Category Archives: Words Of Wisdom

From A Friend

GREAT QUOTES

In my many years I have come to a conclusion that one useless man is a shame, two is a law firm and three or more is a congress. — John Adams

If you don’t read the newspaper you are uninformed, if you do read the newspaper you are misinformed. — Mark Twain

Suppose you were an idiot. And suppose you were a member of Congress. But then I repeat myself. — Mark Twain

I contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle. — Winston Churchill

A government which robs Peter to pay Paul can always depend on the support of Paul. — George Bernard Shaw

A liberal is someone who feels a great debt to his fellow man, which debt he proposes to pay off with your money. — G. Gordon Liddy

Democracy must be something more than two wolves and a sheep voting on what to have for dinner. — James Bovard , Civil Libertarian (1994)

Foreign aid might be defined as a transfer of money from poor people in rich countries to rich people in poor countries. — Douglas Casey , Classmate of Bill Clinton at Georgetown University

Giving money and power to government is like giving whiskey and car keys to teenage boys. — P.J. O’Rourke , Civil Libertarian

Government is the great fiction, through which everybody endeavors to live at the expense of everybody else. — Frederic Bastiat , French economist(1801-1850)

Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it — Ronald Reagan (1986)

I don’t make jokes. I just watch the government and report the facts. — Will Rogers

If you think health care is expensive now, wait until you see what it costs when it’s free! — P.J. O’Rourke

In general, the art of government consists of taking as much money as possible from one party of the citizens to give to the other. — Voltaire (1764)

Just because you do not take an interest in politics doesn’t mean politics won’t take an interest in you! — Pericles (430 B.C.)

No man’s life, liberty, or property is safe while the legislature is in session. — Mark Twain (1866)

Talk is cheap…except when Congress does it. — Anonymous

The government is like a baby’s alimentary canal, with a happy appetite at one end and no responsibility at the other. — Ronald Reagan

The inherent vice of capitalism is the unequal sharing of the blessings. The inherent blessing of socialism is the equal sharing of misery. — Winston Churchill

The only difference between a tax man and a taxidermist is that the taxidermist leaves the skin. — Mark Twain

The ultimate result of shielding men from the effects of folly is to fill the world with fools. — Herbert Spencer , English Philosopher (1820-1903)

There is no distinctly Native American criminal class…save Congress. — Mark Twain

What this country needs are more unemployed politicians. — Edward Langley , Artist (1928-1995)

A government big enough to give you everything you want, is strong enough to take everything you have. — Thomas Jefferson

We hang the petty thieves and appoint the great ones to public office. — Aesop

FIVE SENTENCES TO LIVE BY

You cannot legislate the poor into prosperity by legislating the wealthy out of prosperity.

What one person receives without working for… another person must work for without receiving.

The government cannot give to anybody anything that the government does not first take from somebody else.

You cannot multiply wealth by dividing it.

When half of the people get the idea that they do not have to work, because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that is the beginning of the end of any nation!

Take A Memo

John Hussman this morning tweeted “Just time-stamping this chart for future generations”
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Amen.

This one needs to be saved, as well.

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Ding!

Jeremy Grantham’s 2250 is here. Now an “official” bubble.

Guess What?

Productivity improvement is highly correlated with investment.
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From John Hussman via Twitter

Failure To Thrive

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This chart is all you need to see to understand why the economy isn’t growing. Thanks to John Hussman.

It Does Not Compute

Jeremy Grantham’s discussion of the economic issues behind the immigration crises facing the world stunned me. Somewhat hypnotized by the religious and cultural issues, I simply had not realized the magnitude of the problem. Over to Jeremy:

The truth about immigration to the EU, in my view, is bitter. As covered in earlier quarterlies, I believe Africa and parts of the Near East are beginning to fail as civilized states.

■ They are failing under the pressure of populations that have multiplied by 5 to 10 times since I was born; climate for growing food that is deteriorating at an accelerating rate; degraded soils; insufficient unpolluted water; bad governance; and lack of infrastructure. Country after country is tilting into rolling failure.

■ This is producing in these failing states increasing numbers of desperate people, mainly young men, willing to risk money and their lives to attempt an entry into the EU.

■ For the best example of the non-compute intractability of this problem, consider Nigeria. It had 21 million people when I was born and now has 187 million. In a recent poll, 40% of Nigerians (75 million) said they would like to emigrate, mostly to the UK (population 64 million). Difficult. But the official UN estimate for Nigeria’s population in 2100 is over 800 million! (They still have a fertility rate of six children per woman.) Without discussing the likelihood of ever reaching 800 million, I suspect you will understand the problem at hand. Impossible.

To which you have to add the countries whose economic viability is based entirely on the sale of their energy reserves.

Rough Diamond

Not strictly financial, but Britain’s new foreign minister has a way with words. Some of his gems:

On Hillary Clinton’s candidacy in 2007:

“She’s got dyed blonde hair and pouty lips, and a steely blue stare, like a sadistic nurse in a mental hospital; and as I snap out of my trance I slap my forehead in astonishment. How can I possibly want Hillary? I mean, she represents, on the face of it, everything I came into politics to oppose: not just a general desire to raise taxes and nationalise things, but an all-round purse-lipped political correctness.”

On Islam in 2005:

“To any non-Muslim reader of the Koran, Islamophobia — fear of Islam — seems a natural reaction, and, indeed, exactly what that text is intended to provoke. Judged purely on its scripture — to say nothing of what is preached in the mosques — it is the most viciously sectarian of all religions in its heartlessness towards unbelievers.”

On the EU, in 2013:

First they make us pay in our taxes for Greek olive groves, many of which probably don’t exist. Then they say we can’t dip our bread in olive oil in restaurants. We didn’t join the Common Market – betraying the New Zealanders and their butter – in order to be told when, where and how we must eat the olive oil we have been forced to subsidize.”

On Tont Blair’s 2002 visit to Africa:

“What a relief it must be for Blair to get out of England. It is said that the Queen has come to love the Commonwealth, partly because it supplies her with regular cheering crowds of flag-waving piccaninnies … They say he is shortly off to the Congo. No doubt the AK47s will fall silent, and the pangas will stop their hacking of human flesh, and the tribal warriors will all break out in watermelon smiles to see the big white chief touch down in his big white British taxpayer-funded bird.”

A true fellow spirit to Winston Churchill, another master in the very British tradition of elegant vitriol.

Chicago and Illinois

Union-supported Democrats have ruled the roost in the city and state, Obama’s base, for many years. The cost of that union support is now coming due. Chicago’s so-called net pension liability to its Municipal Employees’ Annuity and Benefit Fund soared to $18.6 billion by the end of 2015 from $7.1 billion a year earlier, according to its annual report. The fund, one of Chicago’s four pensions, serves some 70,000 workers and retirees. The increase will add to what had been an unfunded liability estimated at $20 billion. These estimates are vastly optimistic because they continue to assume a level of portfolio return that simply isn’t going to happen, see John Hussman’s work. Obviously, there is no way the city can make up this shortfall, so unions are working to pass a bailout from Illinois state taxpayers through the legislature.

Illinois state workers are the highest paid in the nation, even ahead of California when adjusted for cost of living. Yet, despite the fact that Illinois is for all practical purposes insolvent, the AFSCME* union demands four-year raises ranging from 11.5 to 29 percent, overtime after 37.5 hours of work per week, five weeks of vacation and enhanced health care coverage.

AFSCME workers already get platinum healthcare benefits that would make nearly everyone in the country green with envy. Median AFSCME worker salaries increased more than 40 percent from 2005 to 2014, reaching more than $62,800. During that same period, median private-sector earnings in Illinois remained virtually flat. But they are still not satisfied. Now the union is working overtime to remove Gov. Bruce Rauner – who actually represents taxpayers’ interests – from labor contract negotiations. The union supports House Bill 580, which would strip the governor of his ability to negotiate. AFSCME wants the current contract dealings turned over to unelected arbitrators who are likelier to decide in the union’s favor.

See any problem here?

* AFSCME is the American Federation of State, County and Municipal Employees

Stick A Fork

John Hussman posted this on his Twitter account this morning:

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Demographics

Stanley Druckenmiller says: “This Is The Most Unsustainable Situation I Have Seen In My Career”

The disaster that Druckenmiller sees coming for the United States is all about changing demographics and entitlement spending. They don’t add up to a sustainable situation.

In 1940, entitlement payments, which include everything from disability payments to Social Security to Medicare, amounted to just over 20% of annual government spending in the United States.

Today, entitlement spending has swelled to nearly 70% of the annual federal budget.

Things are about to get a whole lot more complicated. The 20-year baby boom that took place after World War II is now beginning to result in a retiree boom.

For context, Druckenmiller points out that in 2030, the average age of an American citizen will be older than the average age of a resident of Florida today.

This demographic trend is going to create an entitlement spending catastrophe.

The way the system works, the current workforce provides the tax revenue to support the current senior population. A huge rise in the retiree population relative to the number of people working results in a funding dilemma.

Since 1980, the number of working-age people the country has had has outnumbered those age 65 and over by a count of 5-to 1.

The country has had enough workers generating tax revenue to support the number of retirees.

By 2030, that ratio is going to drop to 2.5-to-1.

By 2029, there will be 11,000 new seniors arriving every day and only 2,000 new adults being added to the workforce to pay for them.

There is just no way that the workforce at that time is going to be able to fund the entitlements of these seniors.

Of course, the demographic situation is much worse in Japan and Europe.

Japan is counting on robots to supplement humans. Europe is counting on Muslims. I don’t think the US government can count.

I’ll take the robots, please. Doesn’t help the problem of the unemployable, though.