Saturday, August 29, 2009

Ayn Rand Passage from Atlas Shrugged

“Then you will see the rise of the double standard—the men who live by force, yet count on those who live by trade to create the value of their looted money—the men who are the hitchhikers of virtue. In a moral society, these are the criminals, and the statutes are written to protect you against them. But when a society establishes criminals-by-right and looters-by-law—men who use force to seize the wealth of DISARMED victims—then money becomes its creators’ avenger. Such looters believe it safe to rob defenseless men, once they’ve passed a law to disarm them. But their loot becomes the magnet for other looters, who get it from them as they got it. Then the race goes, not to the ablest at production, but to those most ruthless at brutality. When force is the standard, the murderer wins over the pickpocket. And then that society vanishes, in a spread of ruins and slaughter.

“Do you wish to know whether that day is coming? Watch money. Money is the barometer of a society’s virtue. When you see that trading is done, not by consent, but by compulsion— when you see that in order to produce, you need to obtain permission from men who produce nothing—when you see that money is flowing to those who deal, not in goods, but in favors—when you see that men get richer by graft and by pull than by work, and your laws don’t protect you against them, but protect them against you—when you see corruption being rewarded and honesty becoming a self-sacrifice—you may know that your society is doomed. Money is so noble a medium that it does not compete with guns and it does not make terms with brutality. It will not permit a country to survive as half-property, half-loot.

“Whenever destroyers appear among men, they start by destroying money, for money is men’s protection and the base of a moral existence. Destroyers seize gold and leave to its owners a counterfeit pile of paper. This kills all objective standards and delivers men into the arbitrary power of an arbitrary setter of values. Gold was an objective value, an equivalent of wealth produced. Paper is a mortgage on wealth that does not exist, backed by a gun aimed at those who are expected to produce it. Paper is a check drawn by legal looters upon an account which is not theirs: upon the virtue of the victims. Watch for the day when it becomes, marked: ‘Account overdrawn.’

“When you have made evil the means of survival, do not expect men to remain good. Do not expect them to stay moral and lose their lives for the purpose of becoming the fodder of the immoral. Do not expect them to produce, when production is punished and looting rewarded.

Ayn Rand - Atlas Shrugged – 1957

Thursday, August 27, 2009

SOS Financial Issues Facing the United States 8/27/2009

Today the financial media is talking about green shoots and being the road to economic recovery. The headlines always has some spin to it. I'm not buying what the media is selling. The FDIC is bankrupt. The big money center banks have trillions of worthless assets that sit off their balance sheets in SPE's. A special purpose entity (SPE) (sometimes, especially in Europe, "special purpose vehicle" or simply SPV) is a legal entity (usually a limited company of some type or, sometimes, a limited partnership) created to fulfill narrow, specific or temporary objectives. SPE's are typically used by companies to isolate the firm from financial risk. A company will transfer assets to the SPE for management or use the SPE to finance a large project thereby achieving a narrow set of goals without putting the entire firm at risk.

We won't have any type of recovery until all of this debt is worked through the financial system and defaulted on or paid back. Since many people do not have jobs and unemployment is rising. I suspect the later won't happen. Don't expect a government bailout. Whose going to bailout our government? You can't print worthless paper backed by nothing and producing next to nothing.

Monday, August 24, 2009

Healthcare is about more than Healthcare, It's about Liberty!

This guy doesn't represent some whack job group, he represents the majority of people that I speak to.

Wednesday, August 12, 2009

Chart of the Day

No expanding volume means watch out below! 87% bullish sentiment readings could mark a sign of a reversal. All of the so called experts are calling for the end of the recession. My guess is the next leg is down.

Sunday, August 2, 2009

US Turning Japanese?

Yes I really think so! Not letting bad banks and companies failure is what Japan did in 1990. Twenty years of stagnation and asset deflation is what Japan got as the result. The US should sign up for that, right?
So deflation is the conclusion unless the US gets the Chinese or the Japanese to buy US debt denominated in Yuan or Yen. If you read the US government is selling debt denominated in foriegn currency and still printing dollars without balancing the budget then the hyperinflation scenario could play itself out. By doing this the US is really putting a gun in its mouuth and the Chinese and Japanese would be daring the US to continue fiscal irresponsibility of money printing. Currently we can just print money and pay the foriegn debts off because the debt is denominated in US dollars and the foriegn debt is a fixed amount. If we try this same scenario with debt denominated in Yuan or Yen then the more money we print makes the US dollar worth less and the debt becomes more and more expensive to pay off which pushes the US into a hyperinflationary spiral. You can't get out of this hyperinflationary spiral and the US and foriegners know this. The only reason the US has been able to get away with this excessive money printing is because we are the world's reserve currency.
Bottom line is the future won't be as prosperous as the last thirty years. And yes I think in a credit based money system the likely outcome is deflation which means we are turning Japanese.

Is the Stock Market Really making you REAL Money?

The stock market rallies day after day, yet the fundamentals of the market are getting worse. In real terms when you adjust the market for inflation the stock market hasn't made a new high since 2000. Look at the market priced in gold and you'll see this is very glaring. The chart above tells us that real wealth in the US market hasn't increased. You can't print money backed by nothing and expect prosperity.