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Tuesday, November 27, 2012

Professor Robert Paquette Takes On PC U

Posted on 1:39 AM by Unknown
Professor Robert Paquette, an esteemed historian who courageously suffers Hamilton College's political correctness, has posted on the unsustainability of the United States  as evidenced at Hamilton.  Like most American colleges and universities, Hamilton advocates environmentalist ideologies that benefit American investment-and-commercial banks; it happens that senior officials of Goldman Sachs are on Hamilton's Board of Trustees, and it was the Goldman Sachs trustees who pushed Hamilton toward sustainabilty indoctrination. 

Paquette points out that universities seek grant money from the same investment banks that have benefited from Bush-and-Obama socialism.  Politically correct, green university students are eager to work on Wall Street, while most are eager to condemn Charles Koch.

Paquette and I were lucky enough to hear Charles Koch speak, and I was impressed.  At a time when academics were extolling Enron, Paul Krugman was collecting honoraria from Enron, Harvard Business School was selling case studies advancing Enron's philosophy, and Fortune was naming Enron the most creative firm, Koch rejected the advice of executives he had hired from Enron.  He suggested that he had found their ideas to have been absurd, yet these were the ideas the American business academy had considered the nation's most creative.  Koch is now the fourth-richest American, and Enron's former supporters now attack Koch because he does not adhere to their ideology, an ideology that was entirely consistent with the views of Jeffrey Skilling and Andrew Fastow.

Paquette makes the following point:


(T)hose who graduate (from Hamilton), precisely because of the deficiencies and one-sidedness of their education, will prove defenseless in articulating a thoughtful response to the caricatures of American and Western history that now pass as gospel as precincts of the cultural left capture ever more ground inside and outside the academy. 

Paquette emphasizes that American history is neglected--even among history majors. This is an understatement, for even if American history were required, it would be taught in an ideologically slanted, uninformed way.  Frederick Jackson Turner's nonsensical frontier thesis is presented as fact in Mickey Mouse history classes while ideologues in academic garb ignore T.S. Ashton's reasoned assessments of the industrial revolution.

Worse, American universities are purveyors of illiteracy.  At Hamilton, which is an elite college, the students have been adequately prepared at the primary and secondary levels.  In contrast, at public universities the students have been indoctrinated in public schools from their early years, but they have not been taught to read, write, or do basic mathematics.  Academics are uninterested in teaching their half-literate students how to read, write, or do basic math because it is much more fun to indoctrinate them than to educate them.  

Still worse, New York's public education system, and the American university system, are not just purveyors of ignorance, illiteracy and lack of historical knowledge.  They are purveyors, along with its inventor--The New York Times--of holocaust denial.My students have never heard of the differences between Hamilton and Jefferson, but they also have never heard of the Gulag Archipelago, and they have never heard of the twentieth century's socialist mass murders.   Their education has been silent with respect to the vicious bloodshed that the ideas of the academic left have caused, for they are taught that workers who voluntarily immigrated here are victims of the worst harm and discrimination in history.

Let us conclude with some certainty:  American universities are a load of crap. They are purveyors of illiteracy, ignorance, and holcaust denial.

 To see the history and origins of political correctness and its link to Wall Street, turn to the history of investment banking and George Peabody.  Peabody was one of the earliest American international investment bankers, but his success at first was as a Baltimore merchant. After some success selling State of Maryland bonds, Peabody sold railroad bonds. Since the best market was in London, he moved and spent his mature years there. 

On one of a handful of return trips to the United States from his home in London, when Peabody was already a famous philanthropist, he counseled another Baltimore merchant, Johns Hopkins, on how to establish a university.   Johns Hopkins University relied on the Peabody Library for decades.  Prior to his death, Peabody invited a partner, J.S. Morgan, to join his firm.  J.P. Morgan, J.S.'s son, was a student at a German university and, in effect, worked as an intern at Peabody's firm. Peabody supported J.P. Morgan during his early business career.  

After his death, at Peabody's request, the Peabody firm's name was changed to Morgan Grenfell.  J.P. Morgan did not graduate college, but his son, J.P. Morgan Jr., graduated from Harvard in 1886.   Morgan Sr. donated generously to the Harvard Medical School, whose transformation can be viewed as the most important historical step toward the modern university.  Abraham Flexner's 1912 report on medical schools, which extolled the Johns Hopkins Medical School, established the Johns Hopkins model (which Harvard followed) as the basis not only of medical education, but of modern American education and the modern American research university.  In effect, two Peabody pupils provided financing for the transformation of the religious American colleges of the nineteenth century into the modern university.  The money trail extends further, for the Carnegie fortune, which was the source of the Carnegie Foundation's funding for Flexner's report, was crystallized through J.P. Morgan's acquisition of Carnegie Steel, and his creation of the steel trust--U.S. Steel.  The university was linked to Progressivism and Wall Street from its beginning.   Today, buildings at Harvard include the Peabody Museum (there is also one at Yale), Morgan Hall (Harvard Business School), Mellon Hall (Harvard Business School), Rockefeller Hall, and Lehman Hall.  
  


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Posted in charles koch, goldman sachs, hamilton college, harvard university, peabody museum, robert paquette | No comments

Thursday, November 22, 2012

Trading Skyrockets My Retirement Account to New High

Posted on 1:19 AM by Unknown
I had gotten out of the market in the weeks before election day.  During the week following the election, the market plummeted by six or seven percent.  There was one day of a huge drop and a few days of big but smaller drops.  I got back in the day before the final drop.  Since then the market has come back.  My retirement account is at an all-time high, while my two stock accounts are near their highs.  My high-dividend stocks, which have low beta or risk, were badly socked in my bokerage account, but they have come back dramatically in the past few days.  I'm hoping for a 20 percent increase in the stock market in the coming year.  If it reaches something in that area I will pull out again.  As I blogged earlier this evening, the mining stocks will probably be sluggish for a while longer, but they are good buys now.
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Wednesday, November 21, 2012

Flies in the Molten Nickel: Mining Stock Prices = K / QE

Posted on 10:20 PM by Unknown
After college in the 1970s,  my first job in the actuarial department of a small insurance company lasted about seven months, after which I worked in the employee benefits department of Inco Ltd., then the capitalist world's largest miner of nickel (Inco was an acronym for International Nickel Company).  Founded by JP Morgan as the nickel trust, and formerly one of the 30 Dow Jones industrials, Inco was  a sleepy, old firm on a 1950s model.  It was not a global monopoly because the Soviet Union controlled a large share of  the world's nickel, but Inco was considered a monopoly of the free world's nickel supply.  Its chief competitor, Falconbridge, was one fourth its size. The monopoly picture changed during the 1970s when third world producers received government subsidies and forced significant downsizing at Inco.  Inco suffered a strike in the late 1970s, and I recall calculating pension benefits for hundreds of miners taking early retirement rather than layoff. Also, Inco made an ill-advised acquisition of Rayovac Batteries.  Thereafter, its stock price was stagnant for two decades.  That changed in the millennial decade with the rise in commodity prices that began in 2001.  According to Wikipedia in 2006 Vale, a Brazilian natural resources behemoth, purchased Inco for $18.6 billion.  To date, that was the largest acquisition by any Brazilian firm.  Vale Inco is now the world's second largest nickel producer following Russia's Norilsk Nickel.

In this week's Kitco Commentaries Rick Mills writes about the world's nickel market. Nickel has a wide range of industrial uses, and government-funded green energy programs are likely to make use of it.  Mills notes that there are two kinds of nickel deposits:  sulphide and laterite.  He adds that there is no simple separation or mining technique for laterites: "Laterite projects require large economies of scale at higher capital cost per unit of capacity to be viable. They are also generally much higher cash-cost producers than sulphide operations."

Although 60 percent of the world's nickel is in laterite deposits, they are low grade and difficult to mine.  Mills states that cheaper-to-produce sulfide deposits, which are the source of 58% of the world's nickel, are depleting. Nickel mining, like mining in general, is capital intensive.  Mills states that the average capital input for mining is one half of total costs, while for the economy in general it is 21 per cent.  Moreover, capital costs have been increasing.  Vale's New Caledonia plant has faced repeated setbacks.  In May 2012 Vale declared force majeure, allowing it to ignore contract obligations, because of an accident at the mine's sulfuric acid plant, according to Reuters.  The Brazilian government has halted production at Onca Puma because of effects of the Onca Puma mine on the Xikrin and Kayapo tribes in northern Brazil. Vale had failed to pay damages to the tribes. Meanwhile, Mill states this:

Indonesia (the world’s top exporter of nickel ore) enacted an export tax system, effective May 6, 2012, under which a 20% export tax is levied on 14 raw ores of Indonesian origin, including nickel – the result was to drive hundreds of small miners out of business and sending Chinese laterite buyers elsewhere. This is the first step by Indonesia towards a full ban on the export of minerals that is scheduled to begin in 2014.

Mill states that 35 years of underinvestment have limited new discoveries.  China has been demanding nickel so that demand has increased  since 2000.  Mill makes the case that now is the time to invest in nickel via junior exploration firms.

Nevertheless, there are three flies in the molten nickel: QE1, QE2, and QE3.  The large capital costs of mining are reduced by sharp reductions in interest rates, and this would improve natural resource producers' stock prices were it not for hyper-low interest rates' effects on competition.  Reductions in interest rates stimulate supply and competition. Because of increased production and competition, stock prices of mining firms are reduced during the initial phases of a monetary boom. Low interest rates reduce the very capital costs that impede production. The excess competition deflates commodity-and-stock prices. It is not until monetary expansion results in inflation that commodity prices start to rise.

Vale, one of whose many products is nickel, is selling at a multiple of six times earnings despite its five percent dividend.  That is a Great Depression-era valuation, suggesting a buying opportunity, notwithstanding the all-thumbs management history that Mills describes.  At the same time, gold stocks have fallen precipitously over the past two years.  The initial market reaction that gold will go up because of monetary depreciation has petered out.  Along with Vale, mining-and-natural resource stocks are selling at Great Depression price-earning multiples.

The sector needs to go through a period like the 1980-2000 one. Contrary to popular belief, the Greenspan Fed consistently increased the money supply, and that was associated with depressed natural resource prices.  The Bernanke Fed is the most stimulative in history, but I suspect the metals price depression won't be that long because there had not been a Volcker Fed to raise interest rates and stabilize the economy prior to the monetary expansion.  Inflation in the coming decades will be worse than in the 1970s, and the Fed will have limited power to reverse it. However, these outcomes are at least two years away, and probably more.  Gold-and-commodity stock prices will increase once the stimulative effects of the monetary expansion are dissolved. My guess is three-to-five years or more.

At the same time, Mills is right. It is not too early to buy nickel stocks. Vale's five percent dividend is a draw.  Mills doesn't like Vale because of its diverse range of products.  The natural resource sector in general will rise with nickel, and it's nice to count some shekels from a five percent dividend while waiting for a turnaround in the commodities sector. 

Incidentally,  I have been buying gold and other stocks, and junior nickel miners are of interest.  
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Posted in inco limited, junior nickel miners, nickel, rick mills, stock market, vale | No comments

Monday, November 12, 2012

A people who allow a tyrant to tell them how much they can eat and drink are beneath contempt.

Posted on 5:33 PM by Unknown
A people who allow a tyrant to tell them how much they can eat and drink are beneath contempt.
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Posted in michael bloomberg, New York City | No comments

Sunday, November 11, 2012

The Democratic versus the Republican Future

Posted on 5:11 AM by Unknown
The American future will materialize in one, five, 10, or 20 years, once the federal government's 14- or 15-digit indebtedness becomes unsustainable. When private and foreign financing sources disappear, money printing will fund the federal deficit.  That will increase domestic money supply, and a currency collapse coupled with hyperinflation will follow, depending on the sustainability of the debt market and the willingness of foreign governments to purchase treasury debt that yields less than two percent while American inflation is above four percent.  The Fed may already be directly purchasing federal debt. When direct monetization of federal debt becomes routine, hyperinflation and a dollar collapse will not be far behind.  The reason is that the total money supply is a small fraction of total US indebtedness.  In 1995 the total US money supply was under $1.2 trillion; today it is about $2.4 trillion, with virtually all of the increase having occurred since 2009.  In contrast, the federal deficit is $1.1 trillion for 2012 alone.

During the Bush years, the federal deficit, which President Clinton had eliminated for four years between 1998 and 2001, rose from $171 billion to $422 billion.  His final budget, which Obama inherited, included a $1.3 trillion deficit. The spin masters at The New York Times and Obama's publicity site, Factcheck.org, now crow that Obama has "reduced" the deficit to $1.1 trillion, but when you get your news from liars like The New York Times and Factcheck.org you get a distorted view of the world. Obama made no effort to rescind the 2009 budget, a power that the Democrats took away from the president during the Nixon years. Moreover, Obama's subsequent budgets have been as bloated as the final Bush budget.  According to the US Treasury outstanding federal debt in 2010 was $10.6 trillion, and in November 2012 it was $16.2 trillion.  Obama has added trillions to federal debt; George W. Bush invented a policy that Barack Obama perfected.  Mitt Romney, a bailout supporter and a military hawk, was likely to maintain Obama-and-Bush levels of spending.

Looking more closely at the publicly held-versus-total debt numbers from TreasuryDirect.com, the Fed may have directly monetized as much as $300 billion of federal debt since Obama took office:

Publicly held federal debt, January 2009:  $6.3 trillion
Publicly held federal debt, August 2012:  $10.6 trillion
Difference: $4.3 trillion

Total federal debt January 2009: $10.0 trillion
Total federal debt August 2012: $14.6 trillion
 Difference: $ 4.6 trillion

The $4.6 trillion growth in total debt during the Obama years, a 46% growth in the total debt outstanding from all prior presidents in just four years, is $300 billion more than the $4.3 trillion growth in publicly held debt. That $0.3 trillion difference  is one eighth of the total money supply. 
 
If interest rates rise, then the federal government's deficit and borrowing costs will also rise, and it will need to de-fund programs.  The political results of de-funding welfare programs like Social Security will be similar to hyperinflation. There may be intense pressure on the Federal Reserve Bank to simply monetize the federal debt.

The results will differ between Republicans and Democrats.  With Democrats in office, there will be a decline in American standards of living as money printing reduces the ability of the federal government to borrow further and as legitimate sources of capital flee a socialistic America bent on stealing to subsidize the Democrats' key beneficiaries: Wall Street, welfare cheats, and do-nothing government employees.  However, you will not be allowed to drink soft drinks in excess of eight ounces.  With Republicans in office there will be a similar economic scenario, but you will not be allowed to use birth control pills.  The Republicans will subsidize Wall Street, defense contractors, pharmaceutical firms, agribusiness, and defense contractors.

Both parties offer a totalitarian future run by ego-maniacal ignoramuses.The only thing more embarrassing than America's two-party system is the American people.
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Saturday, November 10, 2012

Please Sign My Petition to Allow You to Withdraw from Social Security

Posted on 11:27 AM by Unknown
https://petitions.whitehouse.gov/petition/allow-americans-withdraw-social-security-and-receive-value-their-lifetime-contributions-cash/V3h4TrJX



Social Security is a fraud for six reasons. First, thepublic was told that it is an insurance plan. It is not. Second, to reinforce thefraud Congress made it seem that FICA contributions aren't ordinary federalincome tax. They are. Third, unfairly high benefits were paid to retirees untilthe 1980s. Fourth, Congress unsustainably expanded benefits in the 1970s.Fifth, seeing that the extension was unsustainable, Congress reduced benefitsfor those retiring in this century. Sixth, like Jack Madoff, Congress spent alarge portion of the contributions that were in the so-called trust fund onexpenditures that helped their reelection. Given the history of fraudsurrounding Social Security, contributors' money should be returned to themwith interest.
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Thursday, November 8, 2012

America at a Moral Crossroad

Posted on 7:04 PM by Unknown
H/t Mairi. Bill Whittle offers a good video about America's being at a crossroads with respect to virtue. I am skeptical, though,  that Mitt Romney or the Republican Party represents virtue.  The Fed's monetary creation reflects government subsidization as much as welfare does.  A hedge fund manger like Romney whose tens of millions are due to the Fed's artificial monetary creation is no better than a welfare recipient.  I disagree with his claim that Romney reflects virtue or hard work. Romney is as much as welfare scammer as any welfare recipient.

I also disagree that  Democrats and Republicans differ with respect to virtue.  I don't think supporters of Obama or Romney are virtuous or not.  Rather, hard working, honest, virtuous people can support either; neither reflected virtue in the sense that Whittle means it. 

Also, Whittle is wrong that public education was destroyed more than 50 years ago.  Progressive education began the destruction of public education more than 100 years ago, according to Diane Ravitch in her Left Back: A Century of Battles over School Reform. 

Whittle's advocacy of parallel private structures is good, but given that half our money is paid in taxes, it will be difficult to use a significant percentage of our pay in parallel organizations involving space exploration and education.  Contrary to his claim, it will cost more than your cable bill to do the things for which he aims.  

Whittle's idea of ignoring rather than fighting the state is good, but difficult. It makes more sense to establish an alternative citizenship and ultimately reside in a better country. There are an increasing number of better countries as America falters and declines. I would rather have an apartment in Montevideo, Uruguay than pay for a second school system here. 


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Posted in bill whittle, decentralized, parallel systems, self-forming organizations, virtue | No comments

I No Longer Support Ron Paul

Posted on 1:58 PM by Unknown


I just sent this e-mail to the Campaign for Liberty:

I’m not a Republican because, as a libertarian, I consider the Republican Party to be the worse of two evils.  I have decided not to continue to support Ron Paul because of his cheap, opportunistic refusal to support Gary Johnson.  I appreciate all he has done for the libertarian movement, but in the end he’s just another Republican. I have removed my name from your mailing list, and I do not support you.
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Posted in campaign for liberty, gary johnson, Libertarian Party, Ron Paul | No comments

Wednesday, November 7, 2012

The Lesser of Two Evils Won

Posted on 11:37 PM by Unknown
As a libertarian, I'm glad Obama defeated Romney.  Obama was a dismal candidate, but Romney was worse. Obama is a liar who claims to be a friend of the poor but who uses public power to subsidize the super-rich.  Obama initiated an unpopular socialized medicine scheme, and then, through a destructive cap-and-trade bill, attacked private home ownership--especially of the poor.  Obama has consistently subsidized the stock market at the expense of the average American, and he has attacked fundamental American freedoms through the NDAA, which intensifies Bush's Patriot Act.  Given Obama's ugly policies, policies that are harmful to the average American, the Republicans should have had no trouble defeating him.  Moreover, the economy has been dismal, with high unemployment and instability.

The bailout and Obama's healthcare act energized the rank and file of the Republican Party in 2009 and 2010.  I will never understand, then, what possessed the GOP to nominate a candidate who, as governor of Massachusetts, had adopted a healthcare act comparable to Obama's.  As well, Governor Romney had made a fortune working in the same financial industry that the multi-trillion dollar bailout subsidized. Romney made his $200 million because of Federal-Reserve-Bank subsidization. Make no mistake about it: Private equity in today's form is a primary beneficiary of Federal-Reserve- Bank monetary creation.  Romney is a product of crony capitalism, a corporate welfare baby.  As well, Romney stated that he aimed to initiate a trade war, an economically illiterate path, with China. 

Having thought long and hard and having interacted with Republicans in my region over the past few years, I have concluded that the Republican Party is not for me.  The Democrats are evil, but as totalitarian, murderous, and destructive they may be, the Republicans are worse. The Republicans have been present throughout the implementation of Agenda 21; they have fostered Federal Reserve Bank socialism; they have degraded American education; they have adopted as much regulation as the Democrats.  They claim to oppose big government, but they have consistently expanded it. A so-called political party, the GOP, like the Democratic Party, is a corruption machine.   As a representative of the big-government wing of the GOP, Romney was a worse candidate than Obama. 

That the Republicans couldn't conceive of a way to defeat Obama is a symptom of their commitment to centralization, to  big government, and to any and every scheme by which they can loot the public till.  

It is good that Romney lost. He ran a dismal campaign.  His socialism matches Obama's, and he would have contributed as little to the nation's welfare as Obama will.  Add to it that Romney has benefited from the federal government's thieving Federal Reserve system, and I am happy as anything that he has lost. 
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