Category Archives: Government

Inflation?

The increase in average hourly earnings (AHE) was taken as a sign of economic strength. Well, no. AHE is aggregate earnings divided by aggregate hours worked. So if hours worked is declining faster than earnings, AHE goes up. But is a sign of weakness. From ECRI.

In another case of up means down, the NOPE index is signalling trouble.

Economy On Fire?

CNBC says the economy is “on fire” after today’s establishment survey report of an increase of 201,000 jobs.

From the household survey in the same report, the number of people employed fell by 423,000. The labor force shrank by 469,000.

Pretty weird fire, if you ask me. Mostly just reflects the fact the these are random numbers and guesses.

Those Words Again

Fed Chairman Powell, speaking this morning at the Jackson Hole festival of central banker self-love, promised to do “whatever it takes” to prevent another financial crisis.

Unfortunately, Mr Powell, your predecessors have done everything that it takes to guarantee another crisis, a truly special one this time.

The New Gilded Age

The Gilded Age, roughly 1870-1900, was a period where abject poverty and fabulous wealth coexisted.

Unlike today’s New Gilded Age, the original was a period of rapid economic growth. Today, wealth has been concentrated in the hands of a tiny elite by the actions of the Fed, which have inflated asset prices.

I offer as evidence:

24Karat gilded chicken wings. Serving no purpose whatsoever except ostentation. (The gold is tasteless and passes unchanged through the digestive system).

Nashville Cats

Nashville voters just rejected a $5.2 billion transit spending plan.

Why on earth would you spend that kind of money on transit, which is ill-suited to an urban sprawl like Nashville, when autonomous vehicles are about to drastically change the face of urban travel?

Quite apart from the capital investment, public transit is very expensive to operate because it depends on public employees who are granted an effective monopoly over travel in the city. So they can charge what they like – and they like a lot. Just go look at the pay and benefits for BART employees.

Yes, there are situations like New York, London and other major cities where the city simply could not function without the subway. And that’s because the subway has its own right of way that adds valuable capacity. Buses don’t do a thing except clog up the roads.

Nashville voters had their reasons and I don’t know what they were, but they have dodged a bullet by avoiding investing in yesterday’s technology – that was anyway notoriously ineffective except in providing political contributions.

Voting With Their Feet

In 2017, Illinois lost a net 33,703 residents, the largest numerical population decline of any state.

“We could handle the cold, avoid the crime and pay the tax. But the government turned on us (property, income, sales, parking, red-light/speed cameras, bags, soda). Never-ending. Tired of paying for everyone else’s retirement before mine,” said one respondent.

I guess he hadn’t run into the vehicle impound program yet.
Per WSJ:

In the years to come, millions of people, thousands of businesses, and tens of billions of dollars of net income will flee high-tax blue states for low-tax red states…..

For years blue states have exported a third or more of their tax burden to residents of other states. In places like California, where the top income-tax rate exceeds 13%, that tax could be deducted on a federal return. Now that deduction for state and local taxes will be capped at $10,000 per family.

Consider what this means if you’re a high-income earner in Silicon Valley or Hollywood. The top tax rate that you actually pay just jumped from about 8.5% to 13%.

Of course, as the pain of lavish pension plans really starts to kick in, the tax burden will become greater still.

Chicago

Chicago is ground zero for the Obama/Clinton school of Democrat liberal politics. Chicago is Obama’s home town and current mayor Rahm Emanuel was his chief of staff.

So it should be a great place to live, right? Wrong.

No need to re-iterate the shootings, the disastrous finances, the corruption. It is just that, for sheer nastiness, it is hard to beat this.

Byrd had run afoul of Chicago’s aggressive vehicle impound program, which seizes cars and fines owners thousands of dollars for dozens of different offenses. The program impounds cars when the owner beats a criminal case or isn’t charged with a crime in the first place. It impounds cars even when the owner isn’t even driving, like when a child is borrowing a parent’s car.

This civil asset forfeiture idea, originally invented to strip drug dealers of their assets as part of the “War On Drugs,” is a massive abuse of the rights of innocent people. It is a good reminder of the fact that government is a parasite that sucks the blood from the rest of us. And yet people keep voting for more of it. Talk about the triumph of hope over experience.

Silver Tsunami

The title is the name that has been coined for the government pension crisis that is unfolding. I have discussed this at length for quite some time, so here is a collection of current articles.

San Francisco Chronicle

Investment Research Dynamics

New York Times

Wirepoints.com

 

Wag The Dog

As I have said many times before, I believe the biggest mistake the CFTC has ever made is the securitization of VIX. This decision has allowed VIX futures, options and ETFs, trading in any and all of which provides staggering leverage on the overall market. Here’s a piece which shows both how easy it is to manipulate VIX, and the effect of VIX manipulation on the overall market.

I’m watching this as I write, as the manipulators crush price discovery. Of course the eventual consequences of this will be catastrophic – the “Volgasm” of early February was just the fat lady clearing her throat.

The PhD Standard

James Grant (Grant’s Interest Rate Observer) in 2011:

“The 2007-2009 real estate debacle is the monetary equivalent of a chain reaction on a foggy California freeway. The trouble with our monetary mandarins is they [the Fed] believe impossible things. They have persuaded themselves that the central bank can pick the interest rate that will cause the GDP to grow, payrolls to expand, and prices to levitate by just two percent a year, as they measure it. It is impossible as experience and common sense attest. Yet, they hold it to be true.

… William F. Buckley famously and persuasively said that he would rather be governed by the first 400 names in the Boston phone directory than by the faculty of Harvard. Unaccountably, this Congress has entrusted the value of the dollar that we own, that we transact to an independent committee dominated by monetary scholars. In one short generation we have moved to the PhD standard from the gold standard.”

The insanity continues.