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.

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.

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.

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.

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.

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.

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.