Wednesday, November 7, 2012

Off the Cliff? From Freedom to Serfdom?

I wrote this post in response and in support of Karl Denningers post linked at the bottom of this page.  I rarely post directly to this site, but copy some stuff I put a lot of thought into writing.  As Blackie Sherrod, an old Dallas Sportswriters used to say, this is scattershooting at my best. 

Here is my two cents and I have been pretty good at figuring a lot of this stuff out over the years. Not how to fix it, because we are a mature society with a 2 year old mentality and fixing it would require it collapsing first. No one wants to give up their candy. A lot of us have a good idea how to fix it, but that requires breaking what is there. A good start would be ending a Federal program and firing all the associated workers each month. Spending cuts in DC means you are going to get a 6 ounce steak this year, a 7 ounce one next year, but we are going to cut it down to 6.8 ounces and grade up to 9 ounces instead of 10 ounces. The Democrats made up this bullshit during the first term of Reagan, when the press echoed the cruel spending cut rhetoric. The cruel spending cuts were merely a doubling over 8 years instead of 4 or whatever. If the rest of us could only be so lucky.

In any case, you should have never left tickercon 1 Karl. Hope everyone is short, because they have the ultimate fuck going on right now. NYC is on its ass. The liars are suddenly admitting that all of Europe is going in the ditch. A run over dog could have figured that one out a year ago. The US is being propped by layers of fraud. I wouldn't be shocked if that big AAPL trade wasn't a day trade. 1.5 million share, a $2 loss wipes out the capital. Settle at the end of the day. Get the toilet paper ready and hope the next open is up so you can get out. It is always a rogue trader who pulls what the internal control should make impossible. Bet it was an order from the top. AAPL always goes up doesn't it? The models are used because reason says they usually work. When they don't, the result is disasterous, because the whole boat is always full of outfits trading outside the rules with insufficient capital. They always fail to work at some point, usually when it is considered they always work. I recall skipping empty cheap champagne bottles across the parking lot as a kid. I dropped one at a party on carpet once and it broke like an egg.

The government spending component of GDP is bullshit and when it is deficit spending, even though there might be a time lag, the end component (x-i) shrinks on a net basis. If the USA wanted to solve their trade deficit, the first thing that would be required would be for banks to quit financing government deficits. Being a country saturated in debt, the deficit would disappear overnight. So would the Chinese economy, but they are likely our highest potential foe in the next big war, so why not. Things would get cheap too, wiping out leverage.

How do you fix the government and its finances? I'm not sure it is trashing welfare or unemployment insurance. It sure isn't propping prices or taxing the hell out of success, though I would consider raising taxes on rents and other financial gains, as the current structure serves to perpetuate the mathematical divide between possibility and impossibility. Large financial pools of stagnant capital, such as my family's rental properties, save on a grander scale collect rents out of the middle class and government and compound the returns into more rents. One way or another, the end gains on these investments are going to be altered downward. Capital gains? Index to inflation and raise the rate. No one should pay tax on what isn't a real gain, due to government and banker devaluation of money, but those that benefit from acquiring money ahead of the curve should pay a real tax, if we are going to have an income tax. Romney would have won the election had Bain paid a business tax instead of a capital gain tax that was totally derived out of speculation and favorable borrowing terms. He would likely have been much poorer and maybe not have ever been in the asset stripping business in the first place.

Romney was crucified by the idea to cut public TV subsidies. You have to start somewhere. If I was President, I would propose such a plan. Don't laugh until you think it out. Start with public TV. Next month, do away with something else. Each month go after something bigger. Maybe at a year or 18 months, close the department of education, giving states the time to either come up with their own programs or do nothing. Close the department of energy or put it on the fast track to do what Karl proposes with energy. They have been playing with their dicks up there for over 30 years now. Get rid of the DEA. I would get rid of the BATF as well and put what is necessary for both operations in the FBI. Might as well get rid of the SEC as well, as they do next to nothing, other than train evasion officers for Wall Street.

180 degrees from Obama, I would repeal any law that supported closed unions, where employees were forced to join. Think this multi-billion dollar slush fund didn't buy Obama the election? Unions are business enterprises that make their money out of extortion and crony politics. If a union is truly effective, people will pay their dues. Otherwise, the system is set up to unionize and enforce dues. Don't think for one minute the $700 billion Obama stimulus didn't go to protect and enhance union jobs. The GM rescue was nothing more than a $50 billion gift to the UAW. GM will be broke again.

The medical industry needs to be reformed and this starts with insurance coverage. Every insurance plan in the US, including the government ones presents nothing but a free pool of money to grab. More and more creative ways are found to grab the money, which is why the costs are out of control. I would start with making all insurance catestrophic, maybe $25,000 or $50,000 starting points. I would ban prescription plans, which I see as a front to scam the public. You only need go to Walgreens or CVS with your next cash prescription then go to Costco and see what kind of system we have. Criminal.

With a limit of $25,000 or $50,000 to be paid out, the insurance or plans for basic coverage could be styled as monthly expenses or for many people, they could merely do without and create a sinking fund. With most medicine unprotected, I think you would see a competitive system. We could see a return of the charity hospital system. If there were drug plans, I would set them up where there was a minimum $1500 deductible and insurance companies reimbursed the customers. There isn't much to setting up a plan that goes to an online account. The point being, the pharmacies don't need to know if you have insurance or not. You can bet there would be a more competitive pricing system and we wouldn't see the dual pricing we see today. These are observations from the outside looking in.

Lastly, KD grouped Libertarians in with Republicans and Democrats. The problem here is what appears in the Libertarian party aren't libertarians at all, but one or 2 topic people attracted by these causes. When someone joins a cause because they want to smoke dope, but they also want the government to enforce bullshit against other people, they aren't libertarian, they are potheads. When women vote Democratic because the government will mind their business for them, but they want privacy in other matters and want the government to mind their business, they are hypocrites. This is an anti-Libertarian stance. It takes a lot of education to become a true Libertarian, because we have had a lot of brainwashing all our lives to the contrary. True Libertarianism is a complex group of ideas, most Laissez Faire, but some redistributive if the benefits to an individual or group stemmed from an endowment from the State. Large land grants of various governments around the world were very anti-libertarian. Jefferson was likely one of the originals. Compound debt against productive people is the most anti-libertarian of all issues. Government ordering us around in our every day lives is another. The endowment of financial privileges is anti-libertarian and it is clear to me a bank charter in the current system is nothing more than a "Title of Nobility". Libertarian and political social fascism that prevails in the western world today are polar opposites of each other. If you ask the typical person on the street if they support fascism, they would feel insulted. But if they went to the polls yesterday, likely the voted to choose between 2 of them. There are several paths to take to get from point A to point B and we are stuck with a choice of paths, not destination.

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