Julien’s Celebrity Auction Achieves Record Results

June 28, 2010 · Posted in Business · 1 Comment

This will be a little bit of an off-topic post.

The past five days I was busy in Las Vegas, supporting Julien’s Auctions run their live sales via JuliensLive.com, which is powered 100% by my company’s auction software which I conceptualized together with my business partners and which was implemented and is constantly being refined and improved by our brilliant and dedicated team of developers.

Among other things, Michael Jackson’s crystal glove sold for over $190,000, his Beat It jacket changed owners for over $130,000 and Marylin Monroe’s chest X-rays (!!) sold for over $45,000.

The sale was a huge success and has shown the world how well we are able to support live auctions in real time while people from all over the world participate and how superior our thin client bidding application is to comparable bidding applications that require people to install heavy plugins.

Here are some news articles about the sale.

Michael Jackson Glove Fetches $190,000 At Auction:

One of Michael Jackson’s crystal-studded gloves has fetched $190,000 at auction.

The glove, worn during the singer’s Victory Tour in 1984, was the star lot during the sale at Julien’s Auctions in Las Vegas.

Other items included a worn pair of Jackson’s loafers, which sold for $90,000. A stage jacket, expected to raise $6,000, sold for $120,000.

“It just shows you Michael Jackson is the most sought after and most collectible celebrity of all time. It was just phenomenal,” auction owner Darren Julien told the Las Vegas Review Journal..

“People flew in from Asia, Russia, all over. Now that he’s gone, we now realise the true legend we lost.”

The auction coincided with the first anniversary of the star’s death on June 25 last year.

Marilyn Monroe’s Chest X-Rays Sell for $45,000:

A set of three of Marilyn Monroe’s chest X-rays from 1954 have sold for $45,000 at a movie memorabilia auction in Las Vegas. The X-rays had a $3,000 pre-estimate before the Planet Hollywood auction took place.

The pictures of Monroe’s chest and pelvis were bought by two anonymous bidders at the event, which was presented by Julien’s Auctions. The frontal shot was bought for $25,000 by one bidder, while the pelvic and side chest shot were sold at $10,000 each to another bidder.

President and CEO of Julien’s Auctions, Darren Julien, said, “[the x-ray] was taken around the time she was believed to be pregnant and rumor has it that she had a miscarriage.” The x-ray was taken at the Cedars of Lebanon Hospital.

Other items that were sold included a chair from Monroe’s final photo shoot ($3,000), Kate Winslet’s earrings from Titanic ($25,000), Audrey Hepburn’s dress from Funny Face ($56,250) and Michael Jackson’s crystal-studded gloves ($190,000).

I recommend you take a look at the results yourself by browsing through them.

The next sale will be in October in Macau where among other things the black crystal glove will be sold which Michael Jackson was wearing at his wedding.

Tags: auction, juliens

Canadian Household Debt at Record Levels

June 22, 2010 · Posted in Global Economics · Comment

To follow up on my recent post about the socialist basket case that is the Canadian economy, here is an older, yet nonetheless relevant story when it comes to accurately understanding the inevitability of a US-style bank meltdown in Canada:

Canadians’ debt-to-income ratio now ranks first among 20-advanced countries in the OECD and a new study suggests the recession did little to dampen the country’s enthusiasm for taking on household debt.

The level of household income soared to an average of more than $40,000, according to a report from the Certified General Accountants Association of Canada.

“We were a little bit surprised that throughout the recession we continued to take on debt,” Rock Lefebvre, a vice president for CGA Canada, told CTV News Channel.

Household debt reached an all-time high of $1.41 trillion, according to the report. If spread out evenly among Canadians, every man, woman and child would owe $41,740 – more than two-and-a-half times greater than 20 years ago.

Lefebvre said Canadians used to save up to 20 per cent of their disposable income as recently as the 1980s but that number is now less than one per cent.

“Consumerism has taken hold (in Canada) and people who have access to credit, are taking advantage of it,” he said.

Lefebvre said some debt is necessary to stimulate the economy and fill the government’s coffers.

However, he noted bankruptcies were up significantly during 2009 and governments’ debts are on the rise.

“The question becomes at what point has society taken on too much debt?” Lefebvre asked.

Elena Jara of Credit Canada says many Canadians didn’t change their spending habits in spite of the recession.

“People have problems including certain expenditures in their budget or even creating a budget,” she told CTV News Channel.

People were telling me as a response to my last post that I was making things up and that my story lacks backup. I didn’t intend to write an elaborate analysis about the Canadian economy. If you are so interested in the details, then do your own research!

I am merely pointing out that what didn’t work in the US (namely a completely government controlled, politicized, and legislated banking system, subsidized loans on homes, and a central bank with a legal monopoly on creating money to buy up assets such as mortgage securities) ain’t gonna work north of the US or anywhere else for that matter either.

Anybody who tries to tell you that “It’s different here.” or “This time it’s different” because “the Canadian government regulates these things soooo much better blah blah blah” is repeating meaningless platitudes that he read in some newspaper paragraph or heard someone say somewhere on TV.

Government induced credit expansions and ensuing business cycles always lead to an inevitable crash and an unavoidable crisis.

This has been true since time immemorial, and it won’t change until people genuinely start caring about the world, their own lives, and their progeny’s future.

Tags: canada, canadian banking meltdown, canadian household debt

As G20 Prepare to Convene in Toronto, Canadian Government Boasts Over “Having Avoided Banking Crisis” – The Perfect Kickoff to the Canadian Meltdown

June 20, 2010 · Posted in Global Economics · 1 Comment

The AP, in its never ceasing quest for convincing people how good and necessary a bigger government is, writes Canada’s economy is suddenly the envy of the world:

Canada thinks it can teach the world a thing or two about dodging financial meltdowns.

The 20 world leaders at an economic summit in Toronto next weekend will find themselves in a country that has avoided a banking crisis where others have floundered, and whose economy grew at a 6.1 percent annual rate in the first three months of this year. The housing market is hot and three-quarters of the 400,000 jobs lost during the recession have been recovered.

World leaders have noticed: President Barack Obama says the U.S. should take note of Canada’s banking system, and Britain’s Treasury chief is looking to emulate the Ottawa way on cutting deficits.

The land of a thousand stereotypes — from Mounties and ice hockey to language wars and lousy weather — is feeling entitled to do a bit of crowing as it hosts the G-20 summit of wealthy and developing nations.

“We should be proud of the performance of our financial system during the crisis,” said Finance Minister Jim Flaherty in an interview with The Associated Press.

He recalled visiting China in 2007 and hearing suggestions “that the Canadian banks were perhaps boring and too risk-adverse. And when I was there two weeks ago some of my same counterparts were saying to me, ‘You have a very solid, stable banking system in Canada,’ and emphasizing that. There wasn’t anything about being sufficiently risk-oriented.”

The banks are stable because, in part, they’re more regulated. As the U.S. and Europe loosened regulations on their financial industries over the last 15 years, Canada refused to do so. The banks also aren’t as leveraged as their U.S. or European peers.

There was no mortgage meltdown or subprime crisis in Canada. Banks don’t package mortgages and sell them to the private market, so they need to be sure their borrowers can pay back the loans.

In Canada’s concentrated banking system, five major banks dominate the market and regulators know each of the top bank executives personally.

“Our banks were just better managed and we had better regulation,” says former Prime Minister Paul Martin, the man credited with killing off a massive government deficit in the 1990s when he was finance minister, leading to 12 straight years of budget surpluses.

“I was absolutely amazed at senior bankers in the United States and Europe who didn’t know the extent of the problem or they didn’t know that people in some far-flung division were doing these kinds of things. It’s just beyond belief,” he told the AP.

The Conservative Party government of Stephen Harper that took over from Martin’s Liberals in 2006 broadly stuck to his predecessor’s approach, though he cut taxes and, when recession struck, pumped stimulus money into the economy, with the result that Canada again has a large deficit.

But it is recovering from the recession faster than others, and although its deficit is currently at a record high, the International Monetary Fund expects Canada to be the only one of the seven major industrialized democracies to return to surplus by 2015.

This month Canada became the first among them to raise interest rates since the global financial crisis began.

George Osborne, Britain’s Treasury chief, has vowed to follow Canada’s example on deficit reduction.

“They brought together the best brains both inside and outside government to carry out a fundamental reassessment of the role of the state,” Osborne said in a speech.

It’s a remarkable turnaround from 1993, when the Liberals took office facing a $30 billion deficit. Moody’s downgraded Canada’s credit rating twice. About 36 percent of the government’s revenue went toward servicing debt.

“Our situation was dire. Canada was in a lot of trouble at that point,” Martin said. “If we were going to preserve our health care and our education system we had to do it.”

As finance minister, he slashed spending. A weak currency and a booming U.S. economy also helped Martin balance the books. In the 1998 budget the government estimated that about 55 percent of the deficit reduction came from economic growth and 35 percent from spending cuts.

“The rest of the world certainly thinks we’re the model to follow,” said Martin, who was prime minister from 2003 to 2006. “I’ve been asked by a lot of countries as to how to go about it.”

Don Drummond, Martin’s budget chief at the time, says the U.S. and Europe won’t have it that easy, because the economic climate was better in the late 1990s than it is now, with large trade gains and falling interest rates.

“There’s a lot to learn from Canada but their starting conditions are worse,” he said. “Even though we were on the precipice of a crisis we weren’t in as bad a shape as many of them are.”

Well, I’m sorry, but …

The soon to be popped Canadian housing bubble is in many ways a lot more severe than that in the US:

The Canadian banking system is in many ways even more nationalized and thus even worse than the US system.

Banks can sell their mortgage debts directly to the central bank!

This coming G20 convention may just be the perfect kickoff to the Canadian banking meltdown.

Enjoy the ride, folks!

P.S. Thanks to my friend G. from Chicago for sending me this AP article which, as we all know, clearly qualifies as perfectly entertaining horseshit :)

Tags: canadian banking meltdown, canadian banking system

China to Float Yuan More Freely – Roubini Predicts: Yuan Appreciation Against Dollar Unlikely – I Say: Yuan Has Already Begun Depreciating

June 19, 2010 · Posted in Monetary Economics · Comment

Reuters writes China forex move could thwart U.S. hopes – Roubini:

China’s decision to move away from its currency peg might mean the yuan weakens against the dollar instead of strengthens as Washington wants, Nouriel Roubini, one of Wall Street’s most closely followed economists, said on Saturday.

China said on Saturday it would gradually make the yuan more flexible after pegging it to the dollar for nearly two years, a move that the U.S. government and others around the world have long been calling for.

“This is the first significant signal in years of a change in Chinese currency policy,” Roubini, best known for having predicted the U.S. housing meltdown, told Reuters.

But it remains to be seen how China would put the new system into practice including the composition of a basket of currencies that Beijing will use as a reference point for the yuan — also known as the renminbi — and the base date for that basket, he said in an e-mail.

“Since they have not changed the previous range for the band — plus or minus 0.5 percent — most likely on Monday China will allow the renminbi vs U.S. dollar to move,” said Roubini.

The yuan has risen sharply in recent months against the euro, which sank over Europe’s debt problems, so a stronger yuan could not be taken for granted, he said.

If the euro were to continue to depreciate, “the renminbi would have to be allowed to depreciate relative to the dollar, a paradoxical outcome,” Roubini said.

His comments echoed those of an adviser to China’s central bank on Saturday.

Li Daokui, an academic adviser to the monetary policy committee of the People’s Bank of China, told Reuters in Beijing that the yuan could depreciate against the dollar if the euro falls sharply against the U.S. currency.

Roubini, like other analysts, said a major strengthening of the yuan looked unlikely.

“Even if the Chinese were to allow a gradual renminbi appreciation relative to the U.S. dollar, the size of such appreciation would be modest over the next year, not more than 3 or 4 percent as the trade surplus has shrunk, growth is likely to slow down on China and labor/employment unrest remains of concern to the Chinese.”

For more on this see my own predictions on this particular matter.

July 2009 – China Pegging Yuan to Dollar Again?

The stabilization of the Dollar against the Yuan has almost coincided the reversal of the Dollar’s fall against other major currencies. It thus appears as if, since mid 2008, the Yuan/Dollar peg has been reinstated and continues to be in place as these lines are written. What is also noteworthy is that the US current account deficit has been declining sharply since then.

A first look at the above chart leads one to believe that Chinese and US authorities aimed at putting an end to the fall of the Dollar, and thus intervened accordingly. However, another possibility which I would like to propose is that the Dollar had fundamentally and truly begun to stabilize at the level of RMB 6.83 at that point and was actually in for a major revaluation upwards. Thus the current intervention by Chinese authorities could actually be aiming at a stabilization of its own currency at a higher level than the market would mandate.

Some points fundamentally support the thesis that the dollar should gain in value against the major currencies:

- Global deleveraging is driving investors from other currencies back to the Dollar
- Deflation hitting the US first, and other countries only later
- Imports into the US are falling rapidly
- Significant domestic spending sprees by the Chinese government

All this may indicate that if the Chinese government were to let the Yuan float freely at some point, it may actually drop significantly against the US Dollar. Such an event could possibly be the ignition for a significant Dollar rally in the years to come.

The Reuters article is also in line with something I pointed out recently:

An interesting side effect of the Dollar rally is what’s happening to Chinese exports. Since its currency is pegged to the US Dollar, the Yuan is strengthening against the Euro which is hurting the powerful Chinese export lobbyists.
…
Bottom line: The supposed Yuan devaluation everyone seems to be expecting, were the Yuan to be freely floated, is simply not gonna happen!

Luckily, such predictions are testable. Let’s see how we are doing so far. Let’s observe the direction the Dollar has begun to take against the Yuan:

Let’s see if the trend holds up …

Tags: dollar, roubini, yuan

Past 8 Presidents Since 1970 ALL Promised Big Change on Energy Policy

June 17, 2010 · Posted in Government · 1 Comment

Here’s a beautiful display of the government’s complete and utter incapability to affect positive change, from yesterday’s Daily Show:

The Daily Show With Jon Stewart

Mon – Thurs 11p / 10c

An Energy-Independent Future

www.thedailyshow.com

Daily Show Full Episodes

Political Humor

Tea Party

This whole clip is funny and of course sad at the same time.

It’s of course completely predictable that when a government official promises big and positive change on the energy front, the exact opposite will happen, namely EVEN MORE dependence on foreign oil NOW compared to THEN. This is one of the very consistent threads you can observe when it comes to state propaganda and there’s no need to act surprised about such inevitabilities.

But what’s so tragically funny on top of all this is that you will continue to see people complain about these problems while at the same time running again and again to the government for solutions.

Look out for John Stuart sucking up to Al Gore yet again when he’s on his show next time, talking about how we need the government to solve our energy challenges and environmental problems and how “NOW’s the time!”.

This stuff is unfortunately a bit too serious in my opinion to continue to mess around with it. This oil spill along with all the corollary problems that pertain to the US’ energy dependence was and continues to be brought to you by Uncle Sam, until you realize that you need to walk away from this abusive Uncle, and look for serious solutions.

Tags: energy independence

Human Rights in Relation to Ethics, Morality & Aesthetics

June 15, 2010 · Posted in Philosophy · 3 Comments

I want to set something straight for future reference.

Ethics, as I explained before, is the process of examining the logical consistency (validity) and the empirical proof (accuracy) of statements regarding universally preferable human behavior.

If a statement about preferable human behavior cannot be logically universalized it automatically fails the test of validity and can be discarded easily. For example, the proposition “Theft is universally preferable.” faces a rather insurmountable logical contradiction. If it was universally preferable to steal things from others, then that would mean that, in order for the victim to be in compliance with this theory, he would need to prefer non-ownership to ownership. But the thief only steals something in order to obtain ownership over that thing. But then ownership would have to be both valid and invalid at the same time, valid for the thief and invalid for the victim. But then theft cannot be universally preferable, since it can’t be applied to all humans at all times and at all places.

The issue of rights falls right into the realm of ethics, in particular morality, that subset of ethics that deals with logically consistent universal rules involving the use of violence.

In common debates, the term is used all too often without any clear conceptualization behind it. The most helpful and most consistent way to define a right is, in my opinion, only this:

A right is a universally defensible claim.

For example, when I say “Everyone has a right to his body.”, then what I am really saying is: “Everyone has a universally defensible claim to his own body.” And what I am really saying with that is: “It is a logically consistent proposition to say that all humans at all places at all times may violently assert their ownership over their own bodies when aggressed against.”

This is a logically consistent and thus a completely valid proposition. It faces no inner contradictions.

This works in exactly the same way with the proposition “I have a right to my property.”

In this manner we can also easily test propositions such as “Healthcare is a fundamental human right”. This proposition would more precisely read “Every sick human has a right to another human’s resources to heal his own illness.” This could be translated into: “Every sick human has a universally defensible claim to another human’s resources to heal his own illness.” or “Every sick human may violently and universally assert his claim to another human’s resources to heal his own illness.”

This proposition faces several severe challenges:

By introducing the word “sick”, one has left the realm of universality. To say that “only a sick human being has a universally defensible claim …” is an inherently contradictory statement. The criterion for universality is that it apply to all humans at all times and at all places, not just to certain humans with certain conditions.
Another problem is that we have already proven above that every human being has a right to his property and in particular to his body. Even if introducing the term “sick” was valid, the above proposition breaks down because it is logically inconsistent to say that a person has a right to his body and his property but another person simultaneously has a right to this same person’s body or property. So in order to proceed on the proposition at hand, one would first need to disprove the validity of the, so far, valid theorem of self-ownership and property rights.
Another possibility would be to remove the term “sick” from the proposition in order to rescue its universality. But the problem with this would be that the proposition would read “Every human being has a universally defensible claim to another’s owned goods and body parts.” This proposition, however, is equivalent to the one of theft, which suffers from inner logical contradictions. If one had a claim over another’s property or body that may be violently asserted, then he would never have a defensible claim to the obtained goods. But the very objective of such an action would be the assertion of such a claim. Thus the proposition is invalid.

To be sure, the moral invalidity of such a violently asserted right to health care in no way discourages from the validity of other potential ethical propositions, in particular in the field of aesthetics, which deals with propositions involving non-violent behavior such as, “It is universally preferable to help suffering people in need.”

It is just important to understand that rights are fundamentally a concept that falls in the realm of morality, meaning that of universally preferable behavior involving violence, not in the realm of aesthetics, which deals with all other universally preferable behavior propositions.

Tags: aesthetics, ethics, human rights, morality, rights

Obama’s Deficit Reduction Commission Needs More Deficits in Order to Stay in Operation

June 14, 2010 · Posted in Government · Comment

Hotair notes Deficit commission out of money?

Today’s Someone Left the Irony On Award goes to the National Commission on Fiscal Responsibility and Reform, better known as the Deficit Commission. Barack Obama created the panel ostensibly to reach some kind of bipartisan consensus on reducing the federal deficit; a better title may have been the Accountability Avoidance Commission, since it owes its existence to the need for Obama to avoid political blame for the massive tax hikes he needs to fund his nanny-state agenda. Even before they get to that stage, however, they have already proven that government naturally inclines towards unthinking growth and irresponsibility, as the Tax Prof discovered at Tax Analysts:

Saddled with a tight deadline and great expectations, members of President Obama’s deficit reduction commission say they may not have the resources necessary to meet their task.

The National Commission on Fiscal Responsibility and Reform, which the president created through an executive order in February, is charged with developing a plan by December 1 that would stabilize the budget deficit by 2015 and reduce the federal debt over the long term. The group is widely expected to consider a combination of tax reforms and spending cuts.

But despite the weighty demands, the panel has only a fraction of the staff and budget of standing congressional committees. The panel’s own cochairs and Senate Majority Leader Harry Reid, D-Nev., have criticized the meager resources and called for more support. …

According to fiscal commission staffers, there are 10 to 15 people who work for the commission, including two full-time employees, interns, employees “borrowed” from other agencies such as the Office of Management and Budget and the Treasury Department, and special government employees, who are expected to work no more than 130 days in a calendar year. The number of workers will likely grow to around 20 by midsummer.

The White House has set aside the resources to provide the equivalent of four full-time salaries and $500,000 in operating costs for the commission, fiscal commission Executive Director Bruce Reed told Tax Analysts.

The commission has as many as 15 employees, two full-time, for their work. Congress has allocated $500,000 in operating costs apart from the four full-time employees for the life of the panel, which produces its report on December 1. That is about $50,000 per month to analyze the federal budget and develop proposals for cuts, based on having an unpaid commission full of supposed experts in this field. I ran a call center of 45 people with a budget just over four times that much, which included the salaries and a lot of costs that the Deficit Commission won’t have to address, such as phone lines, rent, capital depreciation, and so on.

This is a microcosm of the very problem that the commission is supposed to fix, and the reaction from Washington pols is priceless for understanding it. The gripe from Harry Reid is that the staffing doesn’t match that of Congressional panels, such as the House Ways and Means Committee. That panel employs 90 staffers and spent over $8 million in FY2009. Ninety staffers equals more than 20% of the entire Congress. Maybe the problem isn’t that the NCFRR doesn’t have enough people, but that Ways and Means spends way beyond our means. In fact, the entire federal government spends way beyond our means, and we can thank the Democrats who added over a trillion dollars in annual federal spending in just three short years for that, increasing the budget by 40% during their control of Congress.

Meanwhile, let’s just savor the irony of a deficit commission that couldn’t get halfway to its goal without running its own deficits.

Earlier this year I already posted another absurdity in regards to the then to be Congressional task force:

This task force will have plenty of time to sit around and do nothing while the taxpayer will continue to be pillaged. In the end, all I expect them to come up with is some superficial and immaterial spending reductions (to make it look good), and massive tax increases.

The highlighted part above is actually quite funny: Over the past 100 years there have been two parties in Congress that continuously ran up government spending and deficits. In particular over the past 10 years the Republican Bush administration ran up until then never before seen deficits. Then the Democratic Obama administration picked up on that an ran up even higher deficits.

Now, the solution to the problem is supposed to be a bipartisan task force, comprised of Republicans and Democrats to solve the structural deficits brought about be Republicans and Democrats.

If one is capable of understanding the hypocrisy behind these policies, the following is of course completely predictable and unsurprising:

First, however, the plan would have to pass the Senate on Tuesday, where a vote has already been scheduled. Moderate Democrats want to attach the deficit task force plan to legislation to permit the government to continue borrowing money to pay for its operations.

Ladies and gentlemen, I give you … the Government of the United States!

Ladies and Gents … just when you were worried the President’s own commission couldn’t match such hypocrisy, here they are, not only matching it, but stepping it up, always ready to deliver on my unceasing expectations of complete and unconditional lunacy! Applause!!

Tags: deficit reduction commission

NY Municipalities Borrow Money from Pension Fund in Order to Contribute … to That Pension Fund

June 13, 2010 · Posted in Government · 1 Comment

The New York Times writes:

Gov. David A. Paterson and legislative leaders have tentatively agreed to allow the state and municipalities to borrow nearly $6 billion to help them make their required annual payments to the state pension fund.

And, in classic budgetary sleight-of-hand, they will borrow the money to make the payments to the pension fund — from the same pension fund.

… mmmmmh the sweet taste of utterly deranged insanity. You gotta love it … :)

Tags: new york, state pensions

Hayek’s Road to Serfdom Now #1 on Amazon

June 9, 2010 · Posted in General Economics · Comment

I myself have not read this particular book of his, but it’s always great to see people join us on the path to understanding real economics! I have read many books written by Hayek’s most influential teacher Mises and books by other fellow Mises disciples, such as Rothbard, so I feel safe recommending this one.

This is Amazon’s review:

An unimpeachable classic work in political philosophy, intellectual and cultural history, and economics, The Road to Serfdom has inspired and infuriated politicians, scholars, and general readers for half a century. Originally published in 1944—when Eleanor Roosevelt supported the efforts of Stalin, and Albert Einstein subscribed lock, stock, and barrel to the socialist program—The Road to Serfdom was seen as heretical for its passionate warning against the dangers of state control over the means of production. For F. A. Hayek, the collectivist idea of empowering government with increasing economic control would lead not to a utopia but to the horrors of Nazi Germany and Fascist Italy.

First published by the University of Chicago Press on September 18, 1944, The Road to Serfdom garnered immediate, widespread attention. The first printing of 2,000 copies was exhausted instantly, and within six months more than 30,000 books were sold. In April 1945, Reader’s Digest published a condensed version of the book, and soon thereafter the Book-of-the-Month Club distributed this edition to more than 600,000 readers. A perennial best seller, the book has sold 400,000 copies in the United States alone and has been translated into more than twenty languages, along the way becoming one of the most important and influential books of the century.

With this new edition, The Road to Serfdom takes its place in the series The Collected Works of F. A. Hayek. The volume includes a foreword by series editor and leading Hayek scholar Bruce Caldwell explaining the book’s origins and publishing history and assessing common misinterpretations of Hayek’s thought. Caldwell has also standardized and corrected Hayek’s references and added helpful new explanatory notes. Supplemented with an appendix of related materials ranging from prepublication reports on the initial manuscript to forewords to earlier editions by John Chamberlain, Milton Friedman, and Hayek himself, this new edition of The Road to Serfdom will be the definitive version of Friedrich Hayek’s enduring masterwork.

Tags: hayek, road to serfdom

Paul Krugman, You Need Help!

June 8, 2010 · Posted in General Economics · Comment

Here is a nice takedown of Chief Keynesian Clown Paul K. written by Mish today:

Krugman’s Magic Mirror

Clearly one of us is wrong. But whom? Perhaps this image can help.

Throwing money at problems never works in the long run.

Japan tried that and now has debt to GDP of 200%. Because of its aging demographics, Japan is in serious trouble as soon as interest rates rise. Japan will not be able to finance its monstrous debt nor will it be able to grow its way out of the problem. Such is the nature of compound interest and unsustainable levels of debt.

Likewise, the US tried to spend its way out of the 2000-2001 recession.

Greenspan’s policies seemed to work, but it was nothing but an illusion. The real economy was taking a nosedive even as financial assets soared. It was a nice party, as all Keynesian parties are, but in the final analysis all Greenspan and Bernanke accomplished was to dig the deepest debt hole mankind has ever seen. The housing and debt implosion of 2007-2008 was the direct result.

Now Paul Krugman thinks it’s too early to shut off stimulus.

Hello Paul!

It will always be too early for you. There is no recovery nor will there ever be a recovery until there is genuine demand for goods and services at prices set by the free market not the government.

When the problem is debt, going deeper in debt cannot possibly be the solution.

Yes, Paul, we lost a decade. Yes, Paul, we are going to lose another, not because we failed to follow your recommendations, but precisely because we did!

We had a chance to write off the debt and to let the insolvent banks go under. Instead we wasted over a trillion dollars bailing out banks that still are not lending (and wisely will not lend) because we never purged the debts that needed to be purged nor did we reduce rampant overcapacity.

We could have and should have forced the bondholders of Citigroup and Fannie Mae to take a hit. Instead, taxpayers who cannot possibly afford it, bailed out wealthy bondholders.

In addition, we tried all sorts of Keynesian nonsense like cash-for-clunkers and an$8,000 tax credits for houses. As soon as the tax credit expired housing went in the gutter. It is about to do so for the second time.

Bernanke will not know what hit him even though it is point blank foolish to stimulate housing when there is an ocean of housing oversupply already.

By the way, how many roads can you pave? We paved roads in our area that did not even need to be paved. Now fooking what?

This is exactly the mistake Japan made. Yet you want to repeat it with more absurd makeshift work.

The stimulus money is nearly out and you want more. You will always want more for the simple reason there is no real demand for goods and services, only an illusion of a recovery that comes from passing out “free money”.

When you look in a mirror you see the illusion, what you should see is a Keynesian warthog. Substitute the words “Keynesian Economics” for “Real Economy” on that hag, and the picture is perfect.

As Europe found out, the will and the means to pass out “free money” is 100% guaranteed to end before a lasting recovery can take hold.

That dear Paul, whether you like it or not, is the mechanics of peak debt, compound interest, global wage arbitrage, and something you desperately need to learn: Austrian economics.

Recommended Reading List

Paul, you need help. I suggest a few books on my recommended reading list.

Economics in One Lesson: The Shortest and Surest Way to Understand Basic Economics by Henry Hazlit

Economics for Real People by Gene Callahan

What Has Government Done to Our Money? and The Case for a 100 Percent Gold Dollar by Murray N. Rothbard