Category Archives: The Fisc


There is much noise that the Fed will raise interest rates to combat “inflation.”

Over the last year to the end of February, wages are up 2.8% (nominal). The price of oil, as a metric for energy prices, is up 32%.

Guess what is driving “inflation.”

The Saudis are still pumping as hard as they can, but justifying it on the grounds that they are storing the above-quota output, not selling it internationally. It seems to me that a tank in Saudi and a tank in Oklahoma are pretty much fungible, except that we at least think we know how much is in the Oklahoma tanks.

The bottom line is that global inventories of oil are continuing to expand to new records, more or less on a daily basis. The EIA is forecasting that US shale is set to expand production by 109k barrels from March to April, rising from 4.853mmbpd to 4.962mmbpd, and offsetting OPEC’s entire February production cut.

At some point we are going to see a reaction and that will be the end of “inflation.” For a while, anyway.

Socialism Is Good For You

If you need to lose weight, that is. Due to lack of food supply, Venezuelans have lost an average of 19lbs. over the last year. This despite having the largest proven oil reserves in the world.

California Government Pay

In case you were feeling that government employees in California were underpaid, here’s BART janitor Liang Zhao Zhang pulling down a mere $271,243 for 2015 (and a total of $705,000 in pay and benefits during the four years from 2012 to 2015.).

Check out some of his colleagues here.

Greece Again

Greece is back in the news. As a pretty much unbiased observer, a few points:

  • The IMF is right. Greece cannot pay its debts. Debt repayments come from surplus, profits in a sense. They’re not there, and they’re not coming.
  • Greece is a zombie. It needs a fresh start desperately, for humanitarian reasons if nothing else.
  • Apparently, there is no provision in the rules for a Eurozone member to go bankrupt. Therefore, the Eurozone rules need to be changed. It is foolish to believe that bad things don’t happen.
  • Germany has profited hugely from the Eurozone – on paper – but a lot of those profits are yet to be collected because they are in the form of unpaid debts.
  • Germany is, understandably, reluctant to write off any of those debts for fear that the whole racket will come apart, so it insists on the “nuclear option” of Grexit. As the French would say “Pour encourager les autres.”
  • Draghi is unwilling to take a leadership role in resolving the situation, because he knows that if Greece is given a less painful solution, then Italy is next in line. And Germany will be on the short end of the stick.
  • It is likely that nothing good will happen until Merkel and Schäuble are gone. The good news is that, because of the immigrant crisis, their departure from the scene is no longer unthinkable.


President Trump has made a lot of headlines with promises to “bring jobs back” and get people “off welfare and into jobs.”

Are these promises realistic? What will it take to get people who have left the labor force, or never entered it, working?

The first problem is the so-called welfare cliff. Research from the Illinois Policy Institute details the welfare cliff experienced by single-parent, two-children households and two-parent, two-children households in Cook, Lake and St. Clair counties, and the city of Chicago. This is just an example, there are many other such charts which vary in minor ways depending on location, family circumstances, etc.

The second problem is skills, or rather the lack of them. Picking on Chicago for the simple reason of consistency with the welfare cliff study above, we find that 37% of adults have low or limited literacy skills (level 1 or below on the PIAAC scale). This means 5th. grade skills or less – almost all can read a little, but not well enough to fill out an application, read a food label, or read a simple story to a child. On a national basis, the most recent data I could find shows about 25% for unemployed or out of labor force adults, 18% overall at level 1 or below.

This, of course, says nothing about job-related skills or numeracy. Nothing good, anyway.

Just bringing back jobs is not going to fix either of these problems.


So let’s see. Janet Yellen, at least as of yesterday, sees three or more interest rate increases in 2017 and wants the dollar higher. The Trump team, reportedly, will seek large cuts to government spending.

So… tighter monetary policy + tighter fiscal policy + unfavorable export pricing = market euphoria? Sorry, that equation doesn’t make sense.

And It’s Gone

Jack Ma points out that the US has wasted $14 trillion on wars.

Since the Vietnam war, more than 45 years ago, the US has embarked on a neocon strategy of war in an effort to build a global empire. The result of that strategy has left American infrastructure second rate, its school system in shambles, and its healthcare system a complete and utter joke.

Just imagine what America could’ve done with $14t of investable dollars, instead of waging wars.

Aside from the wars, America spends more than 50% of its discretionary budget on the military, per annum, 16% of its overall budget.

And the neocons are trying to stir up another one, with Russia. Why? For what? Wag The Dog? And that doesn’t even count the other futile wars, like the “War On Drugs.”

The War On Peace

The most dangerous enemies of peace and freedom are not the Chinese, the Russians or even the North Koreans, but the TLAs – the three-letter agencies of the U.S. government – such as the CIA, NSA, NRO, etc.

Edward Snowden did us all a huge service by publicizing their over-reach. These agencies spend enormous amounts of money on themselves with little or no oversight, much of which is concealed in “black” budgets. They are insulated from U.S. society, to the point that employees and their families are forced to cut their ties with non-employees and socialize only with their fellows (because secrecy). They work to foster conflict and fear in order to maintain their status and expand their reach – and, of course, their spending. Politicians fear the agencies, which know where the bodies are buried and which closets contain skeletons – as we recently saw when Chuck Schumer publicly warned Donald Trump not to cross them. There is a carrot as well as a stick, as the contractors who benefit from the spending make sure to keep money flowing into the politicians’ wallets.

These agencies form the core of the “deep state.” We should not be spending any time worrying about the Russians interfering in our elections. The real threat is much closer to home. It is past time to rein them in.

Pictures At An Exhibition

Sorry, Модест Петрович Мусоргский.




Welcome to 2017

Happy New Year. Well, probably not for a lot of people. Today is the first employment report of the year, and the bottom line is that the most optimistic view one could take from it is stagflation. The weakening employment trend does not support the bullish growth meme, especially as the “not in labor force” reaches a record 95.1 million. Adding back the “unemployed,” there are 102.6 million people not working – 0.675 for each employed person. Think about it.

Anyhow, the bubble lives on. US property prices are back to the previous bubble peak, and of course there are many other property bubbles around the world. The US stock market is by many measures the most over-valued in history. I could go on, but what’s the point. It will pop when it pops.

As previously explained in this blog, we are witnessing the death throes of liberal socialism. President-elect Trump is merely a symptom, as are the other “populist” political figures around the world. The liberal establishment that has benefited from the largesse is fighting back with every available weapon, but it is fated to be a losing battle. Que sera, sera.