Confidential to Janet Y.

Mark Spitznagel, The Dao of Capital:
The spread of fire-suppression mentality can be linked to the establishment of forest management in the United States, such that by the early 1900s forests became viewed as resources that needed to be protected – in other words, burning was no longer allowed. The danger of this approach became tragically apparent in Yellowstone, which was recognized by the late 1980s as being overdue for fire; yet smaller blazes were not allowed to burn because of what were perceived to be risks that were too high given the dry conditions. And so smaller fires were put out, but in the end could not be controlled and converged into the largest conflagration in the history of Yellowstone. Not only did the fire wipe out more than 30 times the acreage of any previously recorded fire, it also destroyed summer and winter grazing grounds for elk and bison herds, further altering the ecosystem. Because of fire suppression, the trees had no opportunity or reason to ever replace each other, and the forest thus grew feeble and prone to destruction… In 1995, the Federal Wildland Fire Management policy recognized wildfire as a crucial natural process and called for it to be reintroduced into the ecosystem… Central bankers, too, could learn a thing or two from their forestry brethren.


What I saw at the San Diego Ted Cruz rally

Outside the convention hall, there were a handful of protesters.  Some of them apparently Trumpkins.

... others garden variety leftists.

The crowd was huge.  Tickets were free but obtained by RSVP on Eventbrite.  The initial lot had sold out almost immediately, so a larger space was reserved but their still ended up being a wait list.  This is the line for ticket holders.

Speaking to people in line, many seemed to be curious and open to Cruz but by no means hardcore partisans.

It looked like everyone on the wait list was able to get in, though the room was close to capacity at about 2000 people.

After a few local GOPers gave speeches, Cruz came on.  Good speech, emphasized his campaign message of Jobs, Freedom, Security.  Nods to Reagan coalition, blue collar, young people.  Thankfully light on the religious stuff.  Then talked about the primary: Trump's sore loser whining in Colorado, Cruz's recent string of victories, Nate Silver predicting 61% chance Cruz wins nomination, California likely to be deciding factor.

The crowd grew more enthusiastic as the speech went on.  At one point, some protesters made a ruckus out in the foyer, but inside it was impossible to hear what they were saying. I'm not sure whether they were Berners or Trumpkins or Purple People Beaters, but the crowd drowned them out with a loud chant of "Ted Cruz!  Ted Cruz!"

I think this guy is your nominee, probably with Carly Fiorina as his running mate.  As for beating Hillary, the media, and the Free Sh!# Army, that's a bigger challenge.


Social Security is a massive redistribution scheme -- and why gamblers, hookers, illegal aliens, and other under-the-table workers should report some income

You may have heard that Social Security pays an awful return on the money you put in. That's true -- except for the poor. Very low-income workers get a massive return on the money they pay in.

Here's how it works:
For an individual who first becomes eligible for old-age insurance benefits or disability insurance benefits in 2016, [...] his/her [benefit] will be the sum of:
(a) 90 percent of the first $856 of his/her average indexed monthly earnings, plus
(b) 32 percent of his/her average indexed monthly earnings over $856 and through $5,157, plus
(c) 15 percent of his/her average indexed monthly earnings over $5,157.
See how that works? A huge return on the first $856 per month you report, much less on the next $4,301, and almost nothing on everything above that. So if you're paying the maximum Social Security tax on income of $118,500, you're getting almost no credit for almost half the money you're paying in.

Take for example someone who earns the $856 monthly for 35 years (ignoring indexing and inflation for the sake of simplicity; it doesn't change the principle). With a combined Social Security tax rate of 12.4%, he and his employer would have paid in $44,580 over his career. Now assume he retires at 66 and lives 15 years more. He'll get 90% of that $856 monthly, or $9245 per year, for a total of $138,672 over 15 years -- far more than he paid in!

Now take someone who earns the maximum taxable $118,500 for 45 years. He and his employer would have paid in $661,230. But his monthly benefit would be just $2854 (the actual maximum benefit is currently $2639 due to differences in wage inflation and cost of living). That would be $34,253 per year or $513,796 if he lived 15 years in retirement -- a negative return on the money he paid in.

Clearly, it pays to report that first $856 per month of income to get a big payback on Social Security.  Cash workers, stay-at-home spouses, middle-aged immigrants, and anyone else expecting to live into retirement age should find a way to report some income.  The magic number is 35 years x $10,272 in today's dollars, or around $360,000 in lifetime income.  As a side benefit, there's also the "Earned Income Tax Credit" handout you may qualify for.

The rest of you?  Sorry about those payroll taxes.  We gotta spread the wealth around.


Obama regime erects new Berlin Wall to keep companies from fleeing world's most oppressive taxation

The Treasury Department imposed tough new curbs on corporate inversions Monday, shocking Wall Street and throwing into doubt the $150 billion merger between Pfizer Inc. and Allergan PLC, which was on track to be the biggest deal of its kind.

The Treasury move, which was more aggressive than anticipated, sent Allergan’s shares tumbling 19% in after-hours trading and could stall a trend in corporate deal-making that has seen companies searching for ways to escape the U.S. tax net. Pfizer shares edged 0.9% higher.

The new rules, the government’s third wave of administrative action against inversions, will make it harder for companies to move their tax addresses out of the U.S. and then shift profits to low-tax countries using a maneuver known as earnings stripping.
The U.S. has among the highest corporate tax rates in the world, in addition to being alone among developed countries in taxing the overseas earnings of foreign subsidiaries.

Message to global business leaders: don't start a company in the U.S., because even if you don't mind the high taxes at first, someday you might, and you won't ever be allowed to leave.

Happy Super Tuesday!