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Monday, May 31, 2010

Heart Disease and Brushing Your Teeth

This story had an obvious logical fallacy. Brushing your teeth regularly prevents heart disease! Do you see the error?

This is "correlation confused with causation". It's believable that people who brush their teeth regularly have good health habits overall, and are therefore less likely to develop heart disease.

This is a common mistake by the State media/science engine. Correlation is not the same as causation.

Friday, May 28, 2010

Police With Assault Rifles

I saw something amusing/offensive. In downtown Manhattan during rush hour, two policemen with assault rifles were standing in the subway, by the turnstiles.

Under what circumstances would they actually use the assault rifles? Are they really going to fire them into a crowded subway?

Even if there were terrorists, it would be one or two guys with a bomb. I can't imagine any scenario where an assault rifle would be useful.

The police were probably there for intimidation purposes. They're providing the illusion of security, while accomplishing nothing.

I thought about saying "Hey stupid! What do you think you're doing?" I didn't feel like provoking a confrontation. I don't fit their target profile. They didn't notice me.

The policemen seemed to sort of know that they were doing something ridiculous. They were standing there trying to look tough.

Someone told me that the police with assault rifles are deployed only when a VIP visits. When the President visits, there's an announcement. When other VIPs visit, there's no public announcement. Most/all people probably wouldn't even recognize them. Many high-ranking State insiders are never publicly mentioned. There may have been some VIPs visiting downtown Manhattan, on the day those police were deployed. It is interesting that State insiders are so scared that they deployed those police, even though there was no public announcement of anything important.

The police with assault rifles are an example of State waste and intimidation. I can't imagine any scenario where an assault rifle would be useful on the subway. The police were probably ordered to just stand there and look tough. They probably would not have stopped a turnstile-jumper or pickpocket, even if they noticed it.

Thursday, May 27, 2010

Nobody at the SEC Knows Perl

This story was funny.

The Securities and Exchange Commission took a step Wednesday toward making that job (investigating the sudden market crash) a bit easier by proposing to unify the collection of trading data across all stock and options markets.
The SEC is requiring all exchanges to keep their logfiles in a common format. Allegedly, this will facilitate future investigations.

It would take a competent Perl programmer a couple of hours to convert an exchange's logfiles into a common format. It would be a simple Perl script to parse out the logfile and figure out who was selling during that 15 minute period. The exchanges have to keep track of the buyer and seller for each order/trade.

A FIX message literally is symbol=XYZ, price=XX.XX, quantity=X, accountID=XXXXX, buy/sell=X, time=HH:MM:SS:MMM. It's a very simple Perl script to parse that out. (There are some other minor details.) Almost every exchange keeps its records in FIX format. The other common formats are similarly parseable.

If the SEC can't figure out how to hire a competent Perl programmer, they could hire any CS grad student to assist with their investigation.

The vast majority of financial programming is "convert data from one format to another format".

The SEC seems to be covering up the true cause of the sudden market crash on May 6. This is being presented as a fake excuse for their lousy investigation. I can't believe that zero competent programmers are working for the SEC.

Wednesday, May 26, 2010

An Example of State Waste

This story was interesting.

At a fundraising dinner in New York City last night, President Obama raised more $1.3 million for the Democratic Congressional Campaign Committee.
President Obama arrived via helicopter during rush hour in downtown Manhattan.

Do you see the huge waste of money/wealth? I'll give you a chance to figure it out on your own.

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President Obama raised $1.3 million for the Democratic party. How much did his security arrangements cost? What was the cost of blocking highways and streets during rush hour? A lot of police get paid overtime. A lot of police travel with the President to provide security.

It was one huge waste. It would have been cheaper to have the Federal government pay the Democratic party $1.3M, than to pay the cost of Obama's security. Of course, that would make the corruption more obvious.

The security team protecting the President is an evil fnord. It provides the illusion "This guy is important!" The President is a figurehead and an interchangeable cog.

Tuesday, May 25, 2010

Strengthening the EU

I was watching the Communism Channel and saw an interesting pro-State troll. He was talking about the Greek debt crisis.

He said "The problem is that the EU central government doesn't have enough power! Each individual member country shouldn't have the power to make its own budget!"

That answers a question I'd been wondering about. "How are State parasites going to claim more power, via the Greek debt crisis?" Obviously, the EU isn't going to fall apart. Once a government is created, insiders won't voluntarily give up their power.

Via "Problem! Reaction! Solution!", State parasites will use the crisis they created to claim more power. The solution is not "The EU was a bad idea." The solution will be "The EU central government needs more power!"

State parasites win either way. If things go well, it's due to their brilliant leadership. When things go poorly, that's an excuse to claim more power. In fact, the occasional crisis is desirable. That keeps the slaves scared and demanding more State power.

Monday, May 24, 2010

Germany Allows Naked Short Selling

This story was pretty funny. German's stock market regulator announced a ban on naked short selling for 10 German financial stocks. They also banned the short selling of certain government bonds.

The obvious response is "So it's OK to naked short sell other stocks?"

In an honest short sale, the trader borrows shares from someone else. The person buying get actual shares. The person lending consented to the loan. For a naked short sale, shares are not borrowed. The person buying is forced to lend the seller shares. Some traders naked short sell on purpose, to manipulate prices.

Naked short selling is already illegal. It's illegal, but the law is not enforced. A stock trade is just an entry in a database. If there's a "failure to deliver" or naked short sale, the policy is to merely carry the position forward to the next day. There's no penalty for naked short selling.

If something is illegal, but there's no penalty or enforcement, then it's effectively legal. State parasites declare that possession of marijuana is illegal. They don't merely say "Please don't do it!" A lot of police are searching for people who sell/grow/smoke marijuana. They will assault violators. There's no enforcement of the naked short selling ban.

Financial industry insiders love naked short selling. They can push down the stock of any corporation controlled by someone they don't like. For example, suppose Sumner Redstone didn't behave as CEO of CBS/Viacom. Then, the banksters would naked short sell the stock, pushing down the price. Then, they'd arrange for a leveraged buyout and hostile takeover. Sumner Redstone would be forced to vote for the merger, lest his shareholders sue for cheating them.

Naked short selling is an excellent stock market manipulation tactic. Via "captured regulators", the banksters lobbied for lax enforcement of the naked short selling law.

If I tried to naked short sell, my broker wouldn't let me. Only the banksters may naked short sell. That makes the partial naked short selling ban ironic. The only person who can naked short sell is someone who works for a large bank! Naked short selling is banned, but only for bank stocks!

It's like the banksters agreed "It's OK to steal. However, we agree to not steal from each other!"

Contrast this with what the SEC did during the recent financial crisis. They banned *ALL* short selling of financial stocks, and not merely naked short selling. A market maker has to be able to short sell.

For example, an options market maker buys a call option, and then short sells the underlying to hedge. If all short selling is banned, then the market maker can't hedge the options he already bought/sold.

Germany's partial naked short selling ban is very offensive. It's like they declared "We're only enforcing the law when someone steals from a bankster." Naked short selling is counterfeiting and fraud. Naked short selling is already illegal. However, this law is not enforced.

Friday, May 21, 2010

Another FRE and FNM Bailout

Fannie Mae (FNM) and Freddie Mac (FRE) are in the news again. They're still losing money. They got another infusion of Federal bailout money.

FRE and FNM get a legal perk that no other business gets. Their debt is backed by the Federal government. This means they get to borrow for slightly more than the Treasury rate. This cheap money must be used to buy mortgages and mortgage CDOs. Executives at FRE and FNM maximize their profits by issuing as many mortgages they can.

If I wanted to start my own mortgage financing business, I could not profitably compete with FRE and FNM. Their State-granted perk is too valuable. Even for other mortgages, I wouldn't have a profitable lending business unless I had a State bank license. The Federal Reserve credit monopoly keeps interest rates artificially low. This prevents individuals from profitably lending each other money.

The only way I can get $1000 is by actually working for it. When a bank lends money, they literally print and lend brand new money.

If I lend you money at 6%, that's a bad deal for me. I'll get ripped off by inflation. I'd be better off buying gold. If I lend you money at the true inflation rate of 20-30%, then the borrower gets ripped off. Why would you borrow from me at 20%-30% when you can borrow at 6% from a State bank? Similarly, the borrower would be foolish to accept a loan with a "gold clause". The implied interest rate would be too high.

Even a mortgage trader at Goldman Sachs cannot profitably compete with FRE and FNM. Goldman Sachs may borrow cheaply, but only at the overnight Fed Funds Rate. A trader who borrows at the Fed Funds Rate to buy mortgage bonds can lose if the Federal Reserve cartel raises interest rates by more than expected. Some people say that the housing crash was exacerbated when the Federal Reserve kept the Fed Funds Rate at 5.25% a few years ago. That was Cramer's famous "They know nothing!" rant, demanding lower interest rates.

If you borrow at 3% to buy mortgages yielding 6%, your profit rate is 3% times your leverage, typically 30x-100x+. If you borrow at 5.25% to buy mortgages yielding 6%, there's very little margin for error, especially when borrowers start defaulting.

The trader at Goldman Sachs borrows at the Fed Funds Rate. The mortgage trader at FRE or FNM borrows at the Treasury term rate. This makes it easier for the trader to balance the cashflow and hedge interest rate risk. If the mortgage will take 10 years to be repaid on average, then the trader at FRE or FNM issues a 10 year bond. This is nearly a perfectly hedged position, except for the risk of mortgage defaults. The trader at another bank can't do the same thing, because he may only borrow at the overnight Fed Funds Rate. If a bank issues term bonds, they pay a greater interest rate than the Treasury rate.

Executives at FRE and FNM receive a huge State subsidy paid by everyone else via inflation. This subsidy is in addition to the subsidy all other banks receive.

When State politicians say "We're guaranteeing the debt of FRE and FNM!", that's a huge perk. Even if the Federal government never writes a check, executives at FRE and FNM may borrow cheaply. The recent bailout made this promise explicit and not merely implied. The explicit bailout was necessary because, despite this perk, FRE and FNM didn't have the cashflow to meet their interest payments. Other lenders started getting worried about a default. FRE and FNM debt started trading at a premium relative to Treasury debt. The bailout closed this spread.

As long as real interest rates are negative, and FRE and FNM keep borrowing more money, then eventually they will profit. Inflation means that the bailout loans are repaid with devalued money. Inflation also means that housing prices will start rising again eventually, making mortgage lending very profitable again.

FRE and FNM received a direct bailout of billions of dollars each. However, their total balance sheet is trillions of dollars. To be fair, *ALL* of the debt on their balance sheet should be included as part of the "national debt".

Executives at FRE and FNM receive huge direct and indirect State subsidies. These executives also spend lots of money lobbying Congress. This obviously leads to corruption. It is immoral to receive a State subsidy, and then spend part of that money lobbying the government for favors.

Insiders in nearly every industry act that way. That's leading to the downfall of the US economy. Via State perks and bribes/lobbying, stealing is more profitable than doing useful work.

A pro-State troll says "FRE and FNM are good! They help people borrow money to buy houses!" The fallacy is that you get a cheaper interest rate, but the price of a house is greater. The profits of FRE and FNM aren't free. Everyone else pays the cost via inflation.

A pro-State troll says "Without FRE and FNM, the housing market would crash further!" This cheap money leads to higher housing prices. Individuals buying a house don't benefit. They get lower mortgage interest rates, but the price of a house is greater. There's no free lunch.

Who benefits from FRE and FNM? The executives at those corporations benefit the most. They earn huge salaries without doing any real work. Homebuilders also benefit, because they borrow money at cheap rates, build houses, and then sell them via FRE/FNM. Anyone with a huge leveraged position in housing benefits from this inflation. The average homeowner doesn't use as much leverage as insiders.

Executives at FRE and FNM receive a huge State perk, and then use those profits to lobby for more favors. Under the usual pressure to "grow their business", they lobbied for looser and looser lending standards. They created a housing bubble to boost their profits. When there was a crash, they got a bailout.

If State parasites wanted real reform, they would shut down FRE and FNM instead of bailing them out. That reform cannot occur, because insiders will lobby against it. FRE and FNM shareholders should get nothing, along with owners of preferred stock. If the corrupt debt is honored, then State parasites should pay that debt off. The government should take possession of the mortgage portfolio and gradually unwind/sell it.

The only real way to reform FRE and FNM is to eliminate them. The only way to reform the financial industry is to eliminate the Federal Reserve credit monopoly and legal tender laws. There are a lot of taxes and regulations that make it illegal/impractical to use sound money. That cannot happen, because too many people profit from the corrupt way things are now. Those insiders will always spend money lobbying to block reform. When you have the State-granted perk of printing money, your lobbying/bribing budget is literally unlimited.

FRE and FNM are a flagrant example of State corruption. Executives receive a huge government-granted perk, and spend some of that money lobbying. Corporate monopolies/oligopolies are desirable, because that maximizes corruption opportunities. As an empire collapses, corruption increases and productive work decreases.

Thursday, May 20, 2010

Paul Krugman Obsession

I noticed a disturbing trend on many libertarian/minarchist/anarchist websites. I've noticed this on reason.com, lewrockwell.com, mises.org, and other websites.

Paul Krugman writes something stupid. Then, people spend a lot of time explaining exactly why he's wrong. Paul Krugman has a regular NY Times column, giving him plenty of opportunity to spread lies. Each article contains plenty of evil fnords.

Paul Krugman is a shill for the State. He acts like a clever thinker. He's really making up excuses justifying an increase in State power.

Before you realize that the State is one big scam, it's frustrating to see Paul Krugman touted as a genius. This comment in this post on reason.com had a good explanation, regarding "Why is this idiot so widely touted as a genius?"

He tells a certain wealthy and disproportionately influential class exactly what they want to hear.
The role of the Supreme Court is to make up fancy-sounding excuses for increasing State power. A State-licensed economist also makes up lies. He's justifying State economic power instead of State political/violent power.

Just because Paul Krugman won the Nobel Communism Prize doesn't mean he actually knows anything useful. When State awards are given via "peer review", then that encourages corruption and ****sucking rather than genuine thinking.

For example, someone who wrote "The USA has a corrupt monetary system!" would probably not win a Nobel Communism prize. He probably wouldn't be able to get a mainstream economics journal to publish his paper. He wouldn't get any State research grants. He probably wouldn't be able to get tenure. In this manner, independent thinkers are weeded out of the State academic monopoly.

If I had to think of a system for suppressing scientific progress, it would be hard to come up with something better than "peer review" combined with a State monopoly for funding science. "Peer review" turns science into a popularity contest.

Refuting every pro-State troll is frustrating and time consuming. Even if I could arrange an interview with Paul Krugman, I wouldn't be able to explain his logical fallacies to him. He's too pro-State brainwashed. Trying to explain real economics to Paul Krugman would be like explaining to my psychiatrist or therapist that the "chemical imbalance" theory of mental illness is wrong. Once you've crossed a certain pro-State brainwashing threshold, it's very hard to realize the truth. It would be too traumatic of a mental shift.

Superficially, writing articles refuting idiots seems like a good idea. However, you're defining yourself in relation to pro-State trolls, rather than doing your own thing. If I refuted every stupid thing I read, it would be more than a full time job!

The people who think "Paul Krugman is such a genius!" probably aren't reading my blog or libertarian/minarchist/anarchist websites. It's offensive that the NY Times and mainstream media only publish lies.

The mainstream media acts like a State-owned business. The same insiders who control the mainstream media control the government. Rupert Murdoch and Sumner Redstone wield more influence than the President and most politicians. By covering or ignoring an issue, they have lots of influence. I saw a reporter for 60 Minutes brag "We did a story on Obama back in 2006, before he was considered a Presidential candidate!" Did they cover him because he was a good politician, or did they cover him because he'd already been picked as a suitable figurehead?

Free popular mainstream media coverage made it easy for Obama to get elected. They gradually rachet up the coverage. This gives the illusion that he had overwhelming popular support. Did Obama get favorable mainstream media coverage because he was so popular? Or, did he become popular because he got favorable mainstream media coverage? Imagine if some mainstream media source kept mentioning "Taxation is theft!"

The mainstream media says "We don't have an obligation to cover your viewpoint. We're privately owned." The problem is that they have a State-backed monopoly, although the Internet is changing things. Politicians are once again considering a law that would cripple free speech on the Internet, the "DISCLOSE Act". State parasites hate the Internet, because it's enabling intelligent people to share information and discover their fraud.

The mainstream media presents false opposites as genuine debate. They might have one person say "The Federal Reserve should raise interest rates." while another person says "The Federal Reserve should keep interest rates low." This creates the illusion of debate. "Is a Federal Reserve credit monopoly a good idea?" is not debated.

It's a dangerous intellectual trap. You shouldn't waste a lot of time refuting pro-State trolls. Now that I've mostly cracked my pro-State brainwashing, the logical fallacies are pathetically obvious. The false arguments do follow predictable patterns.

Whenever I read other freedom-oriented websites, it's annoying to see some mistakes repeated over and over again. One common theme now is "Not another article refuting Paul Krugman!" It gets tiresome after awhile.

Tuesday, May 18, 2010

The End of the Euro?

After the Greek bailout, I noticed an interesting trend. Some people are saying "Is this the end of the Euro?"

Greece won't be allowed to drop out of the EU for the same reason that Texas isn't allowed to secede from the USA. Once a central government is formed, State insiders don't voluntarily give up their power.

Once the EU Constitution was ratified, there's no provision for un-ratifying it. In the USA, the Constitution was never put to a direct vote by the people. Even if people 200 years ago approved it, that doesn't make it valid today. Even if 51% or 75% or 99.99% approve a Constitution, that doesn't give State parasites the right to steal via taxes.

Both the Euro and the US dollar are fiat debt-based currencies. However, there's an important difference. The dollar is controlled by the US Federal government. No single government controls the Euro.

The Federal Reserve is the central bank for the dollar. The ECB is the central bank for the Euro. Like the Federal Reserve, the ECB insiders get to do whatever they want with no public disclosure or accountability.

When the US Federal government has deficit spending, they're undermining their own money. No single government controls the Euro.

When the Greek government had deficit spending, they were causing inflation for everyone using Euros. People in Germany had more Euro inflation, due to deficit spending in Greece. There was immediate inflation as Greece's government had deficit spending.

Here's how Greek deficit spending caused inflation. Greek politicians sold their bonds to a bank. That bank borrowed brand new Euros from the ECB and lent them to Greece. There was inflation as these Euros were spent. Some of these new Euros made it to Germany, causing inflation there.

Some people are predicting that the Euro will fall apart. People in Germany are angry that they're financing the Greek bailout. The US financial bailout was passed over the objection of most Americans. Governments in Europe are the same. Via the IMF and Federal Reserve "currency swaps", people in the USA are financing the Greek bailout. (In a Federal Reserve currency swap, the Federal Reserve lends brand new dollars to European banks or the ECB, taking Euros or Euro bonds or Greek bonds as collateral. This causes inflation for the US dollar.)

The idea that government debt is sacred is a lie. The Greek bailout really is a bailout of whoever owns Greek bonds. The banksters own the Greek debt. They lobbied for the bailout. They bought Greek debt at junk rates. After the bailout, the bonds are AAA rated. Via the crisis and bailout, the banksters made a huge profit in a short period of time.

A year ago, the dollar was crashing relative to the Euro, and people were saying "It's the end of the dollar." Now, the Euro is crashing relative to the dollar, and people are saying "It's the end of the Euro."

This illustrates the fallacy of buying foreign fiat currencies as an inflation hedge. All fiat currencies are subject to theft by inflation. The inflation is not uniform, which helps cover up the scam. The only true inflation hedge is buying gold or silver, and taking physical delivery.

This led to a debate with a pro-State troll in the comments of another post. I never said "People should be forced at gunpoint to use gold as money." just like "People should not be forced at gunpoint to use paper as money." My point is that, given the free choice, people will tend to use gold or silver as money. If any other form of money is widely used and decent, I'd be able to convert it to gold/silver if I want to. In the USA, gold and silver are not very liquid, due to State regulation and taxation of gold/silver dealers. In a ZOMFG/SHTF/TEOTWAWKI situation, the only useful thing will be tangible goods, food, water, guns, bullets, tools, etc. If there is a more gradual collapse, gold and silver will retain their purchasing power. Investing in gold protects your savings from theft via inflation, even if the State does not collapse.

Historically, gold and silver are excellent at preserving their purchasing power over time. For anything where there's an apples-to-apples comparison, prices quoted in gold are close over time.

Every fiat currency has a different interest rate and a different inflation rate. This is a huge profit opportunity for currency speculators. Governments are willing to lose money to traders, when manipulating exchange rates. This enables currency speculators to make huge profits, without doing any real work.

It is misleading to say "It's the end of the Euro." or "It's the end of the dollar." It's more accurate to say "It's the end of fiat money." Some people are starting to realize that State paper investments are a scam. Intelligent investors are moving their savings to physical gold.

The final end of the corrupt State financial system is still about 20 years away. Rising gold prices are an indication of the true inflation rate.

Monday, May 17, 2010

Who Cares About the Supreme Court?

It's disappointing to see the coverage of the new Supreme Court justice and the confirmation hearings. It's all one big evil fnord reinforcing "It matters what these nine people do."

I noticed that the current Supreme Court nominee and the previous nominee have the parasitic personality type. Most politicians, like Harry Reid and Nancy Pelosi, have the parasitic personality type. Most people don't notice, due to their pro-State brainwashing. The Supreme Court exists to protect the interests of parasites, more than to protect productive workers.

The only reason the Supreme Court matters is that their orders are treated as new laws. State thugs will enforce these laws without questioning them. Lower-ranking judges will follow the Supreme Court's orders.

Ironically, a Supreme Court judge spends more time writing laws than most Congressmen! Supreme Court decisions are like new laws. The justices usually carefully read the decisions. Most Congressmen let lobbyists write laws for them. There's no way a Congressmen could actually carefully read every law that Congress passes.

Every bad law that erodes individual freedom has been approved by the Supreme Court. The Supreme Court is *NOT* concerned with "What is right and what is wrong." They are only concerned with "What is legal?" The Supreme Court has the final say in resolving all disputes. By definition, whatever the Supreme Court says is legal.

A pro-State troll says "It's good that the Supreme Court has the final decision. This prevents chaos." The problem is that the Supreme Court resolves all disputes, even when one party is the State or another political insider. For example, the Supreme Court has approved the laws that limit the liability of BP and Transocean and Haliburton. This encourages chaos, because insiders can commit crimes and negligence without any negative consequences.

That is the inherent evil of the State legal system, compared to a free market system. State insiders get to resolve all disputes, even when one party to the dispute is a State insider. This causes government to behave like a criminal gang rather than be the protector of freedom.

You don't get picked to be a Supreme Court judge unless you're thoroughly pro-State brainwashed. That's the reason there's so much focus on making sure that the judge will make the "correct" decisions. Back when President Roosevelt was pushing the New Deal, some Supreme Court justices resisted. Now, the Supreme Court rubberstamps most bad laws.

In the confirmation hearings, they'll never ask "Is the IRS Constitutional?" or "Is the Federal Reserve Constitutional?" or "Should defense attorneys be barred from mentioning jury nullification?" or "Do biased jury selection procedures defeat the true purpose of trial by jury?" These are all unstated hidden assumptions. Every Congressman and Federal judge knows the "correct" answer to these questions. The worst laws are endorsed by almost every politician and State parasite.

If you ask a State parasite "Should you have more power or less power?", of course they want more power. Congress and the President choose the Supreme Court. Of course, they will make decisions that favor more State power.

The job of a Supreme Court judge is not to protect individual freedom. Their job is to make fancy-sounding excuses for increasing State power. If you're a pro-State troll, these excuses are believable. A "Constitutional law expert" doesn't debate "What is Constitutional?" Instead, they debate "What is the Supreme Court going to rule next?"

A Congressmen says "We don't have to worry if this law is Constitutional. The Supreme Court will object if we're wrong." A Supreme Court judge says "Of course this law is Constitutional. Otherwise, Congress would not have passed it." In this manner, evil occurs and nobody seems responsible. In the debate surrounding healthcare "reform", some critics asked "Is this law Constitutional?" The Congressmen reacted as if that was a silly, irrelevant, and insulting joke.

The Supreme Court judges are the high priests for the State. The hype surrounding a new Supreme Court judge seems a lot like the hype surrounding a new pope. Government is a crazy religious cult. It's a very successful cult, having brainwashed the vast majority that it is the One True Way to organize a stable society.

The correct attitude regarding the Supreme Court is "Why should I care what those nine pathetic losers do?" Their decisions are treated as new laws. The problem is that the vast majority will obey their orders without questioning it. The Supreme Court doesn't protect individual freedom. Every bad law has been approved by the Supreme Court.

Friday, May 14, 2010

New Record Gold Price

The FRN-denominated price of gold set a new record recently. The price of gold is the least biased inflation measure that's publicly available.

My father enjoys watching the Communism Channel (CNBC). He recites their propaganda very well. There are all sorts of pro-State troll excuses for not buying gold.

Here's one common excuse for not buying gold. "Gold is a deadweight asset. You have to pay storage costs. There's the risk someone will steal your metal, if you keep it in your home. With stocks, you get a dividend and the growth of the business."

The fallacy is that, with stocks, there's fraud and theft. The CEO gives himself and other executives stock/option grants, diluting your ownership. The CEO gives lucrative consulting contracts to his friends. There's all the waste and inefficiency of a corporate bureaucracy.

When I realized that a stock investment doesn't outperform true inflation (gold), it was like discovering that Santa Claus didn't exist.

A pro-State troll says "In 1979-1980, the price of gold sharply rose and the it crashed. The price of golf sharply rose recently. Therefore, it will crash again."

From 1933-1975, it was illegal for individuals to own gold in the USA and most other countries. In the USA, gold dealers are heavily taxed and regulated. This creates additional costs for would-be gold investors. In China, gold ownership was recently re-legalized. Politicians in China are actively encouraging individuals to invest in gold. China now has a more liquid gold market than the USA! When it comes to gold investing, people in China have more economic freedom than gold in the USA.

From 1933-1968, the official price of gold was $35/oz. Most individuals did not have the right to trade their paper for gold at the official price. This allowed the farce of $35 gold to be maintained, in spite of fiat money inflation. Whenever the free market price of gold rose over $35/oz, the central banks sold enough gold to push the gold down. Foreign central banks, like France, started refusing to accept paper dollars and started demanding gold. Eventually, the farce could no longer be retained. Even insiders could no longer redeem their paper for gold at the official price.

In 1975, individuals in USA were allowed to buy gold again. This law was sponsored by Ron Paul. There was no official connection between gold and fiat money anymore, making the ban seem silly. More than a generation later, people had been brainwashed to believe that paper was money and gold was not money. Fake pro-State troll economics brags about the superiority of paper money to gold money. In the present, many laws and taxes make it impractical/illegal to use gold as money.

Once gold-ownership was re-legalized, the price of gold skyrocketed. The banksters started to panic. In 1975, the central banks were hoarding gold, because it was the only valuable asset they owned. They could not push the price of gold all the way down to $35/oz. However, they could use their gold reserves to suppress the price. They started selling some, but not all, of their reserves, causing the price of gold to crash. They adopted a policy of selling gold whenever the price sharply rose. For this reason, the historic volatility of gold/$ is much less compared to silver and other commodities. Lower gold price volatility is a symptom of gold price manipulation.

In effect, the banksters were selling back to the people the gold that they stole in 1933. Having nearly exhausted their reserves, the central banks are losing their ability to manipulate the price of gold. That's the reason there won't be another gold market crash like in the early 80s. The banksters would crash the gold market if they could, but they don't have enough physical metal.

There are plenty of people that would buy gold and take physical delivery, if the price of gold suddenly tanked. In late 2008, the official price of gold sharply tanked, but many online gold dealers had no inventory. As long as gold futures buyers can take physical delivery, the "official" price shoudn't deviate too much from the price at which you can actually buy gold coins.

There's another amusing joke on the Communism Channel. Whenever the price of gold sharply rises, they say "It's too late to buy gold! You missed your chance!" Whenever the price of gold temporarily drops they say "We told you! Gold is a lousy investment!"

Contrast this with stock market propaganda. They say "The stock market is hot right now! Buy or you'll miss out!" Alternatively, they say "Stocks are cheap right now! It's time to buy!"

It's always a good time to buy gold. To minimize the impact of swings, you should make equal purchases at regular intervals. This is "dollar cost averaging".

In recent years, gold has outperformed the stock market by 10%+ per year. If this trend continues, eventually even a buy-and-hold gold investor from 1980 would have outperformed a buy-and-hold stock market investor. If you had bought-and-held an equal amount of gold every year since 1980, you probably would have outperformed an equivalent stock market investment, although I haven't checked the calculation exactly.

Gold and silver, taking physical delivery, is the best way to protect yourself from theft via inflation. For this reason, State comedians denigrate gold investors at every opportunity. For this reason, there are many taxes and regulations restricting gold investors. People who try to set up alternate monetary systems based on gold or silver find themselves the victim of State violence, as occurred with the Liberty Dollar and E-Gold.

Tuesday, May 11, 2010

Stupid Psychiatrist

Because I relapsed, I'm forced to start seeing a psychiatrist and therapist again. Legally, I'm not forced to go. However, my parents would object if I said "I don't want to waste time with these fools."

It was interesting to observe my new psychiatrist. I'm refusing to take the drugs/poison, and she can't legally force me to take them. I noticed that every psychiatrist asks the exact same questions! It seemed that I didn't even need to be there. She was mindlessly asking questions and filling out forms. By now, I've figured out the "correct" answers to the questions.

My psychiatrist was obviously pretty stupid. It's the type of stupid you have to spend years working at. It's similar to the way politicians act professionally stupid if someone asks them "Is taxation theft?" It seems that psychiatrists are brainwashed to ignore feedback from patients, so they don't notice they're hurting them.

Every psychiatrist asks the same questions. I've memorized the correct answers. Some of the "correct" answers are false. For example, one question is "Can you see secret messages on TV?" You're supposed to say "no". However, there really are obvious secret messages when you watch TV. The secret messages are very obvious, now that I've cracked my pro-State brainwashing. They reinforce that you're supposed to think and act in a certain way.

That question makes me really suspicious. It seems like the psychiatry/murder industry is designed to silence people who start achieving greater awareness. Why is it wrong to see secret messages on TV, when they're actually there? One recent example was the 60 Minutes story on "illegal immigration", which had a secret hidden message "The law banning illegal immigration is valid."

Having a therapist is also dangerous. You can wind up substituting the therapist's judgement for your own. For example, I might do what my therapist wants me to do, instead of what I want to do. I'm aware of the intellectual trap now, so I shouldn't be fooled.

It seems that the therapist's job is to re-pro-State brainwash me, rather than help me discover the real truth. That can make the therapist worse than useless. After my ex-therapist called the police when I fired her, I don't see how I can trust a State-licensed therapist.

You really can't discuss anything important with your therapist. For example, none of my therapists were willing to seriously discuss "Taxation is theft!" or "The USA has a corrupt monetary system!" Their assumption is that I am defective, and there are no large-scale problems affecting everyone.

It's annoying that I'm forced to waste time seeing a clueless therapist and psychiatrist. Now that I know how their scam works, they shouldn't be able to hurt me. However, it's still risky. As long as I refuse the drugs/poison, my psychiatrist can't hurt me. It also is risky, because they can call 911 and have me involuntarily hospitalized. As long as I don't relapse, the risk of that is low.

As long as I know to trust my own judgement, my therapist won't be able to re-pro-State brainwash me. Hopefully, I'll be able to avoid relapsing. After a few years without relapsing, I'll stop seeing them.

I feel that I've made more progress cracking my pro-State brainwashing. I'm noticing more favorable reactions from coworkers and women. I don't feel like I'm doing anything different, but I'm getting better reactions. My logical mental state must be getting better synchronized with my emotional mental state. I feel that I'm still making progress.

It's annoying that I had to relapse so many times when cracking my pro-State brainwashing. It's annoying that the "mental health" system only offers treatment options that are worse than useless.

Monday, May 10, 2010

Weird Stock Market Behavior on Thursday

On Thursday, the stock market unexpectedly dropped sharply, and then rebounded. There were weird huge drops in Accenture (ACN), Apple (AAPL), Procter & Gamble (PG), and others.

It seems that an single person/bank is responsible for the huge drop. One explanation is that a single huge trade was entered. It was either for a single stock, a basket of stocks, an index future, or an ETF.

Suppose someone sold a huge bunch of index futures. Some market maker would buy those futures. He then would sell the stocks in the index, to hedge. Just looking at the stock trades is insufficient to figure out the cause of the problem. You also have to look at index futures. Some sources say there was a lot of unusual selling in S&P 500 futures, which led to the stock market declining as traders hedged those futures.

This is somewhat of a problem. Stocks are regulated by the SEC. Index futures are regulated by the CFTC.

Some of the trades may be canceled. That is potentially unfair. What is the cutoff? What if someone bought options to hedge the stock? It would be unfair to cancel the stock trade but not also the option trade.

It seems that a cutoff of 60% was chosen, which seems obviously too wide of a cutoff. However, suppose someone bought stock at a cheap price and later sold or hedged. It is unfair to cancel one trade but not the other.

This also illustrates the stupidity of using stop-loss orders. If you had a stop-loss order, you would have sold your shares at a lousy price. When the market tanked and then rebounded, your stop loss order would have been activated.

Instead of using stop-loss orders, you should sell some of your shares. Even better, you should sell stocks and buy gold/silver. You should take physical delivery of your metal. It was amusing to see gold skyrocket while the stock market tanked. Until Thursday, this year had been relatively favorable for stocks compared to gold.

How can one bad trade cause the entire market to decline? There are computer programs that assume stocks are correlated. P&G and Microsoft are both Dow members. This makes them somewhat correlated. When P&G tanked, computer algorithms automatically moved down other Dow stocks, assuming they're correlated. Once traders realized what was going on, they turned off their computer program and started buying.

I read another interesting quote. One trader said "We knew that some trades would be canceled. Therefore, we turned off our algorithm." That's one reason that all the offers in those stocks disappeared. Knowing trades would be canceled, market makers pulled all their quotes.

It was interesting to see some mainstream media writers say "This incident makes individuals question the wisdom of investing in the stock market." The best way to protect your savings is to buy gold/silver and take physical delivery. Also, if you didn't panic and sell, the anomaly didn't affect you.

Suppose a trader really did enter a huge sell order by mistake. Those trades are not sent out all at once as one huge order. One huge sell order would be obviously suspicious. The specialist on the NYSE would probably halt the stock if he saw a suspicious huge order. It would have been broken up into a bunch of small sell orders. Each order would not be suspicious, by itself.

This is now a common practice. Traders break up huge trades into tiny pieces. There are computer algorithms that look for someone else who is making a huge sell order in little pieces. They try to sell ahead of the algorithm, so they can buy back later at a better price. In this manner, one huge sell order could cause other computer algorithms to start selling.

Suppose one trader made a huge sell order by mistake. That trader is not solely to blame. The bank is supposed to have limits on each trader. Suppose a trader has a $10M limit. Then, the bank's computers are supposed to automatically cut him off if he makes a trade bigger than $10M, either as one trade or as a combination of trades.

The NYSE is supposed to close if there's a big drop in one day. However, the cutoff is 10%, and it was just barely not reached. There probably should also be a per-stock rule. I.e., if a stock drops by 5% in 5 minutes, automatically halt it for 10 minutes.

The NYSE has a per-stock circuit breaker. If a stock moves more than a certain amount in 30 seconds, electronic trading is temporarily suspended. The specialist manually picks the price of the next trade, and then electronic trading resumes. Since the price is chosen manually, it may take a minute or two for the specialist to place the trade. During this time, the NYSE publishes a "slow" quote.

When the NYSE is in "slow" mode, the fully electronic exchanges don't have to honor the NYSE's quote. They can trade at any price. If some program was pushing down the stock market, it would have completely ignored the NYSE, because the NYSE quote was in "slow" mode.

I didn't understand why the NASDAQ CEO was criticizing the NYSE for going into slow mode when the market suddenly tanked. The NYSE system was working exactly as intended. NASDAQ and the other exchanges will probably adopt a circuit-breaker system similar to the NYSE.

It seems that a error is responsible for the huge rapid drop. It probably was a combination of bad software, and a human error.

A lot of the trades will probably be canceled. That is potentially unfair. If you make a mistake, you should suffer the loss. If the policy is "such trades get canceled", then why would anyone bother to take proper precautions? I invested in Citigroup and Bank of America and lost money. How is that any different from a careless trader and lousy software?

Having a policy of canceling stupid trades encourages dishonest/incompetent behavior.

Regulators are saying "We can't figure out who was selling." That is nonsense. The exchanges have to keep track of the buyer and seller for each trade. They need that information to properly settle and clear the trade! It's a simple SQL query or Perl script to figure out "Who was selling during those 5 minutes."

It seems that regulators are covering up who was really selling when the market crashed. I don't believe that they can't figure it out. It probably was one bank or a small handful of banks responsible for the crash.

Thursday, May 6, 2010

Corporate Death Penalty

The BP oil spill caused some people to write about the corporate death penalty. This is almost never invoked.

If executives at a corporation commit egregious abuses, one rare punishment is to revoke the corporation's license. Its assets must then be sold. The sale proceeds are paid to the victims or back to shareholders.

The corporate death penalty is almost never invoked against a large corporation. The only example I can remember is Arthur Anderson. As a result of their criminal prosecution for accounting fraud at Enron, Arthur Anderson was barred from performing audits. This forced Arthur Anderson to shut down, even though their conviction was ultimately overturned on appeal. However, most Arthur Anderson partners merely moved to a competing firm, taking their clients with them.

Ironically, the corporate death penalty is sometimes invoked against small business owners and individuals. If you own a bar, State thugs may revoke your liquor license. That makes your bar worthless, even to sell, because the new owner would have to apply for a new liquor license, which takes years. When you sell a bar, you can usually simultaneously sell the liquor license. Liquor licenses are usually revoked for political reasons rather than legimate reasons.

Another example is for careers where you need a State license. For example, if a lawyer explains jury nullification over the objections of the judge, then the lawyer might lose his law license. This is a type of "corporate death penalty" against that lawyer's career.

Most commonly, corporations die only when they go bankrupt. Even then, most large corporations qualify for a bailout. Executives at a struggling business like Palm can usually negotiate a buyout by a larger corporation. Only severe accounting fraud is punished. Only severe rapid losses result in bankruptcy.

If an individual commits a crime, he goes to jail. For corporate crime, the executives usually have plausible deniability. Each executive made a reasonable decision from his point of view, but the overall result is evil. One "benefit" of a corporation is to allow evil, without anyone being responsible.

One solution is to punish executives is with fines and punitive damages. However, insiders successfully lobbied for "tort reform", limiting their liability. There was a $75M cap on damages for an oil spill. Vaccine manufacturers are absolutely immune from liability. There are caps on medical malpractice damages. In almost every industry, insiders lobbied for laws restricting damages. This encourages dishonest and negligent behavior.

To justify being protected from consequences, insiders developed a corrupt legal theory. Damages in a lawsuit should never be so large that the corporation is bankrupted. This justifies punitive damage caps. This is silly. If a penalty were so large that the corporation is bankrupted then the plaintiffs should become the new shareholders.

The corporate death penalty is one way to limit abuses by insiders. Unfortunately, it is almost never invoked. Insiders use a corrupt legal system to provide the illusion of justice, while they're protected from negative consequences when they're dishonest or negligent.

Wednesday, May 5, 2010

Greek Bailout

It appears that the Greek government is going to get bailed out by the rest of the EU. The bailout will be for 100B-120B euros, the equivalent of $132B-$158B.

It's a no-win situation for politicians in the EU.

If Greece defaults on its debt, then the banksters/insiders who own Greek debt lose money. The banksters took on no real risk when buying Greek debt. They borrowed from the EU central bank and bought Greek debt. They spent money lobbying to ensure a bailout. The banksters had enough connections to know a bailout was inevitable, when they bought Greek debt.

The solution seems to have three parts. First, the rest of the EU will lend Greece money. Second, Greece's government will cut spending and raise taxes. However, there's a limit to how much taxes can be raised and spending can be cut. State bureaucrats in Greece still have to get paid. Third, the EU central bank may directly monetize Greece's debt. They will print new money/euros to purchase Greek debt, driving down the interest rate Greece pays when borrowing and refinancing its debt.

Real interest rates are negative. Lending Greece's politicians money at a negative interest rate is logically equivalent to outright giving them money. The loan can be repaid with devalued money.

The cost of the bailout isn't free. Everyone else holding euros pays the cost via inflation. Why should someone living in Germany experience higher inflation, just so Greek politicians can get a bailout?

"Government debt is sacred and must be repaid!" is an important evil fnord. The benefits of deficit spending go to insiders, and not the average person. Government debt is sacred because most government debt is owned by banksters/insiders.

A long time ago, the banksters learned that loaning money to governments is much more profitable than lending to individuals. State violence and taxes guarantee repayment.

The interest rate on State debt is artificially low. As long as Greece can keep refinancing its debt, they'll be able to pay it off eventually. The loan is devalued via inflation. Perversely, negative real interest rates provided an incentive for Greece to borrow as much as they can. Negative real interest rates, plus the bailout, mean that Greek politicians profiting from borrowing, at the expense of other euro member countries.

The government, via the central bank, repurchases its own debt, keeping interest rates low. If an individual buys government debt, he will get ripped off by inflation. The banksters buy State debt because they borrow cheaply from the central bank and use high leverage.

The Greek bailout indicates a problem with multi-government fiat monetary systems. The USA has all its debts in its own money. For the euro, no single country controls it. If one country has high deficit spending, they are, in effect, stealing from the other member countries via inflation.

If Greece is bailed out, it isn't fair to people living in other euro member countries. One interesting solution is to give each euro member country a proportional check. I.e, if Greece is 5% of the EU, and they got a $100B bailout, then the other countries should get $1.9 trillion, divided proportionally. Of course, that would cause massive inflation. There's no fair way to regulate a fiat debt-based montary system. Every possible action has negative consequences. The people injured are usually non-insiders. Politicians usually adopt a policy of inflation.

The Greek bailout indicates a fundamental problem with multi-country fiat debt-based monetary systems. Deficit spending by one country robs the others. Greece used an accounting trick (via Goldman Sachs) to temporarily hide deficits. If you close one loophole, others are used instead.

As long as there is a fiat debt-based monetary system and legal tender laws, insiders will steal via the State monetary system.

Tuesday, May 4, 2010

Illegal/Unlicensed Immigration

I was watching "60 Minutes" to see the Conan O'Brien interview. Of course, they waited until the end of the show to air that part. There was an interesting story on "illegal immigration".

The story was about a canal on the border between Mexico and California, the All-American Canal. A lot of illegal immigrants died trying to cross that canal.

"The law banning illegal immigration is valid!" was an unstated hidden assumption. Instead, they were debating "Should safety features be installed on this canal, even though most of the people who die are illegal immigrants. Making the canal safer would merely facilitate illegal immigration."

That's a common State mind control trick. You debate Y, while X is taken as a hidden assumption. X is the real important issue. That really was a story advertising "illegal immigration", even though superficially they were talking about the canal.

There was one particularly offensive part. They interviewed a woman, whose husband died crossing the canal. He was an illegal immigrant. He got caught and deported. The way immigration law works, once you're caught as an illegal immigrant, you can never again reenter the country legally. He tried crossing the canal to get back in the USA, and drowned in the canal.

The interviewer said (paraphrasing) "He was committing a crime. He was trying to enter the country illegally." He implied "HAHAHA!! He deserved to die!" The woman agreed with the interviewer, rather than saying "Hey! Illegal immigration is a bad law!"

In the entire segment, they didn't interview anyone who said "The law banning unapproved immigration is bad." The segment was really a hidden advertisement for the State ban on illegal immigration.

Maybe people should call it "unlicensed immigration" or "unapproved immigration" rather than "illegal immigration". The phrase "illegal immigration" has as an unstated hidden assumption that certain types of immigration should be illegal.

"Illegal immigration" is one of those issues used to distract the clueless slaves. People blame illegal immigrants for declining real wages. They really should blame a corrupt economic system. Trillions of dollars a year are spend on direct and indirect bailouts. That's much more damaging than "illegal immigration".

I live in NY. It's perfectly legal for me to move to California and get a job there. Why is it illegal for someone to move from Mexico to California? National boundaries are arbitrary and created by the State.

Illegal immigration derives from the idea "People are property of their government." The leaders of various countries signed treaties, agreeing to respect each others' property. By banning/restricting immigration, State parasites agree to not compete with each other. Otherwise, the most skilled workers would move to the country with the most favorable laws. By banning/restricting immigration, it's easier for every country to have corrupt laws.

The more often that the State propaganda engine hypes an issue, the bigger a lie it is. For example, "Support the soldiers and police!" is repeated as often as possible. The issue of "illegal immigration" is also discussed as often as possible.

In a Communist society, there's a fixed pool of jobs due to the State. If you import workers, that drives down wages. In a really free market, adding workers doesn't decrease real wages, as long as each new worker performs work worth more than his wages.

However, most mainstream debate focuses on "What are we going to do about illegal immigration?", rather than questioning the validity of the law. Even Ron Paul says that the law banning illegal immigration is valid.

The current hype against illegal immigration is a stark contrast to the policy 100-150 years ago. The USA had an open immigration policy. Ambitious people who lacked opportunity in their home country would move to the USA. It was so bad that leaders in Europe were concerned about a "brain drain", as the best workers moved to the USA. The solution was to cripple the US economy. With the creation of the income tax and Federal Reserve, economic freedom in the USA was severely cut. The USA has much less economic freedom now, compared to before 1913.

In a really free market, there's a natural equilibrium. Workers will only move to an area if wages are greater there compared to their old home. In the present, then State immigration ban ruins this equilibrium. State restriction of the market makes it hard for new workers to start new businesses, creating the perception that extra workers drive down real wages.

In a really free market, there's no such thing as "illegal immigration". As long as you can find a job and someone willing to sell/rent a place to live, you can move. Smart workers looking for better jobs would naturally lead to an equilibrium.

I don't "own" my US citizenship in the same sense that I own a car or house. I can't move to another country and sell my right to live/work in the US to another person.

State parasites promote "illegal immigration" for two reasons. First, "illegal immigration" is a good issue to divide and conquer the masses. It creates a scapegoat for economic problems other than the real cause.

Second, "illegal immigration" is related to "people are the property of the government". State parasites made treaties to enforce immigration laws, because they agree to respect each others' property. Without illegal immigration, the best workers would move to the country with the most favorable laws. Then, State parasites in various countries would be competing with each other to offer the best working conditions.

There's no such thing as "illegal immigration" in a really free market. National boundaries are arbitrary and created by the State. It's silly that you get more or less opportunity based on where you are born.

Monday, May 3, 2010

Deepwater Horizon

You've almost definitely heard about this story. There was an accident at an offshore BP oil drilling rig in the Gulf of Mexico, near Louisiana. The name of the drilling rig was "Deepwater Horizon". Eleven workers are missing and presumed dead.

The well is leaking 5k+ barrels of oil per day. It hasn't been stopped yet.

Initial reports were "1k barrels of oil per day". That estimate has been raised to "5k barrels per day". It's amusing how State agents underreport the severity of a problem.

This story was really interesting. The amount of leaked oil might be 25k barrels per day, and not the current official estimate of 5k. The rate of leakage might be increasing. The gushing oil is probably eroding the pipes and equipment already there.

Oil trapped underground is sometimes under pressure. This creates the risk of a blowout or "gusher". That's what happened in this accident.

When people first started drilling for oil, blowouts/gushers were common. In the early 20th century, they started using safety plugs/valves to prevent blowouts. Superficially, a gusher seems good, because it means you found a lot of oil. However, a blowout wastes oil. It damages the drilling rig and equipment. It can injure employees. The spilled oil causes environmental damage, even on land. Oil drillers rapidly developed blowout prevention tools.

If there's a spill on land, only the area surrounding the well is contaminated, although the spill can reach the water table. A spill on water is much more dangerous, because a lot of coastline can be contaminated. Water carries the spill to a large area. It only takes a thin coating of oil to cause damage, killing fish/shrimp and wildlife/birds.

In some ways, the Deepwater Horizon spill is worse than an oil tanker spill. An oil tanker contains a fixed amount of oil. This blowout is spilling more oil every day. It hasn't officially reached "Exxon Valdez" levels yet, but it might before it is stopped.

There was one severe risk I read about. The oil is coming out under pressure. It also contains sand and rocks. The blowout is eroding the pipes and equipment already there. This could lead to an increase in the oil leakage rate over time.

There was one really offensive part of this accident. There was only one blowout cap. I heard different versions of this from different sources. One source said a second backup blowout cap could have been purchased for an additional $500k. Another source said that the blowout preventer should have had a remote-control shutoff feature. BP didn't want to spend the extra money. Such a cap is used in other countries. Some US companies use it, even though they aren't legally required. US regulations don't require this safety feature due to lobbying by corporations like BP.

This is the usual "captured regulators" problem. The oil drilling regulators answer to the interests of insiders, rather than recommending genuine best practices. They lobbied for a regulation that allowed them to cut corners. BP's liability is limited. Therefore, it might have made economic sense for them to cut corners on safety, even though they made a huge payout. The huge payout this year might be more than offset from extra profits in other years.

It's easy to say now that BP should have paid the extra $500k. If you compare the cost of an accident with the cost of the extra safety feature, it seems obvious. However, the extra $500k would be paid for every single well; it's still probably justified.

It was amusing to hear President Obama say "No new offshore drilling! (for awhile)" Oil industry insiders will wait a few years until people forget, and then lobby for more offshore drilling.

It was interesting to see the alternatives for dealing with the problem. That is hard, because the oil is under pressure. The oil is coming out with force, rather than merely leaking.

They are trying to close the malfunctioning safety valve, via remote-control underwater submarines. That isn't working. If that was going to work, they would have succeeded by now.

They are making a steel cap to cover the well. That will contain the oil so it can be pumped away. However, it will take a few weeks to make a steel cap. Why didn't they make one ahead of time?

They can drill a 2nd relief well into the original one. That would be used to pump dense mud into the ground, to stop the leak. It isn't used to directly relieve the pressure, although that's what the name sounds like.

One interesting solution is to bomb the ocean floor. The debris would cover up the leaking well. Why didn't they try that? The only drawback is that it's make the current well unusable.

Catching the oil after it leaks to the surface is the hardest way to do it. When oil comes into contact with water, it spreads out over the surface.

Also, State agents waited a few days before deploying containment booms. That makes it harder to contain the spill, because it's already spread.

The problem is that people have no choice but to rely on the government defense monopoly to clean up after the accident and stop the leak. It's very hard to tell if they're doing a brilliant job or barely competent job. Most likely, it's a barely competent job.

It's amusing that this is being referred to as "Obama's Katrina". When Bush was president, the Federal government did a lousy job after Hurricane Katrina. Now, with Obama as president, the Federal government did a lousy job after the oil spill. The common theme is not Democratic/Republican president. The real problem is that government does a lousy job, because it has a monopoly. Most low-level State employees are the same no matter who is President; they're the ones who do the actual work.

Is offshore drilling a bad idea? You can't conclude that from this incident. The real problem is that State law encourages negligent behavior. Just because BP executives did something stupid, doesn't mean everyone should be banned from drilling for oil offshore. BP will only be required to pay compensatory damages; punitive damages are capped.

Another interesting bit is the the oil underground is owned by the Federal government. BP's contract specifies a fee per barrel for oil drilled. Does BP have to pay for the oil they're spilling?

The Deepwater Horizon accident is an example of government endorsing dishonest behavior. The mainstream media portrays the government as heroes, because they're the ones trying to fix the problem they caused. This is an excellent example of "captured regulators".

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