ncThinker's blog

General Stanley McChrystal pulled off another successful special operation with his resignation from the fools errand commonly referred to as Afghanistan. The facts are McChrystal couldn't quit, but desperately needed a way out. He knows, just as Petraeus does, that this administration can't even spell 'military' much less know how to utilize them, and therefore Afghanistan is a complete waste of blood and treasure. Even worse now than under Bush.

First, invite the Rolling Stone into your inner circle knowing that the article will force the hand of the president.
Second, do so in time to take the family on a much deserved summer vacation.
Third, and most importantly, resign and retire with full benefits.
Fourth, make money on a tell-all book and speaking tour as one becomes the 21st century equivalent of MacArthur.

Speaking of government jiggering, just below is a link to an article on Business Insider about a commission set up by the Federal Trade Commission to “rethink” journalism and the news media, while almost entirely ignoring the blogosphere. One of the proposals made by the commission was to slap a 5% tax on all consumer electronics, in order to raise $4 billion to be used to provide public funding to the struggling mainstream media. It’s all just another scam designed to keep the entrenched mob at the top of the nation’s power structure, entrenched.

http://www.businessinsider.com/the-government-is-preparing-to-bail-out-n...

The link below is a brief but clear interview with Chris Whalen during which he explains that what is being passed off as a housing recovery – evidenced by stats such as housing starts – is actually just an extension of massive government subsidies. Subsidies that now extend to actually paying builders to build homes for a market that has no demand.

Thus, instead of saying “recovery,” the government’s language would be far more accurate and far less misleading were it to say something more along the lines of, “additional deficit spending is adding to the massive overhang of unwanted houses on the market.”

http://www.ritholtz.com/blog/2010/05/whalen-housing-recovery-government-subsidy/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed:+TheBigPicture+(The+Big+Picture)

How dare James Glassman tell the truth!
http://www.huffingtonpost.com/2010/05/04/jpmorgan-chase-memo-goldman_n_5...

"The low level of economic literacy exposed in last week’s hearings before the Senate’s Subcommittee on Investigations offered an unnerving insight into much that is driving the financial reform effort.

From the perspective of economic literacy, last week’s hearings before the Senate’s Permanent Subcommittee on Investigations had to be, well, not memorable, or inmemorable (as infamous is to famous). The hearings exposed an unnerving ignorance of fundamental principles of market economics by folks who have a hand in remapping rules of finance that will be with us for a while.

A government that has held power for many years is defeated in an election. On assuming power, the new party discovers that the old party has been spending a lot more than has been publicly revealed, leaving the state in an even sorrier shape than assumed.

Greece?

Yes, but according to the breaking news overseas, the United Kingdom as well. This is from the Times...

The government last night accused Labour of pursuing a “scorched earth policy” before the general election, leaving behind billions of pounds of previously hidden spending commitments.
The newly discovered Whitehall “black holes” could force even more severe public spending cuts, or higher tax rises, ministers fear.

Vince Cable, the business secretary, said: “I fear that a lot of bad news about the public finances has been hidden and stored up for the new government. The skeletons are starting to fall out of the cupboard.”

It appears we are returning to an era where even the most fundamental of economic laws will be cast aside in a populist rush to provide lifestyle enhancements to a broader swath of the citizenry. When I first read this, I felt compelled to check the date to make sure it hadn't been issued on April 1 - as a joke. But it wasn't... and it's real. The following is a snippet out of yesterday's National Post...

Vacationing a human right, EU chief says. The European Union has declared traveling a human right, and is launching a scheme to subsidize vacations with taxpayers' dollars for those too poor to afford their own trips. Antonio Tajani, the European Union commissioner for enterprise and industry, proposed a strategy that could cost European taxpayers hundreds of millions of euros a year, The Times of London reports.

While having learned to cover their butts by adding some modest modifiers to their generally rosy forecasts, the administration's shills (Geithner, Bernanke, Summers, et al.) are unified in telling us that the worst is over. The fact is that the U.S., nay, the world, is headed for fiat currency crash. Let's push forward with some evidence in support of that contention.

In this fiscal year, the U.S. government will run its second trillion-dollar-plus deficit. Concerned about the political heat going into the November elections, the Democrats have been making noise about cleaning up their sloppy spending. A couple of months back, El Presidente of this banana republic intoned that his government...[cannot] continue to spend as if deficits don't have consequences... as if the hard-earned tax dollars of the American people can be treated like Monopoly money.

A recent Rasmussen survey revealed that 59% of "likely voters" believe states should have the right to opt out of federal programs with which they don't agree. Such a number would have been unimaginable just a few years ago, but I wonder which way this is trending.

http://www.rasmussenreports.com/public_content/politics/general_politics...

Sovereign debt is fast becoming a world-wide problem. Here at home, the political calculations and machinations that will be undertaken in an attempt to deal with our own debt - and to do so without angering a majority of the voting public - means higher taxes for the productive and, through increased business taxes, on the unsuspecting masses as well. Expect to see a VAT imposed here in the U.S., and expect to see the imposition of carbon taxes - not because it's the right thing to do (it's not), but because it's anticipated as an important revenue source in the administration's forward-looking budget.

Tax enforcement, which in the U.S. is already the most systematic and stringent in the world, will only get tougher. With a special focus on the wealthy or those who look to move assets overseas- the same people who already pay the vast majority of the nation's tax revenue. Fair share be damned. From here on out, if you've got any fleece left, it's getting sheared.

David Rosenberg of Gluskin Sheff can almost always be counted on for a useful observation or two, and his letter today is no exception. In it, he comments on the basis for the strong rise in U.S. corporate profits. It's his observation, so I'll let him make it...

THE PROFIT PICTURE - THE REAL STORY
Total U.S. corporate profits (national accounts basis) rose 30.6% YoY in Q4, a huge swing from the -25.1% trend a year ago.
Almost the entire story is in the financial sector where profits have soared 240%, which is unprecedented. With the banks shrinking their asset base, the surge in earnings has been due to the ability to 'extend and pretend' post the FASB 157 changes a year ago and the ability to play a super steep yield curve.
Financial sector profits have accounted for 85% of the overall increase in corporate earnings. Total nonfinancial earnings are up the grand total of 5.2% on a YoY basis, though this is still much better than the -17.9% pace a year ago.