Free Markets, Free People

Daily Archives: October 12, 2009


CA Bans Mail Order Ammo Sales

California Gov. Arnold Schwartzenegger did not sign, but did not veto, AB962, the Mail Order Ammo Ban.  Since California has no pocket veto, that means the bill becomes law without his signature.

This means that, as of 1 Feb 2011, all handgun ammunition sales in California will require a face-to-face transaction between buyer and seller, and sellers will have to obtain a thumbprint and other data from the buyer.


Are Islamic Radicals Sensing Weakness?

It is all fine and good to have a discussion and even a debate about future strategy in Afghanistan.  But probably not 6 months after you’ve announced your former strategy.   For some reason, dithering has a tendency to be interpreted as a weakness, not a strength.  In war, weaknesses are attacked and exploited.  And that may be exactly what we’re beginning to see:

Several thousand foreign fighters have poured into Afghanistan to bolster the Taliban insurgency, the country’s defense minister said yesterday as he called for more international troops.

The remarks come as the United States debates whether to substantially increase its forces in Afghanistan or to conduct a more limited campaign focused on targeting al-Qaeda figures – most of whom are believed to be in neighboring Pakistan.

The minister’s comments hit on a key worry of the United States – that not sending enough troops to Afghanistan will open the door again to al-Qaeda. They also suggest that the Afghan government is nervous about the U.S. commitment amid talk of changing the strategy and a surge in violence in recent months.

This isn’t a Senate debate where you can take whatever time you need and if it’s not finished by the nearest recess, you put it off until you come back. Wars can’t be tabled. A war continues with or without a decision made by either side. And, in many cases in history, wars have been lost because decisions were delayed or not made in a timely manner.

The fact that foreign fighters are pouring in now has to be viewed in a particular context. You can’t snap your finger and produce “foreign fighters” in Afghanistan. They have to be recruited, transported, trained and then gotten to A’stan. So for the enemy to have these fighters showing up now would indicate, at least to me, that they have sensed some form of weakness in the American committment (and make no mistake – there is no NATO Afghanistan mission without the US) and they have been able to sell recruits on the idea that they’re about to turn everything around there and win. And note this: the Taliban won’t have any esoteric conversations about whether or not running us off is a “victory” or just “success”. They’ll trumpet to the world that they kicked our butt while they then barbarically subdue, punish and seek revenge on anyone who worked with us. They don’t care how it happens – force of arms or us just pulling out – it is still a victory. And everyone likes to be on the winning side:

“The enemy has changed. Their number has increased,” the defense minister, Gen. Abdul Rahim Wardak, told lawmakers in a speech. He said that about 4,000 fighters, mostly from Chechnya, North Africa, and Pakistan, “have joined with them and they are involved in the fighting in Afghanistan.”

The longer the administration continues to dither, the easier it is for the radicals to sell their cause and claim the indecision by the administration indicates that, as they’ve always said, the US hasn’t the political will to finish much of anything that extends over a year or two.  Bush would actually be seen as the exception.

Unless and until a decision is made and made rather quickly, recruiting should be good for the radicals.

And of course, good recruiting for them means more losses among our troops. Sure we usually have a high ratio of Taliban kills to every soldier we lose, but that’s not the point. The point is indecision emboldens the enemy and that ends up killing our soldiers.

There is absolutely no reason that a decision could not be reached within a week or two. One of President Obama’s primary jobs is that Commander in Chief. It’s time he started acting like one.

~McQ


Cracks in the Edifice

For the most part, both the Fed and the Obama Administration have been publicly confident of a number of things. They’ve assured us that the bailouts and stimulus spending, along with the great monetary expansion we’ve had since last October, were necessary to stave off economic collapse.  They’ve also assured us that they have an end game for unwinding these policies when necessary.

But, Federal Reserve Bank of St. Louis President James Bullard is now warning that the negative results of the monetary expansion imposes more risk of inflation than generally believed.

I am concerned about a popular narrative in use today … that the output gap must be large since the recession is so severe … [and] any medium-term inflation threat is negligible, even in the face of extraordinarily accommodative monetary policy. I think this narrative overplays the output-gap story.

Take away Pres. Bullard’s Fed-speak, and what you have is a Federal Reserve bank president warning that the Fed’s accomodative policy runs a very real risk inflation when the economy picks up.  Naturally, to fight this ionflation, the Fed will need to raise interest rates.  With a doubling of the monetary base in the past year, that implies the possibility for raising rates quite substantially, which could strangle any nascent economic recovery in the cradle.

So, while Pres. Bullard also says that moderate economic growth for the end of the year is possible, we probably shouldn’t get our hopes up for a while.

Meanwhile, all of the extra dollars floating out there, combined with extremely large federal budget deficits for the next several years, is having an effect on the dollar.  Not only has the number of dollars vastly expanded, the deficits require greatly increased bond sales, which encumber the federal government with a long-term debt obligation that will be harder and harder to meet.  This is making the dollar…unattractive to heathen foreigners.  Not only in terms of dollar-denominated investments, but also in making the dollar fundamentally unattractive as  the world’s reserve currency. The rumblings about dumping dollar continue.

[T]he United Nations itself last week called for a new global reserve currency to end dollar supremacy, which had allowed the United States the “privilege” of building up a huge trade deficit.

UN undersecretary-general for economic and social affairs, Sha Zukang, said “important progress in managing imbalances can be made by reducing the (dollar) reserve currency country’s ‘privilege’ to run external deficits in order to provide international liquidity.”

Zukang was speaking at the annual meetings of the International Monetary Fund and World Bank, whose President Robert Zoellick recently warned that the United States should not “take for granted” the dollar’s role as preeminent global reserve currency.

You cannot simultaneously have your currency act as the global reserve currency while deflating the currency to uselessness by using foreign investment in dollars to maintain huge current account deficits.  The foreigners may talk funny, and have quaint ways, but they’re not big enough hayseeds to recognize who ultimately gets the short end of that deal if it continues.

Still, our government’s response has been heartening.

Following the summit, US Treasury Secretary Timothy Geithner repeated Washington’s commitment to a strong dollar.

At this point, I suspect that the international financial community takes this commitment as seriously as the attendees of the local junior college take my commitment to have sex with barely legal teen girls.  Actually, my commitment probably has a better chance of coming to fruition, since the international financial community doesn’t have “daddy issues”.

Meanwhile,  all of the teachers, cops, firemen, DMV workers, etc., who thought taking a relatively low-paying government job now in return for really good retirement benefits, may need to rethink that strategy.

The upheaval on Wall Street has deluged public pension systems with losses that government officials and consultants increasingly say are insurmountable unless pension managers fundamentally rethink how they pay out benefits or make money or both.

Within 15 years, public systems on average will have less half the money they need to pay pension benefits, according to an analysis by Pricewaterhouse Coopers. Other analysts say funding levels could hit that low within a decade.

After losing about $1 trillion in the markets, state and local governments are facing a devil’s choice: Either slash retirement benefits or pursue high-return investments that come with high risk.

In other words, start stocking up on Alpo for those hearty retirement meals, or hope that the pension fund’s investment in fur-bearing trout farms come through big-time.

But it’s not just government workers who may be looking at a bleak future.  The government’s actions since last October are also having unintended consequences on the domestic economy that affects all of us–although I should point out that these unintended consequences were entirely predictable.

The Fed’s policy of essentially free money means that household savers get no return at all on CD’s, T-bills, Money Markets, etc., while speculators can borrow money at no cost, and toss them at any speculative investment that promises any return at all.  So traditional savings are being gutted.

Excessive government borrowing is sucking the air out of the private credit markets.  While goverment borrowing is proceeding at a $1.9 trillion annual rate, private credit is collapsing.

Last year, banks provided new credit at the annual pace of $472.4 billion in the first quarter and $86.7 billion in the second. This year, on a net basis, they’re not providing any credit whatsoever. In fact, they’re actually liquidating loans at the rate of $857.2 billion in the first quarter and $931.3 billion in the second.

Ditto for mortgages. Last year, mortgages were being created at the annual clip of $522.5 billion and $124 billion in the first and second quarters, respectively. This year, they’ve been liquidated at an annual pace of $39.3 billion in the first quarter and $239.5 billion in the second.

This lack of credit means that businesses have been unable to expand or hire–or even maintain their workforce.  As a result, 7.2 million jobs have been lost in the last 21 months, compared to the 2.7 million jobs lost in the 30 months of the last recession.  The official unemployment rate of 9.8% hides the effect of discouraged job seekers, or the under-employed, which means the actual unemployment rate, as it was calculated prior to 1973 is 17%.  Shadow Government Statistics places the actual unemployment rate at an even worse 21%.

And now, after all the unintended consequences of our past actions, some in Congress are now calling for Stimulus II.  Apparently, Stimulus I did such a bang-up job, that they want to double down on two sixes.

Hop.  Hop.  Hop.

the United Nations itself last week called for a new global reserve currency to end dollar supremacy, which had allowed the United States the “privilege” of building up a huge trade deficit.

UN undersecretary-general for economic and social affairs, Sha Zukang, said “important progress in managing imbalances can be made by reducing the (dollar) reserve currency country’s ‘privilege’ to run external deficits in order to provide international liquidity.”

Zukang was speaking at the annual meetings of the International Monetary Fund and World Bank, whose President Robert Zoellick recently warned that the United States should not “take for granted” the dollar’s role as preeminent global reserve currency.


Still Not Getting It

Other than whistling-past-the-graveyard willful ignorance, how is it that the left and the media (yeah, I know, same thing) can still be so clueless when it comes to the Tea Party movement? The catalyst was the passage of the TARP bill last year, and the continued profligacy of government spending has served to fan the flames of these growing protests. Despite being deemed racist, ignorant, lunatic fringers who are nothing more than astroturfed loud-mouths bought and paid for by (take your pick) the GOP, the insurance industry, et al., the tea partiers have only become stronger and more noticeable. And although the message is excruciatingly simple (Taxed Enough Already), the left/media is still shocked to discover that this isn’t some devious plot to overthrow Obama and the Democrats that was orchestrated by Karl Rove:

While the energy of the anti-tax and anti-Big Government tea party movement may yet haunt Democrats in 2010, the first order of business appears to be remaking the Republican Party.

Whether it’s the loose confederation of Washington-oriented groups that have played an organizational role or the state-level activists who are channeling grass-roots anger into action back home, tea party forces are confronting the Republican establishment by backing insurgent conservatives and generating their own candidates — even if it means taking on GOP incumbents.

“We will be a headache for anyone who believes the Constitution of the United States … isn’t to be protected,” said Dick Armey, chairman of the anti-tax and limited government advocacy group FreedomWorks, which helped plan and promote the tea parties, town hall protests and the September ‘Taxpayer March’ in Washington. “If you can’t take it seriously, we will look for places of other employment for you.”

“We’re not a partisan organization, and I think many Republicans are disappointed we are not,” added Armey, a former GOP congressman.

In other words, it’s not the party, it’s the spending stupid.

However, for some the message is still not getting through:

The right-wing “Tea Party” activists are, obviously, deeply opposed to the Obama White House’s policies and the Democratic agenda in general. But Alex Isenstadt reports that they’re not especially pleased with the state of the Republican Party, either. Apparently, the Teabaggers think the GOP is too moderate…

Now, the notion of hostilities between right-wing activists and really right-wing activists is, to a certain extent, entertaining. State and local Republican parties are already pretty unhinged — pick a state GOP platform at random and read it — but that’s apparently insufficient.

But the part of this that’s really remarkable to me is the notion that the Republican Party of 2009 is just too darn reasonable and open to compromise with those sneaky Democrats, as far as this crowd is concerned.

Yes, the recovery-opposing, nominee-blocking, ACORN-hunting, Fox News-following, health care-rejecting, gay bashing, global warming-denying, scorched earth-raging Republican Party isn’t far enough to the right for the Teabggers.

Talk about misreading the Tea leaves. Benen misses the boat completely. He and his lefty adherents are convinced that the GOP started some fake grassroots campaign to take on Obama and the Democrats, stoked by racial fears of having a black man in the White House, and that the movement has now turned on them. But that was never the case. Instead, it was always about the runaway spending in Washington:

Tea party organizers say their resistance to Republican Party-backed primary candidates has much to do with what they perceive as the GOP’s stubborn insistence on embracing candidates who don’t abide by a small government, anti-tax conservative philosophy.

There it is in a nutshell. The people are tired of speaking out against runaway spending by Democrats just to get Republicans who do the same thing, only at a slightly slower pace. It’s the fundamental thinking in Washington that needs to change, not the letter behind the politician’s name.


0% Tolerance; 100% Nonsense

We’ve all heard the stories about students being suspended for bringing aspirin to school, etc., where administrators are tasked with enforcing a “zero tolerance” policy with respect to drugs, weapons, and the like. While being kicked out of school for a few days for bandying over-the-counter analgesics is bad enough, when kids who are otherwise good citizens are thrown into reform school you know things are really getting out of hand:

Zachary Christie is a six-year old student in Newark, Delaware who is facing 45 days in reform school because he brought his new Cub Scout eating utensil to school for lunch. The utensil includes a knife, and this violates the school’s brainlessly, robotically enforced zero-tolerance policy on “weapons on school property.”

I can sort of understand the school’s problem with Christie having a knife (although, if it isn’t a lock-blade, it’s use as a weapon is awfully questionable), but how on earth does that merit being sent to reform school? When I used to work with troubled kids in a alternative-education wilderness program (where most of the kids came to us through social services and/or the courts), they were allowed to have pocket knives, and these were the kids who were kicked out of every school they had ever attended. If they could be trusted with such a utensil, why is that a Cub Scout can’t have one?

If I were the kid’s parent, I would be looking to move as quickly as possible, because that sort of non-tolerance is simply intolerable.


Not Smart …

In terms of any sort of media strategy, I really don’t get this - the White House has chosen to take on Fox News as some sort of enemy of the administration?  Why?

Anita Dunn, communications director at White House had this to say on CNN’s “Reliable Sources”:

“If we went back a year ago to the fall of 2008, to the campaign, that was a time this country was in two wars that we had a financial collapse probably more significant than any financial collapse since the Great Depression. If you were a Fox News viewer in the fall election what you would have seen were that the biggest stories and the biggest threats facing America were a guy named Bill Ayers and a something called ACORN.”

Now I have to admit not remembering it that way at all. What I do remember is that Fox was about the only news channel who mentioned Ayers or covered the ACORN shenanigans.

However, the “biggest stories” she complains about were mostly covered by opinion shows like Hannity, not the news arm of Fox. And I don’t think that Hannity has ever claimed to be anything but a conservative commentator. Finally, it seems that other news organizations should have been following ACORN a little more closely, given recent events.

Dunn goes on:

“The reality of it is that Fox News often operates almost as either the research arm or the communications arm of the Republican Party. And it is not ideological… what I think is fair to say about Fox, and the way we view it, is that it is more of a wing of the Republican Party.”

“Obviously [the President] will go on Fox because he engages with ideological opponents. He has done that before and he will do it again… when he goes on Fox he understands he is not going on it as a news network at this point. He is going on it to debate the opposition.”

Translation: When he goes on Fox he’s likely to have journalists actually ask him hard and probing questions. When he goes on all the other networks, he expects softballs pitched by fawning sycophants. This explains why he avoided Fox when out doing his 5 Sunday show tour pitching health care.

“[Fox is] widely viewed as a part of the Republican Party: take their talking points and put them on the air, take their opposition research and put it on the air. And that’s fine. But let’s not pretend they’re a news organization like CNN is.”

This is simply stupid in terms of a strategy. You take on the most viewed cable news network, insult it, claim it’s not a news organization” and almost dare it to prove you wrong. Where could such an organization better prove itself than going after the White House? Sure, it might give Dunn and others more fodder for silly statements like those above, but it could also lead to some real problems if journalists actually get a bit mad about being characterized as shills for a political party. They may actually begin to dig for dirt, and as I’m watching this circus of an administration unfold, there is probably going to be a bunch of dirt to be dug.

I’m not sure what Dunn thought she’d accomplish with such statements, but they’re the type that can come back to haunt you. Smart people don’t purposely antagonize and insult news organizations. Sure they may feel exactly as she says they feel, but the only thing that happens when statements such as her’s are made public is to spur those who are insulted to prove her wrong. And one of the best ways to do that is to break some big stories that cast the administration in a bad light.

I suspect we can expect Fox to make such news a fairly big priority since the White House has declared war on it. You certainly can’t expect it from the other “news organizations” as they’ve all proven time and time again.

~McQ

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