot prior to your note.

I haven’t lived in the Bay Area for more than 4 years and haven’t had an office in SF for more than 5 years. If the area in which I had an office were as rundown as implied by the website I certainly was overpaying for the space.

It’s nice that websites regard me highly enough to speculate on my financial condition for better or worse. That said, the leap from ancient mid-decade filings and a digital picture of where I had an office in the ‘90s to me being personally “broke” is Beamon-esque. I currently live relatively near to the spot where Khadafy pitched a tent for his UN visit. I’m reasonably certain I don’t need to defend myself against any links to the Lockerbie bombing.

For the record, I left the board of Duckwall Alco after a decade of service which saw the stock price gain multiples from the time and price at which I joined. Despite those gains, which have decreased since my departure, Duckwall is an extremely small capitalization company. As asinine as it is to suggest I was padding my history by mentioning the position it would have been even more reckless for me to have hyped my role from a position as a national media figure.

In an era where the Madoff’s of finance pay for high rent office space to sucker clients into Ponzi Schemes I find it lamentable that I have to defend any aspects of my entirely legitimate and successful business operations from which I moved on years ago. Perhaps if I overpaid for client seducing marble entrances I really would be broke but beyond the scrutiny of half-assed blog-spots’ speculations. If I took the lease of Madoff’s vacated space in the lipstick building would blogspot hype a new fund?

It would be almost impossible for me to have less in common with Mr. Dykstra as a baseball player, drug abuser or business person. I played mediocre high school football and track but never did pre-game drugs or PEDs of any sort. Mr. Dykstra is to business what I am to Major League Baseball; a spectator and absolutely nothing more. Indeed, the pathetic flailing of Dykstra in business were more reckless and deceptive than a laymen’s swing at major league pitching in the sense that nobody loses their life-savings when a trader takes feeble cuts at Big League pitching. That doesn’t seem to be the case with Lenny where his personal ineptitude cost unwitting investors dearly.

I’m not broke. Perhaps if I were I’d start an asinine magazine targeted towards multi-millionaire baseball players or a desperate website speculating on basic cable personality’s personal finances. Six of one, half dozen of another.

Thanks for asking, Joe. I’ll let you know if I have a pending bankruptcy filing or better pictures of Pacific Heights office space.

Solvently yours,

Jeff Macke

I'm glad to hear it. While I didn't pay much attention to Macke on CNBC and sort of lumped him in with the rest of the bubbleheads, several comments I've seen indicate that he was actually pretty thoughtful and a good guy. And I'm totally with you on the car people thing, buddy.

Hypovehiculation

James Taranto has popularized, if not coined, the term "hypovehiculation" to describe the act of people being thrown under the bus by Obama. As I'm sure you've noticed, there's been quite a bit of hypovehiculation going on lately: Van Jones, David Paterson, Yosi Sergant...

And Ace of Spades has the visual to go along with it.


"Meep, meep."

ObamaCare: Rationing by Accountants

The Washington Times catches this in the Baucus bill:
Yes, there are death panels. Its members won't even know whose deaths they are causing. But under the health care bill sponsored by Senate Finance Committee Chairman Max Baucus, Montana Democrat, death panels will indeed exist - oh so cleverly disguised as accountants.

The offending provision is on Pages 80-81 of the unamended Baucus bill, hidden amid a lot of similar legislative mumbo-jumbo about Medicare payments to doctors. The key sentence: "Beginning in 2015, payment would be reduced by five percent if an aggregation of the physician's resource use is at or above the 90th percentile of national utilization." Translated into plain English, it means that in any year in which a particular doctor's average per-patient Medicare costs are in the top 10 percent in the nation, the feds will cut the doctor's payments by 5 percent.

So if your doctor thinks you need a particular test or procedure, but he's near his government budget expense limit, he'll have to decide whether to give you what you need or take a 5% pay cut. And that's a 5% cut to gross revenues, before staff and office expenses, which means a much larger cut to his actual take-home pay.

Change we can believe in!

The French call Obama a cheese-eating surrender monkey

I never thought I'd see the day when an American President makes the French look hawkish.

Canada's National Post:
Obama: “We must never stop until we see the day when nuclear arms have been banished from the face of the earth.”

Sarkozy: “We live in the real world, not the virtual world. And the real world expects us to take decisions.”

The rest of Sarkozy’s remarks were, well, remarkable:

“President Obama dreams of a world without weapons … but right in front of us two countries are doing the exact opposite.

“Iran since 2005 has flouted five security council resolutions. North Korea has been defying council resolutions since 1993.

“I support the extended hand of the Americans, but what good has proposals for dialogue brought the international community? More uranium enrichment and declarations by the leaders of Iran to wipe a UN member state off the map,” he continued, referring to Israel.

The sharp-tongued French leader even implied that Mr Obama’s resolution 1887 had used up valuable diplomatic energy.

“If we have courage to impose sanctions together it will lend viability to our commitment to reduce our own weapons and to making a world without nuke weapons,” he said.

Mr Sarkozy has previously called the US president’s disarmament crusade “naive.”

You know what they say in France: going to war without Obama is like going deer hunting without an accordion!

Neal Fox's homage to the Federal Reserve

LANGUAGE WARNING -- although the language shouldn't offend you nearly as much as the actions of the Federal Reserve should.

An ode to the secretive organization that caused the dollar to lose 96% of its value in gold terms in just 38 years, is currently printing trillions of dollars to bail out Wall Street at the expense of future generations, and just hired an Enron lobbyist to help resist a Congressional audit.

Dead census worker

The internets are abuzz with the mysterious death of a census worker in rural Kentucky. The guy allegedly had the word "Fed" written on his chest. Details are sketchy due to official silence on the matter, but speculation is that he ran into some toothless Deliverance types that were cooking meth, growing weed, or just didn't like the gub'mint.

Jr. Deputy Accountant has a different theory: that was no epithet written on his chest, it was the killer's calling card.

Do not pass Go. Do not collect $200.

Fail to buy ObamaCare, go to jail.

Where's Waldo at the New York Times

James Taranto's Best of the Web column is the most consistently funny daily column I know of. Taranto rips apart media and political elite with a combination of condescending wit, unassailable logic, mastery of language, and scathingly apt analogies. When I read Taranto, he reminds me of a master university debater.

Enjoy today's column, for example, on the NEA's Keystone Kops handling of the Obama propaganda scandal, and a fun new game for readers of the New York Times.

Modern Macro Economists - blind people touching elephant

We have many so called economists who talk about macro economics by setting many variables constant, as we all do in a chemistry lab, and then try to determine the outcome in the real world. This, to me, is like a group of blind people touching an elephant; some say the elephant is a big wall, some say it is a long tube, ...etc. Well, they are all right describing what they observed with their hand, but the conclusion is wrong because they ignore other parts of the elephant.

The real world economy is like a huge elephant. I was so confused in the past when I read different economists predict what would happen to the US or World economy. There were many conflicting views, but they all seemed reasonable and correct. So who is right? This confused and bothered me so much until I realized that they were all right on what they observed, but some of them had the conclusion wrong because they ignored many other variables. Once we consider all the variables, what we see today makes perfect sense and we can predict the trend more accurately.

I’d like to write on a few topics so I’ll break this into a series of posts.

I'll start the whole economic analysis with this topic: Inflation vs Deflation

Inflationists say gold should be 5000 dollar, while deflationists ask why and they claim everything seems to be cheaper when they go to market. Which side is going to win? Let's discuss by review a series of fact before I can tell you my answer.

1.First topic in the series: Debt

When the money is growing faster than production, we will have inflation, otherwise, it is deflation. This should be simple enough to a lot of people. However, the money here is more than just paper money, it also includes CREDIT. If you are not familiar with this part, please visit http://www.chrismartenson.com/crashcourse . This web site has a clear explainaion on how money and velocity of money works.

Now, let's review a graph of total US Debt VS GDP ratio, and also the graph of US GOVERNMENT Debt VS GDP ratio:



The first graph shows the total US Debt VS GDP ratio; we can see that current total debt is far worse than the 1930s. People claim that government debt is not a problem because in the 1940s to 1950s we had much higher government debt compare with current debt level. Again, this is what I mean when people only look at one fact and ignore the rest when they come to a conclusion. My analysis is: government debt was not an issue in the 1940s because the CONSUMER debt was very low, and we had won the war. Everyone started spending and we could utilize all the technology we advanced during the war. Higher private sector income would boost government tax revenue and paid off public debt, so it was PERFECTLY fine! Now, both consumer debt and government debt is going far beyond dangerous level and some think it is going to be fine? I think it will be worse than great depression based on just the debt level!

In the next post, I will elaborate more on how debt works in our economy, and why it will cause super great depression.

Audit the Fed: Rep. Alan Grayson grills shifty Fed weasel Scott Alvarez



HT: Zero Hedge

UPDATE: Be sure to read Matt Taibbi's background on the werewolf Alan Grayson.

Waterboard the water board!

In the midst of foreclosures, unemployment, and generally the worst economy since the Great Depression, Southern California's Metropolitan Water District is going to increase pension benefits 25% for the unions.

Nice work if you can get it.

HT: T-Dub.

New Jersey: Come for the culture, stay for the cows. Robert Melia Jr.

New Jersey judge rules there's no crime in having sex with cows.

Obama Finally explains his true political philosophy

I'm trying to find the actual video clip, but last Sunday in one of his 36 interviews that day, Obama actually said to George Stephanopoulos, "I have no interest in expanding the Federal Government". That's almost verbatim, but I can't seem to find that one tiny quote. But I heard him say something almost exactly like that. And he's been saying it since February 2009. So it begs many questions, the most important of which might be:

What do you think all those people who generally side with Democrats because of the popular and cleverly cynical notion that "at least the Democrats are honest and upfront about taxing you to death and stealing from you. The Republicans are sneaky about it" are thinking now?

Let's look at Obama's main initiatives/pieces of legislation:
-Cap and Trade expands Government.
-Health Care Reform, as the Dems are proposing, Expands government to the point where it will take over fully 1/6th of our entire economy (represented by the Health Care sector).
-The Stimulus Bill Expanded government to the point where he quadrupled the annual deficit.
-"Card Check" legislation (temporarily dropped) expands government.
-Cash For Clunkers expanded government.
-Taking over GM expanded government, even though Obama used words that are exactly the opposite of what he did ("I have no interest in taking over GM").
-Taking over major financial institutions expanded government.

I could go on, and I might update. But either the man is parsing words with Clintonian precision, and what he really means is, "I have no interest in expanding government because my main goal is to collapse it, and bring about socialist 'change' in its place", or we all have to ask ourselves, and ask our friends, "What ELSE does Obama NOT have an interest in doing as president?"

This man repeatedly says the opposite of what he does. It's a deliberate tactic meant to confuse us, the voters, so that we think he's more reasonable than he is (as if that's new). He wants us so confused that we decide not to pay attention anymore. He wants us voters to think to ourselves, "What? Obama cut medicare? I thought he wanted to enlarge government's role in health care? I guess he's not so bad if he's cutting it." "What? Obama is working hard to cut the deficit? I thought he expanded the deficit. He must not be that bad."

Ken Lewis' fingerprints all over Diane Ward crime scene

... figuratively, that is. (Don't sue me, Kenny Boy, but then you've got enough legal problems of your own these days, doncha?)

We have more details in the latest case of Greenspan's Body Count.

J. Robert (Bob) Ward, who either shot Diane Ward or was present when she shot herself, was apparently in trouble with Bank of America.

Someone in Charlotte (headquarters of a certain very large bank run by a cowardly and stupid country bumpkin) apparently knows the backstory and arrived here this evening by Googling "j robert ward to appear at bank of america w/financial records". Yeah, you're probably pretty much free to schedule something else in that time slot, BofA dude! But thanks for tipping us of that it was you guys who made all those bad loans to Bob Ward.

While we're at it, I found this case where a Richard W. McWhorter (presumably this Atlanta developer) was suing Bob for fraud. Sorry, Dick, but you're not going to get much out of that case.

Obama Youth: Do you get Royalties for this song yet?

Yes, the overt indoctrination was removed from the Obama's speech to school kids from 2 weeks ago. But there are over 3 years left in his 1st term. And recall that the initial plan for this speech did include that more overt indoctrination attempt.

I wouldn't put anything past this President, so I hope in these next 3 years our precious and impressionable students don't somehow end up getting "aligned" like particles of iron in a magnetic field.

Many such videos took place before Obama was elected. How many more can we expect to see by the time he's served his full term? I mean really, Obama's given 120-something speeches on health care. Don't you think he might as well use these groups from these videos to his advantage, and outsource some of those 120 speaking appearances to them?
Remember that clip of young kids militaristically declaring their allegiance to Obama? As I was searching for that clip, I came across this page that has that one on it, plus a whole bunch of similar videos. It's quite a show!
http://www.prisonplanet.com/indoctrination-of-obama-youth-in-schools-accelerates.html

But for now, let's watch the most recent video example, shall we? In it, they somehow forget to give Communion. But oh well, it's just a rehearsal anyway. Here it is (Lyrics Below):



Lyrics:
Song 1:
Mm, mmm, mm!
Barack Hussein Obama

He said that all must lend a hand
To make this country strong again
Mmm, mmm, mm!
Barack Hussein Obama

He said we must be fair today
Equal work means equal pay
Mmm, mmm, mm!
Barack Hussein Obama

He said that we must take a stand
To make sure everyone gets a chance
Mmm, mmm, mm!
Barack Hussein Obama

He said red, yellow, black or white
All are equal in his sight
Mmm, mmm, mm!
Barack Hussein Obama

Yes!
Mmm, mmm, mm
Barack Hussein Obama

Song 2:
Hello, Mr. President we honor you today!
For all your great accomplishments, we all doth say "hooray!"

Hooray, Mr. President! You're number one!
The first black American to lead this great nation!

Hooray, Mr. President we honor your great plans
To make this country's economy number one again!

Hooray Mr. President, we're really proud of you!
And we stand for all Americans under the great Red, White, and Blue!

So continue ---- Mr. President we know you'll do the trick
So here's a hearty hip-hooray ----

Hip, hip hooray!
Hip, hip hooray!
Hip, hip hooray!

HT: NL

Soros-Funded Propaganda video being played in our Schools

This anti-capitalist video is being played in schools all across the nation. Then the kids are tested on it. It was made by the Tides foundation, which gets a ton of money from George Soros. Here's a short take from Glenn Beck on some of the lo-lights of the video. But the full version of this cutesy little Statists' masterpiece can be seen at this link: http://www.youtube.com/watch?v=gLBE5QAYXp8

Watch in delight as this sanctimonious woman explains to young, impressionable minds:

"It's our government's job to watch out for us, to take care of us. That's their JOB."
[emphasis NOT added by me].

If she had said "defend us" I would agree.

Senator Tom Carper: We must honor Obama's backroom deal with big pharma

Obama made a backroom deal to assure billions in profits for big pharma, while big pharma would spend tens of millions on propaganda trying to persuade the public to accept ObamaCare.

Senator Tom Carper says that we should honor that backroom deal.

Wednesday dinner

Black bean and chickpea patties, a Carrot and Potato Time modification of a Veganomicon recipe. We'd done the chickpea patties before, but the black beans were an excellent addition. For the record, we used 15-ounce cans of chickpeas and black beans and doubled CPT's quantities of all other ingredients.



Side dishes are braised Brussels sprouts a la Brassica, and Broccoli Rob (or was it Broccoli Steve? I always confuse the two).

Greenspan's Body Count: Diane Ward, wife of James Robert Ward

Never judge a book by its cover. James Robert Ward and Diane Ward appeared to be happy and fabulously wealthy. Which they were, until Greenspan's bubble popped:
Ward built a life for himself, his wife and their two daughters on the strength of a business that developed exclusive vacation-home communities across the country.

In 2007, he and his wife moved from Atlanta to Orlando's tony Isleworth country-club community; and it was in that mansion Monday night that, police say, Bob Ward shot and killed Diane Ward.

The aftermath shows a family that was in severe financial distress.

[...]

The company went bankrupt in 2008 and had its assets sold for $15.6 million in January, court records show.

The seven-bedroom, nine-bathroom house — once owned by legendary golfer Arnold Palmer, former major-league pitcher Orel Hershiser and publishing mogul Rance Crain — is in foreclosure.

The Wards hadn't made a monthly mortgage payment of $16,841 for more than a year, and as of July, they owed $3.6 million on the home they bought for $4.3million, according to court records.

Listed for $5.2 million, the house has been for sale for nearly two years, according to its listing on realtor.com.

"I think Bob was hit with every kind of stress you can imagine," Saare said. "I don't have a clue as to what happened."

Whether this was murder as the police allege or suicide as James Ward's attorney claims, it's clear that the finger that pulled the trigger was on the invisible hand of Alan Greenspan.

Greenspan's Body Count now stands at 111.

UPDATE 9/24: Varones readers have the best inside scoop! Someone in Charlotte (headquarters of a certain very large bank) apparently knows the backstory and arrived here this evening by Googling "j robert ward to appear at bank of america w/financial records". Yeah, you're probably pretty much free to schedule something else in that time slot, BofA dude! But thanks for tipping us of that it was you guys who made all those bad loans to Bob Ward.

While we're at it, I found this case where a Richard W. McWhorter (presumably this Atlanta developer) was suing Bob for fraud. Sorry, Dick, but you're not going to get much out of that case.

And whaddaya know? Our BofA googler had it right:
The Wards were supposed to bring four years' worth of financial documentation to a deposition Wednesday at the Bank of America Building, located at 390 North Orange Avenue in downtown Orlando; however, James Ward now has larger legal troubles than bankruptcy and Diane Ward will never be able to testify under oath regarding the financial allegations.

Diane Elizabeth Ward
Diane Ward
Edith Moreno
Diana Moreno
Scott Peters
Tom Blackmore
Kevin Daniel O'Connell
Julie Fay
Wallis Fay
Siu Fong Ng
Ernest Scherer Jr.
Charlene Abendroth
J.D. Wood
Cynthia Wood
Aubrey Wood
Dillon Wood
Betty J. Lipply
Dwight Deely
Linda Patrick
David Kellerman
Christopher Wood
Francie Billotti-Wood
Chandler Wood
Gavin Wood
Fiona Wood
Gil Weber
Gregory Graham
Randolph Graham
David Kelley
Ramona woman
Del Mar man
Wayne "Mike" Anderson
Jeffrey M. Pearson
Ervin Antonio Lupoe
Ana Lupoe
Brittney Lupoe
Jaszmin Lupoe
Jassely Lupoe
Benjamin Lupoe
Christian Lupoe
Steven L. Good
Adolf Merckle
Mike Upham
Randy Motts
Kristy Hunt
Joseph Nesheiwat
Tom Brisch
Alex Widmer
Brian Pugh
Marilyn Lewis
Sid Agrawal
Kirk Stephenson
Barry Fox
Dallas Dwayne Carter
David Hetzel
Sharron Hetzel
Cliff Kendall
Pamela Ross
Roland Gore
Mrs. Gore
Wanda Dunn
Karthik Rajaram
Subasri Rajaram
Krishna Rajaram
Ganesha Rajaram
Arjuna Rajaram
Indra Ramasesham
Joe X
Isabelle Jarka
Robert Wagner
Lt. Michael Howe
John Roberts
Palmer C. White
Dianne Pittman White
Ed Boesen
Edwin F. Rachleff
Carlene Balderrama
Troy VanderStelt
Scott M. Coles
Dawn E. Armstrong
Thomas Lizotte
Jonathon Calvin "40-Cal" Jacques
Salvador X
Lupe X
Jade X
Little Boy X
Little Girl X
Kashmir Billon
Bill McMurtry

Lisa McMurtry
James Hahn
Raymond Donaca
Deanna Donaca
[redacted]
[redacted]
Michel Veillette
Nadya Ferrari-Veillette
Marguerite Veillette
Vincent Veillette
Mia Veillette
Jacob Veillette
Maurice Pereira
Natasha Pereira
Mark Achilli
Raed Al-Farah
Andrew Kissel
Rufus Shaw Jr.
Lynn Flint Shaw
Mr. Pierce
Walter Buczynksi
Marci Buczynski
Jason Washington

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